Marginal Revolution too the Wall Street Journal both exceed on a peachy quote from Warren Buffett:
You may enjoin BH doesn't desire the risk, only inward a previous missive of the alphabet Buffett explained that BH was selling 99 twelvemonth position options. And existence hugely diversified is exactly what allows a companionship similar this to direct hold to a greater extent than or less risk.
If it doesn't desire to concur the direct chances it could sell it. Surely at that spot are lots of investors who are skeptics of climate alter -- non warming, only the claim that warming volition laissez passer on ascension to to a greater extent than extreme atmospheric condition too higher insurance payouts; people who cheered at that quote inward the WSG -- too would live on happy to position their coin where their mouths are inward the reinsurance market.
(These thoughts are patently related to health insurance, premium increment insurance too long-term guaranteed renewable contracts that solve the preexisting conditions problem.)
It’s understandable that the sponsor of the proxy proposal believes Berkshire is specially threatened past times climate alter because nosotros are a huge insurer, roofing all sorts of risks. The sponsor may worry that belongings losses volition skyrocket because of atmospheric condition changes. And such worries might, inward fact, live on warranted if nosotros wrote ten- or twenty-year policies at fixed prices. But insurance policies are customarily written for i twelvemonth too repriced annually to reverberate changing exposures. Increased possibilities of loss interpret promptly into increased premiums. . . .
Up to now, climate alter has non produced to a greater extent than frequent nor to a greater extent than costly hurricanes nor other weather-related events covered past times insurance. As a consequence, USA super-cat rates direct hold fallen steadily inward recent years, which is why nosotros direct hold backed away from that business. If super-cats drib dead costlier too to a greater extent than frequent, the likely—though far from certain—effect on Berkshire’s insurance employment concern would live on to arrive larger too to a greater extent than profitable.
As a citizen, y'all may understandably uncovering climate alter keeping y'all upwards nights. As a homeowner inward a low-lying area, y'all may wishing to visit moving. But when y'all are thinking entirely equally a shareholder of a major insurer, climate alter should non live on on your listing of worries.The puzzle to me is, why doesn't Berkshire Hathaway write ten- or twenty-year policies at fixed prices? Or, better, why does it non offering a instant contract, that ensures y'all against the lawsuit that your regular insurance volition live on repriced every vi months? If people are worried close it, too nobody else is doing it, it would appear they could accuse a huge premium.
You may enjoin BH doesn't desire the risk, only inward a previous missive of the alphabet Buffett explained that BH was selling 99 twelvemonth position options. And existence hugely diversified is exactly what allows a companionship similar this to direct hold to a greater extent than or less risk.
If it doesn't desire to concur the direct chances it could sell it. Surely at that spot are lots of investors who are skeptics of climate alter -- non warming, only the claim that warming volition laissez passer on ascension to to a greater extent than extreme atmospheric condition too higher insurance payouts; people who cheered at that quote inward the WSG -- too would live on happy to position their coin where their mouths are inward the reinsurance market.
(These thoughts are patently related to health insurance, premium increment insurance too long-term guaranteed renewable contracts that solve the preexisting conditions problem.)
