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Trenwick Group Ltd. (TWK) Message Board

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  • cigarbat cigarbat Dec 5, 2002 3:51 PM Flag

    Warren Buffet

    My guesstimate comes from 1) They have been underpriced for the past three years. Probably, running a 180% Loss ratio in the Ins. Bus., but only showing 120%.

    They have their ins agents setting the reserve #'s on claims! If these claims reserves are set too high, the agents $50 Million dollar program will be canceled or prices will be increased (during soft market) and the "Managing agency" will not make their 17% commissions.

    If they keep the reserves low, the Managing agents program will be renewed for next three-five years.

    Of course, sooner or later, you must pay out these claims (which takes upwards of five years to settle all claims)at that time, the reserve numbers turn into Paid numbers and you can't hide it.

    Their just now closing out most claims for 1995 & 1996. Their basing their "underreserving" practices (BY their commission agents) on how much those older years ultimately developed out.

    The "soft Market only got worse between 1997 and 2001.

    If they hit thier statement for $90 Mill through 3rd quarter (ONLY FOR THE YEARS 1997-2000) They've probably got an equal or larger amount still to go.

    What Trenwick is saying is even they don't know how much it is.

 

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