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Flagstone Reinsurance Holdings SA - New Opportunity!!


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http://www.marketwatch.com/story/insurance-stocks-down-after-japan-quake-2011-03-11?siteid=yhoof

 

The Insurance Information Institute, which represents the industry, said the Japan quake could be one of the costliest natural catastrophes in world history.

 

“Insurers and reinsurers worldwide have the financial strength to pay the claims that will emerge after today’s 8.9-magnitude earthquake and the resulting tsunami in Japan but these events, coupled with the severe quakes that recently struck New Zealand and Chile, have placed extraordinary demands on the industry,” III President Robert Hartwig said.

 

Four of the five costliest earthquakes and tsunamis in the past 30 years have occurred within the past 13 months, including Friday’s disaster in Japan. Before Friday, insured earthquake losses worldwide dating back to February 2010 totaled $23 billon, Hartwig estimated. Flagstone Reinsurance (FSR 9.65, -1.34, -12.19%)  fell 12% to close at $9.65, leading declines in the sector.

 

http://www.fool.com/investing/general/2011/03/11/flagstone-reinsurance-shares-plunged-what-you-need.aspx

 

There are plenty of reasons to be upset about the disaster in Japan, but investors in insurers that cover catastrophes will almost certainly have to brace themselves for losses. Flagstone's annual report notes that it does "a significant amount of catastrophe business in Japan," so there is good reason for investors to prepare themselves for a hit.
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Where is the opportunity.

 

Looks like the decline in insurers is warranted considering New Zealand, Japan, and a pending Tsunami which effects have not been quantified.

 

I mean there is a reactor offline due to coolant issues. Sounds like picking up pennies in front of a .....

 

I will wait till the dust settles unless I can find an insurer with no exposure which has been thrown out with the bath water.

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People thought that BP was picking up pennies in front of a bulldozer. Look how good that turned out :). I followed Parsad's advice and started reading Fairfax financial's Annual letter from 1985. I wish annual letters were 15 pages long :).

 

BP was picking up pennies in front of a bulldozer. I mean you dont always get hit by the bulldozer. If that well was still spewing BP would be toast. But you are right, it worked out well. But worked out better for those who bought unimpaired and uninvolved oil and gas holdings  ;D, and worked out best for those that bought leaps on these names. Im not saying dont buy insurance. I am saying dont buy the one with the most exposure to a large cat event. Auctually do whatever you want, I am saying I wont buy .........   :)

 

 

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How is any small investor supposed to know exposures to certain events? Should I just call up the company and ask...

 

I'd be willing to bet the company itself doesn't even have a reliable estimate yet. So many times we have heard initial estimate figures for insurance companies, and the like, when a disaster occurs only to find it way off the mark.

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One top executive at Markel, two years ago or so, called for a hard market. William Berkley did basicaly the same thing. Guess what? We're still in a soft market 2 years later!

 

Take their predictions with a pinch of salt. Nobody knows until it happens.

 

Cheers!

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Over the years, I am starting to realize the best investments are usually the obvious and simplest ones.

 

Exactly. As Munger said (or was it Buffett?), in investing there is no extra point for difficulty. Simple and obvious can work just fine.

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