WTM
White Mountains Insurance Group, Ltd.
$2,160.31
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 68.5% below fair value
Bear
$6,866.66
+217.9%
ROTCE 20.0% → 4.00x TBV
Fair
$6,866.66
+217.9%
ROTCE 25.0% → 4.00x TBV
Bull
$6,866.66
+217.9%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
27.0%
6.0%
Key Value Driver
ROTCE (27.0%) vs. cost of equity (6.0%)
Implied Market Multiple
1.26x
Summary
With ROTCE of 27.0% vs. 6.0% cost of equity, fair P/TBV is 4.00x on $1716.66 tangible book, implying $6866.66 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.
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