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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (42844)	5/27/2011 9:39:46 AM
From: Jurgis Bekepuris	Respond to of 78565

I also pretty much have the same criteria as you: - Past track record: book value growth, book value per share growth, not many funny transactions. Unfortunately you can't discard insurance company due to lumpy results and losses in some years. - Management. Unfortunately, BRK and Fairfax are the only two companies where I know about the management long term. - Credit rating and AM Best rating. Definitely. - Investment portfolio. Again, only with BRK we know what it is. Also somewhat with Fairfax. With L we know a bit, but the structure is a bit complex since it's a holding company. For the rest you can only see some distributions and glimpses like AFL's Greek writedowns and some MBSes in a number of companies I looked recently. But even there it's tough to say whether they bought MBSes pre crash or post crash unless you spend detective time going through 2007-2010 annuals. Finally, on the valuation side, it's pretty much P/book. P/E is pretty much useless as seen by looking of reinsurer 2010 P/Es and this year's losses. It might be possible to use 5 year earnings for P/E, though I am not sure this would work well. ROE and ROIC are also not indicative of performance unfortunately. Maybe I should read "Security Analysis" on how Graham suggested valuing Financials/Insurers. If someone else has other measures for valuing insurers, please chime in. :)