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

To: Jurgis Bekepuris who wrote (44311)	9/12/2011 2:58:11 AM
From: Shane M	Read Replies (1) \| Respond to of 78596

Jurgis, on P&C - I could be tainted some by the tough conditions at my company over the past 5yrs or so, but what I see: - largely commoditized product (my opinion I guess) - slow growing market - fighting over fixed pie. - many state regulators, at least in states I deal with, are difficult - catastrophe exposure / risk of ruin (more trouble in property than in auto) - some major players are mutual companies and are willing and able to run certain lines at loss for extended periods, or at least aren't under pressure to have profits (but just break even). Your question about book value is interesting. I just scanned through several co's in my database and some bvps are up, some bvps are down over the past 7yrs of history I see - I can't tell overall what's going on there or paint the industry broadly. Clearly some have done better than others. I found it interesting that even w/ my co book value is higher now than it was 7yrs ago, but I feel we're in a diminished position vs. 7yrs ago (and stock price reflects that despite book value change). At least in my co's case I wouldn't say the book value increase is equivalent to a healthier company. Perhaps I'm not being fair when I call it a tough business - like most industries there are winners there - there's just a lot to be concerned with as I look at the landscape. Maybe I'm too close to it to appreciate the positives. As I looked through there were a couple of players I was curious about, but I don't have a consistent approach to evaluate them - maybe I should do that. (part of the problem I have with looking at financials on insurance cos is the operational metrics like production, retention, policy growth, avg premiums, combined ratio, frequency, severity that explain the business well - don't necessarily tie into the GAAP financials reported very well requiring alot of manual digging around) If I had to look at a few, after glancing through the database, in addition to CB I think I'd look at Travelers, Fairfax and Zurich, but I could probably refine a more interesting list if I sat down and thought about how to build a good P&C insurance industry screen/filter. Financial companies have always been difficult for me to do this and I've tended to stay away because things can look OK and even good on the financials up until the point something goes very wrong and it can go downhill fast - like the surprises that hit so many co investment portfolios in 2008. But there were some companies that sailed through 2008 almost like nothing happened.