Hard Market - Insurance

[longterminvestor]

Just got off phone with trading partner who told me they placed a $5M Primary with Berkshire (50% participation), Lloyds (40% participation), and another market (10% participation) for $900K Premium (17.5% total commission for retail/wholesale brokers).  So to break that down for Berkshire's P&L/Balance Sheet - thats $2.5M of "all risk property" exposure on Berkshire for $371.25K premium for a very short tail risk.  I do not pretend to know what the exact amount Berkshire actual places on liability side of the balance sheet however max exposure is $2.5M - unless they bought facultative reinsurance (FAC) to reduce the risk from a third party.  There would be an expense attached to FAC reducing the amount of premium however highly doubt at these rates Berkshire is buying FAC.  3 years ago, the entire placement ($60M TIV) traded for $200K premium.  There's probably more to this story (claims, ect) but that is a extracting a pound of flesh for sure.  This is a risk in Tri-County Florida.

 

Crazy times.  At these rates, I am VERY surprised why I am not seeing them more and more on these placements. What is keeping them (and others) on the sidelines?   

[BroKon]

Genuine question, why do you say they are on the sidelines? Doesn't your example show they are involved, or is this only the first time you have heard they have been involved, and on most other deals they have been absent? Also to be fair, when was the last time anyone made money in Florida, so you can understand everyone's desire to wait until the last minute to sign deals.