Berkshire Aon insurance deal

[rogermunibond]

http://www.ft.com/intl/cms/s/0/f2d23474-e239-11e2-a7fa-00144feabdc0.html#axzz2XikbXkBW

 

Aon deal with BH criticized by Lloyds.  Sounds like an index or tracking fund of Lloyds syndicate underwriting.

[Nnejad]

Am I right in this?

 

Let's say the average expense ratio for the insurance industry is 30%, and the average combined ratio is 100%.

 

Berkshire, by automatically being allocated 7.5% of all premiums written at Lloyds, is piggy-backing off the underwriting work of the other Lloyd's members. Meanwhile, it's marginal expense cost to write this blanket business is close to 0%.

 

So effectively, if the industry writes at 100% CR, Berkshire writes at 70% CR on this deal?

[rogermunibond]

Yeah, that's how I read. Net whatever commission they are paying Aon. I wonder what the Markel guys think.