I’ve come to realize I’ve been doing this blog long enough that probably only a small minority at this point actually know what I used to do.

So as a quick recap, my old career was investing in insurance companies. Probably the thing I was best known for was my questions at the end of earnings calls. I would ask the questions the other analysts were too timid to ask.

I don’t follow too many calls since I left but when I have read transcripts, it’s pretty clear the quality of the Q&A sessions have gone downhill, which I’m sure management teams are thankful for.

I’ve been told a number of times somebody needs to step up and fill the void so that the calls are more useful for investors. So, while I’m not going to show up on any of this quarter’s calls, I did think I could offer a service.

Thus, what follows is a list of the questions I would ask on the calls about Hurricane Ian and its ramifications on the market. I’m sure I left some topics off but this is a fairly lengthy list to get things started.

Hopefully, someone will take the ball and ask some of them. All you have to do is read off the sheet. It’s easy!

Ian Loss Estimates

Do you believe the modeling agencies estimates of $50-75B? If so, what corroborating claims evidence do you have to support that?

Can you break the modeled loss down by the major counties? It is hard to see significant losses outside of the coastline of Lee and Charlotte counties.

What are the odds this ends up like Maria or Harvey where the initial modeled estimates are way too high?

Some of the Florida based carriers have put out estimates suggesting this is a smaller event than Irma. What do you think they’re getting wrong?

Are you seeing evidence of higher than normal demand surge? Haven’t lumber and shingle prices come back down from last year?

Mitigation Benefit

Is it possible the models are overestimating damageability relative to Irma due to better new construction?

Is it possible that all the AOB claims has actually improved the quality of roofs relative to the model assumptions?

Does it make sense to model similar AOB fraud to Irma given this year’s reforms?

Won’t the new building codes that eliminate the ability to get a free roof with as little as 25% damage materially reduce the roof losses in Ian relative to Irma?

Price Response

Should prices in Florida be up 50%? More? If they are, how will the market function?

How wide will double digit cat price increases spread? US only? Global wind? Global quake?

Why should Japan or Australia pay for US losses? There was a lot of hope in 2012 for a global pricing response to international losses that never materialized. Why will this be more like 2006 than 2012?

Certain insurance CEOs have predicted 22 of the last 2 hard markets. Why will they be right this time?

Will there be enough retro for willing cat reinsurers to grow? If not, will price be up enough to justify raising capital to grow?

Will reinsurance prices go up enough for there to be a follow on impact to primary pricing or will insurers absorb the cost and/or retain more risk?

Reinsurance Buyer Affordability

Which local Florida buyers will be able to afford reinsurance next summer? Is the risk that prices will be way up but little capacity will be deployed due to lack of buyers?

Can the local domestics buy? Will they have to fold rather than buy at uneconomic prices?

Will Citizens choose not to buy above a certain price again? Won’t the market clearing price likely be higher meaning they could choose not to buy?

What is the risk that Citizens market share gets so high and the state chooses to self insure and thus limit bought in FL is way down next year?

Capacity Stress

If demand is up, where will supply come from with so many former prop cat writers insisting they have cut back significantly and won’t write more?

For those carriers who have pulled back from property, isn’t this the exact wrong time to reduce volatility? For the past ten years, you weren’t getting paid enough for the volatility and you wrote it anyway. Now you are getting paid excessively to risk the volatility and you don’t want to participate. Isn’t this compounding your error?

How much less ILS capacity do you expect in the market given Ian losses will tie up collateral? How big a price response will be necessary to get investors to commit new $ given the loss history and alternatives in other asset classes?

If there is less ILS capacity, what is the rated market appetite for writing low layers and retro?

How will the lower pound impact capacity at Lloyd’s? Won’t they have to reduce their cat limits in $?

Does all this leave room for new entrants (class of 23)? If so, is there an investor appetite to fund new teams?

FHCF & Government Response

How big do you think the personal lines loss is? If it’s > $20B, how does the FHCF get recapitalized?

Do you think the FHCF can raise $5-10B of bonds?

If next year’s FHCF layer is largely funded by debt, would you reinsure a local Florida writer whose capital plan assumed they would fully recover a loss below you next year from the FHCF?

If the FHCF has to reduce capacity, what happens to the local carriers? Can they afford to replace that layer with private reinsurance?

If the state decides to bail out FHCF, what happens if there is another big storm next year?

Are there any reforms the state can make that would actually improve the health of the local insurance market and that would attract new capacity?

Is it possible national firms get forced to write more home, especially if they want the auto?

Citizens & Florida locals

How much market share do you think Citizens will have next year? Is there a point where it becomes so much they need more capital to support it?

Do you think we will see more and more of the personal lines market need to move to E&S or is that not an acceptable political solution?

Why do you think Citizens and the local Florida carriers are seeing much fewer claims than Irma so far?

If the locals are right and their losses are well within their treaties and the FHCF is OK, doesn’t this put a big damper on the pricing momentum? If it is business as usual in FL, what is the case for a 06 like hard market?

Given what we saw in Irma, where many of the locals raised their estimate after they renewed their treaty, how will reinsurers be able to agree to renewal terms when you are likely to have a large difference in your view of unreported losses?

Other Lines Capacity/Price

How will other reinsurance lines be affected? Will reinsurers shift capacity away from specialty lines to write more cat?

Does it make sense to write more aviation war, cyber, marine, etc. at current prices when you can grow cat instead? Are we likely to see a capacity squeeze in these lines as well?

What is the risk to MGAs that reinsurers won’t support their growth to pivot towards more cat? Does it make sense to continue providing cheap capital to unproven clients when you can redeploy that capital at high returns elsewhere?


How confident are you in your initial loss estimate given loss reporting has been slow so far?

Why is this a slow reporting event? Where is the uncertainty? Adjusters are getting to people, power is back, losses are in populous areas. What is the difficulty getting information?

As a reinsurer, can you rely on loss reports from cedants or are you mainly reserving to the model for now?