About as close as I'll probably ever get to gushing over a company is when I talk about Arch Capital (NASDAQ:ACGL).
I have followed this insurance company for a long time now (selling the
shares a long, long time ago deserves an entry for me in the Great
Moments In Idiocy hall of fame), and have always been impressed by the
company's keen focus on disciplined, profitable underwriting
and unrelenting pursuit of good returns on shareholder capital. That's
not always so easy to do in the insurance business, as the ongoing price
erosion in property & casualty and reinsurance shows.
Arch
Capital has generally avoided M&A, arguing that there are few
companies out there with the cultural and quality fit worth buying, and
those that are out there tend to be expensive. Arch Capital found a big
exception in August, though, when it agreed to acquire United Guaranty
from AIG (NYSE:AIG)
and vault itself to the top of the list in mortgage insurance. This
deal substantially improves the long-term prospects for earnings growth
and good returns on equity, and while I don't think Arch Capital is
particularly cheap (a familiar problem), it's worth keeping a careful
eye on in case a sell-off creates an opportunity.
Read the full article here:
Another Potential Masterstroke For Arch Capital
No comments:
Post a Comment