Insurance is a funny business in that it is really two businesses in one; underwriting and investing. Screw up either, and the company will suffer. Do both well and eventually you become Warren Buffet (OK… maybe if you do both really well).
Endurance Specialty Holdings (NYSE:ENH) is a $2.5B (market cap) Bermuda based insurer and reinsurer with a promising medium term outlook, but a stretched valuation and a short-term headwind. The company is facing a mediocre underwriting market which will improve over the next couple of years, but the investing portion of its business looks a bit riskier. Given this, investors should hold off on establishing a position now, but instead look for the headwind to create an...
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