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  • jballinvest jballinvest Oct 14, 2004 1:31 PM Flag


    I recall your prior posts pointing out that insurance companies don't trade on weather events. I have to admit this perspective seems pretty much correct. I shorted ALL when ivan was still forming, seeing no reason ALL should be near all-time highs with major earnings damage on the way. It all came true: big storms, big damage, big earnings hit, and ALL looks pretty resilient.

    How many megatons of energy in 4 hurricanes? And now, a little hot air from Spitzer has been enough to turn my modest short position profitable in a small way. I'll gladly cover my mistake in the chaos and confusion this morn and ponder the lessons...

    But insurance companies are still boring... ;)

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    • trade on weather events in fact the last few years they did seem to do so. This year was different and they didn't seem to trade on them. The perception seems to be that these events can effect one quarter but in the long run they may have a benefit that offsets the immediate loss. The perceived benefits are higher rates and reunderwriting in particularly loss prone areas.
      Insurance isn't the most exciting area in the world but investing in the large P & C companies can be very profitable if you enter at the bottom point of the cycle. (Hint I think we are 85% of the way to the top of the cycle). HAGD

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