2008 Insurer Losses

[oldye]

Throughout 2008, insurers lost more capital than in any year in recent memory.  Certain insurers are now scrambling to write business hoping that a light cat year + rebounding of asset prices might help them maintain market share. 

 

Allstate: "Book value per share, excluding the impact of

unrealized net capital gains and losses on fixed income securities, declined to $30.08 as of December 31,

2008 from $34.25 as of September 30, 2008 and $38.11 as of December 31, 2007."

 

Too bad Gaap doesn't recognize this form of accounting because YoY BV is down 42%! 2008 was a cat heavy year, and Allstate managed to generate CR of 99, hard to see them doing better in 2009 as Reinsurance prices have started to firm while the economy continues to drag down prices for regular lines of insurance.  Debt to Equity is now around 50%

 

Cincinnati Financial Corporation : Started 2008 with 5.9 billion dollars in shareholder equity, which adjusted for major losses from FITB, a core holding since the 50's that crashed with the rest of the banking stocks, to their credit they did sell the shares albeit after the crash.  BV is down 29% YoY...UW was around 100 and should face considerable pressure from market prices.

Management like to give guidense on where they think the Combined Ratio will be next year... can't make this stuff up. 

 

White Mountain: ADJBV/Share down 20% to 328 YoY, their assets are performing better than expected (ie I'm not sure why they didn't take more write downs, their mortgage backed securities must be better than average something),  CR was at a respectable 95% for this cat heavy year.  Of course BV consists in part of tax differed assets, MBS (Agency Backed and not) CBMS, and insurance recoverable which explains why Mr. Market is selling WTM at 65% of book.   

 

Markel: BV per share down 16% to 222,  CR was 99 in 2008,

 

Renaissance Re: Reinsurance prices are strengthening into 09, not that you can judge the strength of any risk taker over a period of months, but you have to look at their performance over a number of years.  They've released 400 million dollars over the last 2 years from their reserves which is admirable but from a competitors stand point they've reduced capital by 400 million YoY, to their credit it was due to share buybacks.

 

Ace: The Greenberg Clan didn't get completely wiped out, Hank's son Even did must better with BV down 10% YoY, CR was at a very healthy 89.7 (these guys do all kinds of insurance including reinsurance health and life).

 

Chubb Re:  88.7% CR, BV unch YoY even after they bought back 1.3 billion dollars worth of stock. 

 

Kingsway Financial: Haven't announced their numbers but based on projections BV is down about 70% YoY,  the company has 350 million dollars of debt which probably exceeds BV at this point.  Nobody likes to see a viable company die, hopefully they'll start selling non core assets and perhaps buy back any public debt they have at a discount. 

 

Anyway I thought I'd get this started and hopefully we'll get a good list going as results come out

[Smazz]

this should be an interersting thread.

 

thanks Oldye.

[ShahKhezri]

Travelers book increased YoY.

 

I own Travelers in my 401K.

[oldye]

Thanks for the heads up on Travelers, I always thought they were owned by Citi for some reason.

 

Was doing a quick look thru it looks like they were saved by the short average duration of their portfolio...despite their claimed 18% record on equities, only 1% of assets was invested in equities at the start of 08. Good timing.

 

Have they always been this conservatively positioned?

 

  Could be very interesting if they are capable of putting more money to work in this market!

[StubbleJumper]

Do not forget that even the venerable Lloyds and SwissRe have been scrambling to find capital.  AIG is in the process of being broken up.  It might not all happen in 2009, but at one point these guys are going to need to shrink their books....

 

[Partner24]

Renaissance Re Holdings (a reinsurer) saw it's book value per common share decline by 5,6% in 2008.

[Parsad]

XL got hammered in 2008 as well.  Cheers!

[Smazz]

so perhaps a killing in underwriting AND investments in the days ahead?

 

Proper ratings (dont know if this ever going to happen) where the number of legit undewriters (with excellent ratings) gets narrowed?

 

 

In a perfect world: Exit profitable bonds - enter convertables and other at high yield.

This latest stimulus goes through the equities start to jump.

 

 

The gift that keeps on giving.

 

I believe we are still living in interesting times.

 

[Partner24]

so perhaps a killing in underwriting AND investments in the days ahead?

 

Well, I think that FFH could get some decent returns with their investment portfolio in the years ahead, but it's more difficult to me to predict what will happen with underwriting, but I'll cross my fingers. The more damage our competitors have and the less outside capital they'll be able to obtain, the better for us.

 

Cheers!

[Mikenhe]

 

 

The more damage our competitors have and the less outside capital they'll be able to obtain, the better for us.

 

 

 

maybe just some damage and a need for some other experts in the field to buy them out?? In a fair and friendly manner?

 

I think whats also very omportant is the ratings of some competitors on the way down as FFH and its subs go up... There are some very big companys out there who aren't going to be renewing with insurers that have poor ratings and will be looking elsewhere...