undervalued insurance stock, page-25

Good reading in this post, I looked into CIX a few months ago and formed a similar view, as in limited downside risk with good upside potential.

A couple of things though, about 70% of GWP's are from commercial lines where I believe pricing is still on the soft side.

On the personal lines, I would like to know the split, I would say they have a lot of business targeting discretionary segments, luxury cars, houses club insurance etc and areas of the market that are likely to suffer in a downturn.

Also a bit surprised at them paying a dividend as my view was that most financials are happy to have the excess capital at the moment.

On the loss ratio side, the catastrophe cover might not be useful for the recent Brisbane storms as they were fairly spread out so will be interesting to see what the net cost will be.

Final thought, there have been comments made that there are investment gains from falling yields. Nick Kirk said this will cover the increased cost of reserves as they are duration matched. This might be the case but there is obviously some upside and downside risk from this in the future. As mentioned by others I would also be interested in knowing how they have been affected by credit spreads.

I would be interested in the thoughts on these. Overall though I agree with the view that anything under $.4 is cheap but more of a long term investment.