Q: Hello, on August 15th you answered a question by Derek about this company. Feel free to abridge this quote within your response, pasted below. I don't fully understand your response, as it seems to indicate that TSU will grow faster, but why would you say that IFC is more balanced? Does this mean that IFC should actually grow more over time, or that it will grow less but is more stable? Thank you very much.
Original answer about growth:
IFC (property and casualty insurance and auto insurance) - consensus growth estimate over the next few years 6%
TSU (specialty insurance) - consensus growth estimate over the next few years 10%-12%
TSU has the best growth, as the company reinvested the majority of its earnings back, and volume growth in TSU’s recent quarters is quite healthy. TSU has the strongest growth, but we think IFC could be the most balanced name between capital returns and growth.
Original answer about growth:
IFC (property and casualty insurance and auto insurance) - consensus growth estimate over the next few years 6%
TSU (specialty insurance) - consensus growth estimate over the next few years 10%-12%
TSU has the best growth, as the company reinvested the majority of its earnings back, and volume growth in TSU’s recent quarters is quite healthy. TSU has the strongest growth, but we think IFC could be the most balanced name between capital returns and growth.
5i Research Answer:
IFC, at $46B in market cap, is 23X as large as TSU. Small companies have an inherently better ability to grow, since they have far more leverage to single contracts, acquisitions or other corporate activity. Our comments related to the size of IFC and its more stable operations due to better business diversity. It also pays a dividend and TSU does not, so that can make shares more stable as well. TSU has the ability to grow faster and consensus estimates calls for faster growth in the next two years. But this does not always translate into better stock performance, but it certainly can. But IFC is the far more conservative and reliable stock of the two.