Insurance Companies as bond/fixed-income substitutes in portfolios

[Packer16]

Y'all,

 

Has anyone purchase insurance cos as bond/FI substitutes in portfolios?  If so, what has been your return vs. risk experience vis a via bonds?  TIA

 

Packer

[twacowfca]

Y'all,

 

Has anyone purchase insurance cos as bond/FI substitutes in portfolios?  If so, what has been your return vs. risk experience vis a via bonds?  TIA

 

Packer

 

We had a total unlevered return of 55% on our major long term insurance investment this past year, and, with a total return derivative, some acounts had an even higher return on the same investment.  However, I don't think this is what you are looking for because that company made their abnormal returns on underwriting, rather than investing acumen. 

 

In comparison, might be our holding of Third Ave Focus Credit, an unlevered fund that holds bonds and other debt instruments which has returned @ 16% TTM vs BRK @22% TTM or MRH with about the same TTM.  We were in and out of these last two insurers as well as BRE so our ARR on them was much higher, but I assume you are looking for TTM returns.  BRK and MRH are better than average companies that have good underwriting as well as the opportunity to make returns on their investments.  In that sense, they are better than leveraged bond funds as some have described insurance companies.