At a glance
- The combined ratio—claims, claims expenses and underwriting costs divided by premiums collected—is the number that separates an underwriting profit from an underwriting subsidy, and its threshold is elementary: below 100%, the insurer made money on risk before collecting a dollar of investment income.
- Reconstitution in June fixes the portfolio on combined ratios as of that month, so the fund rewards trailing discipline: an insurer whose underwriting results slide will not be trimmed by the screen until the following summer.
- Tuttle's framing, per the launch materials, is that the combined ratio tells you which insurers are good at underwriting and which are merely big, and that position sizing follows the math rather than a story.
Tuttle Capital Management announced the debut of the Porter & Company Property & Casualty Index ETF (PCPC), a sector fund whose stock picking is a single accounting ratio: the fund tracks the Porter & Co. P&C Insurance Index, which selects up to 20 U.S.-listed property and casualty insurers and reinsurers, weights them by the inverse of their combined ratio, caps any position at 10%, and rebuilds itself each June.
The combined ratio—claims, claims expenses and underwriting costs divided by premiums collected—is the number that separates an underwriting profit from an underwriting subsidy, and its threshold is elementary: below 100%, the insurer made money on risk before collecting a dollar of investment income. The launch materials note that cap-weighted sector indexes allocate to size rather than efficiency, which is the design choice PCPC is built against. A weighting rule doing the stock picking turns sector exposure into a quality screen, one the release ties to the underwriting-first philosophy of Warren Buffett.
Reconstitution in June fixes the portfolio on combined ratios as of that month, so the fund rewards trailing discipline: an insurer whose underwriting results slide will not be trimmed by the screen until the following summer. Giving up the ability to anticipate margin deterioration in exchange for never having to forecast it is a coherent bargain for a rules-based product, though it means the index's quality tilt is by construction somewhat retrospective.
Tuttle's framing, per the launch materials, is that the combined ratio tells you which insurers are good at underwriting and which are merely big, and that position sizing follows the math rather than a story. The screen is doing the selling here. Its restraint is the fund's real bet: with up to 20 names and none past 10%, a single insurer's underwriting result reaches the portfolio with little dilution.
PCPC is the second product from Tuttle's partnership with Porter & Company, following the multi-asset Porter Portfolio Index ETF (PCPP) earlier this year, and where PCPP bundles asset classes, PCPC is a single-sector rule play, the cleaner test of whether Porter & Company's research travels as an ETF. VettaFi calculates the index and Porter & Company sponsors it, leaving the index intellectual property with the sponsor while Tuttle supplies the wrapper—a division of labor that lets a firm reporting $3.9 billion in regulatory assets under management and 15 employees, according to ETF records, stay on the shelf without building the research itself. The coverage does not give PCPC's expense ratio, which for a 20-name rules-based sector fund is the number that decides whether the screen reaches advisors.
Reported by the Launches desk from ETF Trends. Published . Corrections