giofranchi

Unfortunately, I have just very few of them... Anyway, I will look for the ones I have and post them as soon as I can. giofranchi

Well, I guess you are right: the claim payment duration for their portfolio averages between 1.5 – 3 years. twacowfca, I looked for it hastily this morning, but could not find it: which is the average claim payment duration for Lancashire? Thank you, giofranchi The average time til payment of a claim for property cat exposed (re)insurers varries in a band that usually averages about 18 months, depending on the types of claims they are paying and if some claims are contested. Retrocessional claims are settled quickly normally, but when there is a super cat, claims get complicated as they often go around in a circle or even a spiral from one company to another and back to the original insurer as in the LMX spiral of the mid 1980's. The phenomenon of loss creep is much more prevalent after a very large event. That said, Lancashire's usual average time til payment of claims has been about 18 months, until recently, but with the strange supercats of 2011 and the surprising demand of the Italian authorities that the hulk of the cruise ship be removed from the rocks in one piece (which has been fully reserved) instead of piecemeal means that their average time until claims are paid is now almost two years. twacowfca, thank you! Your answer is accurate and precise as usual. Here is something I don’t understand though: you once wrote that Mr. Brindle could not invest the way Mr. Buffett does, because Lancashire concentrates on short tail contracts, while Mr. Buffett could hold the float for much longer. If that is really the case, how do you explain the way Mr. Einhorn invests? GRLE, just like Lancashire, underwrites short tail contracts, but invests almost nothing in short-term low-yielding bonds. What am I missing here? giofranchi

Well, I guess you are right: the claim payment duration for their portfolio averages between 1.5 – 3 years. twacowfca, I looked for it hastily this morning, but could not find it: which is the average claim payment duration for Lancashire? Thank you, giofranchi

Anyone know how to get this letter in pdf? Find the pdf in attachment. giofranchi Hayman_Capital_Management_LP-_Market_Commentary__Nov_2012_.pdf

Thank you for posting. I think that Mr. Bass’s reasoning on Europe is always crystal clear! giofranchi

Well twacowfca, no doubt I agree with you! I think good P&C underwriters, that concentrate on short tail contracts, are going to do very well in the next few years. Obviously, it follows that outstanding underwriters (like Lancashire) are going to do extremely well! What I am not so sure about is the following: And that’s because I think a P/E contraction is a very real risk. I am not saying it will happen, just that it is a risk nobody should ignore. That’s why among companies with longer tail books I prefer those with a fully hedged stock portfolio and a lot of cash at hand (the only one I know of is Fairfax), or those which employ a long/short value based strategy and are much underleveraged if compared to their peers (the only one I know of is GreenlightRe). And yes! Thank you! I am feeling much better now. giofranchi

Thank you very much twacowfca, very nice discussion! I got a terrible cold and I was in bed the last two days, so I can read your impressions from the meeting just now. It seems that the so-called “new normal” is very good news for Lancashire! I also find Mr. Brandon’s comment about the stock market interesting. Time will tell! giofranchi

I also like and always check the "GMO 7-Year Asset Class Forecasts". giofranchi

Michael E. Lewitt on the Fiscal Cliff, on Europe, and on the Outlook for stocks and bonds. giofranchi 11-15-12_TCS.pdf

Junto, I know you won’t believe it… but I have just bought that book this morning!! :) I am not really “the banking type”, but I think it will be a very good read anyway! Thank you, giofranchi

I think dshort.com is a wonderful site to keep track of market valuations. Over there you can find on a monthly basis: - The Crestmont Research P/E Ratio, - The cyclical P/E ratio using the trailing 10-year earnings as the divisor, - The Q Ratio, which is the total price of the market divided by its replacement cost, - The relationship of the S&P Composite price to a regression trendline, - The S&P Composite P/E10 ratio by Percentile, among many other market valuation metrics. I highly recommend the site. Of course, I think you know that gurufocus.com provides the market-cap / GDP ratio. Hope this helps! giofranchi

Yes! Very good indeed! Thank you for posting, giofranchi

I know: nothing new! And I really hope they are dead wrong! But at least some of it seems logic reasoning to me. Table on page 29 is a sad thing... giofranchi Lowering_Berkshire_s_Economic_Moat_Trend_Rating.pdf

February 22, 1936 It is said about the wealthy banker Gorge F. Baker of New York: 1. He always bought sound stocks and bonds when they were offered below intrinsic value. 2. He always had liquid cash for such a purpose. 3. After he bought such stocks and bonds he held on “until the cows came home.” He never made a practice of speculative buying and selling and never tried to catch the market swings. He simply bought when bargains were offered. He never sold unless the stock market was going bad or the price offered was too good to refuse. The Great Depression A Diary – Benjamin Roth Investment Banking is like Insurance: in the wrong hands they both might lead to disaster. Vice versa, if you know the owner-manager, if he has an outstanding track-record, and, most important of all, if you understand his process and agree with it, both Investment Banking and Insurance could be great! giofranchi

WOW! Next year I would really like to come! ;) Well, with all the questions I have already asked YOU about the insurance business in general and about the specifics of some insurance companies … it is hard to come up with something new! Anyway, when the meeting is finished and you find some time, I guess we all will be very grateful, if you could briefly sum up the most interesting topics brought up and discussed. Enjoy your staying in Bermuda! :) giofranchi

Bridgewater on "The Five Stages Of A Sovereign's Life-Cycle". giofranchi The_Five_Stages_Of_A_Sovereign_s_Life_Cycle.pdf

Personally, I think it is a very good article. I only invest in companies that are owner-operated. No matter what the price offered is! Because I don’t trade, and I don’t want to be invested in a company that is not owner-operated. So, I have nothing to add to the discussion about BAC and AIG. Instead, I would like to express my thought on portfolio concentration: I have great confidence in all the owner-operators my firm is invested in. With the only possible exception of FFH, which I could call my single best idea (and the one I have by far the largest amount of capital invested), I would be hard pressed to find the 2nd, the 3rd, …, or the 10th best idea… I think I have partnered with a group of outstanding individuals and it is really tough to choose among them. But this I would say: being invested in 7 – 10 ideas mitigates the risk of “the man at the helm leaving” quite satisfactorily. That’s my view on diversification. If I were sure that Mr. Watsa’s health would remain in great shape for the next 20 years, that he would never have any accident, and that his priority will always remain to increase FFH BV per share at 15% annualised, than I would feel comfortable to invest all my firm’s capital in FFH. giofranchi

twacowfca, it surely is not just me! I guess everyone on this board, who is interested in Lancashire (beyond me to understand why someone should not be interested in Lancashire…), is really thankful to you for sharing all that knowledge about the Company! How could it be otherwise?! :) giofranchi

October 13, 1933 I just finished reading a book called Mellon's Millions. In all thier business ventures they conservatively built up huge cash surplusses during time of prosperity. When a panic came they were able to absorb competitors for a song. During prosperous days their corporations advanced steadily but during depression they advanced by leaps and bounds. They showed rare business judgment. For instance they sold their ship-building company for an enormous price in 1917 at the height of the war boom - but the market for ships was gutted by time war ended. In 1930 they sold McClintic-Marshall Steel Co. to Bethlehem for an enormous price and on top of that Bethlehem assumed 12 million of McClintic Bonds. Since 1930 no steel co. has ever earned interest on bonds. The Great Depression, A Diary - Benjamin Roth Yes, I think it is a very interesting book! giofranchi

Thank you again and again! Please, just keep giving us such useful information! giofranchi

You know, it very rarely happens I like a business so much that it makes me wonder: “Well, I just invested half the capital I would like to see deployed in that business… will I ever get the chance to buy it at a cheaper price, or am I fooling myself and I will lose the boat?”. Usually I don’t fall victim to such an emotional weakness. But… Lancashire is really testing my discipline! And I guess part of the fault is yours, because of all the wonderful things you write about the company and its management!! ;D ;D Thank you, giofranchi June 6, 1933 ... I am afraid the opportunity to buy a fortune in stocks at about 10 cents on the dollar is past amd so far I have been unable to take advantage of it. It is my conclusion that the successful investor must cultivate the habit of "patience". He must be able to hold his money and wait until it is really the time to buy. In this panic it meant waiting over 3 years until stocks were really at rock bottom and selling at less than 1/10 of their normal value. I suppose the real investor would then have the patience and courage to wait until normal times returned before selling. Patience to wait for the right moment - courage to buy or sell when the time arrives - and liquid capital - these are the 3 essentials as I see it now. The Great Depression, A Diary - Benjamin Roth On the other hand, I am very well conscious of the fact that Lancashire is not average at all. Instead, it is a gem to hold for the very long time! What applies to the averages, certainly does not apply to Lancashire. I always really like to leave ample room to average down... but Lancashire tempts me otherwise... giofranchi

Ah! That’s why Mr. Brindle said the fact that everybody else is getting ready to leave work and go home at 4 pm is a great competitive advantage for Lancashire!! Great! :) giofranchi

You know, it very rarely happens I like a business so much that it makes me wonder: “Well, I just invested half the capital I would like to see deployed in that business… will I ever get the chance to buy it at a cheaper price, or am I fooling myself and I will lose the boat?”. Usually I don’t fall victim to such an emotional weakness. But… Lancashire is really testing my discipline! And I guess part of the fault is yours, because of all the wonderful things you write about the company and its management!! ;D ;D Thank you, giofranchi

Did you see the special dividend per share somewhere? I read the Reuters report stating the special dividend was $173 million implying the special dividend would be $1.09/share with 158.11 million shares outstanding. Am I missing something? I became a shareholder at 842p a few days ago. I look forward to becoming much more familiar with Lancashire in the coming years! Ross812, in the document I have attached a few hours ago, you can find the right amount of the special dividend declared. twacowfca is right: it is $0,90 per common share. giofranchi Dividends Lancashire announces that its Board has declared a special dividend for 2012 of $0.90 per common share (approximately £0.56 per common share at the current exchange rate), which will result in an aggregate payment of approximately $145 million. The dividend will be paid in Pounds Sterling on 19 December 2012 (the “Dividend Payment Date”) to shareholders of record on 30 November 2012 (the “Record Date”) using the £ / $ spot market exchange rate at 12 Noon London time on the Record Date. In addition to the special dividend payment to shareholders, approximately $28 million in aggregate will be paid on the Dividend Payment Date to holders of share warrants issued by the Company pursuant to the terms of the warrants. giofranchi

Did you see the special dividend per share somewhere? I read the Reuters report stating the special dividend was $173 million implying the special dividend would be $1.09/share with 158.11 million shares outstanding. Am I missing something? I became a shareholder at 842p a few days ago. I look forward to becoming much more familiar with Lancashire in the coming years! Ross812, in the document I have attached a few hours ago, you can find the right amount of the special dividend declared. twacowfca is right: it is $0,90 per common share. giofranchi