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Strategies & Market Trends : Value Investing

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To: Shane M who wrote (44354)	9/14/2011 10:21:15 PM
From: Spekulatius	of 78670

re insurers. PGR insurance life has increased over the last few years (they state that in their last 10Q), so I am guessing that they are closing the gap to Geico. I went ahead and had my insurance needs quoted online. 1) While PGR does not do property (homeowners) they have that integrated in their quoting process so it's not visible at all (like it is with Geico) that you are dealing with a separate company. They state in their 10Q that they work with 3 different insurance providers. 2) The online quote process was smooth and very well thought out. Many fields were already pre-populated (they know our cars for example and the size of our house after i provided an address 3) They were not able to beat the price of my current insurance, which is with MCY. ( Amica and Geico cannot beat the price of MCY package deal either) PGR acquisition cost appears to be much lower than for other insurers. I also think they are doing a good ob with their advertising campaign. I see online/mobile online presence and capability to serve the customer as a customer major differentiation point and PGR seems to excel there. At 1.8 tangible book and 12x earnings PGR is not cheap but my guess is that their stock may beat most peer stock over the years. I would gladly buy some at 15$. As for CB, I agree they are well managed. I think there was some luck involved, since they are concentrated in high value housing Katrina was not that much of a factor but Irene could have been, if it had been stronger. Their bond portfolio has performed well during 2008 but so has TRV's. My issue with the property insurers is that the fat lady has not sung yet. I believe the song that the fat lady will sing is "No more reserve releases from the fhard market years 2003-2007. For example TRV had over 1B$+ in annual reserve releases - that is more than 1/3 of their nominal earnings. Others are probably in a similar boat that they releases reserves in a controlled manor to boost earnings. However that can only go on for so long. So far the day has not come yet when the reserve releases are no longer justified but it ought to be close.

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