re: cix goldman sachs redfaces about , page-11

re: cix goldman sachs redfaces about collonade. . . .history will tell that CIX entered the industry two years too late (not their fault. . . that was the timing of REAC runoff). pricing has come back SO MUCH in commercial lines in last two years that even big / efficient companies will be struggling to make underwriting profits (in commercial lines) in 07 - personal lines pricing is much stickier. CIX is doomed not to be one of the most efficient players in the market due to their scale.

However - it is very hard to find profitable niches in the insurance sector. .. . and if you only have $50 million of capital and no credit rating, your credibility isn't that high with some potential customers.

the "undercapitalised" [note - i am not suggesting that CIX is undercapitalised for the risks that they write - just that their small balance sheet dictates the risk that they are able to write] players that have made a go of things in insurance sector are the likes of OAMPS and Guild Insurance. . .. both of which have a natural constituency. CIX does not have such a natural market niche.

As for HHL - they certainly bought the dream. Now they couldn't sell even if they wanted to... . . except into a takeover.