Euler Hermes: Leading Provider of Trade-Related Insurance Solutions

Robert Leitz presented his in-depth investment thesis on Euler Hermes (Paris: ELE) at European Investing Summit 2015.

Euler Hermes is the world’s leading provider of trade-related insurance solutions with a 34% market share and EUR 860 billion of covered business transactions in 2014. This is a great company trading at a cheap price (EUR 85/share). Euler Hermes is in a strong position to benefit from real and nominal growth in developed and emerging markets. Its competitive position is protected by an unrivalled global network of customer relationships, market intelligence, and scaling benefits. The company has one of the strongest balance sheets in the industry (39% equity ratio) and would be a beneficiary of rising interest rates (the majority of the investment portfolio is in short-term government bonds and cash). At EUR 85/share, Euler Hermes is trading at a P/E ratio of 12.8 and an owner earnings yield of 9.3% (5.1% cash dividend + 4.2% growth in book value/share). This seems too low given the company’s growth prospects and defensive characteristics (it remained profitable throughout the 2008-2009 financial crisis).

About the instructor:

Prior to founding iolite Partners in 2011, Robert Leitz was a management consultant at KPMG Corporate Restructuring and investment analyst at Goldman Sachs’ European Special Situations Group. He later joined TPG Credit, a credit opportunities hedge fund launched in partnership with private equity firm Texas Pacific Group, as a founding member. Robert graduated from the University of St. Gallen (HSG), Switzerland, with a Masters of Science in Business Administration and Economics. He wrote his master’s thesis at Columbia University under the guidance of Prof. Eli Noam.