Insurance TBV Multiples & Probability Weighting

Likely proving that a little knowledge is a dangerous thing, I was looking over the insurance tangible book value (TBV) multiples that I monitor and it stuck me that the S shaped curve from prospect theory may be more suitable than a linear fit. As I say, I am likely adding one and one and getting three!

The TBV multiples have continued to expand in 2013 as the graph below shows (market values as of the date shown against the tangible book value from the preceding quarter).

click to enlargeInsurance TBV Movement 2011 to 2013

For the market values as of today against Q3 2013 tangible book value, I fitted a S curve as below.

click to enlargeInsurance Tangible Book Value Multiples Probability Weighting Dec 2013

I am aware that the S curve is the wrong way around compared to one in the previous post but that could be rectified by flipping the axis. As I said, I haven’t really thought it through in detail but thought it was interesting all the same!

With that, I’d like to wish everybody a great Christmas and a peaceful 2014. Many thanks for your interest in my ramblings through 2013.

3 responses to “Insurance TBV Multiples & Probability Weighting

  1. Happy new year mate !


  2. Thanks Eddie and a profitable & healthy 2014 to you.
    Should be an interesting year!.

  3. Fast Eddie

    Thanks a lot. I guess you know the old Chinese curse: “May you live in interesting times !” :-). Really looking forward to what 2014 will bring us.


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