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MAJC - Majestic Insurance (Formerly CRM)


rick_v
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I thought I would put this one out there since I used to think this was the riskiest value play just to see what you guys think:

 

Majestic Insurance, Formerly CRM Holdings. Workers Comp Insurance based in Bermuda (tax free investment income).

 

Market Cap - Grand Total of $3.91m

 

Investment Portfolio - $304m invested in Treasuries and MBS yielding a grand total of 3%.

 

Cash - $28.4m

 

Total Equity - $52m

 

 

What happened? In short a convergence of two factors, the first the company had a terrible CEO with a bad reputation who mismanaged some of their business, he was fired but retains a large stake. The AG opened an investigation almost 2 years ago. Since then nothing has really advanced. The CEO is actually a smart guy and is trying hard to salvage the business. The second factor is they are in workers comp insurance which has been hit hard due to the slowdown in construction.

 

Now again I subscribe to the notion that there is a value for everything. At 4m Market Cap its hard to argue that MAJC is overvalued. They also recently engaged I-bankers to come up with strategic alternatives.

 

I would love to take over this company, the problem is Bermuda Corp Docs say you can only own up to 10% of the voting shares. Wouldn't it be great to manage this insurance float (305m$)??

 

I would also conduct a R/S to retain NASDAQ listing and initiate a share buy back.

 

They are losing money but again the CEO Jim Scardino is really cutting costs and starting to clean things. And it was nice to see shareholder equity decline by the lowest amount in the last two quarters.

 

Just another high risk high reward value play... would love to hear your thoughts.

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I dont have an opinion on the investment, but do like your style. I prefer low risk, high reward but you got to take what you can get.

 

Thanks

 

 

I think the former CEO stretched for yield with crappy MBS as well as committing other sins.  If they had been domiciled in the US, they might have been a candidate for being seized by their regulator. The New CEO was installed at the insistance of the investment community.  The board would not be receptive to an exploitative takeover.  They are trying to prevent a blot on the reputation of offshore insurers.  The new CEO is doing a good job running things conservatively,  but they are still facing headwinds.  Stay tuned.

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  • 7 months later...

Looks like the end of the line for MAJC:

http://stocks.us.reuters.com/stocks/keyDevelopments.asp?rpc=66&symbol=MAJC.O&timestamp=20110321124000

 

Majestic Capital, Ltd. announced that Bayside Capital Partners LLC (Bayside) has terminated the previously announced merger agreement with Majestic Capital. In its termination notice, Bayside cited a material deterioration in Majestic Capital’s capital surplus, an inability to secure regulatory approval for the merger, and a failure to satisfy the closing condition with respect to termination of Majestic Capital’s lease for office space in Poughkeepsie, New York on terms acceptable to Bayside. As a result, Majestic Capital and its subsidiaries expect to seek protection under applicable United States and Bermuda bankruptcy and other similar laws for the protection of creditors. 

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