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Author: mungofitch Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1306  
Subject: Re: MKL comparison to other P & C insurers? Date: 3/26/2013 6:16 PM
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Yours is an excellent question.
I'm not well placed to comment on the others, but certainly a good
place to start is to look at each year's book value growth % plus
dividend yield for that year, for each firm, and how that has
evolved over time. It's not that meaningful for a short interval,
but over 10-15 years you start to get a feel for what the
firm is capable of. Investment returns times leverage minus cost of
leverage (mostly avg cost of float) is what ultimately matters.
The only hard part is trying to estimate how sustainable each of those
is based on results (easy), corporate culture, and management skill.
My general rule is to avoid insurance firms entirely because management
has the means, opportunity and motive to crank leverage and
underestimate dangers and incurred liabilities.
I make a very few specific exceptions that I'm comfortable with,
so I generally don't end up in the position of trying to compare firms numerically.

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