P&C insurance

[pricingpower]

Seems reasonable shorter term assuming they can do a better job segmenting drivers with good behavior than competitors their marginal advantage increases as the new source of danger is people using smartphones while driving (a not random population) and severities trending ever higher (value of a human life increases and cars are steadily more difficult to repair).  Makes sense to me that good underwriting is more valuable than historically and given how fast growth is already a rational operator would choose the extra combined ratio benefit over pedal to the metal growth.  I don’t have strong confidence current combined ratios will be sticky but I also have a view investment returns will eventually improve with higher rates.  Would recommend their investor presentations, watching them feels more like a master class on operating their business with an unusually high level of transparency... that probably comes from not being super threatened by the competition.

[Spekulatius]

Seems reasonable shorter term assuming they can do a better job segmenting drivers with good behavior than competitors their marginal advantage increases as the new source of danger is people using smartphones while driving (a not random population) and severities trending ever higher (value of a human life increases and cars are steadily more difficult to repair).  Makes sense to me that good underwriting is more valuable than historically and given how fast growth is already a rational operator would choose the extra combined ratio benefit over pedal to the metal growth.  I don’t have strong confidence current combined ratios will be sticky but I also have a view investment returns will eventually improve with higher rates.  Would recommend their investor presentations, watching them feels more like a master class on operating their business with an unusually high level of transparency... that probably comes from not being super threatened by the competition.

 

Thanks for all the input. I agree that PGR looks impressive. They may be over-earning a bit, but they are also growing and the multiple isn't really rich either. It’s one I should buy and possibly add more at a opportunistic times as one is unlikely wrong about the business quality here.

 

One thing ai noticed is that PGR has become a little bit of a “stay at home stock” lately and tend to be strong on weak days and weak on days the market is bullish. So there is probably a chance to get in at an opportunistic price just based on the markets short term volatility.