Focused Compounding EP 286. Analyzing and Investing in Insurance & Reinsurance Businesses
Jan 28, 2021
AI Snips
Chapters
Transcript
Episode notes
Progressive's Growth-Underwriting Strategy
- Progressive aims to grow rapidly with a combined ratio around 96 to remain profitable but aggressive in underwriting.
- This balance supports fast growth while maintaining some underwriting profit, unlike aiming for maximum underwriting profit alone.
Evaluate Underwriting Consistency
- Analyze underwriting history with combined ratios below 100 to ensure profits from underwriting alone.
- Beware of insurers frequently switching business segments, as it suggests instability and higher risk.
Insurance Recovery & Premium Flexibility
- Insurers must be able to reduce premiums drastically or recover from large equity losses to remain strong.
- Avoid companies that cannot shrink or rebound after catastrophic events to ensure durable compounding success.