Reviewing Blue Capital Reinsurance Holdings (BCRH) and Third Point Reinsurance (NYSE:TPRE)

Third Point Reinsurance (NYSE: TPRE) and Blue Capital Reinsurance Holdings (NYSE:BCRH) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Third Point Reinsurance and Blue Capital Reinsurance Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Third Point Reinsurance 0 2 1 0 2.33
Blue Capital Reinsurance Holdings 0 1 0 0 2.00

Third Point Reinsurance presently has a consensus price target of $15.50, suggesting a potential upside of 7.27%. Given Third Point Reinsurance’s stronger consensus rating and higher probable upside, research analysts clearly believe Third Point Reinsurance is more favorable than Blue Capital Reinsurance Holdings.

Valuation & Earnings

This table compares Third Point Reinsurance and Blue Capital Reinsurance Holdings’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Third Point Reinsurance $924.00 million 1.68 $206.08 million $1.92 7.53
Blue Capital Reinsurance Holdings $41.20 million 4.09 $16.02 million $1.83 10.52

Third Point Reinsurance has higher revenue and earnings than Blue Capital Reinsurance Holdings. Third Point Reinsurance is trading at a lower price-to-earnings ratio than Blue Capital Reinsurance Holdings, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Third Point Reinsurance has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, Blue Capital Reinsurance Holdings has a beta of 0.1, suggesting that its stock price is 90% less volatile than the S&P 500.

Dividends

Blue Capital Reinsurance Holdings pays an annual dividend of $1.20 per share and has a dividend yield of 6.2%. Third Point Reinsurance does not pay a dividend. Blue Capital Reinsurance Holdings pays out 65.6% of its earnings in the form of a dividend.

Insider & Institutional Ownership

68.0% of Third Point Reinsurance shares are owned by institutional investors. Comparatively, 40.2% of Blue Capital Reinsurance Holdings shares are owned by institutional investors. 36.9% of Third Point Reinsurance shares are owned by insiders. Comparatively, 0.1% of Blue Capital Reinsurance Holdings shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Third Point Reinsurance and Blue Capital Reinsurance Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Third Point Reinsurance 22.18% 13.56% 5.04%
Blue Capital Reinsurance Holdings 38.93% 8.84% 7.76%

Summary

Third Point Reinsurance beats Blue Capital Reinsurance Holdings on 11 of the 16 factors compared between the two stocks.

Third Point Reinsurance Company Profile

Third Point Reinsurance Ltd. is a holding company. Through the Company’s reinsurance subsidiaries, it provides property and casualty reinsurance coverage to insurance and reinsurance companies. The Company’s segments include Property and Casualty Reinsurance, and Corporate. The Company’s investable assets are managed by its investment manager, Third Point LLC. The Company also writes reinsurance contracts that provide protection against adverse development on loss reserves. Through Third Point LLC, the Company makes investments globally in all sectors, and in equity, credit, commodity, currency, options and other instruments. The Company also acts as the underwriter for the majority of the premium that it underwrites. The Company writes reinsurance contracts covering product lines, such as property, workers’ compensation, auto, general liability, professional liability, credit and financial lines, and multi-line.

Blue Capital Reinsurance Holdings Company Profile

Blue Capital Reinsurance Holdings Ltd. provides collateralized reinsurance in the property catastrophe market and invests in various insurance-linked securities. The Company conducts its operations through its subsidiaries, including Blue Capital Re Ltd. (Blue Capital Re), which provides collateralized reinsurance, and Blue Capital Re ILS Ltd. (Blue Capital Re ILS), which conducts hedging and other investment activities. Blue Capital Re provides reinsurance to third-party insurance and reinsurance companies through reinsurance contracts, either directly with the cedant or on a fronted basis. Blue Capital Re ILS may purchase catastrophe bonds to access certain risks. Blue Capital Re or Blue Capital Re ILS may buy and sell industry loss warranties as a way to access certain risks. Blue Capital Re ILS’ portfolio may include over-the-counter or exchange-traded futures or options listed on catastrophe indexes, such as catastrophe or weather derivatives.

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