dwy000

They reconfirmed 2025 earnings last night in advance of the investor update so it would probably reflect that

Without a national healthcare system (which has its own major issues) it's never going to change. Providers want maximum care at maximum price. Insurers want minimal care at minimum price. And people want maximum care at minimal price. The factors will never gibe.

So is the problem the insurer, who's goal is to reduce the cost, or the providers who have no restrictions on what they charge?

From what I've read, the President is required to remove the Martial Law order without delay once Parliament votes to override it. If he doesn't, things aren't so clear. I'm kinda scratching my head to see how this turns out as a positive for the President. Unless he is successful in turning South Korea into North Korea this looks lime political suicide. He will likely be thrown in jail.

Having the Syrian army disintegrate on contact shows how much Putin has had to pull out of the region to support his Ukraine efforts.

I suspect there will be significant overlap with rail car leasing companies (like GATX and Greenbriar) since they are interchangeable, modular leasing units.

Russian ruble collapsing. After holding relatively steady for past 2 years it's down about 20% in the past 2 weeks as Central Bank seems to be running out of funds to support it. Will be interesting to see what happens if the general public really starts feeling the effects of the war in Russia.

Exactly. His point that Apple was so successful an investment that it threw off everything else is very accurate. So lightening up on it gets headlines as well as creates a cash pile that draws more headlines. Not sure we should read more into it than he's reaping gains from one of his most successful investments ever.

Have things gotten so bad in North Korea they're now selling soldiers?

Profitability is definitely regional and in Florida it isn't even just weather risk (fraud and litigation risk is one of the bigger causes). But regardless of regional differences or reasons why, multiple companies have pulled out of the market because they cant make money. The provider of last resort is losing money. If prices are going up 30% in a business where it takes about 10 minutes to get a competing quote then it's less price gouging than that's the competitive price. To get prices down you need more supply and nobody seems to be willing to offer it. The recent storms are unlikely to make companies want to jump into the fray unless they can get massive price hikes.

It's tough to argue that companies are fleecing their customers because other companies are leaving a market where they can't make money.

While there's definitely an increased hype cycle, the number of insurers who have quit Florida (and parts of California), as well as the losses and overwhelming demand at Citizens (insurer of last resort in Florida) would suggest there's underlying truth to the hype. Insurance is one of the easiest products to shop around so if a couple of companies were trying to gouge prices off the hype they'd lose the business in a heartbeat to others who think they can make money at the lower price.

Not invested in anything here so I'm probably just talking shit but I would have thought the impact on many of these companies from both Helene and Milton would be less direct and more peripheral. The back-to-back nature of them and the impact will undoubtedly affect insurance costs across the entire state (panhandle was spared but so was Tampa for 100 years) and it's hard to argue that it won't make many people considering the area start to think twice. That being said, if it leads to redevelopment with hurricane resistant structures and better flooding management it could have a positive longer term impact as it shows survivability - but obviously increases upfront costs.

At first i assumed it was being ironic. Guess not!

I think you'll do just fine with this portfolio and a lot of your tailwind rationale holds. Just keep in mind that a lot of these MA companies are deeply intertwined with other businesses that can be a drag even if your thesis on MA proves correct. The press and government seem determined to villify PBM's which could impact both CVS and UNH

It always amazes me how people confuse luck with skill - and then get angry when their luck runs out

On its headline, Marsh seems to be getting quite a deal at less than 6x revenues. Plus there's a $500m deferred tax asset included. If Stonepoint bought Truist 6 months ago it's likely your assumption of refinancing high cost debt is playing a role here.

I tend to agree with the transparency argument. While complexity and customization is definitely a factor, in other industries most outsized broker or agency rates have come down due to transparency (as well as the internet taking away information advantage). When you buy or sell a house, you know exactly how much you're getting for the house and how much the broker is getting. When you buy a stock, bond or option, you know exactly how much the stock costs and how much the commission is (often free now!). But when you buy insurance, all you see is the premium(s). You have no idea how much of that is true underwriting risk, how much is administration and how much is commission. If they were forced to break out those numbers in your premium it would be too easy to go to another broker and say "beat this price" and they could do it with the exact same underwriter. I can't see a circumstance where anyone (other than the customer) wants to have that level of transparency and kill the golden goose. So maybe the anomaly continues for the indefinite future.

Great response. This is what makes the brokers such a great business - extraordinarily high ROC, increasingly the only channel to customers, etc. Which does make me wonder how this continues to be such a market anomaly and what will hurt it in the long run. I can't think of many broker models that haven't ultimately been reduced to market returns over the past 10-20 years with the recent real estate broker changes tipping over this summer. As Munger said (paraphrasing here) if you have the resources, buying insurance is a dumb financial decision. And that's true if you think that even with combined ratios of 90-100 the actual insurance payouts are in the 70-80's. So why is there not more pressure on the fairly high commission expenses for underwriters? As you point out, taking a phone call, doing some paperwork and cashing a $1000 or $10000 check for it feels like something that should be squeezed hard. Again, as you mention, capital will jump in to grab the quick dollars by underpricing risk so why wouldn't they push as hard to price risk properly and squeeze the "easier money" out of the model. Is it just that insurance is seen as so complicated that buyers are willing to way overpay because they don't understand the true cost? Surely as pricing softens the commission will get squeezed - especially as brokers chase growth and steal business? @longterminvestor - I guess what I'm asking is...given the trends from every other broker industry over time, what kills the golden goose here? Is there something that makes insurance immune to those pressures?

While there's obviously a lot of value not captured in the industry market cap due to mutuals and Lloyds type companies, there has to be a similar, or even higher, percentage of value not captured in the brokers number, of which a large proportion are still smaller non-public entities. Which leads to the obvious question of why the brokers are worth so much of the industry vs the companies actually providing the underlying product. Not to take anything away from the sales channel but boy there's a lot of premium value that's not being seen by the customer. The margins for brokers are pretty high - and those are probably earned for the initial placement, but is there really a 6-10% value for the purchaser in a renewal? Now that a lot of the insurers have moved the sales channel off their own books, is there a point at which they start pushing back hard on the commissions, especially if underlying pricing is starting to soften?

+2. Not a book to make you a better investor but highly, highly entertaining.

It's the societal equivalent of lottery tickets but with a more gradual take rate. And less community reinvestment.

It looks like 200 pages of "nerdy billionaire awkwardly flirts with women". I will read most things about Bill Gates but pretty sure I'll pass on this.

@longterminvestor are you seeing any real tightening of pricing anywhere these days? I look at the results of both the insurers, reinsurers and brokers and there seems to be a lot of profitability sloshing around right now. After years of hardening and price increases way above inflation and now great underwriting results across the board I would have guessed we would be in for a round of softening. Haven't seen it yet but surely this can't keep up much longer without a ton of new capital coming into the market.

In order to have the same FCF the asset heavy business has to have much higher gross margins than the asset lite business. That makes it much more susceptible to competition and it usually comes down to which competitor has the lowest cost of capital (or is willing to accept a lower ROI).