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Good book to learn the Insurance business


kapilm
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I have learned quite a bit by holding and watching FFH, BRK, CNA, and Lancashire. The annual reports are also really good intros to the market. I posted Lancashire's yesterday on the board.

 

Basically thier are 3 ways to make money insurance.

 

Writing at a loss / break even and making money on float - FFH thus far. The Hedge Fund Model.

Writing at  a profit and managing a very conservative investment portfolio - LRE - Lancashire. The Insurance Company Model.

Both, writing for profit and managing float. - BRK and HALL - The blended model.

 

The key to insurance in my opinion is Management. I am an Accountant and earnings are typically whatever you want to be. In insurance they literally are whatever you want them to be. Its based on assumptions and models and there is plenty of room for Management to fudge / massage the numbers. I glance at the underwriting results and look for prior year development because that gives you an idea on how conservative they are. I dont really look for growth because you can very easily grow an insurance business unprofitable at any time.

 

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  • 1 year later...

Nice blog post: "Analyzing Insurance Stocks: The Income Statement"

 

http://streetcapitalist.com/2010/03/31/analyzing-insurance-stocks-the-income-statement/

 

 

If anyone has any suggestions for this, feel free to shoot them my way. Hoping to put up the second post, the balance sheet, next week.

 

Hi Tariq. Sorry for the bump but I just wondered if the balance sheet part is on your blog? I couldn't find it yet. ;(

 

I learned a lot from the post on the income statement, many thanks for that. :)

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