Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Spekulatius who wrote (42978)	6/10/2011 11:46:01 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78748

I guess I should setup a mental limit of what part of my portfolio I want to invest into insurance companies and then buy a basket up to it. Just to (re)summarize pros and cons covered by a bunch of posts: Pros: - Float is great, free float is super great - Good investment of float can yield good-to-great returns - Long term book, book-per-share growth of some insurance companies is adequate to great - Valuations are low - Cats should pass - Conservative policy writing is great Cons: - Low bond yields may equal low return on float - Moving to risky investments to catch yield was and is risky - Too many players, too low policy prices - too much money sloshing around - Everyone talks conservative underwriting, few practice it - So-so long term growth may yield continued low valuations - Perhaps weather patterns are changing and cats are becoming more common. Non cat insurers may have their own issues. Unfortunately, there is no free lunch - almost - and the companies that don't have cat losses (NWLI), or have high growth (AFSI, HCC), or have good/great float allocators (BRK, FRFHF) trade at premium to run-of-the-mill, OKish, generic (??) companies. As we saw from the NWLI/BRK chart, it's not clear that buying more expensive and "better" companies outperforms cheaper OK'ish companies. So I would not dare to choose clear leaders in the current crop. Disclosure: I still hold BRK, AXS, AFSI, FRFHF, TRH, FSR, L, CI. I added very little if at all recently.