I think WTM should start to lighten up on some of the 80% stake in OB..worth about $1.2 billion now. The last reported book value of OB was $11.57. OB is now just under $16. That means OB is trading at 140% of book. Take the money are run! The if WTM book is $535 and it's shares are valued at $444...SELL OB at 140% of book and buy parent WTM at $90.00 UNDER book.
The investment portfolio of bonds of OB will soon be yielding little. And the Fed just said that will star=y thru 2014. And any new business OB writes gets invested at only perhaps 1.00% (or less)....that is a KILLER to insurance companies who are used to getting 4% to 5%. A sluggish economy makes sales growth harder too. The people who buy OB at 140% of book are blind. Just look at OB earnings. OB is paying $80,000,000 in dividends. I am not sure that OB will even earn that that in net income.
If anyone would buy WTM's 80% stake now.....at $16.00.....or 140% of book......WTM should LEAP at the chance. Why own OB at 40% OVER book when there are tons of other insurance compaies to be had at 20% UNDER book! Including the parent, WTM.