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Recs
focus on ROE in insurance operation and capping losses wiht re-insurance stands to minimize cat losses.
Recs
PROS:
.89 Capacity Ratio.
1.3B surplus for Internation/Specialty (Re)
Trades less than BV.
High growth prospects.
Merger creates synergy and Peleus adds high growth aspect to stable portion of business.
CONS:
Systematic Risk - mainly subprime issues. Can also be unsystematic, depending on Argo's exposure to subprime market in their investment portfolio.
Weak Re and Insurance pricing. High competition and uncertainty of catastrophic weather events and global warming (how real is it?).
Recs
Overpaid for PYRE at $5.17. PYRE fell from $25 because of its flawed risk models and its very high risk re-insurance contracts. It was an accident waiting to happen well before Katrina.
Anytime they got wiped out, seemlying recapitalised by shareholders. A lot of dodgy accounting - debts treated as assets on balance sheet due to accouting laxity in bermuda.
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