Montpelier Re Holdings Ltd. (MRH)

08 EPS: 1.09
09 EPS: 2.57
10 EPS: 2.3
trailing p/e 15
p/e 6.5
forward p/e 7.28

Insurance, it's like gambling in Vegas, over the long run they (the house) will win, because the odds are on their side, calculated over the years. New Orleans was a accident waiting to happen, now those odds are refigured in, expect the house to recoup those losses. just like Vegas.

MRH instilled a lot of fear after the two big hurricanes and all that fear is still in the price. It trades below book and generates good cash every quarter. Hopefully management has learnt its lessons - if so, this one will do 2x-3x.

Top of valuation and entirely too close to 52 wk high. If it dives instead of dips, I'll buy back in around 11-12. Til then it's a slippery slope from here.

Great Company with very STRICT underwriting guidelines in regards to their Property Catastrophe Reinsurance Department. When it comes to investment income operations, and Hurricane property Modelling, they swim against the grain

book value>stock price.

safe?

cheap, p/e of 5, 3% dividend

Why I like Montpelier Re:
1) No options. Stock based compensation is all RSUs, making for better alignment of interests with shareholders. Still far too few companies like this.
2) A bargain. Priced at under book. I expect price to exceed 1.5 x book after we get through this recession (depression?). Further, I expect book value to improve from here, probably even with confirmation of that later today.
3) Diversifying risk. I like the broadening of coverage types and geography. New London platform will take time to rev up, but should smooth out results over time.
4) Firming reinsurance prices. I hear reinsurance prices are on a firming trend in recent months. Makes sense with capital tight in the current economic environment.
5) Small and under-followed. Lets us small guys capitalize on our advantage of not needing consensus or volume (though volume seems to be here anyway).

Concerns:
1) Hurricanes and terrorism. These guys insure some nasty stuff.
2) CEO Harris. He's way too new. But, I like that the last CEO is staying on as Chairman for a bit.
3) Am I wrong about book value improvement?

This is a solid company, but whent he hell is it going to take off?!

Has the potential to explode. Solid company with a solid market, plenty of cash, good mgmt.

A dependable guy named Frank is pretty bullish on this one. P/B is good, insurance losses manageable, insurance pricing is firming up. MRH did make some bad investments lately (as did I), but other than this, things are looking up.
In real life, I sold some of this (at a good price) to buy some undervalued BRK (if I am going to own a re-insurance company, why not BRK...). Then MRH dropped, and I have re-purchased a smaller aliquot of MRH.

Insurance rates are hardening as a result of the deterioration of investment income. Reinsurance rates are also hardening. Should make for some handsome profits.

LOW P/E AND ITS GETTING LOWER EVERY DAY

Lots of income, nice dividend...

What's not to love? As the financials come back, this will come back better than most.

Litle debt, steady income, low PE

Book value should improve over the next few months now that the results of the hurricane season and the failure of Lehman brothers has been accounted for - providing there are no major failings for its investments. Tthe stock price should rise accordingly.

20 bagger

risk ratio 1:2 :)
aig ratio 1:11 :(

do the math : good management + beaten down sector= 20 bagger

hold and go away ; come back in 10 years.