Now that Warren Buffett has bailed on WTM and OneBacon... and results are turning south.. How long before we have more bloodshed at OBI?
I expect Jack and his cronies would sell it off today if they had a suitor. Instead I predict a continued piecmeal dismantling of what had once been a great company prior to the White Mountain folks getting their greedy fat hands on it.
OneBeacon shares hit low after 1Q loss, downgrade Monday May 5, 11:10 am ET OneBeacon shares hit low after downgrade and 1st-qtr loss on higher claims, accounting changes
NEW YORK (AP) -- Shares of OneBeacon Insurance Group hit an all-time low Monday morning after the company said it swung to a first-quarter loss due in part to accounting changes and higher claims, and an analyst cut his rating. The stock gained 49 cents to $18.60 Monday morning after hitting a low of $17.60 earlier in the session.
For the period ended March 31, One Beacon posted a loss of $24.3 million, or 25 cents per share, compared with earnings of $60.5 million, or 61 cents per share, in the year-ago period.
Analysts polled by Thomson Financial expected, on average, earnings of 41 cents per share for the period.
Earned premiums at OneBeacon fell to $455.3 million during the first quarter, from $468.9 million during the year-ago quarter.
Revenue at the Canton, Mass., company fell 22 percent to $453.6 million from $577.5 million.
OneBeacon's combined ratio worsened to 100.1 percent from 97.5 percent. Combined ratio measures how much an insurer pays out in claims and expenses compared with how much it takes in from premiums. A ratio above 100 means the insurer is spending more than it earns in premiums.
One Beacon said the jump in combined ratio was due to higher catastrophe losses and losses in its commercial lines unit.
Net realized investment gains dropped to $3.7 million from $54.9 million. The company instituted Financial Accounting Standards No. 159 during the period and took a $59.1 million charge related to unrealized gains and losses.
Keefe, Bruyette & Woods analyst Dean Evans cut his rating to "Market Perform" from "Outperform" and his price target to $19.50 from $24.
"We expect the softening pricing environment and volatile investment markets to pressure OneBeacon's profitability," Evans said in a note to clients.
The new price target implies he expects the stock to rise about 5 percent over Friday's $18.51 close.
For 2008, Evans now expects earnings of $1.75 per share, compared with a previous $1.95 forecast. Analysts expect earnings of $1.86 per share for the year.
Obviously short sighted thinking. OB is experiencing nothing more than market fluctuation in insurance. Look at the results of the industry as a whole, and the stock price of relatively good performers like Progressive and Allstate.