Any news ref LA fires ? |
"Elsewhere in the report, KBRA observed that the January 1 reinsurance renewals for property insurers saw rates largely flat to down, with loss-free exposures receiving more significant rate decreases." |
To echo eigthwonder, another big loss event, another requirement for those paying out to harden rates. Timing is tricky though. |
The insurance and re-insurance industry are used to paying out for hurricanes but it feels as though this year could prove a fair bit bigger than average; rates may harden medium term, but the payouts could test even the reinsurers short term. All to be revealed. |
At these levels (sub- £5) it's still a smidgen below IPO price. |
elbrus55
Depends what the insured loss turns out to be.
If forecasts turn out to be accurate, the economic loss, at least would be absolutely enormous.
The insured loss for Helene is expected to be approx $6.5bn, whereas the economic loss is c. $250bn. |
If Milton (and any subsequent event) causes big losses, it ought to make the Market harden sharply.
From the recent interims:
"Natural catastrophe accumulations remain in balance relative to the overall portfolio and our net exposures to such events remain within our tolerances
Long-term success lies in building a resilient and diversified book of business and the non-catastrophe lines continue to present areas of interest for increased capital deployment.
Conduit continues to see an attractive underwriting environment into which it remains well capitalised to continue to grow its premium base and deliver attractive shareholder returns"
An outfit with a growing book, and capital awaiting further deployment -- note: " non-catastrophe lines continue to present areas of interest for increased capital deployment." |
I think they'll be well aware of the risks of covering Florida. Hurricane damage is hardly a new thing there, is it? And why are the directors buying shares? Would you, if you could see a big loss coming your way? |
Maybe you missed the latest Florida weather forecast? |
On Friday, @ close, it uncrossed @5.14 (well above the offer @4.30 p.m. -- 5.11) for 67,637 shares, which was a big buy.
So the drop this a.m. ???
Odd. |
Hurricane Milton on its way ... |
Slide seems inexplicable.
Hurricane Helene economic loss is estimated at c.$250bn, but insured loss estimates are c.$6.5bn.
Although the share price drop is around 8% from recent peak, that isn't huge.
On the charts, currently testing 12month support level, and hovering around the 200dma.
Is Trevor feeling tempted again?
I wonder. |
Management are not pump and dump merchants, far from it. But they have sold a business in the past and they are not spring chickens. Plus, this business is cyclical, capital comes and goes, and there are smart players run by entrepreneurial types (including CRE) and there are players run by employees with less skin in the game, and then tend to make less smart decisions. |
I was hoping that this would be a stock that would earn me on average 8-10%pa for the next 30 years as it part of my retirement planning. The Bermuda domicile helps me (no IHT).5%pa divi and 3%pa growth would be fine. The target is much higher but it is optomistic - a bonus if they can hit ghatm Disappointed if the objective of the management and other shareholders is only to pump it and dump it to a greater fool who doesn't have any confidence that this management can earn 8 to 10%pa longer term. Kind of wonder what you would plan to do with the cash if it is bought out - look for another company which can provide that return? |
eigthwonder post 93
Excellent summation. |
free stock charts from uk.advfn.com |
I met them when they were setting it up. They've made a mint once and could see the cycle about to provide the opportunity to do it again, so it's both for the money and the thrills of winning at the game. Having spotted the opportunity their real effort was in raising the cash and hiring senior management; can't believe it is too much of a strain from there on. Oh, and there'll be an exit strategy, likely predicated on some corporate sector buyer with a pocketful of money and a management team who decide they really must be in re-insurance. |
elbruss55 & eigthwonder
I doubt if NE & TC have entered this venture with a 'long-term' view (as they are not 'young-guns' of the sector, as it were). And a pro rata book does have a tail!
Fatten up the golden goose, and flog it off, methinks, and then, finally, retire to some enchanted isle (not Bermuda, for sure! Ha ha!)
Perhaps CRE is just a thrilling, tax-exempt, career swan song for them both?
(btw, chart: could be an inverted IHS, or could breakdown --- interestingly poised) |
They're both right in that it reflects what they believe are their strengths; Beazley have been doing cyber long enough that they probably think they know what they are doing, whereas if Conduit think they don't have the expertise on board they aren't going to be involved. But back to my original point, Beazley are more like a B2C business and Conduit a B2B business - with a little less granularity and broader spectrum of risks, and likely more price driven. And pricing is as much driven by the cost and availability of capital as it is customer demand |
Agee to some extent but need to be careful. The 'detailed knowledge of customers' which you mention could also be a generous way of saying they are willing to accept risks that other companies wouldn't touch with a barge pole.For example, Beazly are known to write business interruption cyber risks and Conduit have said they mostly try and avoid it.Who is right? ... We will know in 20 years time. |
eigthwonder
NE and TC have been around for a very, very long time, through multiple market cycles.
Yes, their's is a reinsurance portfolio (and pro rata to boot), but it would be surprising if they did not have 'detailed knowledge' of the individual reinsureds.
NE has a track record of making money at Benfields and for making mega-bucks from sale of Climate Exchange (where he was CEO, I believe).
It would be a big surprise, to me at least, if NE entered this eterprise without a VERY clear eye on an exit strategy.
I'll say it again: IPO was @£5. Any exit price would have to be significantly above that for NE to say 'yes'!
This, pro rata, reinsurance portfolio, would be a neat, big-ticket, item for bigger, possibly composite, fish to swallow whole, imo. |
I’m sure I am about to do the insurance business a disservice with the following, but Beazeley has direct contact with the original insured, so that requires a detailed knowledge of individual customers in order to write the policy - that’s worth a premium. Reinsurance is insuring other insurance companies - it still requires knowledge but is a bit more of a wholesale business IMO, and a bit more price driven, hence fickle, hence worth les of a premium. |
Yes something like Conduit should trade around book value, possibly a slight premium if you rate management. Something like Beazley is a bit different as they have deep underwriting expertise in areas such as cyber security so reasonable to pay a much bigger premium to pay for that expertise. Conduit effectively just buy existing insurance contracts so should not trade at big premium in my view. |
He is saying that in this sector good management and systems is worth something, but not as much as implied by a takeout at a notable premium as mooted above. Reinsurance contracts have relatively short lives which need to be re-bid on expiry, hence the companies tend to be valued close to the value of capital available, book value. |
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