MHLD - Yes, they advertise their avoidance of cat risk, so it would be strange if they had huge cat losses. However, as you can see from their presentation (slide 4), they are paying a price for the cat avoidance. They have nice and flat combined ratio that is lower than other cos when cats occur but it is quite higher than other cos when cats don't occur. Overall it's not clear for me from the chart that their combined ratio is better than other cos looking long term.
Another issue which Paul Senior alludes to with his short history comment is that we simply don't know if MHLD is taking some other risks that have not come home to roost yet. Obviously it's taking some kind of risks, nobody gets money for nothing in insurance business. All insurance and reinsurance companies claim "unique business model", "specialized", "differentiated", "disciplined", "customer focused" business. If only I had $10 for every time these words are mentioned... I highly doubt that (m)any of them really have a huge moat advantage. Buffett talks his own book when he says Berkshire is the best (re)insurer, but he's right that this business attracts a lot of "hot" money and (re)insurance cos have trouble "differentiating" from other cos long term.
I agree that MHLD results so far look pretty OK and the price is cheapish. I'll think about it, but I'll probably skip it for now. |
