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Aspen Insurance Holdings Ltd. Message Board

  • jamessmarson7 jamessmarson7 Dec 7, 2011 2:40 PM Flag

    I am fully invested now

    Unless it drops. But I have been buying for the last month.

    Trading at 6/10 tangible book after excluding the preferred dividend liquidation and near the best operating metrics in the industry.

    let me just say that all casualty insurers are extremely undervalued and you can throw darts at AXS, PRE, AWH and no doubt make 100% should be today but at least 100% shortly but AHL is far superior in terms of risk and returns.

    I am expecting a triple here. This stock hasn't moved from the IPO. It was fairly valued until 2006 but continued to execute throughout the crisis but stocks didn't move then. Then the company was severly undervalued and it buys back 20% of its stock.

    So you had a company undervalued in 2011 by 100% buying back 20% of its stock. And this is for all casualty insurers since a lot bought back stock, some even more than Aspen. But Aspen is the perfect mixture of really cheap, very well capitalized for an insurance company. All its ratios are A+++++ near the top of the industry and it has some of the best returns.

    My target on this is $52

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    • Also let me add that hedge funds are at a tremendous disadvantage buying CAT Bonds.

      You don't see a problem with an actuary valuing risk then selling it as a bond to someone who has no idea about insurance and how to calculate risk of a hurricane?

      You honestly think insurers will lose if this market took off which it hasn't?

      Why do I even reply to someone so stup,-id

    • "And in the context of those $425 billion a year in insurance premiums, cat-bond issuance of $6 billion or $7 billion this year is a drop in the bucket. I’m reminded of the optimism I saw three years ago at the Milken Global Conference, after a record $7 billion of cat bonds were issued: everybody agreed that the number was still tiny, but there was a lot of hope that it would rise fast. Instead, it fell dramatically in 2008 and then again in 2009; after a modest recovery in 2010, the best hope for 2011 was that more bonds would be issued than were actually maturing"

      http://blogs.reuters.com/felix-salmon/2011/04/25/the-tiny-cat-bond-market/

    • CAT Bonds is not the same as reinsurance. A Cat Bond would pay a specified amount while reinsurance is for unknown amounts. A Clear difference. They are not selling equity they are selling bonds. On top of this while selling reinsurance is probably free you just sell part of your claim a CAT Bond will be paying monthly payments.

      Also you may want to look at combined ratios the year after Katrina they were pretty average. So perhaps know something before you talk

    • Cat bonds can be issued by primary insurers to hedge funds and others, meaning that the primary insurers are not at the mercy of the reinsurers. We no longer have extended periods of scarce reinsurance capital like we used to have after a bad cat year, so the "hard markets" aren't as lucrative to reinsurers as they used to be. Cat bonds are good for insurers, but a mixed blessing (mostly negative) for reinsurers. Cat bonds take business away from reinsurers when rates firm. Reinsurers can also issue cat bonds but this advantage does not make up for the bigger disadvantage. In fact, since AHL's reinsurance competitors know they can pass on risk to cat bonds, these competitors can bid (against AHL) for more book than they would otherwise. The secular increase in cat bonds and their ability to find buyers on short notice are detrimental on balance to AHL. Wall Street is therefore looking for only a modest firming of cat reinsurance rates in 2012 even though 2011 was very tough and depleted a lot of capital. So we're stuck at a significant discount to tangible BV. By contrast, reinsurers made whopping profits the year after Katrina et al due to a shortage of capital, and their stocks were bid up accordingly. Those were the days!

    • lol but who issues those cat bonds? Its the catastrophe insurance companies themselves. So why would they issue an over abundance of these bonds to lower their rates. They wouldn't. They use it to diversify risk which can also be done by sharing some of the risk.

      Cat bonds seem like a huge! positive to me not a negative. If it was a negative they could just close the market.

    • I am holding my shares. Don't see much downside for 2012 since rates are getting better. For AHL to take off they need to build a strong primary insurance business so they can move in and out of a commodified reinsurance market. They're trying and might succeed.

      Also holding a smaller position in PRE and a mid-sized position in ACE.

 
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