Soft Market Drawing to a Close???

[nwoodman]

Early days I know, but pleasing to see at least a little pricing power returning. Good to see Workers Comp leading a subdued charge for Zenith, up 2%.  Surety up 2% also vindicates Loews sub CNA buying out the minority stake in CNA Surety.  Energy up 2% has to be a good thing for Lancashire.

 

http://www.marketscout.com/frontend/barometer2.asp

 

 

cheers

 

nwoodman

 

 

[Guest misterstockwell]

I fear that the slowing global economy and the compression of interest rates will be headwinds to a hardening market and the benefits thereof.

[StubbleJumper]

I fear that the slowing global economy and the compression of interest rates will be headwinds to a hardening market and the benefits thereof.

 

 

Because people will be searching for better places to deploy capital (at least better opportunities than treasuries) and will throw piles of capital into the insurance industry?

[nwoodman]

I fear that the slowing global economy and the compression of interest rates will be headwinds to a hardening market and the benefits thereof.

 

I tend to agree that is why I thought the results were interesting, perhaps it is just an anomaly

[Viking]

I wonder if we do not have buying opportunities of a generation in insurance; I am talking about the exceptionally well run companies (not the companies that are underreserved which means BV is overstated). Buffett told us what he thinks about BRK's valuation.

 

My guess is we still need an really bad year for catastrophe losses and for a bunch of excess capital to disappear before we get into a hard market.

 

Currently my favourite is BRK. Others on my watch list are FFH (hedged) & WRB (no exposure to Europe); I am hoping they trade below BV. I also am starting to follow ACE (large, diversified, well managed). Most of the re-insurers look crazy cheap. I have followed PRE for years but they have new management and have had some issues with their French aquisition; I also do not understand what exposure they may have to Europe should things there get worse.

 

With a basket of these companies hard to see how one does not do well over the next 10 years.

[Uccmal]

Shouldn't the very low bond yields drive price increases?  At the very least it will drive a reach for yield again which should crush most of the insurers in time.  I would expect part of the hardening market will be driven out of eropean bond haircuts.  Most of the larger entities have full euro ops.

[merkhet]

 

Shouldn't the very low bond yields drive price increases?

 

 

That's the side I'm coming down on -- when you can't depend on investment income given yields, you can really only decide to increase your prices.