FDU-INS General Insurance — Developed Markets Value Strategy
Primary Method: Price-to-Book (P/B) Ratio + Combined Ratio + Investment Income
Key Metrics
| Metric | Target | Assessment |
|---|---|---|
| P/B Ratio | 0.7-1.5x | Fair value typically 1.0-1.2x; below 0.9 signals value opportunity |
| Combined Ratio | <100% | <100% = underwriting profit; >100% = underwriting loss |
| Underwriting Profit Margin | >5% | Combined Ratio converts to margin: 95% CR = 5% margin |
| Investment Yield | 4-5%+ | UK gilt yields 4.45% (Feb 2026); use as benchmark |
| Dividend Yield | 3-5% | Sustainability check vs combined ratio |
| Expense Ratio | <30% | Operating efficiency as % of premium |
Benchmarks
- UK Motor Insurance: Admiral Group maintained combined ratio <90% (exceptional; industry average 95-110%)
- General insurers trade 0.7-1.0x P/B during market peaks, 1.0-1.5x during troughs
Investment Income Impact
- Rising gilt yields (2026: 4.45%) boost insurer profitability significantly vs 2016-2021 near-zero environment
- Investment income now 20-30% of total earnings for well-positioned insurers
- Reinvestment risk if rates fall; assess portfolio duration