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PMI and other insurers
Old 11-07-2007, 01:22 PM   #1
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PMI and other insurers

PMI and others are getting slaughtered in this housing mess. During the bubble, I recall PMI issuing fairly pessimistic reports on overvalued markets. Did they fail to adjust their models, premiums, and reserves for what they saw coming?

Anybody nibbling on this sector yet, or is it still too early?
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Old 11-07-2007, 03:10 PM   #2
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Well, I took a small nibble today at $10.77. They are likely to see more losses, but I've seen fair value estimates of between $28-56, a lot of their business comes from fairly conservative underwriters like credit unions, and I figure they'll adjust their premiums going forward even if they previously underestimated risks.

Remember how beat up the health insurance industry was during the Clinton administration? I'm hoping mortgage insurance has the same upward RTM after they get beat to a bloody pulp.
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Old 11-07-2007, 05:06 PM   #3
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When a stock or sector is either a very good deal, or about to be washed out, I take a look at insider buying. It isn't bad here, but also not real impressive. Some directors and an officer bought moderate amount of stock at much higher prices, before this recent smash-down.

Still, even as a flat out gamble it probably is much better than options.

Ha
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Old 11-07-2007, 11:36 PM   #4
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Bloomberg.com: Opinion

This is from Bloomberg and makes the excellent point that if the insurerers are unable to cover defaults why would anyone buy in the future and they only have a minimal amount of capital to cover a huge potential loss. And if even one of the insurers fails why would anyone buy any insurance? The bonds themselves would sell on their own ratings
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Old 11-08-2007, 12:53 AM   #5
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Quote:
Originally Posted by Running_Man View Post
Bloomberg.com: Opinion

This is from Bloomberg and makes the excellent point that if the insurerers are unable to cover defaults why would anyone buy in the future and they only have a minimal amount of capital to cover a huge potential loss. And if even one of the insurers fails why would anyone buy any insurance? The bonds themselves would sell on their own ratings
Here are some interesting market quotes from big bond insurers, pulled from the article you cited:

The stocks of the two biggest bond insurers, MBIA Inc. and Ambac Financial Group Inc., plummeted as investors worried that the two firms' exposure to failing mortgages might cost them their AAA credit ratings.
On Oct. 5, Ambac shares traded at $70.57 per share. Yesterday they closed at $24.60. Back in May, they traded at a high for the year of $96.08.
The story at MBIA was little better. MBIA was $67.78 ON Oct. 5; it closed yesterday at $33.23. Its high for the year was $70.76 on May 9.

And these things have AAA ratings to bestow on their insured bond issuers?

Ha
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Old 11-09-2007, 01:44 PM   #6
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I hate it when this happens. Up 33% in 2 days. Sell now or hold? I think I'll hold for a while and see how this plays out.
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Old 11-09-2007, 01:58 PM   #7
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Quote:
Originally Posted by haha View Post
When a stock or sector is either a very good deal, or about to be washed out, I take a look at insider buying. It isn't bad here, but also not real impressive. Some directors and an officer bought moderate amount of stock at much higher prices, before this recent smash-down.

Ha
...and just WHERE does an idiot like me :duh: newbie find such information!?? Thanks !
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Old 11-09-2007, 02:00 PM   #8
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Just click on "Insider Transactions" on Yahoo (in the left column under the ticker).

In the case of PMI, it wasn't insider buying that was most bullish. It was one of their competitors acquiring their shares.
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Old 11-09-2007, 02:13 PM   #9
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WOW...never been to Yahoo much before...never to the Finance page....I've always used MSN....uhhh....at least I USED to....yeah, that's it....I USED to use the MSN page

Thank you for the heads up! First I find the "Woot" page here and now this.....are there any other fancy "Must Watch" pages that I'm missing out on??

Heh....maybe this should be a new thread so everybody could share their secret sites!!??
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Old 11-09-2007, 02:49 PM   #10
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Wow was that ever a timely buy!
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