This Time Is Different—But the Principles Aren’t
Stocks and bonds have performed better than expected year to date. Continued earnings growth has fueled US stocks to a 14% increase through September end. Meanwhile bonds have enjoyed tailwinds from high starting rates and are up 6% over the same period. Following several years of slow earnings growth and tepid market returns as a result, International stocks have advanced 23%, thanks to positive currency dynamics and perceived insulation from macroeconomic concerns.
2025 has been filled with news asking investors, “Is this time different?” Tariffs, wars, and political tensions have caused spikes in uncertainty not seen since the Financial Crisis or the early days of the pandemic.
Every time is indeed different. But as long-term allocators of reinsurance reserves, our focus remains on what does not change—namely, strong balance sheets, consistent free cash flow, diversification, and valuation discipline providing the basis for lasting investment success. In concert with prudent tax management across reinsurance strategies, these principles ensure our clients’ reserve portfolios will weather storms and blossom during times of plenty.
Looking forward, we see the following:
a) A stock market offering attractive opportunities in certain corners where technology-enabled efficiency gains are potentially underappreciated,
b) Valuations that appear elevated on the surface but in fact are commensurate with margin expansion and earnings growth,
c) Low consumer sentiment, which has historically presaged upside stock market surprises, and
d) Interest rates that could provide further fuel to the market’s rally should long- term bond and mortgage rates follow short-term rates’ drift lower.
History’s most successful investors achieved durable results by maintaining discipline through uncertainty—owning high-quality, cash-generative businesses while allowing markets to set the tempo for opportunity. Likewise, our process within JGP Reinsurance Alpha is designed to capitalize on dislocations created by near-term volatility while adhering to the portfolio’s liquidity, risk, and regulatory parameters.
At JGP, we remain committed to investing in companies with sound balance sheets, recurring cash flows, and return on capital profiles consistent with our reserve account objectives. In concert with thoughtful asset-liability management and ongoing tax and capital efficiency, this disciplined framework continues to underpin long-term value creation for our reinsurance partners.
JGP Investment Committee
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