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
How to Reform Sports Gambling
Sports gambling is spiraling out of control, sort of like, well, an addict spiraling towards rock bottom. In just the last few weeks alone, there have been scandals about a NBA player sabotaging his performance to win bets, a finance employee for the Jacksonville Jaguars stealing tens of millions from Continue Reading
New Year’s Flashback: Revisiting Past Predictions
Last week, I looked back at some of 2022’s predictions, but this blog has made a lot of successful predictions over the years. In fact, I think it’s one of the core strengths of what I do here. I sometimes forget most people reading probably have not been around for Continue Reading
Who Are The Real Oil Profiteers? ESG Investors!
Informed Tip of the Week: Since this is a climate themed post, I thought this recent research was worth sharing. Dr. Klotzbach, who some of you will remember for his annual hurricane forecasts, looked at trailing 30 year hurricane activity and found a declining rate of storm frequency and severity. Continue Reading
Do ESG Funds Actually Hold ESG Stocks?
I’ve written plenty about ESG before. As a reminder, or for those newer to the blog, my stance on ESG investing is that it manipulates people who truly care about ESG goals by selling them products that don’t address what they actually care about so that fund managers can make Continue Reading
Providing Life Support to AIG
To make an (perhaps poor) analogy, AIG is like a patient with a lot of pre-existing conditions. It’s overweight (expenses are too high), has high blood pressure (too much operational leverage), and eats too much processed sugar (in too many underperforming businesses). With AIG’s recent decision to separate the P&C Continue Reading
Ian’s Brief #7: AI, AEL, and ESG
Back with another Brief since too many things to talk about and not enough time to write them all up separately… That Didn’t Take Long! It was only a few weeks ago I outlined a new business model for life insurers. I suggested established insurers should focus their energy on Continue Reading
Third Point Abuses Its Shareholders Again
In the annals of CEOs running their own personal fiefdoms without regard for the interests of shareholders, I’m sure there are worse stories than Third Point. However, there can’t be too many. Third Point just screwed its shareholders again with last week’s acquisition of Sirius. But before we address that, Continue Reading
Why Tesla’s D&O Premium Wasn’t High Enough
Earlier this week, Tesla decided to cancel its D&O insurance because it was too expensive. I will argue it wasn’t expensive enough. A 100% rate on line sounds appropriate to me. Elon Self Insures First, let’s review what exactly Elon did. Below is the language from the revised 10-K (all Continue Reading