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A_Hamilton

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Everything posted by A_Hamilton

  1. I would argue that reputationally it is very poor form to fleece one's asset management clients by foisting material dilution on them because of a formula that was set ex-ante and with a stock that has traded very poorly. In the long term I think doing the right thing will lead them to much better opportunities here, heck maybe FIH trades at a premium to book one day and they can issue a bunch of stock and drive more fees to say nothing of all of the other relationships FFH has.
  2. I'd close out, was a great trade at a silly price, less attractive now. The other thing is that TRS are priced at SOFR + a spread, so this isn't necessarily cheap capital.
  3. The issue for Pacwest wasn't the loan quality or the yield they were earning. The problem for PACW was that they were seeing deposit outflows and were having to fund these with wholesale funding / using up their FHLB/discount window etc lines. The rationale for selling is that you get rid of the risk that you need to fully fund the incremental $1.7 billion (on top of the $2.3 billion already outstanding) of borrowings as these projects get completed. Too, in the current environment there is some extension risk if the deal sponsor can't find another bank to take a traditional 1st or, more troublesome, was developing on spec and can't service the loan. The mark here so close to par and the low LTV's on completion cost suggest that across the book as long as thereisn't fraud and disbursements to builders are properly done based on completion milestones, these should be money good. In any case, the overall reason for PACW to sell was to bring more liquidity on its balance sheet and get rid of a contingent but known call on liquidity.
  4. TRV reported $459 million in pre-tax losses from Elliott versus $305 million in Uri quarter. ALL $779 million in Cat losses ($478 due to Elliott) versus $590 million for Uri. Hannover reported $190 million in losses versus $133 for Uri. I don't know how retentions have grown/ Hannover certainly has more NE exposure, but it seems this was a pretty big hit for the primary guys.
  5. No. I'd bet dollars to donuts that its is somehow tied to the counterparties involved in the total return swaps. The price moves are small and the volumes are huge suggesting that two parties have either long or short exposure and need to swap them out and both are afraid of moving price too much.
  6. Any thoughts on losses from the December deep freeze throughout the U.S. and then these California floods? Hard to know how much loss content there will be on the reinsurance side, but I imagine the primary side will feel it industry wide.
  7. That isn't how it works. The multiple voting shares cannot ever be more than 41.8% of the vote per the proxy. The difference has to be made up with subordinate voting shares which have a minimum of 58.2% of the vote.
  8. I think you'd need share count to go well below that. Based on my understanding, Prem gets 41.8% of the voting rights (max) via the multiple voting shares. That leaves the subordinate voting shares with 58.2% of the vote. Prem controls 794,000 of these giving him 43.9% of the vote. In order to get 6.1% of the incremental vote at current levels Prem would need to own another 2.3 million shares at current levels. At current that is ~$1.35 billion of stock. Even if share count comes down by a few million shares, the price per share will appreciate and the cost to take true 50%+ control will be exorbitant. This all says nothing of the board's fiduciary duties around allowing a true change in control which would be above and beyond this.
  9. Answering my own question here. Would be very difficult for Prem to get control via share repurchases as he would need to control like 15% of the subordinate voting shares on top of the multiple voting shares, and he is nowhere close.
  10. Definitely aware these won't be sold. There is reference in the proxy to Sixty Two having subsidiaries in which it only owns 75%, but that doesn't necessarily mean there is more than one owner of Sixty Two. Relatedly, I'm curious if as FFH buys in more shares, and Prem's voting control gets closer to 50% whether there will be a change in control / premium issue that comes up. It is a very odd structure given that it will fall away 5 years after Prem exits the company / passes away (hopefully a long time from now).
  11. Does anyone know if Prem is the only owner of Sixty Two, the vehicle in which he owns all of his multiple voting shares in FFH? Thanks.
  12. I've really thought Sokol got a disproportionately raw deal in the Lubrizol scandal. However, the link above does not help to restore his reputation. Why would you get involved in this in any way shape or form? Just poor judgement on his part...again.
  13. I guess I disagree re: FFH's book loss. One has to include the deficiency in fair value from non-insurance associates. It is part of the investment book and real. FFH would be down ~12% with this included. Nonetheless, I don't think it matters all that much given the growth rates here and strong combined ratios...
  14. I'd like to see them just keep it on hand to fund premium growth and or begin reducing equity investments to tangible capital. I don't know why they always insist on living on the edge as it relates to liquidity and investment portfolio. Thankfully Bradstreet has kept them so short in duration this time around.
  15. The idea of matching the duration of your policy tail is that all else equal the yield on offer at a point in time should equal the risk premium inclusive of inflation expectations, so your risk isn't all that great. Problem is at very low rates and narrow spreads you better be using some form of modified duration because you are taking so much rates risk. It has been pretty incredible to watch Brian Bradstreet change his mind over time. 7 year duration post-GFC to Trump era and then down to basically nothing post Trump election. With 5 year treasury over 3.5%, I imagine you start seeing FFH move duration out another 6-12 months, perhaps buy some intermediate term high grade corporates. It is interesting, FFH mistakes on fixed side have been limited to the inflation floors being just too large of a bet and then the atrocious Greek Government Bond trade that they just never mention. On just pure rates trading, absolutely astoundingly good. If we could get just 1/2 as good on the equity side we'd be rolling.
  16. Always good to have BB report on first day of a new quarter.
  17. FYI. Good overview of where ORH is writing premium and where it is avoiding. Sounds like a rough Q3 for the industry (and ORH to a lesser extent) and that there is still more to be learned on COVID losses in EMEA and South Africa. https://www.theinsurer.com/reinsurance-month/
  18. Sandridge Exco Long GGB's prior to Greek default Eurobank (1st tranche) Blackberry RFP Sale of JNJ, USB, WFC to fund some of these.
  19. Xeres, they literally could not sell their position in Blackberry when it spiked last time because all of the proceeds would have had to have been remitted to Blackberry. Short swing profits rule.
  20. Positive. Prem is on the board, so he is an insider, subject to blackout. Also, FFH owns ~20% of shares out via the converts. In the U.S. you are "deemed" an insider when you own over 10% of a company...so regardless of whether Prem is on the board or not FFH would be considered an insider. From my perspective, best we can do is hope that BB halts its own stock news pending and preleases results today/after market close/over the weekend and then FFH can trade in two days...
  21. More I think about this FFH is definitely blacked out. Going to need an earnings pre-release and wait for two days of trading to take advantage.
  22. Quarter just ended for BB so they could be blacked out from trading.
  23. Roger Lace was like $13 Canadian, Wade Burton waited a bit longer and got $24 canadian. So can drive a truck through the difference in price. Regardless seems likely some monetization to take place here / may have already this morning.
  24. The annual says on page 95 that they have repurchased for cancellation 137,923 shares and then 42,197 shares for treasury thru 3/4.
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