Where will KFS bottom?
Marking the price down to $12 only reflects the discount for
the most recent reserve adjustment.
There are other issues that have to be resolved in the market's
price.
1. General loss of confidence in management.
2. Since they obviously have to increase premium rates
at LG (and elsewhere), can they write any business
with higher rates?
3. Developing problems at American Country and Southern
United.
4. Low investment returns are soon to be united with a
deteriorating investment climate.
It is my opinion that the stock price will continue to
decline for several quarters until we can clearly see
what the exact situation is at KFS. We will not see a
meaningful buyback of stock. We could be heading back
to the multi-year lows of $4 to $5.