Historical tests of QSGâs Insurance model indicate that the model would have outperformed the equal-weighted universe of all publicly traded insurance securities in the U.S. by an average of 1.05 % per month from March 1996 to December 2006 excluding transaction costs.
QSGâs insurance model, which makes use of specialty datasets from SNL financial, adds a new dimension to cherry picking stocks in the Insurance sector. The financial statements of insurance companies are characterized by technical jargons and idiosyncrasies unique to this sector. Quantitative investors often seek solutions and tools to address these challenges confronting the investment management community. QSGâs insurance model is designed to model the inherent differences in the presentation of accounting information between insurance companies and other financial services entities. The model provides a robust platform to help clients enhance their stock selection processes by allowing end users to compare the relative performance of insurance companies on a consistent valuation framework designed to identify stocks with significant Alpha generating potential.
Yogesh Sundarum, QSG Quantitative Analyst stated, âThe model is an amalgamation of different measures or benchmarks to evaluate the financial, operating and stock price performance of companies in the Insurance sector. The relative valuation methodology of the model ranks companies on a daily basis based on earnings quality, management quality, underwriting quality, analystâs expectations, valuation metrics and price momentum.â
The model performance stated in the preceding paragraphs represents total return numbers with distributions reinvested at the dividend reinvestment prices stated without considering transaction costs and represents past performance. Past performance is not indicative of future results; current performance may be higher or lower.