undervalued insurance stock

Hi Guys!

The last post I read on this thread was from someone who posted in March chastising management for exiting equities. With the benefit of hindsight it now appears that CIX was the only insurer out there with no equities in its investment portfolio going into this downtown.

Consider the following for Calliden -

* Nil exposure to equities
* Conservative investment strategy which has helped it avoid credit-related losses (unlike the majors)
* Extended duration (not credit) courtesy of outsourcing of investments
* Trading at a discount to NAV
* Trading only marginally above NTA
* Purchased interests (AUGIL etc) trading at ratios well below the current market norm
* Recent evidence (reported) of Directors buying
* Very conservative debt/equity ratio
* Ability to "cherry pick" markets
* Fast moving company
* Excellent management (hand picked from other insurers)
* Excellent Board with investment / insurance expertise
* Undervalued JV assets (eg. CSA)

Trading at 0.34/0.35 is, imo, a little bit of a joke. Yes, I know there are many other bargains out there at the moment, but there is no rationale for CIX to trade below NAV given the lack of erosion of NTA over the coming few years, and the probability that they will meet their income (PE) targets at the end of 2008 (no update to guidance yet = within 10% of initial estimates). Equity will continue to grow, and with a PE of around 12 (compared to market of around 16), I forsee the price "normalising" towards 1.33 x NAV (i.e. $0.51) over the coming year. Very few insurers actually offer a potential capital gain of around 45% over the coming twelve months.

Simple maths, common sense. A real winner if you want some exposure to the insurance sector atm.

Best regards
Kit