Author Topic: 2017 Annual Letter  (Read 16526 times)

flesh

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Re: 2017 Annual Letter
« Reply #70 on: March 15, 2018, 11:44:15 AM »
Gokou3 - You need to take into account Corporate expenses, runoff, interest expenses and preferred dividends.

Vinod

How do I back into corporate expenses that aren't included in combined ratio? Is a tax rate of 25% conservative considering most business is done in countries that have a lower effective tax rate? If doing a steady state/owners earnings type of analysis isn't it safe to assume runoff is replaced with organic growth at least?

If we assume 25% cash (2 years or less), 50% bond(and divi/interest paying instruments), 25% equities, with 40b in investments (inclusive of holdco cash) and a conservative (based on recent five years) 98% combined ratio on 12b premiums written and a 25% tax rate.

10b cash @ 2%        = 200m
20b bond @ 4.5%     = 900m
10b stock @ 7%       = 700m

underwriting profit    =240m
+non insurance profit=?
                               = 2040m
-corporate/what else?
- 242 m interest        = 1798m
-25% tax                  = 449m
                                = 1348m

-67m preferred          = 1281m

Trying to wrap my head around this from a what will I be paid, conservatively, in the next few years standpoint. I'm still digging into this, just thought I might accelerate the answering of these questions by farming it out here.


                           


petec

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Re: 2017 Annual Letter
« Reply #71 on: March 16, 2018, 11:53:14 AM »
Reading all three letters I am really struck by the quality of managers these guys are able to attract. E.g. the guys they've hired to build Digit (who previously built Bajaj Allianz and then spent 5 years in Munich at senior levels in Allianz)) and the guy they have running Philafrica Foods (ex CEO Nestle China). There are impressive people just about everywhere.

LightWhale

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Re: 2017 Annual Letter
« Reply #72 on: March 20, 2018, 09:21:43 AM »
Has any of you had a look at Eurobank?  Trading at 1/4 to book, Prem in the letter argues it's one of the cheaper stocks in the world

petec

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Re: 2017 Annual Letter
« Reply #73 on: March 20, 2018, 09:48:20 AM »
Yes. There are some good presentations on the investor website and you can make a case that Greece will start reflating soon which would be great news. However the ECB stress tests in May will be key. Even if capital levels are ok the ECB and Berlin may insist on dilutive capital raises - they want Greece to exit its bailout this year and they don't want it to collapse back into bailout in a couple more years.

Now, you might argue that even if they issued 100% more shares you'd still only be at 0.5x book...but that's the risk.

TwoCitiesCapital

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Re: 2017 Annual Letter
« Reply #74 on: March 20, 2018, 12:25:13 PM »
Has any of you had a look at Eurobank?  Trading at 1/4 to book, Prem in the letter argues it's one of the cheaper stocks in the world

I have taken a speculative starter position in it again around EUR 0.80. The problem is the last time Greece looked like it was making progress, there was a political surprise and investors lost 99% of their investment. I'm betting it won't happen again, but you never really know...

Once bitten, twice shy.

FairFacts

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Re: 2017 Annual Letter
« Reply #75 on: March 20, 2018, 01:51:01 PM »
Kyle Bass of VC Hayman Capital (macro, event driven focus) reckons that Greece will break out in 2018 with a likely change in leadership. He predicts that Tsipras will be ousted before year end and replaced by the far more business friendly Mitsotakis. He says there is tons of money on the sidelines waiting to flood back into Greece.

ValueMaven

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Re: 2017 Annual Letter
« Reply #76 on: March 20, 2018, 05:26:28 PM »
FFH trading right around BV...anyone warming up to the name given the recent/modest selloff?

Sincerely,
VM

petec

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Re: 2017 Annual Letter
« Reply #77 on: March 21, 2018, 03:15:33 AM »
Kyle Bass of VC Hayman Capital (macro, event driven focus) reckons that Greece will break out in 2018 with a likely change in leadership. He predicts that Tsipras will be ousted before year end and replaced by the far more business friendly Mitsotakis. He says there is tons of money on the sidelines waiting to flood back into Greece.

Do you have a source for this?


petec

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Re: 2017 Annual Letter
« Reply #79 on: March 21, 2018, 06:19:05 AM »
Thanks!