Who is Insuring the Insurers?

Insurance companies have been there for a long time. So, who is really insuring the insurers? Insider Monkey has a complete post about "Who is Insuring the Insurers?" With the memory of Hurricane Sandy still fresh for many of those affected by last October’s tropical storm, insurance claims continue to roll in for those seeking reprieve for damages. While a largely negative event for insurance companies, most do not assume all of these risks and are able to pass on a significant amount to a secondary sector, known as the reinsurance industry. Reinsurers exist to help spread risk over multiple parties and thus better absorb the financial setbacks of unforeseen events. One of the most preeminent reinsurance players is Warren Buffet, and his interests have swelled into the billions of dollars, primarily through his Berkshire Hathaway holdings that include GEICO and General Re.

The types of reinsurance vary across providers and depend heavily on the primary insurers they service. The size of liabilities, unforeseen events (i.e. weather-related), and solvency issues can create varying risk profiles and potential dips for buy-and-hold investors. However, buying opportunities exist in this sector, whose price-to book ratios have typically been seen above 1.00. We have compiled a list of five reinsurers that compete in the same spaces and have similar market capitalizations of $4-6 billion. Go to Insider Monkey for the full article about this insurers.