txlaw Posted February 25, 2015 Share Posted February 25, 2015 Annual letter is out: http://www.alleghany.com/files/doc_financials/2014/Q4/2014-Annual-Letter_v002_m1ed53.pdf Link to comment Share on other sites More sharing options...
james22 Posted March 9, 2015 Share Posted March 9, 2015 I always enjoy reading the Y annual report. I think it's run by great people and like it a lot. It's a little conservative for my taste, but look, they are beating or at least keeping up with the S&P 500 index without taking a lot of risk. They are also investing in private businesses, like BRK and MKL. It's interesting that MKL and Y are both taking a similar approach, breaking out their investments into private businesses; disclosing EBITDA of them etc. It's definitely an interesting situation at 1.0x BPS. http://brooklyninvestor.blogspot.de/2015/03/alleghany-annual-report-2014.html Link to comment Share on other sites More sharing options...
Jurgis Posted March 9, 2015 Share Posted March 9, 2015 Y underperformance compared to MKL and FFH is why I never invested in it. It is possibly more conservative and therefore underperforming. Link to comment Share on other sites More sharing options...
james22 Posted March 10, 2015 Share Posted March 10, 2015 Y outperformance compared to a bond fund is why I might invest in it. Link to comment Share on other sites More sharing options...
Lowlight Posted May 20, 2015 Share Posted May 20, 2015 Just saw it come across Bloomberg that Y make be getting interest in TransRe at 6.5 billion. This is 85% of Y's market cap. The stock is trading at 1.05 book value. I already owned a 5% stake but was happy to double to 10% in the event there is any truth to this. Company compounds book at 9% per year, has excellent management and a vey low risk bond portfolio with extremely low duration. I am a happy owner of the stub for about 1.25 billion if the news is true. Link to comment Share on other sites More sharing options...
Nnejad Posted May 20, 2015 Share Posted May 20, 2015 "As of March 31, 2015, Alleghany’s equity attributable to the reinsurance segment, insurance segment and corporate activities was $5.2 billion, $2.8 billion and ($0.4) billion, respectively." Would be a very nice premium. Link to comment Share on other sites More sharing options...
constructive Posted May 20, 2015 Share Posted May 20, 2015 Selling TransRe and then declaring a huge special dividend doesn't seem to make much sense tax wise? If someone wants to buy it, it would make more sense to merge with Y and then spin out whatever they don't want. Link to comment Share on other sites More sharing options...
Lowlight Posted May 20, 2015 Share Posted May 20, 2015 Selling TransRe and then declaring a huge special dividend doesn't seem to make much sense tax wise? If someone wants to buy it, it would make more sense to merge with Y and then spin out whatever they don't want. I agree that wouldn't make much sense but these guys are pretty good capital allocators. I'm feel pretty confident they will make the best after-tax decision for the shareholders. Link to comment Share on other sites More sharing options...
gfp Posted May 22, 2015 Share Posted May 22, 2015 From Insurance Insider -- "Alleghany rejects $6bn Scor bid for TransRe Adam McNestrie Paris-headquartered reinsurer Scor has had a circa $6bn offer for Transatlantic Re rejected by parent company Alleghany, The Insurance Insider can reveal. Alleghany is said to have given Scor an indication that it would engage in talks if the Gallic reinsurer was willing to stretch beyond its initial offer, which represented a double-digit premium to book value. However, given the valuation mismatch, Scor is thought to have shelved its interest. Alleghany is also understood to have had a number of other approaches for its reinsurance business as well as for the excess and surplus lines unit RSUI, with Goldman Sachs retained to advise on the interest. One of the interested parties is believed to be a global (re)insurer, with at least one other party understood to be involved. Reuters published a story earlier this week suggesting that Alleghany was open to a sale of Trans Re, with a valuation of $6.5bn, or around 1.25x book value. However, sources have told this publication that the approaches are unsolicited, and that Alleghany has not been shopping its reinsurance business around the market. Talks are believed to be at an early stage and - given the size of the company and the target valuation - the most likely outcome seems to be that Trans Re will remain under Alleghany's ownership. Scor would have found it very difficult to stretch further for Trans Re, given the scale of the dilution its existing shareholders would have faced. The Paris-headquartered reinsurer has a market capitalisation of $8bn and trades at 0.90x trailing book value. Sources said that Scor was lining up an equity and debt raise to finance the deal, although it is also likely to have relied on a paper component. A move for Trans Re would have offered Scor significant additional scale, taking its non-life gross written premiums up to $10.2bn and placing it almost on a par with Hannover Re. The transaction would also have rounded out Scor's geographical diversification given that it is relatively underweight in US business, particularly on the casualty side. Although Alleghany is not thought to have been looking to actively offload Trans Re, a sale at a valuation of 1.2x book value would potentially unlock huge value for the holding company. The business was bought for $3.4bn in 2012 at a valuation of just 0.86x book value. In addition, Alleghany's current trading multiple is just 1.01x. This is despite the significant value that the market is likely to ascribe to the $1.6bn equity RSUI, which could be worth close to $3bn of the group's undisturbed $7.8bn market capitalisation. Considering the value ascribed to smaller insurance entities CapSpecialty and PacificComp, in addition to Alleghany's non-insurance assets, TransRe looks as if it is being valued at a 10-20 percent discount to book value. The discount is likely to reflect its relatively low returns and the difficult state of the reinsurance market as structural and cyclical threats combine. Alleghany has also made it clear that it is not wedded to holding onto its assets indefinitely, with some sources comparing it to a private equity company in this regard. And at a Bank of America Merrill Lynch conference earlier this year, Alleghany said part of its strategy was to "be willing to sell when it's the right move for stockholders". Nevertheless, the sale of a business representing two thirds of Alleghany's total book value would be a huge strategic move for the company that it would be unlikely to make lightly. The New York-listed holding company would have to feel that a combination of other available acquisitions and capital return offered very attractive returns to shareholders to contemplate liquidating such a significant asset. Scor said that it does not comment on market rumours. Alleghany could not be reached." Link to comment Share on other sites More sharing options...
Lowlight Posted May 22, 2015 Share Posted May 22, 2015 It will be interesting to see whether there is any movement from the other unsolicited offers and whether hiring Goldman is quietly putting TransRe out for bid. I can see TransRe fetching closer to $7 billion from the right buyer. RSUI at $3 billion (from the article) and other assets/ins. cos. at $1 billion (net of debt) would get you to a $687/share value. Certainly no home run from here but the downside is fairly limited considering they trade just north of book and have a long track record of 9% returns on book. Link to comment Share on other sites More sharing options...
Lowlight Posted May 31, 2015 Share Posted May 31, 2015 So I will admit my additional purchase (on the day of the announcement that someone put in an unsolicited bid for TransRe) was not a good decision. I could have simply waited and found out that Y rejected the $6 billion offer (a ~15% premium to book value) and I would have been able to purchase the stock below 3/31 book value. We are now 60 days into the 2nd quarter and (unless they have been under lockout provisions), Y has almost certainly bought back a few shares and grown book value by a percent or two. It isn't like management is bad at capital allocation either (TransRe is a good example) so I am surprised to see the stock trade back below book. I continue to think this is a safe investment that will compound intrinsic value at a reasonable pace over time. I am still not convinced that we won't hear about a TransRe sale at a much higher number than $6 billion in the near future. Link to comment Share on other sites More sharing options...
gfp Posted June 3, 2015 Share Posted June 3, 2015 from Insurance Insider - "Swiss Re has held takeover talks with $5bn equity reinsurer Transatlantic Re, The Insurance Insider can reveal. Sources said that the world's second-largest reinsurance company had engaged with Trans Re's New York-listed parent Alleghany and its financial adviser Goldman Sachs during the last month. It is not known if Swiss Re's interest remains live. Alleghany is understood to have had a number of discussions with parties about Trans Re over the last month or so after Chinese conglomerate Fosun made an approach before its major deal with Ironshore. Late last month The Insurance Insider reported that Alleghany is open to offers for Trans Re at the right price. Scor is understood to have made a cash-and-shares bid for the global reinsurance business, valuing it at around $6bn. Sources said that Alleghany had indicated to Scor that it was open to a sale at the right price - believed to be around 1.25x book value, or approximately $6.5bn. After having its bid rejected early in the first half of last month, Scor is believed to have gone back to the drawing board to consider an enhanced offer. However, considering the dilution already contemplated by its first bid, the Gallic reinsurer opted to keep its powder dry. Given TranRe's US-oriented book and that two thirds of its premiums are sourced from casualty lines, a move for the company would allow Swiss Re to accelerate its growth strategy in these areas, where it is relatively underweight. However, Swiss Re has historically been cautious on major reinsurance transactions, particularly in terms of the valuations it places on rival businesses, owing to the potential for significant dis-synergies. Any transaction between carriers operating in the same space can see (re)insureds reduce lines where the two companies double up. But as the scale of the companies involved rises, the risk of meaningful business leakage grows. Some would also argue that Swiss Re is such a dominant player in the reinsurance market, with so much leverage, that it could just grow its book organically at the expense of other carriers without having to pay a premium for TransRe." Link to comment Share on other sites More sharing options...
kab60 Posted June 3, 2015 Share Posted June 3, 2015 Thanks for the update. It gets more and more interesting to start that position. Link to comment Share on other sites More sharing options...
no_thanks Posted June 8, 2015 Share Posted June 8, 2015 Just curious why someone wouldn't buy Y at 1x Book. I read about surplus reserves building up in the industry, but I don't really know what that means. Thanks. Link to comment Share on other sites More sharing options...
Jurgis Posted June 8, 2015 Share Posted June 8, 2015 Just curious why someone wouldn't buy Y at 1x Book. I read about surplus reserves building up in the industry, but I don't really know what that means. Thanks. Personally, I find their book-per-share compounding too low compared to FFH or MKL. Of course, you can't buy FFH or MKL at 1x book right now, so that's acknowledged by the market. If you think it's a buy, what is your thesis and expected returns on Y? Link to comment Share on other sites More sharing options...
kab60 Posted June 8, 2015 Share Posted June 8, 2015 I invested at these levels because downside is somewhat protected by book value. A bit less than 10 percent ROE is not bad with a shortterm bond portfolio and these interest levels, and if they sell TransRe you get a nice premium to book. Link to comment Share on other sites More sharing options...
CorpRaider Posted June 9, 2015 Share Posted June 9, 2015 "Of course, you can't buy FFH or MKL at 1x book right now..." Oh but if you could. Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted June 9, 2015 Share Posted June 9, 2015 "Of course, you can't buy FFH or MKL at 1x book right now..." Oh but if you could. I'm curious at what you're hinting at (if you're just being jocular I understand lol) Link to comment Share on other sites More sharing options...
Spekulatius Posted June 9, 2015 Share Posted June 9, 2015 Just curious why someone wouldn't buy Y at 1x Book. I read about surplus reserves building up in the industry, but I don't really know what that means. Thanks. I the reason not to buy it at 1x book is that it can be bought lower at times. I bought it at 0.91x book a year or so ago And that was when book was lower. As Jurgis mentioned, this is a slow compounder - you can read their annual reports- they are happy with 8% compounded. MKL and other comparable shave been compounding at low double digit rates and over time that makes a huge difference. I think Y is extraordinary conservative and many be a good stock for conservative investors (I still own some) but there are most likely better (higher return) opportunities out there. I for one would buy such a stock only when it's definitely cheap. Link to comment Share on other sites More sharing options...
no_thanks Posted June 9, 2015 Share Posted June 9, 2015 Just curious why someone wouldn't buy Y at 1x Book. I read about surplus reserves building up in the industry, but I don't really know what that means. Thanks. I the reason not to buy it at 1x book is that it can be bought lower at times. I bought it at 0.91x book a year or so ago And that was when book was lower. As Jurgis mentioned, this is a slow compounder - you can read their annual reports- they are happy with 8% compounded. MKL and other comparable shave been compounding at low double digit rates and over time that makes a huge difference. I think Y is extraordinary conservative and many be a good stock for conservative investors (I still own some) but there are most likely better (higher return) opportunities out there. I for one would buy such a stock only when it's definitely cheap. Thanks, I appreciate the response. That is a good point. I guess I was just thinking that with the merger activity in the industry, it was a safe bet. I guess we will see, but I imagine you are right and this might not be the best idea. Seems safe though. *Edit - I should add that I already own a bunch more MKL than Y. Link to comment Share on other sites More sharing options...
CorpRaider Posted June 9, 2015 Share Posted June 9, 2015 "Of course, you can't buy FFH or MKL at 1x book right now..." Oh but if you could. I'm curious at what you're hinting at (if you're just being jocular I understand lol) Sorry, yeah, just stating a wish to get some lower valuations for those two. Link to comment Share on other sites More sharing options...
no_thanks Posted June 10, 2015 Share Posted June 10, 2015 HCC Insurance just got bought at 1.9 times book. Pretty insane price. The article says 1.14 is the median price for mergers in the last 5 years. I wonder how similar Trans Re is to HCC. I will try and read more tonight after work. http://www.bloomberg.com/news/articles/2015-06-10/tokio-marine-buys-hcc-for-7-5-billion-in-its-biggest-takeover Link to comment Share on other sites More sharing options...
Jurgis Posted June 10, 2015 Share Posted June 10, 2015 HCC Insurance just got bought at 1.9 times book. Pretty insane price. The article says 1.14 is the median price for mergers in the last 5 years. I wonder how similar Trans Re is to HCC. I will try and read more tonight after work. http://www.bloomberg.com/news/articles/2015-06-10/tokio-marine-buys-hcc-for-7-5-billion-in-its-biggest-takeover HCC is insurer not reinsurer. I have looked at HCC in the past - they had really good results IIRC - always traded at a premium to book, so I did not buy. I don't have a full analysis of HCC specialty lines. I may be prejudiced, but Japanese acquirers are not necessarily smart money... can't expect others to follow suit. Link to comment Share on other sites More sharing options...
OracleofCarolina Posted February 24, 2017 Share Posted February 24, 2017 http://www.alleghany.com/investors-and-news/annual-letters/default.aspx 2016 annual letter is out. Link to comment Share on other sites More sharing options...
Guest notorious546 Posted February 24, 2017 Share Posted February 24, 2017 Thanks for link/reminder Link to comment Share on other sites More sharing options...
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