Investment opportunities in Japan

[Myth465]

Here is some color hpmst3.

 

The 100 year event. Typically means a 1 in 100 year storm, or a 1 in 250 year storm. Basically a storm so bad it would only occur 1 in xx amount of years.

 

The question is what year event is this 1 in 50, 75, 100, or 250?

Also what city / location? Finally what about both, is that 1 event or both events, or .... ?

Do we add the totals together, does that include nuclear or disaster, what about reinsurance? 

 

We could go on for weeks.

 

 

 

http://en.wikipedia.org/wiki/Return_period

 

Return period as "expected frequency"

 

The theoretical return period is the inverse of the probability that the event will be exceeded in any one year. For example, a 10-year flood has a 1 / 10 = 0.1 or 10% chance of being exceeded in any one year and a 50-year flood has a 0.02 or 2% chance of being exceeded in any one year.

 

While it is true that a 10-year event will occur, on average, once every 10 years and that a 100-year event is so large that we expect it only to occur every 100 years, this is only a statistical statement: the expected number of 100-year events in an n year period is n/100, in the sense of expected value. Similarly, the expected time until another 100-year event is 100 years, and if in a given year or years the event does not occur, the expected time until it occurs remains 100 years, with this "100 years" resetting each time.

It does not mean that 100-year floods will happen regularly, every 100 years, despite the connotations of the name "return period": in any given 100-year period, a 100-year storm may occur once, twice, more, or not at all, and each outcome has a probability that can be computed as below.

 

Note also that the estimated return period below is a statistic: it is computed from a set of data (the observations), as distinct from the theoretical value in an idealized distribution. One does not actually know that a certain magnitude or greater happens with 1% probability, only that it has been observed exactly once in 100 years.

 

This distinction is significant because there are few observations of rare events: for instance if observations go back 400 years, the most extreme event (a 400-year event by the statistical definition) may later be classed, on longer observation, as a 200-year event (if a comparable event immediately occurs) or a 500-year event (if no comparable event occurs for 100 years).

 

Further, one cannot determine the size of a 1,000-year event based on such records alone, but instead must use a statistical model to predict the magnitude of such an (unobserved) event.

[turar]

I dont know them, and they are getting killed, but I think similar to AHL they may deserve it. Its probably a bit overboard, but I would be speculating by saying it definitely is.

 

Out of curiosity, why do you think AHL deserve it?

[Valuebo]

Thanks for the informative posts all!

 

I believe LRE's estimates on losses for the 100 & 250 years events would at least include some major damage in cities like Tokyo. Or is that too optimistic?  Of course it's impossible to determine what exposure LRE could have and where, they could be in for a serious hit where they reach the upper range of their estimates, but I find is less likely for them. When the stock takes some serious hits I will be buying anyhow, this never get 100% clear before it is too late.

 

What do people think of this being a catalyst for a hard market? It's all starting to add up...

 

Thumbs up for an extremely well-prepared government & population over there btw! In any other country this would have been ten times worse.

 

[Myth465]

I dont know them, and they are getting killed, but I think similar to AHL they may deserve it. Its probably a bit overboard, but I would be speculating by saying it definitely is.

 

Out of curiosity, why do you think AHL deserve it?

 

Well they had some exposure to New Zealand 1 and I was surprised they didnt sell off during New Zealand 2. They basically didnt move when I would venture to guess they would have additional exposure. I dont know about Japan, but based on the NZ earthquakes I would say they have exposure here.

 

They are off about 7% points with other insurers being off a bit less. It makes sense to me. Basically I think a small sell off from the second quake in NZ was warranted. As you can see my reply is less than scientific  :). I also didnt like that they had to come back and raise the reserves for the first quake.

 

I could be wrong. It looks like its 1 big customer, but I dont know. Insurance is funny, you never know till you know and as a prior poster said by then its too late.

 

http://seekingalpha.com/news-article/251716-aspen-insurance-raises-estimated-new-zealand-quake-losses

 

tombgrt - I agree on Toyko. I also keep in mind that Katrina was no where near the perfect storm. Its all modeling, but now its check writing time. Who has the cash?

 

[accutronman]

Loaded up on Kajima today. Infrastructure, especially construction, will be the money play

[Smazz]

I believe its already been noted but just in case, everyone is talking about Japan but there are still other significant items on the books from before that for Q1.

[Alekbaylee]

Wonder what will be the (adverse) effect of this nuclear disaster on the fisheries in that area (Pacific) vs other parts of the world.