Converium Holding AG (CHR)

super duper special situation in the insurance field.

here we got a mid cap reinsurer posting 61 million in quarterly net income and it has a market cap of 1.74 billion. .. i guess a P/E ratio of 7....

and it also trades at 1 x book value.. my type of company.

this is mostly a reinsurer..

this was a spinoff out of Zurich Financial.

some stuff went wrong relating to the years 1997 to 2001 and they had to take a whole lot more reserves.

teh stock cratered drom liek 25 or 30 all the way to 3 bucks. and has been since climbing back to 6 ish levels.

methinks it is not too late yet on this.

recent events.

Q1 earnigns. nice results other than gross premium volume which is not stable yet.

They also hired a new CEO.. the other was just interim .

this is a turnaround.. but after 2/3 years in turnaround mode no longer a high risk turnaround.

i think the new CEO, Inga Beale will finish the turnaround and give shareholder nice rewards over tiem. she comes from GE Insurance Services. this business was sold by GE to Swiss RE. so Inga Beale, left GE as an accomplished executive to be running her own firm, rather than be just one number cruncher within the Swiss RE organization. she has not been on the job for too long but is generally gettting good marks.. the Q1 results just reported didnt have much of her had writing on it..

teh old acting CEO was an actuary primarily charged with stabilizing the performacne of this puppy.. now i guess that the company is stabilized the new CEO will look to grow it responsibly..

the next event ahead will be the ratings review in july 2006.. i think one quarter of nice results will help the ratings review..

much hinges on the ratings. with better ratings they are in a better position to underwrite more gross premium.

with a ROE of around 15% in teh Q1 2006, i guess this is not too shabby..

i,m sure that a long time GE manager will but the special GE touch onto this company in coming quarters and years to come.. i doubt that teh converium crowd will be happy with gross premium shrinkage and 15% ROE..

somethign else is in store here.

this is why this is stilla total turnaround rather than a stabilized situation..

now will add some more perspectives on this down the road. see what so call comps trades at..

but for now all i care is that this company has the potential to turn in 200 millio in net income and has potential to boost that to 300 million over time and all that performacne should it be valued at 1x book value????

of course the investment results matter apart from underwriting discipline.

plus as a reinsurance biz, another question is.... what will the future hold. more storms more other stuff. that is undesirable???

the US business is in runoff... so gotta see what this biz brings... i think teh runoff of it has bee well reserved for.. it looks now that they can release even some reserves. .... typical big bath accountign. when problems occur, write down a lot and reserve into that equity base. when thing go well. release those reesrves and boost earnings. some of this may continue over next 2, 3 years ads runoff continues.

anyway. as an idea for further due diligence, i think it has some potential.

i have been scouting the swiss markeet for quite some time and found nothing really that appealed.

i did liek that idea though.. as it has a bunch of events and catalysts lined up..

in one of he future posts i put up some perspectives of what a turned around comapny such as this in this industry might be worth..

what multiple of book value, and what multiple of earnings.

lately i am gettign a whole lot more interested in teh insurance sector. but which is the play to go.. .. converium looks intersting as a spinoff, castout.. so it rings close to home.


BTW, Martin Ebner, teh swiss turnaround investor owns a big chunk of this..