Argo Group International Holdings, Ltd. (AGII) currently trades at one of the largest discounts to book value in the entire property and casualty insurance space, with the potential to reach double-digit return on equity by 2015, says Amit Kumar, Vice President and Senior Analyst at Macquarie Group Limited.
“Recently, we were on the road with Argo Group management, and if you look at some of the road maps they have laid down, the ROEs for Argo Group could reach close to double-digit or slightly lower by 2015. If that is the case, the stock will start trading a bit more in line with some of the peers. Currently, Argo is trading at the one of the biggest discounts to book value in the entire P&C space,” Kumar said.
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Kumar says AGII is one of the insurance stocks he likes, and he says seeing management’s plans shed more light on why the insurer could expect significant upside the upcoming few years.
“Again, it’s a specialty insurance play, it trades at meaningful discount to book, it has a mid-single-digit ROE,” Kumar says.
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