Utah Insurance

I have a new long in my portfolio insurance, employers Holdings (EIG), merit highlighting. It is an IPO there is little, a strong and has the potential for further profits here. It is an opportunity for investors seeking exposure to these cases.

The company is not known, in part because some of the accounts is complex. In addition, there is no Sell-Side coverage, and it will probably not all in early March.

However, employers Holdings has a good model of insurance: small businesses, moderate risk. He has this business, particularly in two countries: in Nevada and California. It also has small operations in Colorado, Utah, Montana, Texas and Arizona. With the IPO, expansion in countries where its operations are small and move to Illinois and Florida.

Holdings is an employer of the demutualization Nevada State Workers’ Compensation Fund. The current management team was to run only when public funds was not penniless. The team then bought Fremont benefits of health insurance is bankrupt Workers’ Compensation writers, when he was bankrupt in 2002.

Both were successful in recovery, so that the largest employer Holdings WC writers in Nevada, the seventh largest in California and 17 the largest employer of USA Holdings’ Fremont timing was exquisite, it was to Low market reform and WC soon as Dir Arnold Schwarzenegger.

Some of the accounts is a bit complex. There is a reinsurance agreement as a post performance deferred, and that the company will keep paying above the best estimate, near the edge of the range of Actuaries. These two factors understate the book value and earnings overstated, because everyone receives continuous profits of the group.

There is more complexity. Given that this is a demutualization, insurance have received shares or cash in exchange for their shareholdings. The exact percentage of policyholders, vs cash reserve is not known, even if I have an interview for the company to find out. Plus you have money, plus the remaining equity value.

Once I know the amount, I can clarify on the evaluation of the company. My figures are based on the principle that 90% of policyholders requested cash. Policyholders are small businesses. Businesses need money, and the existence of an ancillary activity is active, that most companies do not know what to do. You do not normally brokerage accounts Corporate. If all species of insurance figures took my assessment would be rich by about 14%.

What is it, my best guess now is that employers Holdings now in trade adjusted 74% of book and 10.9 times 2006 in terms of estimating result. There is the possibility of real growth as it expands further the Nevada and California which, so far, is 94% of their enterprises. (Right complement adaptations investors. Naive investors see as an employer establishments low-income, prices, high price-to-Book Company).

In underwriting, two thirds of the companies business comes from the second lowest risk classification (four rows). Employers Holdings is very different from the industry, their exposure largest industry is only 3%.

It seeks business with a strong work ethic and focuses on the Workers’ Compensation insurance to choose from small enterprises to medium-low risk groups, such as hotels and restaurants in certain geographic markets. The management is of the opinion that the merger offers a unique competitive advantage, so that the company win a retail customer and market know-how and expertise. Furthermore, with an emphasis on small and medium enterprises, it tends to get strong and continuing attractive prices.

Another positive employer Holdings “strong asset quality of its invested assets consist of loans and 94% share of 6%. Its debt” AA + “for quality. The company is booked was conservative, with reservations versions per year since 2001.

There is a little conscious of being negative. First, it is probably in bad weather on the pricing cycle time to go to toilet insurers because premium rates are falling, but the employer Holdings is easy to achieve cheap. Furthermore, because it is known that the conservative underwriting and booking up to a certain point, I can cycle to ignore.