nwoodman

Not really , for the most of the most part even their Emerging Markets investment exposure is hedged back to USD. I tend to think of them as a Bermuda based US company that just happens to be listed on the LSE . As always happy to be corrected by far more knowledgeable board members FWIW nwoodman

I wonder if Schiff has taken into account Australia's own particular set of challenges. "At 3.2 times GDP, Australia's housing bubble has surpassed both the United States and Hong Kong housing bubbles, but remains below both the Japanese and Chinese bubbles. Nevertheless, it is clear that Australia's housing market has entered dangerous territory and, based on HSBC's analysis, a fall in home values of more than 30% could be expected should our housing bubble deflate." http://www.unconventionaleconomist.com/

Thanks Bronco, I thought these comments from Jim Tisch gave a little color to what it could mean if CNA paid back the preferreds "The Berkshire transaction significantly de-risks the CNA balance sheet by taking hopefully forever CNA’s, the fastest liabilities off the table, and I think that a number of CNA’s regulatory and rating constituencies understand that as well. We Loews, are hopeful that CNA will pay down the preferred. Its nice to receive the 10% dividend on that preferred, and it will be missed when the preferred is paid down, but remember once that preferred is paid down then depending upon a lot of factor, but CNA could be capable of paying a dividend to all its shareholders, and so Loews could receive cash flow from a CNA dividend on its commonly stock as opposed to dividend on its preferred stock. So, I heard the CNA call, I heard people worrying that the repayment of Loews preferred had to be mutually agreed by Loews and CNA and I’ll just remind everyone that CNA has already paid off $250 million of that preferred by mutual agreement of the two companies." Cheers NW

http://www.lancashiregroup.com/lre_group/media/releases/2010/2010-08-05/ Qtrly EPS 0.48 CR 51.5% "Following the Deepwater Horizon loss, premium rates in the worldwide energy market have increased by between 10% and 30%. Demand for Gulf of Mexico deep water energy wind coverage has strengthened, resulting in a corresponding improvement in premium rates. As anticipated at the beginning of the year, our property catastrophe book, particularly in Florida, came under sustained rating pressure in recent weeks. We have therefore reduced our property catastrophe exposure to windstorm in the South East and Gulf regions at both the June and July renewals. Pricing pressures also led us to decline, or reduce our participation on, several of our retrocessional accounts and we have also scaled back our direct and facultative account exposures." A thing of joy and beauty! Cheers nwoodman

Results were pleasing. Although I must confess to being disappointed that they didn't buy back more of their shares during the qtr . In the CC, they stated that this was due to the CNA/NICO deal. Can anyone explain why this would be the case? Is it considered insider trading? Also can this issue be resolved by outsourcing the buyback (with limits) to a third party similar to what LRE does? Thanks in advance nwoodman

About 8-9 mins in length, Prem discusses Soft market - never know when it will end CPI linked derivative contracts - provides protection, contracts with strong counterparties who will be there in 10 years time TIG acquisition - runoff duration 3-5 years, they have looked at many runoffs and have finally found one that meets their crietera, he sounds pretty excited Cheers nwoodman

No problems at all and a nice touch. It certainly makes the seven lean years just that bit more obvious vs BRK as the benchmark. I guess it goes without saying that they are all pretty good answers, but if you can cop the lumpiness, then 18% compound plus divs certainly makes you just that bit richer vs the 15% :P. I just wish I had perservered in my initial research on FFH when I first started to notice them back in 2002-2003. This and the previous board certainly helped me get my head around them, so thanks Sanjeev. Still even if the returns might not be as high going forwards I am ultra comfortable with management and I certainly share their view of what the investment landscape might look like over the next few years of deleveraging (possible debt deflation) followed by an almost inevitable period of inflation. Also thanks Myth, I think it might have been one of your posts that helped me join the dots on Loews.

The recent decline in Diamond Offshore and discussions on this board got me thinking about Loews as an investment possibility. I thought it would be interesting to compare it to my two benchmark companies in terms of book value growth over a period of approximately 20 years (1991-2010). I realise that past performance is no guarantee how any of these companies will do in the future. Company Comp Book Growth Ave P/B Current P/B Disc from average book Loews 10% 1.1 0.8 -25% Berkshire 15% 1.7 1.3 -21% Fairfax 18% 1.4 1.0 -29% ---------------------------------------------------- S&P Index during period compounded at 5% plus divs P/B is a very coarse metric but on the whole the market seems to have normalised valuations of these companies to around a 10% return if you bought at the average book multiple (give or take). It goes without saying that the real value was to be had when the prices departed from their average multiples of book. Going forwards it is unlikely that Berkshire will be able to achieve the same level of compounding that it has in the past, although I wouldn’t be all that surprised if they came close. I ascribe a valuation of around 1.6x’s which gives an answer inline with many other intrinsic value estimates ($130-140k). I am reasonably comfortable with a fair value on Fairfax at 1.4x’s book and will be looking to buy more sub book. I also believe if CNA can be fixed then Loews offers good value at current valuations, as in the longer term it should trade at around 1.3 to 1.4x’a book. I picked up a small stake in Loews on this basis. I realise this won’t be all that illuminating to many of the keen minds on this board but after reading so many great posts I thought I would upload it anyway. Spreadsheet attached and apologies in advance for the sea of spaghetti in the graph.

Julia Gillard - Prime Minister Wayne Swan - Deputy Gillard won unopposed, so Rudd chose not to contest. An incredible turn around for a prime minister that had one of the highest approval ratings of all time. Now we get to see whether Gillard will pull the Resource Super Profits Tax. Interesting times indeed.

Caucus is currently voting (9am AEST) but it sounds like Julia Gillard has well and truly got the numbers and will trounce Kevin Rudd.

Great links above, many thanks Some of the ones I read Macro China Pettis http://mpettis.com/ Andy Xie (need to search) http://english.caijing.com.cn/finance_features/ Debt Deflation Australian Economist Steve Keen http://www.debtdeflation.com/blogs/ Hoisington http://www.hoisingtonmgt.com/hoisington_economic_overview.html Companies Berkshire Chucks Angels http://finance.groups.yahoo.com/group/chucks_angels/

I wish I had more to add, but thanks for passing this on, very interesting read Cheers

Hi Viking, I tend to use Purchasing Power Parity (PPP) as an overlay to my US stock purchases. Our currency here in Australia has certainly been manic over the last few years. In order to keep this in perpsective I divide my fair value of BRK, FFH and ORH currently by 0.80/0.69 (PPP) to get a currency adjusted valuation. On this basis I figure that I have approximately 16% more purchasing power so my maths work something like this based on what I figure is IV BRK IV = US120000 est from JKish's intrinsivalutor, BRK Price = US82500 (based on 30 b's) -> 82500/(120000*1.16) So my currency adjusted IV is 59% FFH IV =1.4 x 255 = US357 FFH price = US242 ->242/(357*1.16) = 58% ORH IV = 1.4 x 43.8 = US61.32 ORH price = 42.3 -> 42.3/(61.32 * 1.16) = 59.5% PPP is a very course metric but ultimately seems to at least be a long run anchor point on currency movements. The usual caveats apply in that you need to be mindful of "printing presses" and the shortcomings of using basic IV measures such as multliples of book value and the intrinsivaluator. Cheers nwoodman