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Berkshire Hathaway Inc. Message Board

  • asdsdf asdsdf Feb 10, 2000 2:25 PM Flag

    you know what I like about Buffett?

    You know what I like about Buffett?

    He probably doesn't even know his stock
    is tumbling! :-)

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    • Glad to see those who understand insurance sharing their knowledge on this board! :-)

    • They are doing homeowners in FL but Im not sure
      about Texas. It's trading a bit over book value but I
      think that valuation is very much justified. In fact, I
      think it is a screaming bargain. MCY has been writing
      auto with a combined in the low 90s for most of the
      decade, including this year. ROE is very high as a
      result. Right now they are overcapitalized, but if
      expansion goes well that will be something that will come
      in handy. There is at least one other extremely
      highly regarded executive that I know of.

      It
      seems they have more sophisticted statistics that
      enable them to write policies very cheaply and
      profitability. Even Charlie Munger recently commented on them
      and said they were great.

    • Don't know the company or whether current
      valuation makes sense. However a few comments. First,
      individual leadership can mean a tremendous amount in this
      business, but at a certain point there has to be more to
      the franchise than the individual. How is management
      depth? Second, auto is a very jurisdiction specific
      line. Allstate lost a fortune on auto in Massachusetts,
      but others made a fortune based on their knowledge of
      local politics. In general, I would view broad fast
      geographic expansion as a warning sign for auto. Third, find
      out if they are expanding into homeowners. Difficult
      to penetrate the Texas and Florida auto markets
      without also writing homeowners -- not a smart move. You
      can buy quite a few long term auto players for below
      BV these days. Don't know how Mercury's valuation
      stands up relative to these types of safety margins.

    • I own a position in Mercury General (MCY)
      also.

      I think it's a first rate auto insurer. It's
      primarily based in CA but is expanding into Texas,
      Oklahoma, Illinois, and Florida. Later this year expansion
      into NY and Virginia is planned.

      Mr. Joseph,
      the CEO, is considered an insurance genius. I suspect
      that if BRK wasn't the owner of Geico, it would have a
      position in MCY at this price. Do you have any thoughts on
      the company as an investment or as a competitor to
      Geico?

    • ...Berkshire could never have been a great
      business. Yet writers like WEB Copycat suggest that this is
      the end of the world.

      Such posts represent a
      TOTAL lack of understanding of how we got here and what
      makes this tough time a vital part of our
      growth.

      Perhaps some of you could read a few of the old annual
      reports. All Buffett's letters are on the net and maybe we
      should require that pasters read them before we read
      their messages.

    • Seems you are well informed about the insurance
      industry....Perhaps a little friendly competition for
      "dealraker."

      Seems like we are all about to get just a little better
      educated to the inner-workings of BRK......Thanks

    • I'm really not sure how to answer your question.
      There are the obvious big players like State Farm,
      Allstate, Nationwide, AIG, Travelers, Zurich/Farmers,
      Firemans Fund, CNA, Hartford, USAA, Liberty Mutual, CGU,
      Royal/Sun, Safeco, St Paul, Chubb, Ace/Cigna, GEICO,
      Progressive... If you extend globally, CGU and Royal/Sun are
      lots larger. Allianz/Firemans Fund, AXA, Generali,
      Zurich/BAT. Others, who have I missed? Everyone is reporting
      weak numbers, with more dramatic impact on share price
      felt by the personal lines companies. Mutual companies
      tend to care less and tend to have more capital to
      fall back on. There are economies of scale in this
      business (at least up to a point). Smaller companies have
      a tougher time in a tight rating environment. I
      think buyers, both personal and commercial, are
      beginning to realize that there will be a thinning out of
      the ranks of insurance companies, and are picking
      their partners more carefully. Lower volume against
      high fixed expenses tends to accelerate problems for
      the small companies. Some companies are definitely
      better than others among the big players -- underwriting
      and good management tend to be the drivers. BRK has
      plenty of both.

    • AM Best's P&C Review (monthly)is probably the
      best and most reasonable reading. National Underwriter
      and Business Insurance are also popular, but I find
      them too sensationalistic and don't read them myself.
      Could be very misleading for someone less familiar with
      the insurance business.

    • What's the best prop/cas industry trade publication for general readers (like us who are not in the industry?)

      Thanks for the good post.

      Ralph

    • Hi --

      I liked your post. I wonder if you
      know who the top ten in the insurance world are. I
      guess that my question is not very clear in terms of
      casualty/property or what. Well, I am trying to understadn BRK
      (which means GEICO and GenRe and some others). In any
      case, if you give me some information on the large
      insurance companies and how they are doing, I will have a
      better idea about your analysis. Thanks.

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