With all the news around California fires, year end earnings, and so on, I didn’t have the chance to write about Juan Andrade leaving Everest Re to take over USAA. I’ve met Juan a number of times over the years and he is a very capable executive. However, USAA needs Continue Reading
Predicting the Everest Reserve Charge
One of the big stories to watch for year end earnings will be how many companies will confess that their casualty reserves are still woefully short. There doesn’t seem to be a whole lot of angst about this, even after the large Swiss Re charge last quarter. Just because management Continue Reading
Allianz’s Foolish Bitcoin Bond Buying
Did you know Allianz is at the center of the biggest racket in financial markets since AIG was insuring mortgage CDOs? Some of you are probably familiar with MicroStrategy. They are the software firm led by Michael Saylor that morphed into a Bitcoin hedge fund (that doesn’t hedge!). After Satoshi Continue Reading
Industry Cat Loads Are Still Not High Enough
Verisk recently released their updated estimates of industry cat risk. Amazingly, average annual loss (AAL) surpassed $150B, up from $100B just four years ago. Similarly, the 1 in 100 aggregate loss (PML) grew to $400B from $300B four years ago. These are stunning rates of growth beyond what we have 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
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
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