Jump to content

I would personally not buy any insurance from this company controlled by Apollo


LongHaul
 Share

Recommended Posts

https://www.forbes.com/sites/antoinegara/2018/02/01/apollo-and-blackstone-pick-insurance-as-their-next-bet-to-disrupt-wall-street/#1ae3de057689

 

This Apollo controlled insurance company sells annuities etc.  I think of most private equity firms are at the opposite end of the character spectrum as Buffett (especially Apollo) so I personally would not entertain buying any insurance from PE firms. 

 

 

I edited for clarity

Link to comment
Share on other sites

Maybe I don't understand your point. But I would totally buy insurance from Buffett. Actually I'm working on a venture right now and one of the things we're trying to solve is how do we buy insurance from Berkshire Hathaway.

Link to comment
Share on other sites

I edited to try to make my point clearer.  Berkshire has a very high credit rating and their companies generally try to do the right thing so great to buy insurance from them.

 

On the opposite side of the spectrum I think a lot of PE firms are interested in maximizing short term value any way they can and 1. They may not be around for the long pull and 2.  They may try to weasel out of paying you.

Link to comment
Share on other sites

That is really interesting cameron.  Is he known as a cowboy on the asset side or liability side or both?

 

I can only repeat what I heard second hand but its basically it's on the asset side.  Partially it's doing what WEB have been doing, basically selling insurance to generate capital for mutual funds, but with the balance sheet and leverage that resembles an insurance company rather than a company like Berkshire that can withstand losses.  Granted, when I heard this I thought well greenlight and third point have there own insurance businesses too, which may be a way of saying the traditional insurance is skeptical of maybe good innovation.  At the same time, I think I remember my dad talking about this guy trying to make money by aggressively pursuing a carried interest trade, I dont remember the context, but I think it's likely (havent done research) that he's doing the same thing now with MSRs (mortgage servicing rights), instead of selling more insurance to buy MSRs (which admittidedly were a great deal), I think athene borrowed a lot of money so they could buy more.  This is no longer insurance but risky carried interest trade.  Even though rates were low when you bought, what happens if rates collapse, and people refinance a mortgage and you lose both the MSR and have to pay back a loan that was made at higher interest rates.  Granted they did these deals at historic low rates, but as a buyer of insurance, you dont participate in any of the upside, you just want to get your money when you need it. 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...