With PartnerRe (NYSE:PRE) trading around $98.60, non-insurance investors probably look at the book value on the stock of $109.26 and think the firm is a steal and an obvious arbitrage situation. It is not. In fact, up until recently I thought the global reinsurer was closer to a 'hold' than a 'buy'. The stellar loss environment of 2013 (i.e. there were very few major disasters in 2013), the Fed's move to raise rates which should drain excess capacity from the reinsurance market, and the generally limited impact of higher interest rates on the firm's investment book have changed my mind.
Today, PRE trades around 0.90X book-value. I think the stock is a moderate buy based on an improvement...
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