Lancashire's Annual Report is Out

[twacowfca]

I originally was disgusted by the board comp and the salaries. But it is a big company and not everyone gets by on the money I do... They are Brits afterall ; )

 

As for the warrants, not too mad... It's interesting you said what you said Twacowfca - I think this is his own hedge fund... hear me out.

The guy does an ipo at 3.6p or so... and issues warrants to himself and other managers for ~15% (if I recall correctly) of the common - with the bonus of receiving any divies that accrue to the common. So in effect any value created beyond the ipo goes 15% to management! It's brilliant really.

 

And from what I recall there is no additional warrants or options issued every year... so it's just a Corp operating in P&C, that has a (tax efficient!) HF pay structure.

 

 

Yes, but most of the initially vested warrants went to the sponsors and founders at the IPO.  They had the good sense to generously incentivize Brindle and his core staff with the remainder.  But Brindle et al had  to earn the vesting of most of these by consistently performing above their high hurdle.  Now their warrants are in the money, and they are happily incentivized to avoid the downside as well as to gain on the upside.  This is the way Brindle is wired anyway, so the incentive plan

resonates with him and provides near perfect allignment with other shareholders.  :)

[Myth465]

TWA you hold equal amounts of this and FFH as your largest 2 holdings?

 

I like the warrants, especially after hearing a board members explanation. Allowing distributions prevents empire building, holding cash, and allows for high ROIC.

 

I hold LRE in my Roth and look forward to when the dividends have completely paid back my principle or as the giant buybacks increase my holding position.

[kapilm]

Myth465: What brokerage do you use for buying LRE ?

[Myth465]

I hold the pink sheet shares at think or swim. They are thinly traded but I have managed to buy when needed. Will be buying more in the next few months. I dont have much capital. About $100k total in assets so the pinks do fine for me. I havent bought a true foreign security but would probably look towards IB if needed.

[Hawk4value]

Just curious. Since you are already a holder, and if you say you will be adding to your position soon, is there a particular price that makes sense to you, and why.

[Myth465]

I would buy at around book value. The price right now is fine actually, depending on the quarter it should be below book. I would never pay 2x for an insurer but I believe these guys deserve a book value multiply between 1.5 - 2.0. They are making a great deal of money in this soft market and should do very well with a hard market. When off quarters feature combined ratios of 85% and regular disaster free quarters have ratios below 60% its hard to over pay. I would probably pay up to 1.2 currently.

 

The next call will be interesting. They have some exposure to Chile which may send shares down and will elaborate on the buyback program. I would put this in the same category as FFH, FUR, or BRK when it was smaller. You buy on the dips and hold for the long term. I am trying to accumulate most of my shares in my Roth due to the large dividends which are paid.

[twacowfca]

TWA you hold equal amounts of this and FFH as your largest 2 holdings?

 

I like the warrants, especially after hearing a board members explanation. Allowing distributions prevents empire building, holding cash, and allows for high ROIC.

 

I hold LRE in my Roth and look forward to when the dividends have completely paid back my principle or as the giant buybacks increase my holding position.

 

 

LRE has been an increasing share of our portfolio since we first bought it in 2006 as we've come to understand it better and better.  We rotated out of most of our FFH soon after they announced their stock issuance and NYSE delisting. Prem and his team are great; we're light FFH now for

no other reason than those technical issues.  We used the proceeds to load up on BRK in anticipation of the greater liquidity with their stock split and the greater interest in owning it among funds with the anticipated addition of BRK to the S&P 500.  Third Ave Focus Credit rounds out our core holdings.  These are the great majority of what we own. :)

 

These are all great holdings, lead by outstanding owners and managers.  All but BRK are selling at BV and are likely to return lots of value to shareholders no matter what the market does.  I would feel comfortable putting half my assets with any of them and then doing a Rip Van Winkle and waking up five or more years later.

[Guest kawikaho]

I don't understand.  I thought LRE trades on the pink sheets like FFH in the U.S. 

 

TWA you hold equal amounts of this and FFH as your largest 2 holdings?

 

I like the warrants, especially after hearing a board members explanation. Allowing distributions prevents empire building, holding cash, and allows for high ROIC.

 

I hold LRE in my Roth and look forward to when the dividends have completely paid back my principle or as the giant buybacks increase my holding position.

 

 

LRE has been an increasing share of our portfolio since we first bought it in 2006 as we've come to understand it better and better.  We rotated out of most of our FFH soon after they announced their stock issuance and NYSE delisting. Prem and his team are great; we're light FFH now for

no other reason than those technical issues.  We used the proceeds to load up on BRK in anticipation of the greater liquidity with their stock split and greater interest in owning it among funds with the anticipated addition of BRK to the S&P 500.  Third Ave Focus Credit rounds out our core holdings.  These are the great majority of what we own. :)

 

These are all great holdings, lead by outstanding owners and managers.  All but BRK are selling at BV and are likely to return lots of value to shareholders no matter what the market does.  I would feel comfortable putting half my assets with any of them and then doing a Rip Van Winkle and waking up five or more years later.

[turar]

I'm trying to figure out the dividends they're paying out. Is it correct that for 2009 there was a total of 79 pence paid?

[twacowfca]

LRE trades on the London Stock Exchange, symbol is LRE:LN  It's a member of the Financial Times 250.  99% of its liquidity is on the LSE.  :)

[twacowfca]

I'm trying to figure out the dividends they're paying out. Is it correct that for 2009 there was a total of 79 pence paid?

 

 

Their $1.25 special dividend went ex div in 2009 and was paid in January, 2010.  :)

[Guest kawikaho]

LRE trades on the London Stock Exchange, symbol is LRE:LN  It's a member of the Financial Times 250.  99% of its liquidity is on the LSE.  :)

 

Yep, I know that.  So, does that mean that the liquidity of LRE on the LSE is much greater than FFH on the TSX? 

[turar]

Their $1.25 special dividend went ex div in 2009 and was paid in January, 2010.  :)

That's the same as 76 pence, right? Plus 3 pence in August for a total of 79 pence, which is about $1.2 at current rate GBP/USD rate. But keeping it simple, all in GBP, is it correct that the div rate for 2009 is about 16% at current price?

[twacowfca]

LRE trades on the London Stock Exchange, symbol is LRE:LN  It's a member of the Financial Times 250.  99% of its liquidity is on the LSE.  :)

 

Yep, I know that.  So, does that mean that the liquidity of LRE on the LSE is much greater than FFH on the TSX? 

 

 

Both companies have most of their shares in the hands of a small number of funds other than mutual funds.  FFH has a much bigger market cap.  Therefore, without comparing trading volume, I would guess that the market value of FFH shares traded is greater because of its larger market cap, but the avg daily vol traded may favor LRE because of the lower share price.

[twacowfca]

Their $1.25 special dividend went ex div in 2009 and was paid in January, 2010.  :)

That's the same as 76 pence, right? Plus 3 pence in August for a total of 79 pence, which is about $1.2 at current rate GBP/USD rate. But keeping it simple, all in GBP, is it correct that the div rate for 2009 is about 16% at current price?

[/quo

 

 

LRE 's financials are kept in dollars (to match  their exposure to mostly dollar claims).  Dividends are declared and paid in dollars and then converted into another currency if necessary.  This is a little strange because the shares trade in pence.  :)

[Guest kawikaho]

LRE trades on the London Stock Exchange, symbol is LRE:LN  It's a member of the Financial Times 250.  99% of its liquidity is on the LSE.  :)

 

Yep, I know that.  So, does that mean that the liquidity of LRE on the LSE is much greater than FFH on the TSX? 

 

 

Both companies have most of their shares in the hands of a small number of funds other than mutual funds.  FFH has a much bigger market cap.  Therefore, without comparing trading volume, I would guess that the market value of FFH shares traded is greater because of its larger market cap, but the avg daily vol traded may favor LRE because of the lower share price.

 

Thanks for the info.  I'm gonna have to follow you guys on this one and buy LRE.  Sounds like a good long term hold. One final thing, are you worried about the dollar/pound disparity?  I mean, if the pound starts to fall against the dollar, wouldn't that affect the value of your LRE holdings?

[bargainman]

Has anyone bought LRE using IB?  Can you get them directly on the LSE?

[Guest misterstockwell]

Has anyone bought LRE using IB?  Can you get them directly on the LSE?

 

Yes you can

[Myth465]

Whats the fee look like at IB for foreign shares, i may have to move to them at some point.

[twacowfca]

LRE trades on the London Stock Exchange, symbol is LRE:LN  It's a member of the Financial Times 250.  99% of its liquidity is on the LSE.  :)

 

Yep, I know that.  So, does that mean that the liquidity of LRE on the LSE is much greater than FFH on the TSX? 

 

 

Both companies have most of their shares in the hands of a small number of funds other than mutual funds.  FFH has a much bigger market cap.  Therefore, without comparing trading volume, I would guess that the market value of FFH shares traded is greater because of its larger market cap, but the avg daily vol traded may favor LRE because of the lower share price.

 

Thanks for the info.  I'm gonna have to follow you guys on this one and buy LRE.  Sounds like a good long term hold. One final thing, are you worried about the dollar/pound disparity?  I mean, if the pound starts to fall against the dollar, wouldn't that affect the value of your LRE holdings?

[\quote]

They keep almost all their assets in dollar denominated securities.  Therefore, their assets rise and fall with the dollar.  In practice their share price olso tends to follow the dollar, with allowance for appreciation of their shares.

 

[rmitz]

Whats the fee look like at IB for foreign shares, i may have to move to them at some point.

 

If you have a cash account (this security screams Roth to me) you have to manually convert funds over to GBP using an FX trade, then purchase the security on the LSE.  The LSE real time quotes are actually free, but you need to enable them.  The forex base fee is $2.50 and up to 50k GBP purchase on the LSE is 6GBP.  You can find details here: http://www.interactivebrokers.com/en/p.php?f=commission and navigate to the appropriate tab.

 

The only thing irritating me lately on IB is that they started charging an inactivity fee on accounts if you don't have a minimum amount of commissions.  I may have to reconsider having all my accounts there because I really don't trade very often.  Or I suppose I could generate fees with some small-scale arbitrage.

[nodnub]

The only thing irritating me lately on IB is that they started charging an inactivity fee on accounts if you don't have a minimum amount of commissions.  I may have to reconsider having all my accounts there because I really don't trade very often.  Or I suppose I could generate fees with some small-scale arbitrage.

 

I think IB Canada has had that for a long time--they require minimum commission of $10 per month. If you subscribe to a data package they waive the minimum commission fee.  

 

This minimum fee is a logical requirement to filter out clients that trade very infrequently and have small amounts of capital. They can only make money from active traders or large accounts. It costs a lot to service small accounts that have small $ value (partly because those account holders are often just starting out and they call customer service a lot for help).

 

[link01]

LRE trades on the London Stock Exchange, symbol is LRE:LN  It's a member of the Financial Times 250.  99% of its liquidity is on the LSE.  :)

 

this has been a very informative thread....thx guys!

 

has any one looked closely at flagstone re, mark byrnes reinsurance co? seems to have a similar model to LRE, tho they have a very short history to go by, so the jury's still out. i've bought a small pos...would have bought much more but i didnt like the way they ran things on the asset side going into the recession, ie investments. i would have thought that mark byrne would be a tried & true value investor type, but was surprised & dismayed to see fsr adhering to a weighted asset allocation model driven by statistical research. when the markets plunged they sold stocks, saying something to the effect that they were no longer safe or appropriate. methinks they are a bunch of quants over there! well, that might be fine on the underwriting side anyways...and as they have lowered their risk appetites on the asset investment end maybe they can drive attractive long term returns from superior underwriting without risk of undermining those with bad investment results.

 

and i'm definately going to consider LSE after what i've read here.

 

finally, i just checked the fidelity website & found they do offer some international trading. so for those of you at IB that have said you arent quite happy with the account fees etc here's a link to what fidelity offers on the internation front:

 

http://personal.fidelity.com/global/search/inquira/resultsindex.shtml?question=london stock exchange

 

[rmitz]

I think IB Canada has had that for a long time--they require minimum commission of $10 per month. If you subscribe to a data package they waive the minimum commission fee.  

 

Actually, they don't do that anymore, at least in the US.  The only things that count towards the fee are actual commissions, at least from what I was able to determine.

 

This minimum fee is a logical requirement to filter out clients that trade very infrequently and have small amounts of capital. They can only make money from active traders or large accounts. It costs a lot to service small accounts that have small $ value (partly because those account holders are often just starting out and they call customer service a lot for help).

 

In some sense it is, though they should also be able to make money on margin (not very much, though, given their rates).  I put together an advisor account so that I could manage several accounts in a unified interface.  So far that experience has been somewhat trying in and of itself, and you have the minimum commissions for each account.  It's not really targeted for people who have full authority on all the different accounts.  All that said, the margin rates are so low that if one uses even a moderate amount sporadically, that should make up for the other fees.

[Guest kawikaho]

LRE trades on the London Stock Exchange, symbol is LRE:LN  It's a member of the Financial Times 250.  99% of its liquidity is on the LSE.  :)

 

Yep, I know that.  So, does that mean that the liquidity of LRE on the LSE is much greater than FFH on the TSX? 

 

 

Both companies have most of their shares in the hands of a small number of funds other than mutual funds.  FFH has a much bigger market cap.  Therefore, without comparing trading volume, I would guess that the market value of FFH shares traded is greater because of its larger market cap, but the avg daily vol traded may favor LRE because of the lower share price.

 

Thanks for the info.  I'm gonna have to follow you guys on this one and buy LRE.  Sounds like a good long term hold. One final thing, are you worried about the dollar/pound disparity?  I mean, if the pound starts to fall against the dollar, wouldn't that affect the value of your LRE holdings?

[\quote]

They keep almost all their assets in dollar denominated securities.  Therefore, their assets rise and fall with the dollar.  In practice their share price olso tends to follow the dollar, with allowance for appreciation of their shares.

 

 

Sweet.  Ok, I'm in on this.