I don't know how large a slice of their business it is, but AAA's insurance wing is dumping Safeco by the end of this year. If being affiliated with AAA was a big source of easy traffic for Safeco, that would be coming to an end... Reply
Economic use of Capital???? you know not what you speaketh? How can you analyze a public co the same way as non-public mutual that doesn;t have "shareholders&quo... but stakeholders with different agendas? So don't try to. Obviously they are overcapitalized, and giving out policyholder dividends kisses off funds forever. Why?? To understand the "interests of people in charge of mutual, you would have to discuss directors (you don;t), cross ownership holdings (often other local banks, insurers), likelihood of future demutualization (rationale of directors, potential beneficiaries among management and wall street I banks). Come on stop with your "5 quick ideas" every day, and back something up with analysis. Reply
One thing I don't get and that is value investing. You guys buy stuff on the way down because as it falls, it gets cheaper. Great if there is a turnaround in the near-term but if not, (can you say Enron, and more recently Bear Stearns?) you lose your shirt.
Traders call that trying to catch a falling knife for good reason. My research shows that the fundamentals lag price action by anywhere from 3 - 9 months so waiting for a fundamental signal to exit is a dangerous practice from where I sit (you reading this Cramer?).
Now combine the principles of value and employing the right fundamentals with an ability to read a chart... now you're talking! Reply
Insurance companies which have thrived by suckling at the teat of anti-competitive state regulation - like SAFT - can be very dangerous plays when the state opens somewhat to competition. You're basically making a bet that either (1) another company wants to enter the state through buying renewal rights, or (2) that the company, which is typically inbred and used to the status quo, has enough flexibility to respond to the changes and leverage their market share. I don't think either of those are good bets, but go ahead and play Lotto if you want to. Nobody's gonna buy a company like that for their "systems" or "market knowledge" because the market has changed and the systems are geared towards the OLD way of doing things.
Take a look at Seibels Bruce Group and the South Carolina auto insurance reform as an example of what can happen. Reply
I also own SAFT, but not because I think they are much of a company. In fact, their business is based on Massachusetts private passenger auto- they are really not good at anything else. With the recent semi-deregulation in Massachusetts, I think they are a take-over candidate (see Commerce)- and meanwhile you get a decent dividend. Reply
David is right on the money. I currently work for Safeco, and it is a company in the grips of outsourcing mania. The asset management department is just one example, albeit one of the more obviously bad choices. People with specialized "Bottom Left Drawer" knowledge are grossly undervalued here, and implicit costs are gleefully ignored by the current management team. Reply
Considering today's challenges for the insurance companies, I think it would be pretty archaic to not outsource their IM operations. It would have been and was natural to do it inhouse but with increasing life expectancy and increase in natural catastrophes, insurance companies have no choice but to logically outsource operations and investments to those who excel at it and focus on increasing the size of their business. Reply
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Liberty Mutual / Safeco: Potential and Challenges Loom Online [view article]
I don't know how large a slice of their business it is, but AAA's insurance wing is dumping Safeco by the end of this year. If being affiliated with AAA was a big source of easy traffic for Safeco, that would be coming to an end... ReplyLiberty Mutual / Safeco: Potential and Challenges Loom Online [view article]
Is the 50,000 auto quotes each month for Liberty just their total through agents, or is it for the whole company? Reply4 Things I Just Don't Get [view article]
Economic use of Capital???? you know not what you speaketh? How can you analyze a public co the same way as non-public mutual that doesn;t have "shareholders&quo... but stakeholders with different agendas? So don't try to. Obviously they are overcapitalized, and giving out policyholder dividends kisses off funds forever. Why?? To understand the "interests of people in charge of mutual, you would have to discuss directors (you don;t), cross ownership holdings (often other local banks, insurers), likelihood of future demutualization (rationale of directors, potential beneficiaries among management and wall street I banks). Come on stop with your "5 quick ideas" every day, and back something up with analysis. ReplyBlackman
4 Things I Just Don't Get [view article]
One thing I don't get and that is value investing. You guys buy stuff on the way down because as it falls, it gets cheaper. Great if there is a turnaround in the near-term but if not, (can you say Enron, and more recently Bear Stearns?) you lose your shirt.Traders call that trying to catch a falling knife for good reason. My research shows that the fundamentals lag price action by anywhere from 3 - 9 months so waiting for a fundamental signal to exit is a dangerous practice from where I sit (you reading this Cramer?).
Now combine the principles of value and employing the right fundamentals with an ability to read a chart... now you're talking! Reply
4 Things I Just Don't Get [view article]
Insurance companies which have thrived by suckling at the teat of anti-competitive state regulation - like SAFT - can be very dangerous plays when the state opens somewhat to competition. You're basically making a bet that either (1) another company wants to enter the state through buying renewal rights, or (2) that the company, which is typically inbred and used to the status quo, has enough flexibility to respond to the changes and leverage their market share. I don't think either of those are good bets, but go ahead and play Lotto if you want to. Nobody's gonna buy a company like that for their "systems" or "market knowledge" because the market has changed and the systems are geared towards the OLD way of doing things.Take a look at Seibels Bruce Group and the South Carolina auto insurance reform as an example of what can happen. Reply
4 Things I Just Don't Get [view article]
I also own SAFT, but not because I think they are much of a company. In fact, their business is based on Massachusetts private passenger auto- they are really not good at anything else. With the recent semi-deregulation in Massachusetts, I think they are a take-over candidate (see Commerce)- and meanwhile you get a decent dividend. ReplyEditors
General Discussion on SAFC
Is this a buy or a sell? ReplyOutsourcing Asset Management is Hurting the Insurance Industry [view article]
David is right on the money. I currently work for Safeco, and it is a company in the grips of outsourcing mania. The asset management department is just one example, albeit one of the more obviously bad choices. People with specialized "Bottom Left Drawer" knowledge are grossly undervalued here, and implicit costs are gleefully ignored by the current management team. ReplySawant
Outsourcing Asset Management is Hurting the Insurance Industry [view article]
Considering today's challenges for the insurance companies, I think it would be pretty archaic to not outsource their IM operations. It would have been and was natural to do it inhouse but with increasing life expectancy and increase in natural catastrophes, insurance companies have no choice but to logically outsource operations and investments to those who excel at it and focus on increasing the size of their business. Reply