Omega Underwriting, Idea #11

This is a holding company that underwrites insurance with lloyds.  It's lead underwriter, John Robinson, suddenly quit because of a disagreement with CEO (relatively young CEO & CFO, CEO appointed in 2002).  John Robinson owns 7% of the company and has a good reputation for years of successful underwriting.  He is 55.

Large, no-nonsense shareholders are circling management and demanding Robinson be put back in charge of underwriting.

The valuation is compelling.  Nothing is wrong with business per se, it's trading at a slight discount to book value (cash, cashlike investments held as a security for it's underwriting).  Premiums are at a cyclical high.  And, most compelling to me, and not mentioned in the VIC writeup, are some insider buys.

obvious positives:

good corporate governance... stuff is happening with activists & management

management seems to be worried about their jobs, they're discussing situation with large shareholders.

even one of the directors they're trying to boot is buying shares.

they pay a big dividend

trades at less than cash & cashlike investments

It didn't tank at all during financial crisis. 

John Robinson owns shares.  Real skin in the game.

Risks & Issues:
- I'm not sure I can explain the current weak share price. 
It seems like the share price should be a little higher.
The reasons for the weakness are (1) they recently raised capital and are increasing their lloyd's capacity and (2) their legendary risk analyzer is out of the picture.   I guess those reasons are good enough.

- didn't look at comps
I'm taking the VIC write-ups word about how it trades relative to peers.

- John Robinson went from lead underwriter to head of risk management, 6 months before he quit.  Maybe he wants to quit?  I guess he wouldn't be buying if he wanted to quit.  Maybe he is restricted on his buying/selling.