Escolar Documentos
Profissional Documentos
Cultura Documentos
August 6, 2015
DISCLAIMER
Before making an investment decision, investors are advised to
read carefully the Offering Memorandum, including the
description of the risks, fees, expenses, liquidity restrictions and
other terms of investing in the funds. Performance data has not
been prepared to meet any specific requirements applicable to the
presentation thereof and should in no event be viewed as
predictions or representations as to actual future performance.
Investment may involve a high degree of risk and should be
considered only by investors who do not require access to their
capital and can withstand the loss of all or part of their
investment. Return targets in this document are subjective
determinations and do not reflect either actual past performance
or a guarantee of future performance. Referenced benchmarks
may fail to provide a meaningful comparison. Forward looking
statements are based upon assumptions which may differ
materially from actual events. This information should not be
relied upon in making an investment decision.
Approach to investing:
Out-of-favor stocks that are mispriced due to uncertainty
or fear, misunderstanding or obscurity
Conduct significant due diligence to overcome those
hurdles
Invest only at a deep discount to intrinsic value
Limited to 15 to 20 best ideas
In-Depth Analysis
Profile
Background
New Management
2013
Loss Ratio
2014
Combined Ratio
2015E
12.0%
11.9%
2Q14
3Q14
11.7%
12.4%
10.4%
4Q13
1Q14
4Q14
1Q15
2013
Loss Ratio
2014
Combined Ratio
2015E
2010
13.0%
13.0%
2011
2012
12.0%
12.0%
2013
2014
Wholly-owned
2 went bankrupt
2 more nearly went bankrupt
120.00%
100.00%
80.00%
60.00%
40.00%
2012
2013
Loss Ratio
2014
Combined Ratio
2015E
$100
$101
$37
$50
$$(50)
$(100)
$(150)
$(114)
2012
2013
2014
1H 2015
USMI Capitalization
Respected Operator
Per DALBAR:
LTC Insurance
Lapse rate
Used avg. life insurance lapse rate of 5 to 6%, but actual lapse
rate has been 0.7%
Result
Significant increase in reserves for future claims
2 separate reserves:
Claims reserve for current claims - policyholders
receiving benefits today.
Severity key variable
Increased $700M, new survival ratio of 4.6 is
conservative
Active Life Reserves policyholders who have yet to
make a claim
Increased another $700M for older acquired block
expected to realize a loss
Reduced expected profit on organic block, but no
reduction in NBV needed unless expect a loss
Extensive vetting process and assumptions used provide
comfort
Net operating income, after tax, for LTC the last 3 years:
2012 - $101M
2013 - $129M
2014 - $59M before the reserve increase
Material Weakness
Risk is the material weakness that you dont know about, not
the one you do know about and overcome with extensive
managerial and auditor review
Risks to Consider
1.
2.
3.
4.
Valuation Methodology
Asset Play
Key Assumptions
Valuation
Weighted Avg Valuation
Upside
Downside
Intrinsic Value
$16
$8.85
Stock Price
$5.64
$5.64
Upside
183%
57%
Catalysts
1.
2.
3.
4.
5.
6.
Mgmt decided not to sell life and annuity because the offers were too
low and it could impact their ratings
Appendix
Passed CPA exam, ABV exam, and all 3 CFA exams on first attempt
2006 Elijah Watt Sells Award (top 10 CPA exam score in the world
out of 50,000+ test takers)
Contact Information
Booth-Laird Investment Partnership
9005 Westlake Avenue
Baton Rouge, LA 70810
(225) 767-1439
Website: www.boothlaird.com
Blog: www.boothlaird.com/boothlairdblog/
Twitter: http://twitter.com/#!/BoothLaird