SAFT
Safety Insurance Group, Inc.
$72.72
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 64.7% below fair value
You pay
$72.72
Bear
$150.43
Fair
$206.12
Bull
$206.12
Bear
$150.43
+106.9%
ROTCE 9.8% → 2.92x TBV
Fair
$206.12
+183.4%
ROTCE 13.1% → 4.00x TBV
Bull
$206.12
+183.4%
ROTCE 15.1% → 4.00x TBV
Key Value Driver
ROTCE (13.1%) vs. cost of equity (6.0%)
Implied Market Multiple
1.41x
Summary
With ROTCE of 13.1% vs. 6.0% cost of equity, fair P/TBV is 4.00x on $51.53 tangible book, implying $206.12 per share. DDM cross-check: $66.49.
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.
Dividend-based valuation: $66.49 (68% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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