Buying Japanese insurance stocks
During the spring the team behind Danske Invest Global StockPicking spotted an investment opportunity in the Japanese insurance market and invested in the company Tokyo Marine which has a strong position within the car insurance market.
Large price falls on Japanese stocks invited John William Olsen and his team behind Danske Invest Global StockPicking to invest in Japanese insurance stocks while they were still priced at historically low levels. In this connection Tokyo Marine was included in the portfolio.
”This is a classic value investment in a company with a sound business model, which due to a temporary factors is trading at a large discount relative to its long-term potential. We bought the share immediately after the earthquake, since the share price of insurance companies is always pushed down in wake of such a catastrophe – regardless of how large impact the event actually has on the company,” states John William Olsen.
The insurance company Tokyo Marine has a particularly strong position within car insurance. Therefore, the earth quake did not have a great impact on the company’s finances. Nevertheless, the catastrophe sent its share price down to an attractive level where chief portfolio manager John William Olsen and his team placed an investment.
Squeezed du to demographical development
Moreover, Tokyo Marine has also been squeezed due to the demographical development in Japan. The older the population gets, the more veteran drivers the insurance company has, and they are not paying as high premiums as the young clients. Therefore, the company has a need for increasing premium rates - something which so far has been difficult for Japanese companies to explain because the population for many years now has been used to falling premiums.
”The company has signalled that it intends to increase premiums next year, and it appears that they have convinced the two other dominating insurance companies to do the same. If this will be the case, it will be much easier for Tokyo Marine to retain clients despite premium increases,” states John William Olsen.
Overall, he expects that the investment in Tokyo Marine will provide a fair return to the sub-fund's investors.
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