WhoIsWarren Posted January 27, 2014 Share Posted January 27, 2014 Forgive me if this subject has already been addressed elsewhere, but I'm looking to get a sense for how Fairfax's various (re)insurance businesses are being (or will be) affected by the rise of "alternative capital". It's the topic "du jour" in the sector generally, but I never see reference to how Fairfax will fare. Prem was asked about this in a general sense at last year's AGM -- his answer was, shrug of the shoulders, capital comes and goes in the insurance industry; it's perhaps in a different form this time around, but (naive) capital will get hit and exit, paving the way for the next up-cycle. This contrasts with the views of other industry insiders -- take Richard Brindle from Lancashire (because he's well-respected and followed on this board), who thinks that the alternative capital, yes could be a bit frothy in places, but it's here to stay and the traditional (re)insurers will just have to embrace and adapt to it. Perhaps Prem is right and there's nothing to worry about. But, if he's wrong, where are the pressures most likely to be felt? Presumably it's in the reinsurance book, which accounts for c.40% of net premiums (with Odyssey Re alone making up nearly 50% of total over the last 10 years, according to Prem's 2012 letter). But could there be knock-on implications for the direct businesses?? I know there are lot's of insurance buffs out there. And Fairfax buffs. I'd love to hear your thoughts. Thanks Link to comment Share on other sites More sharing options...
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