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Insider Quarterly article on Ajit


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This article was terrific. 

 

It sounds like this market is expanding:

 

"Berkshire is likely to be one of the businesses most hurt by the glut of insurance-linked securities (ILS) capacity in the cat markets. As a big writer of post-event cat reinsurance and one of the largest traditional retro markets, its territory is being invaded. And, in contrast to most other risk carriers, there is no way for it to co-opt or take advantage of ILS: with a balance sheet of Berkshire's size it has no need to take in third-party capital and no incentive to purchase even dirt-cheap retro.

 

The cycle-killing quality of ILS and, indeed, the moderating impact of modelling, also deprives Jain of the opportunity to write aggressively into a distressed market that is starved of capacity."

 

Anyone have stats on cat bond issuances and side cars?  If this market keeps growing, at some point there will be a blow up and BRK will clean up.

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at some point there will be a blow up and BRK will clean up.

 

Absolutely, you can back it in.  I get the impression that Jain's actions are the passive aggressive version of of NI's sharpening pencils

 

cheers

 

nwoodman

 

I did not know about ILS before reading that article. It sounds like it has the potential to be another manifestation of what happened with MBS and related instruments. Not saying it will but something I plan to learn more about and keep an eye on. Calling it "cycle killing" kind of sounds to me like "new normal". I really need to read more trade rags, lots of good stuff in there.

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Willis Group to unveil new arrangement tomorrow; Berhsire Hathaway and Peoples Insurance of China and Hiscox said to be ready to sign up-- FT

Tuesday, October 22, 2013

 

 

The FT reports that Willis will unveil a plan in which it will allocate up to a quarter of all premiums to pre-selected underwriters in London's corporate insurance market.

The FT notes that traditionally , price and terms are determined by a 'lead' underwriter. The head of global placement at Willis, Alastair Swift, believes this new arrangement will be key source of additional funding for the sector.

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Guest longinvestor

Many thanks. That guys writing style makes my head hurt but some interesting observations nonetheless

 

cheers

 

nwoodman

 

+1

 

Berkshire's statutory surplus is $106 B, for comparison purpose, Allstate has $17B. Not wishing mega cat events, but imagine just how good it would be for BRK if there are a few of them simultaneously.

 

http://alephblog.com/tag/berkshire-hathaway/ breaks down the surplus at Berkshire's insurance subs.

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Guest longinvestor

Many thanks. That guys writing style makes my head hurt but some interesting observations nonetheless

 

cheers

 

nwoodman

 

+1

 

Berkshire's statutory surplus is $106 B, for comparison purpose, Allstate has $17B. Not wishing mega cat events, but imagine just how good it would be for BRK if there are a few of them simultaneously.

 

http://alephblog.com/tag/berkshire-hathaway/ breaks down the surplus at Berkshire's insurance subs.

 

Can someone knowledgeable of the Insurance industry comment on the $106 Billion surplus at BRK? Are there any other insurance companies with similar surplus? It is a very large number!

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Guest longinvestor

Surplus or "Float"....I have not looked recently but though that was the "float"...or are they the same thing?

 

My understanding is that Float is different from Statutory surplus. But let's see if someone with more knowledge than I have responds.

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Regarding the large surplus at Berkshire - it is largely because many subsidiaries are owned inside the insurance companies - especially within National Indemnity.  100% of the stock of BNSF, for example, valued at BRK's cost of $34 Billion - is owned by National Indemnity and counts towards the statutory surplus.  Also, National Indemnity owns 100% of the shares of GEICO.  Then in addition there are the securities, of course.

 

GEICO, in turn, owns 100% of the shares of Clayton, McLane, TTI, as well the marketable securities.

 

I'll attach an NAIC filing if you really want to geek out.  But unfortunately, the mystery stock Buffett has been accumulating and receiving confidential status on through the SEC is hidden like always inside the "Harney Investment Trust" - Buffett's go-to vehicle for keeping stock trading hidden from regulatory filings.  (Harney Street is in Omaha)

2633682.pdf

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