Author Topic: 2017 q4 result out!  (Read 17564 times)

zippy1

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Viking

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Re: 2017 q4 result out!
« Reply #1 on: February 15, 2018, 02:51:39 PM »
From the press release: “At December 31, 2017, common shareholders' equity was $12,475.6 million, or $449.55 per basic share, compared to $8,484.6 million, or $367.40 per basic share, at December 31, 2016. Common shareholders’ equity at December 31, 2017 does not include the unrecorded pre-tax $1,233.1 million excess of fair value over the carrying value of investments in associates and certain consolidated non-insurance subsidiaries.”

Allied World Q4 combined ratio = 132; looks like they bore the brunt of $185 million in catastrophe losses due to California wildfires. I hope this business is getting some nice price increases and turns things around in 2018.
« Last Edit: February 15, 2018, 03:57:45 PM by Viking »

StubbleJumper

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Re: 2017 q4 result out!
« Reply #2 on: February 15, 2018, 03:40:35 PM »
Well, the numbers are nice, but it does bring to mind all of the cautions about lumpiness of results.  A few random observations:

1) Net written spiked nicely in Q4 and was up overall in 2017.  Given FFH's capital levels and underwriting capacity, this is a good sign of things to come.  If you are brave enough to pencil in a combined ratio of 95 and $500m in interest and divvies, it provides the basis of a decent and predictable operating income.

2) Nice to see reserve releases, especially for ORH.  WTF is going with Allied's adverse development, and can FFH fix it?

3) The bond and equities ports are running pretty lean, which is an excellent position in the context of rising rates.  Shitloads of cash, t-bills and short term bonds is a nice place to be.  Can we be brave enough to pencil in 2% for the cash equivalents for 2018, or is that dreaming in technicolour?

4) Holdco cash is high, which is no surpise after some of the asset sales.  But what's the deal with expanding the revolver to $2b?  So the holdco now has ~$4.0B-4.5B of immediate available cash, when taking into account the expanded LOC.  Why?  Presumably there's a standby fee for the revolver, so doubling it is a bit strange when FFH is already swimming in cash.  I understand that you want to acquire your credit when you don't actually need it, but this one seems strange.

5) Unrealised gains on equities were considerable.  How much of this has been given back in the past week or 10 days?  Some of the large legacy equity positions have finally moved the right direction, but has the market turned before FFH had the opportunity to exit?


Overall, I like the current position with very little of the port in equities and 5+ year bonds.  If the cash actually starts to yield something in 2018 and 2019 (as I questioned above, dare we dream 2%) and net written expands with the continued prospect of writing a CR of 95, there's a solid prospect of sizeable operating income.

And today it traded pretty much bang-on with the adjusted book.  Hard to believe.


SJ

dutchman

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Re: 2017 q4 result out!
« Reply #3 on: February 15, 2018, 03:59:32 PM »
Thanks for that review Stubble. Sounds like ull be buying more.

StubbleJumper

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Re: 2017 q4 result out!
« Reply #4 on: February 15, 2018, 04:11:20 PM »
Thanks for that review Stubble. Sounds like ull be buying more.


It's doubtful that I will buy more.  I'm at 22% FFH, which is already far too high.  The shares look cheap, but Prem has done so many wacky things over the past 5 years that it's a tough thing to take the plunge to go to 30% or 35% (I've been there in the past, but the recent wackiness is a real hurdle for me).


SJ

Txvestor

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Re: 2017 q4 result out!
« Reply #5 on: February 15, 2018, 04:36:40 PM »
I agree, and I hope he has come to terms with his wackiness!
I also worry a little about the Underwritig at AWH and hope there are no roaches in that motel we have taken over.
« Last Edit: February 15, 2018, 04:38:37 PM by Txvestor »

Viking

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Re: 2017 q4 result out!
« Reply #6 on: February 15, 2018, 04:53:28 PM »
The key moving forward, as it usually is with FFH, is how they invest. What is the plan with the $17 billion in cash and short term investments? Given the results posted over the past 5 years I think many people are in wait and see mode.

As bond yields move higher the decision in Q4 2016 and Q1 2017 to sell long dated bonds and move to cash has certainly been a good one. But it may take 12-24 months before FFH starts making meaningful purchases of long dated bonds again. Patience will be important.
« Last Edit: February 15, 2018, 04:55:38 PM by Viking »

Valuehalla

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Re: 2017 q4 result out!
« Reply #7 on: February 15, 2018, 05:02:24 PM »
With the new investment in CTL, Prem has done a great decision.
But I hope he will increase this very small position after the positive Q4 figures which came out yesterday.
« Last Edit: February 15, 2018, 05:55:29 PM by Valuehalla »
BRK FFH MKL LVLT CTL BAC WFC BMY MRK MCD MO PM

Dazel

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Re: 2017 q4 result out!
« Reply #8 on: February 15, 2018, 05:26:33 PM »
You guys had me at hello!!

LOL
« Last Edit: February 15, 2018, 06:03:14 PM by Dazel »

Dazel

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Re: 2017 q4 result out!
« Reply #9 on: February 15, 2018, 05:58:55 PM »

Look at the 2018 thread