FFH Valuation

[Grenville]

Not to beat this issue to death, but another interesting article regarding the Iceland Volcano and its bigger sibling.

 

A Bigger Iceland Ash Blast Probably Coming Soon, Says RMS

http://www.property-casualty.com/News/2010/4/Pages/A-Bigger-Iceland-Ash-Blast-Probably-Coming-Soon-Says-RMS.aspx?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+NationalUnderwriterPropertyAndCasualtyBreakingNews+(National+Underwriter+Property+and+Casualty+Breaking+News)

 

Also at the AGM Prem in answering a question about stress testing for insurance events that could wipe out the insurance subsidiaries said that there were no losses due to the Icelandic Volcanic Ash.

[Packer16]

If you look at the reserve triangles on p 137 -142 of the AR you will get a sense that the underwriting is very conservative (i.e. there is a lot of reserves being released).  The key question is the past a good indication of the future.  If you look at the triangles the reserve releases appear to be occurring across hard and soft markets (back to the 2002/2003 time frame).  An additional macro factor that I didn't fully understand until discussed at the meeting is that FFH (along with BRK-A and MKL) don't duration match assets and liabilities instead FFH holds alot of cash & puts and more aggressively invests the float with great results.

 

Packer