Tiptree: Not Getting Hit With Discount On P&C Picks

2025-02-02 09:38:18 ET

Summary

• Tiptree's valuation is compelling compared to RLI, with a P/B ratio below 2x versus RLI's over 4x, despite similar ROEs.
• Fortegra's E&S insurance line, driving 40% of premiums, grew 34% YoY, contributing to Tiptree's 18% overall revenue growth and 38% net income growth in Q3.
• We wonder about exposure to Californian wildfires, but the impact on Tiptree's business may be rather limited, similar to statements recently made by RLI management.
• The new US administration's inflationary policies make insurers with reserve portfolios attractive, as they can offset higher capital costs and benefit from favorable bond rollover conditions.
• We probably prefer TIPT over RLI as a specialty insurance pick, but want to wait a bit and see about the Q4 results.

Tiptree ( TIPT ) has only now hit the valuations that Warburg Pincus thought it deserved when it established its position a few years ago . However, with years now of strong premium growth in profitable specialty lines of insurance, primarily specialty insurance through E&S insurance, a basis for value creation, business reinvestment and compounding emphasises the relative valuation case against other specialty insurers like RLI ( RLI ) which trades at a higher P/B....

Read the full article on Seeking Alpha

For further details see: