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Biotech / Medical : Oxford Health Plan (OXHP) -- Ignore unavailable to you. Want to Upgrade?

To: robt justine who wrote (565)	12/15/1997 8:41:00 AM
From: jeffbas	Respond to of 2068

I will repeat what I have said before in other ways. As a group health actuary for over 30 years, I can tell you that there is still a lot of danger in considering investing in OXHP. This is not like a typical industrial company which can promptly raise prices if costs change. These companies typically have one year rate guarantees in place on their business. The reserve increases take care of inadequacies with respect to claims already incurred. It would be unusual for reserves to also be set up for inadequate premium rates, to cover the period until the next rate change date. However, such large reserve increases suggest inadequate premium rates (or poor results for quite some time). This is also not like industrial companies in that everyone is going to have to raise prices at the same time. They will be raising prices more than their competitors. The results are not very predictible, either as to what increase in lapse rate they will get or whether they will be left with a poorer quality book of business or not.

To: robt justine who wrote (565)	12/15/1997 9:29:00 AM
From: Michael Burry	Read Replies (2) \| Respond to of 2068

Re: analysis If someone wants to dispute my numbers - I've asked the thread to do this many times- they are more than welcome. It would help me greatly. And if my numbers are right, then I would like to know the reasons they don't matter. "Please stop" and "Where were you before the announcement on this issue?" don't cut it. As I am a fundamental investor, I take great heart in a strong balance sheet. The biggest reason I was bullish was because of the solid balance sheet and the franchise. The biggest reason I now present worries is the balance sheet in danger despite the franchise. I really only have one issue here - a margin of safety in the balance sheet that guarantees solvency at a minimum. Before the announcement, the fundamental situation was different and more sustainable. It's pretty simple really. <<OXHP management believed that their original writedowns were sufficient. >> Exactly. So what info "was out there if you wanted to investigate?" There was no reason to suspect a $200M hit to the balance sheet from just 3 states. The company sure didn't guide shareholders or analysts in that direction. In fact, during the conference call on the 3Q Wiggins emphasized that they were very conservative with the $90M in charges "in order to protect the patients" and implied to all that as far as hits to reserves, the worst of the charges - if not all the charges- were behind them. This is exactly what I got when I talked to the company - the patients first, so the charges may be a bit excessive. If anything it takes a disciplined investor to change on a dime when the fundamental situation warrants. And since I was so bullish, I felt it only ethical to present my full current view. With no present position here, I certainly don't need to do this. If the thread doesn't want it, point taken. I would venture that you are getting a bit full of hubris in making a single public correct call. Good Investing, Mike