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Analyst Profile – Ania Aldrich

Throughout the month of March and in celebration of International Women’s Day, we are highlighting female analysts and PMs who are critical to Cambiar’s success.

What’s an investment theme or industry that has you particularly enthusiastic in 2021 and why?

 

Ania Aldridge helps Cambiar Investors serve as an active value global managerInsurance businesses follow their own cycles, which do not necessarily correlate with the economic one.  Strong economic growth, however, is also good for these companies since insurance is a GDP plus growth business.  We are at the point of the insurance cycle when price adequacy is returning; improving profitability and revenues are increasing meaningfully.   Severe dislocation in the market due to meaningful capacity withdrawal combined with several years of large losses are resulting in accelerating pricing ultimately driving higher margins for the industry.  One insurance executive puts it best: “market now offers incredible opportunity to lean and aggressively grow the business”.  As more premiums are written, the “float” to invest increases, generating higher investment income.  A potential increase in interest rates would also contribute to higher returns.  Recent economic rebound similarly benefits the sector as corporations require more protection for their expanding businesses.  The sector has been overlooked by investors who do not fully appreciate the magnitude of the projected profit growth for the next few years.  As price increases are significantly above loss cost trends, margins are anticipated to expand for several years.  Stocks do not look particularly expensive with high-quality names in the sector trading just above book value.  During prior periods of expanding margins stocks traded at 1.5x to 2x book value.  As profitability improves, stocks should realize expansion in the valuation matrix, representing an attractive investment opportunity.

Learn more about Ania Aldrich.

 

 

 

 

 

 

 

Disclosures

Source: Bloomberg

Certain information contained in this communication constitutes “forward-looking statements”, which are based on Cambiar’s beliefs, as well as certain assumptions concerning future events, using information currently available to Cambiar.  Due to market risk and uncertainties, actual events, results or performance may differ materially from that reflected or contemplated in such forward-looking statements.  The information provided is not intended to be, and should not be construed as, investment, legal or tax advice.  Nothing contained herein should be construed as a recommendation or endorsement to buy or sell any security, investment or portfolio allocation. 

Any characteristics included are for illustrative purposes and accordingly, no assumptions or comparisons should be made based upon these ratios. Statistics/charts and other information presented may be based upon third-party sources that are deemed reliable; however, Cambiar does not guarantee its accuracy or completeness.  As with any investments, there are risks to be considered.  Past performance is no indication of future results.  All material is provided for informational purposes only and there is no guarantee that any opinions expressed herein will be valid beyond the date of this communication. 

The specific securities identified and described do not represent all of the securities purchased or held in Cambiar accounts on the date of publication, and the reader should not assume that investments in the securities identified and discussed were or will be profitable. All information is provided for informational purposes only and should not be deemed as a recommendation to buy the securities mentioned.

 

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