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
Tesla Insurance Is Still A Bad Idea For Tesla
It’s been a bad year for Tesla so far. The stock is way down and so are new car sales. But there’s another problem that has received less attention. The auto insurance business is in deep trouble. The last time I wrote about Tesla selling auto insurance, I suggested it Continue Reading
No Accounting For Taste: Reviewing Lemonade’s Revenue
I was looking at Lemonade’s 10-K the other day and noticed something startling and wondered how I had never noticed it before. Lemonade uses inappropriate accounting for its reinsurance which has the effect of inflating its revenue. Importantly, there is no impact on net income, so this effect is purely Continue Reading
Muddy Waters Attacks Fairfax With Unfair Facts
One thing I was well known for during my investing days was critiquing the sell side analysts. I’m sure many will tell you how they dreaded seeing an email response from me after they published a report. I had what I thought were fairly low expectations – the report should Continue Reading
The Era of Reserve Releases Has Ended
The Axis and Markel reserve charges over the last week weren’t the first of this cycle and, most assuredly, won’t be the last. But I do think they serve as something of a marker. We have gone through a generation of reserves nearly always being favorable. That time appears to Continue Reading
My Allstate Activist Campaign Proposal
You may have seen the recent news that famed activist investor Nelson Peltz took a stake in Allstate. This is surprising on a number of fronts. First, activist investing has largely failed in insurance (most prominently Carl Icahn and friends at AIG). Second, Allstate is not an obvious target for Continue Reading
The First Draft of Hippo’s Obituary
You ever wonder how after someone famous dies the news sites instantly have an obituary written? You probably know it’s because there are writers who compose these ahead of time while the subject is still alive. Maybe not the most polite thing to do but understandably necessary. In that vein, Continue Reading
Why VCs Keep Getting Insuretech Wrong
How’s that for biting the hand I am asking for food? But I think any investors reading this will hopefully realize this is valuable advice that will be helpful to them. After spending a few years now comparing how I look at investing in insuring companies and how VCs look Continue Reading
The Revenge of the Balance Sheet
I’ve been building up to this piece for a while now. It’s a little bit like the end of the season episode where you get the payoff for the various plotlines. Today I’m going to tie together all my skepticism of MGAs, my views on overvalued brokers, the importance of Continue Reading
Can The Florida Insurance Debacle Be Solved?
Florida is holding another special legislative session this week to address the failed home insurance market. With FHCF wobbling, the future of many private insurers in the balance, and many residents being priced out of the market, the need for a solution has never been more pressing. Currently, nearly every Continue Reading