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12:48 pm
March 13, 2010
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stocki711
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| Member | posts 21 |
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I think HCII is deceptive. They are not trading below book nor do they have a negative enterprise value.
The yahoo! statistics are misleading. They do have $85M in cash and investments but also $69M in liabilities for unearned premiums. They are trading near book but they don't seem to generate increases in book value as quick as other insurers. Also, they gained approximately 44,000 citizens insurance policies from the state of Florida because it was deemed to risky for the state of Florida. I wonder how it is less risky for a smaller less capitalized insurer than an entire state. I was a huge fan of HCII until I dug deeper. For insurers I like AWH a lot. It is a 2.4B market cap trading with $3.2B in equity and growing faster than HCII. It has a more diverse portfolio of insurance policies and they cover for catastrophe accidents. Another good insurer is FSR (or so I've been recommended). They have slightly better fundamentals then AWH but are much more conservative and are no longer investing in equities after recent downturn. AWH has been earning 15% approximately on equities each year for the past 3 or 4 years.
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12:43 am
March 13, 2010
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Jae Jun
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| Admin
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Ahh yes. Randy from Durig Capital does a good job. His other picks that be posted on this site have both worked out very well in a short time frame.
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1:31 pm
March 11, 2010
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freddyclho
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| Member | posts 5 |
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RayB, if you are still interested in HCII, there is this website that I found follow this stock:
http://investment-income.net/h…..eview.html
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12:57 am
March 11, 2010
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Jae Jun
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but how to do you value HCII?
What is the intrinsic value before and after the share offering?
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4:49 pm
March 10, 2010
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freddyclho
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| Member | posts 5 |
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interesting idea. but what do think about this:
http://insurancenewsnet.com/ar…..=newswires
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10:07 am
March 9, 2010
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RayB
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| New Member | posts 1 |
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| Company Overview |
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Homeowners Choice, Inc., through its subsidiaries, operates as a property and casualty insurance holding company. It provides property and casualty homeowners, insurance, condominium-owners, insurance, and tenants, insurance to individuals owning property in Florida. Homeowners Choice offers its products through independent agents. The company was founded in 2006 and is based in Clearwater, Florida.
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HCII only operates in Florida, which over the past several years has been hit hard by hurricanes and caused a lot of turmoil in the P&C insurance business. When turmoil in an industry occurs, it is a good opportunity to look to make money. HCII was created to provide insurance to Florida homeowners while most companies were leaving the state. In addition, HCII is authorized to purchase policies from Citizen's Property Insurance Corp, which is basically a state ownedP&C insurance provider. Since a lot of Florida residents couldn't get insurance, a state controlled entity was setup to provide insurance to homeowners. Citizens is now trying to move these policies to private companies, and HCII is one of the companies assuming the policies. HCII was also just recently allowed to increase their policy rates.
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Insurance companies make money by using their float to invest and make a return on their money to increase their book value. Float is the difference in the money that they take in vs the money that they have to pay out. The payout can be reinsurance or claims, whlie the money in is always premiums from policies.
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| Financials |
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| Assets (in thousands) |
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| Investments |
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$ 111,293.00 |
| Policy holder money don't have yet |
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$ 13,206.00 |
| Other Assets |
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$ 3,126.00 |
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| Liabilities (in thousands) |
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| Policy holder money we have |
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$ 95,093.00 |
| Debt |
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$ - |
| Other liabiliies |
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$ 4,804.00 |
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| (in thousands) |
| Float |
$ 81,887.00 |
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| Debt |
$ - |
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| Equity |
$ 45,998.00 |
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| Financing |
$127,885 |
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| book value per share |
7.06 |
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| Insurance companies utilizes three vehicles for financing: Float, Debt, and Equity. HCII currently has $127MM of financing and we see that about $111M of that is currently invested. |
| Pros |
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- HCII Market Cap is $52M and they currently hold $62M in cash with no debt. Current EV is -$37M making this company cheap
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- HCII is profitable while having a negative EV
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- HCII has been growing book value – Insurance companies are valued on book
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- HCII is very conservative – purchase a lot of reinsurance in case of a major catastrophe. HCII limits their out of pocket per catastrophe to only $5M and reinsures the rest.
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- They were approved to raise their premiums starting with new policies in April 2010
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- Policies able to be assumed under Florida’s take-out program, which encourages private insurance companies to assume policies from state-owned Citizens to reduce the state’s exposure risk
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| Cons |
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- No dividend – Insurance companies generally provide a dividend to their shareholders, and the lack of dividend could affect the stock price
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- Only been around since 2006, so we don't have too much of a history to base the company on going forward. Insurance companies are all about the returns they make on the cash they invest. So far HCII looks to fairly conservative but profitable.
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