The saying about being wary of fast growth in financials, esp. banks and insurers is very true.

So what if ER is a bit low(er) because the underwriting is done fast(er) without looking into risks in that much detail, leading to a) low ER and b) faster quoting which the brokers might prefer and thus deliver much business.

The low LR and thus low CR overall might be understated due to the high growth. So the moment the growth stops

1) investors might assign a lower multiple due to lower growth/reinvestment, and

2) a yet lower multiple due to higher LR/CR and thus lower roe

(That said, I play the pessimistic dude here but own another high growth insurer)

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Feb 13Liked by Ryan Reeves

hard to outperform expectations of 40% growth for too long

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