HedgeCo Re - The problems with Hedge fund led Reinsurance

[LC]

A short blog post on some reinsurance company busts over the years.

 

http://nihoncassandra.blogspot.de/2013/08/greenlight-redlight.html

 

It makes me wonder...the post leaves out reinsurance successes such as Berkshire's reinsurance companies (although to be fair, Berkshire isn't a hedge fund). Perhaps success in this case has to do with the humility and discipline of the manager and corporate culture (i.e. not taking overconfident, undue risks).

[giofranchi]

Thank you for posting this. I will read it with much attention.

Anyway, if there is a person I don't see taking overconfident, undue risks, that person is Mr. Einhorn. Actually, I think he is one of the best risk managers out there! ;)

 

giofranchi

[ItsAValueTrap]

Thanks for the link, very interesting!

 

Personally I think that Einhorn is too overleveraged.  What can happen is that both his longs and shorts will move against him.  With 130-170% leverage, it can get ugly.  Read Richard Sauer's book "Selling America Short".  Or read "Trading with the Enemy" and then read Jim Cramer's book Confessions of a Wall Street Adict... guys like Jim Cramer have no problem with squeezing people out of the hedge fund business.

[jay21]

A short blog post on some reinsurance company busts over the years.

 

http://nihoncassandra.blogspot.de/2013/08/greenlight-redlight.html

 

It makes me wonder...the post leaves out reinsurance successes such as Berkshire's reinsurance companies (although to be fair, Berkshire isn't a hedge fund). Perhaps success in this case has to do with the humility and discipline of the manager and corporate culture (i.e. not taking overconfident, undue risks).

 

I would like someone like Berkowitz to say: We're are going to launch an insurer where underwriting will come first.  We will, for the most part, match our float with bonds.  We will invest in equities directly (i.e. not through a hedge fund giving me easy fees).

 

That would be much more like BRK than some of the other (re)insurers with value investors heading the companies.