We initially purchased Tokio Marine (TSE:8766, Financial) when it traded at a discount to book value and held excess capital largely in the form of publicly traded Japanese equities. Essentially, we saw Tokio Marine as an attractive way to own potentially undervalued Japanese companies, with positive developments continuing to benefit its underlying insurance operations. Tokio Marine was the first of the Japanese non-life insurers to undergo consolidation with the goal of achieving more efficient cost structures.
Over the past year, many investors seemed to have welcomed the developments in the Japanese property & casualty insurance market. These developments included industry consolidation, a more favorable pricing environment, improved underwriting standards and declining cost structures resulting from integrated expense bases post-consolidation. In addition, Japan’s equity market has appreciated significantly, which has made investors more enthusiastic for Tokio Marine’s large equity holdings. We sold our position in the company during the quarter as it appreciated toward our estimate of its intrinsic value.
From Brandes Global Equity Fund second quarter 2015 commentary.
