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P/C Insurance Hard Market?


Parsad
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The problem with being a property-casualty insurance investor is that horrible events generally translate into a hard market in insurance premiums.  While I hope that everyone that is affected by Hurricane Irene get through it quickly and as painlessly as possible, the reality is that this is a pretty big storm whose landfall path is going to be quite wide.  Take a look at the satellite image below.  This is going to be a hell of a storm in those coastal states!  Four of which have already called state of emergencies and mass evacuations.  Cheers!

 

http://www.weatheroffice.gc.ca/data/satellite/goes_eusa_visible_100.jpg

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What's going on with the weather this year?  I feel like we haven't even had 5 days yet this entire year over 80 degrees, yet the rest of the country has been dealing with extreme heat, tornadoes, earthquake, and now this!  My lawn is still green yet we haven't even watered it once!

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What are people thinking about insurance / re-insurance stocks? Looks to me like we are near the cycle low. Time to buy and hold on for the ride.

 

1.) BRK: trading at BV (near historic low), this is my favourite no brainer pick. I just need to decide how concentrated I want to get (currently 30% of portfolio). Should stock continue lower I will not hesitate to move to 40%.

2.) WRB: despite arrogance, like Bill (not sure why). Looking to get back in at or below BV (sub $28).

3.) FFH: need to review and understand all the puts and takes (hedges etc). Looking to get back in at 0.8 or 0.9 x BV. Spoiled in past years by stock swings.

 

I have been following PRE for years and they are dirt cheap P/BV = 0.65. My concerns are how good the new management team are and possible exposure to Europe.

 

Ace is a company that looks intersting to me. Management looks quite arrogant but they look pretty savvy and stock has not sold off like PRE. Looks cheap not crazy cheap.

 

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I am looking at FFH, CNA, and BRK should things look ugly. I will hold LRE through, its the gift that keeps on giving. I thought alot of insurers pulled out of Florida?

 

That storm is huge, thank god its not headed towards Texas, though we could use the rain...

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