Editor’s Note: My annual NFL predictions follow at the end of this article. The NFL recently confirmed that they will let private equity buy small stakes in NFL teams. This caused much consternation that private equity will somehow ruin the NFL. Today, I will argue the opposite. Buying into the Continue Reading
The Dual Danger In Carry Trades
You’ve probably read a lot in the news recently about carry trades. Many of you may not fully understand what they are or why they matter. I’ll try to help explain that, but I also want to go beyond that and delve into how central banks enable these carry trades Continue Reading
Will FHCF Survive 2024 – Part II
Last week, I discussed why the FHCF is still in trouble going into this wind season (see here). Today, I am back to conclude the analysis with a dive inside the numbers to illustrate why the math doesn’t work. Simply put, the FHCF doesn’t charge insurers enough premium to cover Continue Reading
Will the Florida Hurricane Cat Fund Survive 2024?
Back with another edition of “what happens in Florida after the FHCF fails”! (Last year’s version here.) The good news is there were no losses last year, so the FHCF rebuilt some of the surplus lost in recent years. The bad news is they still don’t have enough money to Continue Reading
Prop Cat Is Significantly Underpriced This Year
One of the great mistakes of the financial crisis was mortgage underwriters and investors thinking they would be OK because their models told them what a bad outcome looked like and that they would be OK under that outcome. The problem, of course, was the models accounted for “normal” stress Continue Reading
Why It’s The Perfect Time For The NBA To Cut To 65 Games
With the NBA season coming to a close, the last big piece of news before next season is the finalization of the new TV contracts. We know TV revenue will go up dramatically, which creates a golden opportunity to rethink the economics of the sport. My proposal is to reduce Continue Reading
Remembering Dinos Iordanou
This was not at all what I had planned to write about this week, but I don’t think there is anything else I could write about now other than the loss of my friend, Dinos Iordanou, who passed over the weekend at age 74. This is hard to write, not Continue Reading
The Dangers Lurking In Excess Casualty
Most of you reading this are likely aware of the pressure on casualty loss trends due to rising social inflation and aggressive litigation tactics. However, unless you work in casualty excess or reinsurance, you may not be aware of how destructive rising casualty inflation can be. There is a significant Continue Reading
State Farm Policyholders Unite!
As a follow up to my recent piece on State Farm’s capital situation, I wanted to expand on the fundamental tensions underlying State Farm and its governance. State Farm, as you all know, is a mutual. That means its policyholders own it. Normally, owners of a business make the decisions Continue Reading
How Long Can State Farm Lose Money? A Long, Long Time!
When I last wrote about State Farm, I suggested they had somewhere between $75-100B of excess capital. I commented at the time that their excess capital alone would make them the largest US insurer outside of Berkshire. Since then, State Farm has proceeded to post larger and larger underwriting losses Continue Reading