FIG trader_

A General Insurance Brokers Story

This group has gone through many interesting periods in the last five to ten years, with unusual opportunities to profit from "growth' (in the case of AJG in the Nineties, and BRO forever), MMC (growth in the Nineties, restructuring/blowoff in 2006), AOC (transition in 2003-2005) and WSH (good consistent player). How do things stand now? The way I see it, nice business, and they probably offer some downside protection (versus banks, p/c insurers, Investment banks), but each individual stock has its own set of problems/challenges. And why not look at price/book; It is a measure of risk, since if they don't produce expected returns on intellectual capital (i.e. intangibles), it should be viewed with some skepticism as to the reliability of the cash flow. My personal favorite is AJG (after runup in MMC, the rich valuation for BRO, AOC alreday at fair value), and the market seems to be recognizing the growth vehicles, nice ROE and free cash flow, and reasonable valuation