AICI Capital Trust 9% Pfd (fka AICPQ)

[mrholty]

What business would you want to do?

The business that caused them to fail was two fold.

1. A poor reinsurance contract with Granite Re was only 1 part of their problem in their Crop Insurance Business. The only had bought this business a few years prior.

Overall a decent business. However you have to get to scale and quick. There are two players in this market that have their own sales reps and are doing well. The next 4-6 have a few dedicated sales reps but generally sell via a broker business. These guys shift spots every few years as #1 and #2 pull away as they can get any premium pricing as the brokers just churn clients and sales.

2. The business in runoff mode was primarily in Workers Comp. Their major losses were in CA like many other insurers in the 90s. Many other insurers closed down due to legislative issues that crippled them, only large insurers stayed offsetting their losses. Only in the past 18 months has the CA workers comp market started looking good from an insurers standpoint.

The life and P&C auto markets are basically commodity markets now. And to compete in home and others you need scale.

If I was starting recapitalizing these guys I'd be looking at Mortgage Insurance or Crop. I have a few ideas on the crop side especially since you can give away 20% of what you write to the Feds to reduce your risk. Good tech in this sector could give you an underwriting advantage, along with dedicated reps in a few states allowing you to grow and then slowly broker out would be my plan.