Hedging large FFH position

[MMM20]

Does anyone have an elegant hedge against FFH that they're willing to share? I'm looking at hedging out some of the catastrophe risk, at least through hurricane season. Not really a fan of options as I prefer something where time is on my side. 

 

Generac (GNRC) is trading at what seems like a fair-ish high teens NTM P/E and low teens NTM EBITDA for a pretty great business and natural hedge. Seems like it could stand alone as an investment which is ideal… but it's also blunt (and maybe obvious).

 

Anyone have a better idea?

 

Sorry if already a topic!

 

Edited August 29, 2023 by MMM20

[This2ShallPass]

I asked this question a while back. There was some discussion, but didn't get good comparables for which P&Cs are closer to FRFHF. I did some research and decided to hedge with OTM puts against a basket of companies. My goal is simple, I don't want to overthink it - my FRFHF position is large and the tail event that could really hurt me is a once in 50-100 yr hurricane. I'm not trying to hedge against hurricanes in general, that's part of investing in an insurer, just the big one. 

 

Based on my analysis, I'll have to pay the equivalent of ~$8-10 per Fairfax share to get the hedge during hurricane season. I plan to do it for 3 years and could cost me $30-50 total. Here are the hedges I put at end of July 

 

Travelers ~10% OOM Put, premium cost ~0.9% (Oct'23 expiration) 

Chubb  ~10% OOM Put, premium ~0.9% (Nov'23 expiration) 

Allstate ~10% OOM Put, premium ~1.1% (Oct'23 expiration) 

Progressive ~9% OOM Put, premium ~1.8% (Nov'23 expiration) 

Markel ~10% OOM Put, premium ~0.6% (Oct'23 expiration)

WRB ~10% OOM Put, premium ~0.6% (Oct'23 expiration) - didn't buy WRB puts as they're a well managed insurer 

 

https://www.reinsurancene.ws/top-100-u-s-property-casualty-insurance-companies/