As a life-long surfer, and one who enjoys the pristine power of Atlantic hurricane swells, the 2007 hurricane season has been a disappointment. Yes, I know we've had a decent # of named storms, but I think that was more political than anything. I can only think of a couple of solid storms, and they took a southern track through the Caribbean. Where are the storms near the U.S.? You know, the ones that make a beeline for Florida or North Carolina, then curve a few hundred miles offshore and head back into the Atlantic? The ones that send great waves to the beaches? Or even worse, the ones that make landfall and cause widespread damage like Hugo, Andrew and Isabel? They haven't formed. Yet.....we're still paying insurance premiums.......



Partnerre RE (PRE) is one of my core holdings, and I also have call options expiring in November (some at 75, some at 80). PRE is a reinsurer based out of Bermuda with absolutely crazy-low valuation. Growth is steady, and they have no subprime exposure. They insure globally, and are catching onto growth in China and emerging markets. After the consequential 2004 and 2005 Atlantic hurricane seasons, too much fear was priced into insurers and reinsurers. Now, after two consecutive seasons without catastrophic-economic storms.....PRE stands tall. Yet, the stock is still unappreciated. As an insurer, PRE also falls into the 'financial' sector. Yep, the same financial sector which took a hit this summer (and is still taking a hit) with subprime, mortgages, loan defaults, etc. I don't know about you, but I find it a bit hard to compare PRE with Countrywide.



PRE's P/E is below 7; industry average is nearly 12. Give PRE a P/E of just 10, and the stock is valued over $110. Price/Sales, Price/Book, Price/Cash Flow and Price/Free Cash Flow all show PRE valued much less than the industry average. PRE pays a small dividend (~2% yield), but the real value is in the stock price. I said before that PRE could be ~$85+ by 2007's end; I think I'm going to have to bump that up a bit to at least $90, maybe more.



A slow hurricane season might not be good for news media, always searching for the next catastrophe. Yet, a it's quite good for PRE. Buy now. Hold for a while.