EIG
Employers Holdings, Inc.
$49.85
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 20.3% below fair value
You pay
$49.85
Bear
$43.78
Fair
$62.55
Bull
$81.31
Bear
$43.78
-12.2%
ROTCE 4.0% → 0.30x TBV
Fair
$62.55
+25.5%
ROTCE 1.3% → 0.30x TBV
Bull
$81.31
+63.1%
ROTCE 1.5% → 0.30x TBV
Key Value Driver
ROTCE (1.3%) vs. cost of equity (6.9%)
Implied Market Multiple
1.3x
Summary
With ROTCE of 1.3% vs. 6.9% cost of equity, fair P/TBV is 0.30x on $38.36 tangible book, implying $62.55 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (1.3%) is below the minimum investors require (6.9%). This means the bank is worth less than the net assets on its books.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly