P&C market pricing

[StubbleJumper]

Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market. And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?

 

Let's do an experiment: which P&C insurers hit a combined ratio of 89 or less during the last 5-6 years? And then, which P&C insurers which passed that first test still had a combined ratio of 89 or less for the last year, the last 6 months, and the last quarter?

 

 

 

 

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV?

 

Price is what you pay, value is what you get.  We need to pay attention to both.

 

 

SJ

 

Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices?

 

 

Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated:

 

Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?

 

Your statement excluded any reference to the market price of the security.  I kinda think it's an important factor.  So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment.

 

If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price.

 

Regards,

 

SJ

 

No, no and no! Just because the insurer can be bought below book does not turn a poor underwriter into an ok investment! That is precisely the myth that will make you lose money in this business. Those value traps are often the most dangerous to your wallet!

 

Have you ever looked at CNA? It's been selling below book for years! Have you ever done a backtest to actually have evidence for you assertion? Of course not, or you would know how totally wrong it is.

 

Try to engage in evidence based reasoning.

 

I am trying to help you and all you can focus on is that I am not gentle while trying to keep you from losing money.

 

I've been diplomatic with friends before, and they went backrupt. I promised myself I would never be diplomatic again when it comes to helping people. Being diplomatic is not about courtesy towards other's feelings, it's about a selfish urge to be liked. I would rather save you money than have you like me.

 

In retrospect, I was too diplomatic in the Netflix thread with those suicidal shorts. Think of how much money they've lost because other people on the board were trying to be polite. I don't have an ego need to be liked. I have a need to help people.

 

 

Really Harry, why is it so hard to simply acknowledge the points that other posters have made in this thread?  There were really just two of them, which were simply that underwriting ability matters, but don't forget investment prowess or market price when evaluating a P&C insurer.  Why such a visceral reaction to a couple of very indisputable points?

 

In CNA you found one example of a real dog with chronic adverse development that sells for well below book.  If you would tone down the testosterone level for 5 minutes, you might recall me saying to you in a previous thread that I would not touch it at its current price because of the adverse development and the mediocre investment history with CNA.  However, the fact that CNA is a value trap does not mean that all insurance companies that sell for less than book will also be value traps.  In fact, there's a pretty bright chap on these boards who has identified a mixed life and P&C outfit out of Canada that sells for about .6 or .7 of book, and it writes in the mid-to-high 90s and has done so reliably for years.

 

The other observation that I would make is that you never really know how long it might take for an investment to work out.  You try to get $1 for $0.50, but it can take quite some time for everyone else to agree that it's actually worth $1.  You have made some very astute calls, some of which culminated in a takeover....but a takeover is far from assured and you could still be sitting on a security that's worth $1 but happens to still sell for $0.50.  Congratulations on a favourable outcome, but a least have the humility to recognize that the timing was fabulous.

 

WRT Netflix, you were NOT far too diplomatic.  You made your point.  People understood your point.  Some of them just happened to disagree with you, which is their prerogative.  They are adults and they made their decisions.  It would not have helped anybody if you had elected to be more obnoxious in making your point.

 

 

SJ  

 

Where do I begin?

 

I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance.

 

II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK.  

 

III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing     Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit?

 

IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic.

 

Let's be honest. You have a hard time hearing that you're wrong. Rather than focusing on correcting you mistakes, you would rather focus on the lack of diplomacy in the person helping you. In my business, that's called avoidance.

 

 

Well, Harry, I would suggest that you could have begun by calmly reading the thread before constructing a reply.  This is my last post on this increasingly vapid thread.  A few observations:

 

 

I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance.

 

Ok, sheesh, now we're back to denying that the market price at which you buy a security has an impact on the ultimate return that you will realise?  Come on, Harry!

 

II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK.  ;D

 

Harry, I would remind you that you used these words which did not speak of a "poor" underwriter:

 

"Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?"

 

III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing  ;)   Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit?

 

Yes, your timing was fabulous, congratulations again.  Systemic methods for entry and exit do not guarantee an immediate favourable outcome, but certainly the thought process is helpful to be in a position where such an outcome might occur.

 

IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic.

 

Altruism is an interesting thing.  We all get something out of everything we do, even if we don't/can't articulate what it is.  Reflect on that, and think about what you get out of posting on this forum and how that might colour your posts.

 

In the end, we will just have to disagree that the purchase price is a key consideration when evaluating P&C insurers.  I will stick to what I do, and you can go ahead and buy securities without looking at the price tag. :-*

 

 

This is what happens when you try to help people. Confirmation bias at work. You have a right to refuse to learn, but you don't have a right to misquote me. As I've said before, I do look at the price of the goods--after I inspect their quality. It's over-paying to pay even 1 cent for a rotten apple.

 

Learn and prosper my friend.

 

Point of personal privilege, I quoted you precisely.  You would do well to read the entire thread calmly.

[Guest HarryLong]

I was discussing the pricing of insurance industry wide. On need not focus on the hardness or softness of the insurance maket if you have an insurer that can write in the 80's even in a soft market.

 

You really refuse to understand, it's amazing.

[Guest HarryLong]

Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market. And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?

 

Let's do an experiment: which P&C insurers hit a combined ratio of 89 or less during the last 5-6 years? And then, which P&C insurers which passed that first test still had a combined ratio of 89 or less for the last year, the last 6 months, and the last quarter?

 

 

 

 

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV?

 

Price is what you pay, value is what you get.  We need to pay attention to both.

 

 

SJ

 

Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices?

 

 

Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated:

 

Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?

 

Your statement excluded any reference to the market price of the security.  I kinda think it's an important factor.  So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment.

 

If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price.

 

Regards,

 

SJ

 

No, no and no! Just because the insurer can be bought below book does not turn a poor underwriter into an ok investment! That is precisely the myth that will make you lose money in this business. Those value traps are often the most dangerous to your wallet!

 

Have you ever looked at CNA? It's been selling below book for years! Have you ever done a backtest to actually have evidence for you assertion? Of course not, or you would know how totally wrong it is.

 

Try to engage in evidence based reasoning.

 

I am trying to help you and all you can focus on is that I am not gentle while trying to keep you from losing money.

 

I've been diplomatic with friends before, and they went backrupt. I promised myself I would never be diplomatic again when it comes to helping people. Being diplomatic is not about courtesy towards other's feelings, it's about a selfish urge to be liked. I would rather save you money than have you like me.

 

In retrospect, I was too diplomatic in the Netflix thread with those suicidal shorts. Think of how much money they've lost because other people on the board were trying to be polite. I don't have an ego need to be liked. I have a need to help people.

 

 

Really Harry, why is it so hard to simply acknowledge the points that other posters have made in this thread?  There were really just two of them, which were simply that underwriting ability matters, but don't forget investment prowess or market price when evaluating a P&C insurer.  Why such a visceral reaction to a couple of very indisputable points?

 

In CNA you found one example of a real dog with chronic adverse development that sells for well below book.  If you would tone down the testosterone level for 5 minutes, you might recall me saying to you in a previous thread that I would not touch it at its current price because of the adverse development and the mediocre investment history with CNA.  However, the fact that CNA is a value trap does not mean that all insurance companies that sell for less than book will also be value traps.  In fact, there's a pretty bright chap on these boards who has identified a mixed life and P&C outfit out of Canada that sells for about .6 or .7 of book, and it writes in the mid-to-high 90s and has done so reliably for years.

 

The other observation that I would make is that you never really know how long it might take for an investment to work out.  You try to get $1 for $0.50, but it can take quite some time for everyone else to agree that it's actually worth $1.  You have made some very astute calls, some of which culminated in a takeover....but a takeover is far from assured and you could still be sitting on a security that's worth $1 but happens to still sell for $0.50.  Congratulations on a favourable outcome, but a least have the humility to recognize that the timing was fabulous.

 

WRT Netflix, you were NOT far too diplomatic.  You made your point.  People understood your point.  Some of them just happened to disagree with you, which is their prerogative.  They are adults and they made their decisions.  It would not have helped anybody if you had elected to be more obnoxious in making your point.

 

 

SJ  

 

Where do I begin?

 

I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance.

 

II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK.  

 

III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing     Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit?

 

IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic.

 

Let's be honest. You have a hard time hearing that you're wrong. Rather than focusing on correcting you mistakes, you would rather focus on the lack of diplomacy in the person helping you. In my business, that's called avoidance.

 

 

Well, Harry, I would suggest that you could have begun by calmly reading the thread before constructing a reply.  This is my last post on this increasingly vapid thread.  A few observations:

 

 

I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance.

 

Ok, sheesh, now we're back to denying that the market price at which you buy a security has an impact on the ultimate return that you will realise?  Come on, Harry!

 

II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK.  ;D

 

Harry, I would remind you that you used these words which did not speak of a "poor" underwriter:

 

"Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?"

 

III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing  ;)   Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit?

 

Yes, your timing was fabulous, congratulations again.  Systemic methods for entry and exit do not guarantee an immediate favourable outcome, but certainly the thought process is helpful to be in a position where such an outcome might occur.

 

IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic.

 

Altruism is an interesting thing.  We all get something out of everything we do, even if we don't/can't articulate what it is.  Reflect on that, and think about what you get out of posting on this forum and how that might colour your posts.

 

In the end, we will just have to disagree that the purchase price is a key consideration when evaluating P&C insurers.  I will stick to what I do, and you can go ahead and buy securities without looking at the price tag. :-*

 

 

Not looking at the price tag...that must have been what I was doing when I found SURW, perhaps the cheapest telco in the country at the time, and perhaps the cheapest stock in the U.S., when I first wrote multiple articles on it, brought it to the board's attention, did 2 youtube videos on it.....

 

It's amazing that you would mischaracterize my record in such a fundamentally disingenuous way. When I post, I do so under my own name and my record is clear. I stand behind it. You may say ridiculous things, but you do it from behind the veil of anonymity. Think about that when you deliberately mischaracterize someone who has merely had the timerity to share great ideas with you and to clarify for you the proper way to go about evaluating insurers.

 

You are addicted to misquoting me. As I've said before:

 

"In addition, when it comes to valuation, as I have said many, many times before, the true book value is often under-stated due to reserving, whereas weak underwriters often under-reserve. Ironically, the poor underwriter, or middling underwriter appears cheaper on a P/B basis, but often it is the company which appears more expensive on a P/B basis which is actually cheaper after making adjustments for over-reserving."

 

Quality is fundamentally related to true valuation! I say it again and again, but you purposely come away with the opposite conclusion and attempt to mis-represent my views.

 

Just think of how far you could go if you put as much effort into learning!

[zippy1]

Harry,

 

        Do want to thank you for SURW. 

 

        I don't know much about insurance companies.  Thank you for sharing the points about how to chose insurance companies to invest.  They do make senses.  Please keep posting.  Whether you share specific ideas or not. 

[Valuebo]

SJ, I think what Harry meant on price was clear enough multiple times...

Quality > price, especially in insurance where being conservative is a must to survive in the long run.

 

In insurance I prefer having a small MOS for something safe in comparison with getting an extra 30-40% discount on something average or just bad. And because some insurer is at 0,6x BV doesn't mean it will ever get to that 1,5xBV or more just because times are better.

 

 

Given his knowledge and will to explain and share things, I really don't care much about how Harry sounds. Especially if he has to make things clear over and over when he has explained it a couple of times already. I don't think he is unrespectful, perhaps at times a little harsh.

[Guest HarryLong]

Harry,

 

        Do want to thank you for SURW. 

 

        I don't know much about insurance companies.   Thank you for sharing the points about how to chose insurance companies to invest.  They do make senses.  Please keep posting.  Whether you share specific ideas or not. 

 

Thanks for the support  ;D

[Guest HarryLong]

SJ, I think what Harry meant on price was clear enough multiple times...

Quality > price, especially in insurance where being conservative is a must to survive in the long run.

 

In insurance I prefer having a small MOS for something safe in comparison with getting an extra 30-40% discount on something average or just bad. And because some insurer is at 0,6x BV doesn't mean it will ever get to that 1,5xBV or more just because times are better.

 

 

Given his knowledge and will to explain and share things, I really don't care much about how Harry sounds. Especially if he has to make things clear over and over when he has explained it a couple of times already. I don't think he is unrespectful, perhaps at times a little harsh.

 

I appreciate that  ;D

[StubbleJumper]

Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market. And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?

 

Let's do an experiment: which P&C insurers hit a combined ratio of 89 or less during the last 5-6 years? And then, which P&C insurers which passed that first test still had a combined ratio of 89 or less for the last year, the last 6 months, and the last quarter?

 

 

 

 

Er...what if you can find an insurer that will write low-to-mid-90s and currently sells at 0.6X or 0.7X BV?

 

Price is what you pay, value is what you get.  We need to pay attention to both.

 

 

SJ

 

Fremont got taken over, CNA Surety got taken over, and now you lecture me about price and value. Wow. Since when have I suggested paying exhorbitant prices?

 

 

Uh, Harry, nobody was lecturing you....just as a reminder, this is specifically what you stated:

 

Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?

 

Your statement excluded any reference to the market price of the security.  I kinda think it's an important factor.  So my answer to your rhetorical question of "Why be invested in the P&C insurer rather than the alternatives" is that the P&C insurer can be bought at 0.6X or 0.7X BV, which can even turn a poor underwriter into an ok investment.

 

If you read the thread in detail, I think you will see other posters also reminding you that a singular focus on underwriting misses out on investing prowess and price.

 

Regards,

 

SJ

 

No, no and no! Just because the insurer can be bought below book does not turn a poor underwriter into an ok investment! That is precisely the myth that will make you lose money in this business. Those value traps are often the most dangerous to your wallet!

 

Have you ever looked at CNA? It's been selling below book for years! Have you ever done a backtest to actually have evidence for you assertion? Of course not, or you would know how totally wrong it is.

 

Try to engage in evidence based reasoning.

 

I am trying to help you and all you can focus on is that I am not gentle while trying to keep you from losing money.

 

I've been diplomatic with friends before, and they went backrupt. I promised myself I would never be diplomatic again when it comes to helping people. Being diplomatic is not about courtesy towards other's feelings, it's about a selfish urge to be liked. I would rather save you money than have you like me.

 

In retrospect, I was too diplomatic in the Netflix thread with those suicidal shorts. Think of how much money they've lost because other people on the board were trying to be polite. I don't have an ego need to be liked. I have a need to help people.

 

 

Really Harry, why is it so hard to simply acknowledge the points that other posters have made in this thread?  There were really just two of them, which were simply that underwriting ability matters, but don't forget investment prowess or market price when evaluating a P&C insurer.  Why such a visceral reaction to a couple of very indisputable points?

 

In CNA you found one example of a real dog with chronic adverse development that sells for well below book.  If you would tone down the testosterone level for 5 minutes, you might recall me saying to you in a previous thread that I would not touch it at its current price because of the adverse development and the mediocre investment history with CNA.  However, the fact that CNA is a value trap does not mean that all insurance companies that sell for less than book will also be value traps.  In fact, there's a pretty bright chap on these boards who has identified a mixed life and P&C outfit out of Canada that sells for about .6 or .7 of book, and it writes in the mid-to-high 90s and has done so reliably for years.

 

The other observation that I would make is that you never really know how long it might take for an investment to work out.  You try to get $1 for $0.50, but it can take quite some time for everyone else to agree that it's actually worth $1.  You have made some very astute calls, some of which culminated in a takeover....but a takeover is far from assured and you could still be sitting on a security that's worth $1 but happens to still sell for $0.50.  Congratulations on a favourable outcome, but a least have the humility to recognize that the timing was fabulous.

 

WRT Netflix, you were NOT far too diplomatic.  You made your point.  People understood your point.  Some of them just happened to disagree with you, which is their prerogative.  They are adults and they made their decisions.  It would not have helped anybody if you had elected to be more obnoxious in making your point.

 

 

SJ  

 

Where do I begin?

 

I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance.

 

II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK.  

 

III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing     Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit?

 

IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic.

 

Let's be honest. You have a hard time hearing that you're wrong. Rather than focusing on correcting you mistakes, you would rather focus on the lack of diplomacy in the person helping you. In my business, that's called avoidance.

 

 

Well, Harry, I would suggest that you could have begun by calmly reading the thread before constructing a reply.  This is my last post on this increasingly vapid thread.  A few observations:

 

 

I. You are not processing correctly. Your low price argument is not an "indisputable point." It is highly disputable, since it's totally wrong. There is no evidence for it when it comes to insurance.

 

Ok, sheesh, now we're back to denying that the market price at which you buy a security has an impact on the ultimate return that you will realise?  Come on, Harry!

 

II. Now you're setting up a straw man that you strike down. Writing in the mid to high 90's makes an insurer an average underwriter, not a poor underwriter as I discussed. Ironically, you know the example of CNA, but you ignore it anyway. OK.  ;D

 

Harry, I would remind you that you used these words which did not speak of a "poor" underwriter:

 

"Pricing should only be a focus if your P&C investment can't acheive a combined ratio in the 80's during a soft market.And if it cannot acheive a combined ratio in the 80's, and there are alternative potential investments which can, why be invested in the P&C insurer to begin with and not the alternatives?"

 

III. My timing was fabulous? Thank you. Do you know the history of my investment in FMMH? Then you must know how right you are...I just sat around and magically got great timing  ;)   Every hear of buildfremont.com? Ever hear of "systematic methods" for entry and exit?

 

Yes, your timing was fabulous, congratulations again.  Systemic methods for entry and exit do not guarantee an immediate favourable outcome, but certainly the thought process is helpful to be in a position where such an outcome might occur.

 

IV. Netflix. People didn't understand my point at all. They thought it was about prediction. It turned out to be about risk control. Go through the thread. There was even some fool on the Netflix thread who called my points about risk control "incoherent ramblings." They didn't get the point at all, and I was far too diplomatic in not pressing it. They're adults? How lucky they are that I persisted in my points despite their insults. I had nothing to gain. It was totally altruistic.

 

Altruism is an interesting thing.  We all get something out of everything we do, even if we don't/can't articulate what it is.  Reflect on that, and think about what you get out of posting on this forum and how that might colour your posts.

 

In the end, we will just have to disagree that the purchase price is a key consideration when evaluating P&C insurers.  I will stick to what I do, and you can go ahead and buy securities without looking at the price tag. :-*

 

 

Not looking at the price tag...that must have been what I was doing when I found SURW, perhaps the cheapest telco in the country at the time, and perhaps the cheapest stock in the U.S., when I first wrote multiple articles on it, brought it to the board's attention, did 2 youtube videos on it.....

 

It's amazing that you would mischaracterize my record in such a fundamentally disingenuous way. When I post, I do so under my own name and my record is clear. I stand behind it. You may say ridiculous things, but you do it from behind the veil of anonymity. Think about that when you deliberately mischaracterize someone who has merely had the timerity to share great ideas with you and to clarify for you the proper way to go about evaluating insurers.

 

You are addicted to misquoting me. As I've said before:

 

"In addition, when it comes to valuation, as I have said many, many times before, the true book value is often under-stated due to reserving, whereas weak underwriters often under-reserve. Ironically, the poor underwriter, or middling underwriter appears cheaper on a P/B basis, but often it is the company which appears more expensive on a P/B basis which is actually cheaper after making adjustments for over-reserving."

 

Quality is fundamentally related to true valuation! I say it again and again, but you purposely come away with the opposite conclusion and attempt to mis-represent my views.

 

Just think of how far you could go if you put as much effort into learning!

 

1) Mischaracterize your record?  I made absolutely no reference to your record.

 

2) Go ahead an post under whichever name suits you.  The internet is a big place with all kinds of people, so some of us prefer to be a little more cautious with personal information. But to each his own.

 

3) You apparently have found the single most appropriate way to evaluate insurance companies.  Congratulations!  Wonder what Bertrand Russell would have said about such a view!

 

4) Don't pull quotes out of other threads and youtube videos out of cyberspace and act indignant that they have not been taken into account in this particular thread.  Like seriously, get a grip!

 

5) Nobody ever said quality wasn't a factor in evaluating an insurance company.  As I have suggested in previous posts, go back and calmly read THIS thread, and you'll see that I was very clear that underwriting, investing prowess AND PRICE are all important elements.  On this issue, it is clear we do not seem to agree.

 

6) If you would cease your arrogant attempts to be the sole authoritative fount of knowledge, you too might become a better investor.  Serious delusions of grandeur!  We're not worthy!

 

 

SJ

[Guest HarryLong]

I guess people who try to help you must be arrogant. I feel sorry for you if that's how you see the world. Do whatever you want, then. I apologize for trying to help you.    :'(

[RichardGibbons]

Given his knowledge and will to explain and share things, I really don't care much about how Harry sounds.

 

I do.  Forums work when people act as a community, treating each other with respect.  When people are no longer treated with respect, they will not participate, the community will go away, and the value will be lost.

 

Luckily, it's very clear that Sanjeev understands this as well.  He's been good at knowing how much flexibility people should have to make vehement arguments, and where to draw the line.

 

Richard

[StubbleJumper]

I guess people who try to help you must be arrogant. I feel sorry for you if that's how you see the world. Do whatever you want, then. I apologize for trying to help you.    :'(

 

 

Nope, I've received plenty of help from a great many thoughtful and humble people, and for that I am very grateful.  But there is a difference between dogmatic arrogance and thoughtful advice.

[Guest HarryLong]

I guess people who try to help you must be arrogant. I feel sorry for you if that's how you see the world. Do whatever you want, then. I apologize for trying to help you.    :'(

 

 

Nope, I've received plenty of help from a great many thoughtful and humble people, and for that I am very grateful.  But there is a difference between dogmatic arrogance and thoughtful advice.

 

As a friend of mine once said,

 

"Incompetence never recognizes competence--it mistakes competence for arrogance. But competence always recognizes incompetence."

 

 

Experience keeps a dear school, but fools will learn in no other

--Franklin, Benjamin

 

Never give advice...

A wise man won't need it

A fool won't heed it.

--Unknown

 

[Uccmal]

Harry, You are obviously very knowledgeable and skilled at analyzing companies. 

 

But, The first rule of teaching is to know your audience.  Much of the audience on this board are people who get double digit returns on their value investments year in and year out.  I personally have met at least thrity of them.  They are very, very good at what they do unlike those on any other message board.

 

The style you are using turns much of this audience right off, especially when delivered via the message board.  It would likely work much better in person as per your video on SURW.  I think you will find many more receptive if you tone down the attacks on those who dont agree with you.  Couple this with the fact that many of us, being value investors, are very suspicious of self promoters, having all been stung at one time or another.

 

Alternatively, Why dont you follow your own suggestion and set up your own message board.  You can post the links on this board so your supporters can find you, and you can really focus on them as students. 

 

Try attraction rather than promotion!

 

Al. 

 

 

[Guest HarryLong]

I told him he was wrong. He's just not used to someone succinctly telling him why he's wrong. When you try to help someone to improve their process you're promoting them, not yourself. I persist in my points despite your censure. Any new idea offends the current consensus, by definition. And groups tend to lash out at new ideas, which by definition, are divisive. The intellectual weakness of one's debate opponents is obvious for all to see when they drop any attempt to rebut analytical points and instead attack style.

[Guest HarryLong]

Who knew that telling someone they're wrong would be such a revolutionary act?! I guess it doesn't happen anymore at our major corporations, so it shocks people. I refuse to engage in the soft bigotry of low expectations whereby we expect people to be superstitious beings incapable of change. I have an optimistic view of people as fully capable of rationality and show them the highest respect by treating them as such.

 

And for goodness sake, please stop bandying about the weak argument, Uccmal, that somehow being good at something negates the need for continous improvement. That's called complacency, and it's what's destroyed American industry and let competitors such as the Japanese, who do not believe in such idiocy, to beat us with their philosophy of Kaizen, or continuous improvement in processes, as espoused by W. Edwards Deming.

[Guest HarryLong]

Now, having dispensed with the style fashionistas, let's return to the analytical point at issue. I shall systematize my points:

 

The 10 Commandments of Insurance:

 

I. Thou shalt protect thine ass, capital being an extension of it. Keep this above all other Commandments.

II. Thou shalt not sacrifice Quality for Price.

III. Thou shalt Live by the Dice and Die by the Dice. Make sure thou Dice be Loadeth in thy favor if you wish your days to be long with capital on this Earth.

IV. Thou shalt not believe in the craven image that paying a discount to book value will save you from loss of capital.

V. Thou shalt pay special attention to the combined ratio during a period of weak pricing in the industry. Such periods reveal the True Character of the Underwriters and in the strength of the Loadeth Dice.

VI. Thou shalt respect thy reserving table.

VII. Thou art buying the insurer for its underwriting prowess if thou art an investor. If thou taketh the insurer over, firing its incompetent portfolio managers is but a small feat, but bad underwriting may take a decade to dig oneself out of it the tail of the insurance be long.

VIII. Thou shalt pay special attention to the Premium to Surplus ratio. If it be high, and the underwriting solid, thou art probably safe, but if it be high and the combined ratio be over 100, Woe unto you! Short are your days with your capital on this Earth!

IX. Thou shalt attempt to find insurers which can underwrite with a combined ratio below 90. Such a situation is Heaven on Earth for those who live by Loading the Dice.

X. Thou shalt not believe the foolish soothsayers who say that it is impossible to find a fine underwriter that is selling cheaply. Have faith in thine research and eternal patience to keep honor with the nobility of thine search.

----------

 

Hope that helps  ;D

[Guest Bronco]

Uccmal - I haven't had the opportunity to meet anyone, but I'll take your word on the investment prowess of the board.

 

If that is true, it would be to the benefit of everyone if more investment ideas were posted.  I think many of us appreciate Harry b/c he posts ideas and supports them.  

 

I understand how someone like Parsad who runs the board, uses his real name, and runs money for a living will not post ideas.  However, anyone else can either post their ideas and/or use a fake name.  Maybe one exception is if a person is investing a material position in a small cap stock.

 

I have posted tons of ideas on here, some good and some bad (actually they were all good but I'm being diplomatic).  Truth be told, many investment ideas will pan out in a market going from 7 - 13k on the DOW.   However, I would like to see all the A-listers on the board step up their game.  We can talk about LVLT ad nauseam and how bad buybacks suck and how evil Republicans are - and its fun.  But where are all these ideas generated double digit returns?

 

There are some really smart people in tech here.  Let's hear about Blue Coat and Citrix.  Some smart engineers I bet.  Give me the skinny on fracking and related shale plays (I'm making this all up, bear with me).  Smart pharma guys here as well - I can tell.  Give me some more biotechs.  Is JNJ as good as I think?  

 

I have 2 kids under 2 that don't let me sleep.  I can't put in the time like some others.  I appreciate new ideas / new ways to think - it can save me time and help me learn.  

 

I would suggest to others that first and foremost, don't get offended.  Everything here is just words.  And I would say 90%+ of the people here are anonymous (unless you go to the FFH AM - so I may be wrong on this).  Anyway...If you want to call me an a-hole, go ahead.  I'll do it for you - I'm a fat, lazy, smelly a-hole.  Words on the internet don't offend me.

 

And I'm long TAP, GOOG, EXC, GLW, DELL, L amongst others.  Now let's talk stocks.

[Liberty]

Sometimes I wish we would focus more on discussing potential investments and less on how/why we disagree with each other. It's good for each side to state a position, but after a certain point, it just goes in circles and it's more productive to just agree to disagree and get back to more interesting things like 10Ks, PC market pricing levels, and combined ratios  ;D

 

Public debates are rarely resolved satisfactorily for simple evolutionary-psychology reasons. Productive discussions with divergent viewpoints are usually achieved in private, when there's no audience. My 2 cents.

[Uccmal]

Harry, You fancy yourself a teacher.  Why dont you pay attention to what some of your audience are saying, instead of getting so defensive about it.  Your style turns alot of people off.  I am not the only one.  Alot of board members have stopped engaging you at all due to your abrasive take no prisoners attitude. 

 

You talk so much about learning but refuse to learn anything yourself.

 

Thats the last you will hear from me on this topic.

 

You really should start your own board or rejuvenate your blog.

[Guest HarryLong]

Harry, You fancy yourself a teacher.  Why dont you pay attention to what some of your audience are saying, instead of getting so defensive about it.  Your style turns alot of people off.  I am not the only one.  Alot of board members have stopped engaging you at all due to your abrasive take no prisoners attitude. 

 

You talk so much about learning but refuse to learn anything yourself.

 

Thats the last you will hear from me on this topic.

 

You really should start your own board or rejuvenate your blog.

 

You clearly haven't read the outpouring of support I've had on this thread and on the "Best Insurance" thread. Why not learn to speak for yourself and not pretend to speak for others?

[rmitz]

Harry, You fancy yourself a teacher.  Why dont you pay attention to what some of your audience are saying, instead of getting so defensive about it.  Your style turns alot of people off.  I am not the only one.  Alot of board members have stopped engaging you at all due to your abrasive take no prisoners attitude. 

 

You talk so much about learning but refuse to learn anything yourself.

 

Thats the last you will hear from me on this topic.

 

You really should start your own board or rejuvenate your blog.

 

You clearly haven't read the outpouring of support I've had on this thread and on the "Best Insurance" thread. Why not learn to speak for yourself and not pretend to speak for others?

 

Harry, that's because most people who agree with you but think that your style sucks just keep silent at this point.  Talk about confirmation bias.

[Uccmal]

As I said, no more from me Harry, ever!  Too much flogging a dead horse.

 

[rjstc]

[

Uccmal - I haven't had the opportunity to meet anyone, but I'll take your word on the investment prowess of the board.

 

If that is true, it would be to the benefit of everyone if more investment ideas were posted.  I think many of us appreciate Harry b/c he posts ideas and supports them. 

 

I understand how someone like Parsad who runs the board, uses his real name, and runs money for a living will not post ideas.  However, anyone else can either post their ideas and/or use a fake name.  Maybe one exception is if a person is investing a material position in a small cap stock.

 

I have posted tons of ideas on here, some good and some bad (actually they were all good but I'm being diplomatic).  Truth be told, many investment ideas will pan out in a market going from 7 - 13k on the DOW.  However, I would like to see all the A-listers on the board step up their game.  We can talk about LVLT ad nauseam and how bad buybacks suck and how evil Republicans are - and its fun.  But where are all these ideas generated double digit returns?

 

There are some really smart people in tech here.  Let's hear about Blue Coat and Citrix.  Some smart engineers I bet.  Give me the skinny on fracking and related shale plays (I'm making this all up, bear with me).  Smart pharma guys here as well - I can tell.  Give me some more biotechs.  Is JNJ as good as I think? 

 

I have 2 kids under 2 that don't let me sleep.  I can't put in the time like some others.  I appreciate new ideas / new ways to think - it can save me time and help me learn. 

 

I would suggest to others that first and foremost, don't get offended.  Everything here is just words.  And I would say 90%+ of the people here are anonymous (unless you go to the FFH AM - so I may be wrong on this).  Anyway...If you want to call me an a-hole, go ahead.  I'll do it for you - I'm a fat, lazy, smelly a-hole.  Words on the internet don't offend me.

 

And I'm long TAP, GOOG, EXC, GLW, DELL, L amongst others.  Now let's talk stocks.

Now, having dispensed with the style fashionistas, let's return to the analytical point at issue. I shall systematize my points:

 

The 10 Commandments of Insurance:

 

I. Thou shalt protect thine ass, capital being an extension of it. Keep this above all other Commandments.

II. Thou shalt not sacrifice Quality for Price.

III. Thou shalt Live by the Dice and Die by the Dice. Make sure thou Dice be Loadeth in thy favor if you wish your days to be long with capital on this Earth.

IV. Thou shalt not believe in the craven image that paying a discount to book value will save you from loss of capital.

V. Thou shalt pay special attention to the combined ratio during a period of weak pricing in the industry. Such periods reveal the True Character of the Underwriters and in the strength of the Loadeth Dice.

VI. Thou shalt respect thy reserving table.

VII. Thou art buying the insurer for its underwriting prowess if thou art an investor. If thou taketh the insurer over, firing its incompetent portfolio managers is but a small feat, but bad underwriting may take a decade to dig oneself out of it the tail of the insurance be long.

VIII. Thou shalt pay special attention to the Premium to Surplus ratio. If it be high, and the underwriting solid, thou art probably safe, but if it be high and the combined ratio be over 100, Woe unto you! Short are your days with your capital on this Earth!

IX. Thou shalt attempt to find insurers which can underwrite with a combined ratio below 90. Such a situation is Heaven on Earth for those who live by Loading the Dice.

X. Thou shalt not believe the foolish soothsayers who say that it is impossible to find a fine underwriter that is selling cheaply. Have faith in thine research and eternal patience to keep honor with the nobility of thine search.

----------

 

Hope that helps  ;D

 

Harry; I'm very new to this board and I've really been learning a lot. Thanks to all of you. I've got some really great ideas from you and others. Some of which I've already taken advantage of such as LRE. I've learned more about how to value insurance company's here than I have in many years of prior stumbling around.

    I agree with Bronco however. Let's talk stocks.

    Whether you are right or wrong when you are arguing with some of these people. It doesn't really help me learn. It takes up time that you could be helping me learn. I would love to hear more insights like this one you posted. I'd like to hear more about your thinking about how you analyze these. I'd of course really like to hear some more stock picks and how you chose them so I can learn from those. Some of us don't have your intuitiveness and procedures down for picking out the best. Intuitiveness comes with time but if I could have help more with procedures I could really start maybe with better habits. In fact that goes for many of the people who have great records and stock picking abilities.

    Thanks Harry and everyone else for the good stock discussions. I'm on this site reading 3-4 times a day. I'm also re-reading a lot of the older posts and getting a lot of good ideas. Ron

[rranjan]

 

 

I would suggest to others that first and foremost, don't get offended.  Everything here is just words.  And I would say 90%+ of the people here are anonymous (unless you go to the FFH AM - so I may be wrong on this).  Anyway...If you want to call me an a-hole, go ahead.  I'll do it for you - I'm a fat, lazy, smelly a-hole.  Words on the internet don't offend me.

 

 

 

Bronco - Can't we have discussion without calling someone fat,lazy etc? Is it too much to ask? I understand some people might not take offence but thats not true with everyone participating here. Why not keep it polite? Why not use a language which is all inclusive?

 

I think we had roughly same discussion few months back. Then, I was trying to communicate to Harry that he can realize his dream of helping larger number of people by using bit toned down language. That way more people will benefit. Why not say the same thing little bit differently which makes it more effective. By effective I meant , larger set of people paying attention to actual message rather than getting turned off due to language. Sure when you know some one personally then during face to face exchange, you can call fat, lazy etc. But in discussion forum, where we have members from various backgrounds, I think it will be helpful to avoid such language.

 

It's good that all of us can improve on what we already know but sometime chain of response is circular and it does not add any value. Also realizing that learning goes both ways is important else you might wrongly assume and start lecturing everyone thinking that everyone knows less than you.

 

Anyway, talking about ideas should  not be the excuse for not being polite.

 

Since you raised JNJ - I think it is selling at 70-80 cents but with very little downside. It will grow 7-10% annually so with discount, especially if you bought when it was below 60, you can expect to get 15% returns with low risk. I used 15%  because I do expect p/e multiple expansion of JNJ going forward. JNJ is much better than holding cash for sure. If it ever gets back to 60 again you can check 2 years out leaps (just out of money). They were priced very cheap in my opinion.

 

 

[Guest Bronco]

What if I am fat and lazy?

 

Keep in mind I live near Phila and work near NYC so I am de-sensitized to many things.

 

I did buy JNJ under $60 but have sold it after they released earnings.  Even with all the mishaps, this is a great company.

 

I'm all for focusing on stock ideas (exclusive of LVLT). 

 

There are tons of great companies, which we all know about - JNJ, KO, AAPL.  It becomes a matter of price.  We all get the business models - easy to understand.

 

Then there are the Gretzky plays - where is the puck going?  We can talk about Citrix, Blue Coat, Riverbed, etc.  Maybe nat gas. 

 

Then there are the small cap plays.  I find this of great interest.  Stuff Harry talks about.  Perhaps an RLI.  I mentioned Nathans the other day.  Big fish don't swim in these pools.  Perhaps a young Buffett would be swimming here.

 

Then there are the great capital allocators, or the companies that attempt to do so.  BRK.  Fairfax.  Loews.  LUK skywalker.  Even baby boy Biglari.  HRG I brought up last week.  MKL is a good one.  etc etc

 

Bring it all on.  Its all great stuff.