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American International Group, Inc. Message Board

combined_ratio 39 posts  |  Last Activity: Jul 21, 2014 12:46 PM Member since: Feb 8, 1999
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  • Progressive equity has been a high-profile underperformer the past several years. Many insurance industry equity analysts have asserted the shares sell at a lofty valuation. Although they have been correct in the recent past, could this view be about to change? Nobody questions the fact that Progressive is one of the best run insurance companies in the US, if not the world, and deserves to sell at a premium p/e and price to book ratios. However, I am observing an acceleration in the underwriter's premium growth rate, which may translate into upside EPS surprises. Moreover, this company generates significant excess cash flow which it can utilize to increase its share repurchase activity as well as engage in other type of capital return to shareholders. I like this stock on recent price weakness.

  • combined_ratio by combined_ratio Jul 16, 2014 8:05 AM Flag

    Intel is one of Central Securities top five holdings. Obviously, its NAV should benefit from the strong rise in this equity.

  • Reply to

    Mid-.year dividend paid this week

    by combined_ratio Jun 14, 2014 6:24 PM
    combined_ratio combined_ratio Jul 14, 2014 7:09 PM Flag

    For the year-end distribution, Central will ask whether you want the funds in cash or paid in shares. As indicated above, I always take the shares and pay the tax obligation with other funds.

  • combined_ratio by combined_ratio Jul 9, 2014 9:26 PM Flag

    If AmTrust and its affiliates have had access to Tower Group's business through their reinsurance cut-through agreement, why should it close on a transaction in which it is taking major and unknown liabilities for a significantly over-stated price? This just makes absolutely no sense to me. I know TWGP shareholders would like this transaction to close. However, if they were in the Karfunkels position, would they complete this transaction? Does anyone really believe this company will have a positive net worth when shareholders vote on this merger? Obviously, it will be very interesting to observe what happens after the August 6th date of the TWGP shareholders' meeting. I'm in the camp that says ACP will be in no hurry to close this transaction.

  • combined_ratio by combined_ratio Jul 7, 2014 10:19 AM Flag

    UBS insurance equity analyst Brian Meredith raised his 2Q14 EPS estimate for PRE this morning, and he now projects that the company will achieve more than $13@share in EPS. This number is well above consensus estimates in the mid-$10@share range. If such a performance is recorded, it will boost the reinsurer's book value per share to well over the $120 level, which is my personal price target for year-end. In any event, I trust that management is continuing to aggressively repurchase its woefully cheap equity.

  • combined_ratio combined_ratio Jul 6, 2014 2:53 PM Flag

    When is the meeting date?

  • IMO, there will be no transaction before TWGP's 2Q14 financial results and that these numbers will go a long way toward indicating whether ACP goes forward with its purchase. If TWGP records similar results to those generated in 1Q14, the company will be in a negative net worth position. It is hard to understand why rational buyers would want an entity in such dire financial condition. Moreover, the stated financials might understate the "true" financial condition of the insurer. In any event, with the second-quarter now completed, I don't see how a deal gets done without the numbers reported for this interval.

  • combined_ratio by combined_ratio Jul 4, 2014 9:17 PM Flag

    It will be interesting to observe if Central Securities (CET) management engaged in significant share repurchases in 2Q14. I always favor such actions inasmuch as the stock sells at such a large discount from net asset value (NAV). Obviously, we will learn this information when the company releases its 6-month financial report later this month or early next. Moreover, we will also observe if management elected to further increase its valuation on its sizable Plymouth Rock holding. I expect that the information provided in this disclosure will propel additional upward movement in its share price.

  • combined_ratio by combined_ratio Jul 2, 2014 11:22 AM Flag

    Janney equity research put out a piece this morning which forecasts that PartnerRe's 2Q14 book value per share may be quite close to $120@share. My personal price objective for PRE equity by year-end is $120, so this estimate pay prove to be conservative. In any event, with this continued robust growth in book value, it makes superb sense for management to continue aggressively repurchasing its equity at a significant discount to economic value.

  • I saw this morning that morning that MS insurance equity analyst Kai Pan has increased his 2Q14 EPS for PartnerRe to $3.09 from $2.50. Obviously, this rise is well above consensus forecasts for this interval. One should expect the shares to respond favorably to this development.

  • Central Securities should benefit from the efforts of Nelson Peltz to unlock value in Bank of NY equity, since it is one of the fund's top 10 holdings. The stock was up more than 3% today to a 52-week high. Central (CET) recently paid its mid-year dividend of $0.20@share on 6/24.

  • Reply to

    Getting tired of this

    by lastmanstanding2020 Jun 27, 2014 6:28 AM
    combined_ratio combined_ratio Jun 29, 2014 9:54 PM Flag

    I couldn't agree more with your sentiment. Charman thinks he has the support of Endurance's shareholders, but I'm not so sure. If he did, why did management lose the recent "Say-on-Pay" vote? I also worry that Charman will stretch the company's financial results during this period to present a more flattering portrait to the investment community. I'm highly suspicious of dramatic improvements in operating performance achieved through significant reserve releases. Like you, I want management to get back to running the business full time and not divert attention to buying a competitor whose management has no interest in being acquired.

  • PartnerRe has a successful history of successful M&A in the reinsurance industry, having made numerous acquisitions during its 20+ year history. Its most recent purchase, Presidio Re, is proving to be a very successful acquisition. I see no reason why PRE will not continue to be opportunistic in the upcoming consolidation of the worldwide reinsurance sector. IMO, the company is in an excellent strategic and tactical position to take advantage of these secular trends, having an extremely strong balance sheet and a deep and technically strong management team. There is little doubt in my mind that acquired entities will enhance the company's revenue and profit growth going forward.

  • Reply to

    What is "TRUE" state of Tower Group?

    by combined_ratio Jun 29, 2014 9:17 AM
    combined_ratio combined_ratio Jun 29, 2014 2:27 PM Flag

    Do you really think the regulators are going to let ACP strip the assets out of Tower and leave more liabilities for the guarantee funds? ACP isn't suppose to be engaging in an asset purchase. It is suppose to be purchasing control of the holding company with all the "good and bad" that comes along with it. I don't see the regulators permitting anything like a "good bank" "bad bank" structure. The mere fact that Tower would send a letter to ACP requesting they affirm their intention to complete the purchase of Tower indicates to me that there is serious question as to whether this transaction will be completed.

  • combined_ratio by combined_ratio Jun 29, 2014 9:17 AM Flag

    What is the "true" financial state of Tower Group? Does anyone really believe that this is a viable business? Why would anyone purchase a falling knife? As far as Tower's distribution network is concerned, its the product of selling an underpriced product. I doubt there is much, if any, brand loyalty here. It certainly isn't worth looking down the barrel of a gun, IMO.

  • combined_ratio by combined_ratio Jun 27, 2014 5:57 PM Flag

    After reading the two letters, it certainly seems to me that ACP Re is covering its #$%$. I didn't see any commitment to close this transaction at the $2.50@share price. It will be interesting to observe what it anything Tower's management does next week in response to ACP Re's letter.

    And the drama continues......

  • combined_ratio by combined_ratio Jun 26, 2014 11:10 AM Flag

    What would TWGP's stock price be without the ACRe acquisition proposal? I just finished reading the company's recently filed 10Q for 1Q14. It is one of the most distressing financial documents I've ever seen. I don't see how these numbers can have any credibility. TWGP is almost certain to have negative equity in its balance sheet if/when 2Q14 financials are published. If some folks see value in this situation, they're certainly smarter/braver than I.

  • PartnerRe has raised its dividend every year since its establishment in 1993, or 21 years. We expect this superb reinsurer to continue this trend into the future. It is rare to find an equity which is selling below book value, pays a 2.5% yield, is returning significant capital to stockholders through share repurchase, is growing earnings, and increasing its dividend annually. I also believe reported book value is significantly understated because of a loss reserving methodology which is extremely conservative.

  • IMO, the Karfunkels will try to renegotiate a reduced price for this entity before closing this transaction. There are no other buyers for Tower and why should they pay such a large premium to its value, assuming it has any value at all. These are smart people and I stronger suspect they will take advantage of their superior bargaining position.

  • combined_ratio by combined_ratio Jun 21, 2014 1:09 PM Flag

    I believe there is a good possibility that PartnerRe will report better than expected 2Q14 EPS. So far, this period has had benign major catastrophe loss activity. Moreover, I suspect the reinsurer will record continued favorable loss reserve development, as well as benefiting from its expense savings initiative. Finally, EPS should reflect favorably from a significantly reduced number of shares outstanding. Incorporating all these factors, I would not be surprised to observe EPS for the interval in excess of $3.00. I continue to believe PRE shares will achieve a price level of $120 or above before year-end.

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