Category 6 storm

There is no such thing as a category 6 storm, at least what anyone has seen. What a category 6 storm is, is a storm that comes only once every 500 years. This is for insurance actuarial purposes, but in theory could happen. Insurance companies need to have reserves that could pay for 1 category 6 storm. Here I am talking about P&C or property and casualty insurance companies. These storms are hypothetical storms. However, to actuaries they are real, they are a mathematical calculation. It seems that storms are getting bigger and more dangerous, perhaps because of global warming. I have yet to see a real category 6 storm, the big one. One that could wipe out an entire state for example and I hope I do not. Category 5 storms come once every 3 years on average.

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What is reinsurance

Reinsurance is insurance for insurance companies. Insurance is all about spreading risk, diversification. Insurance companies buy insurance to cover themselves against huge losses. This is particularly applicable for P&C or property and casualty insurance companies that have potential exposure to large storms.

Besides risk transfer another reason why insurance companies use reinsurance is income smoothing. That is they can create more predictable income streams as reinsurance will reduce large losses.

Basically insurance companies must choose reinsurance companies carefully as they transfer insurance risk for credit risk

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White Mountain Insurance insider trading | WTM

There is not way you can judge a companies future value by the trading by the insiders. The value of the company is based on the numbers and the business. Insiders trade stock for various reasons. Often connected to personal situations or company politics. When people point to White mountains chief Ray Barrette buying 800,000 dollars of the stock, approximately. You can also look at the Chief of investments John Gillespie selling 1.5 million dollars, approximately. Insiders have millions and move stock and trade stock for reasons unknown to outsiders. WTM has a P/E of 17.6. In my opinion for a financial company this is high, further its been in a strong downward trend. These are more important determinate factors in a stocks future than who buys what. Look at how close actual earnings comes to projected earnings and future P/E, earnings momentum etc not insider trades. Also look if there are better companies to buy now. Although WTM might come back from its 200 point fall from 600 to 400, I will wait for more evidence than insider trading at White Mountain Insurance | WTM before I personally buy.

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Liberty Mutual Insurance in China

Liberty Mutual is opening an office in China. Liberty will focus on personal lines and small to mid-size businesses. This will include Auto. Over all its only one office in Beijing but strategically a very good move for Liberty mutual insurance. I think if you just run the number about how many people have become middle class in China and their buying power, the potential for profits is huge. Insurance is a well calculated gamble and insurance companies always win. The main thing that held Liberty from having a branch in China before was the regulatory agency; however, Liberty mutual received approval from the China Insurance Regulatory Commission and this is a start. I have seen Liberty Mutual make large gains in Poland. I think Liberty is generally a strategically very forward looking company.

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White Mountain Insurance | WTM | White Mountains Advisors

White Mountain Advisors like all insurance companies invest in fixed income securities to safeguard their investment assets which are the assets of their policyholders of White Mountain Insurance group’s subs.

The question is how much trouble is David Linker the Asset/mortgage back security expert at White mountains advisors in? I do not know. Until I get the facts I would say no. They are not in trouble. But I would say I want to see their investment returns.  What I do know is White Mountain Advisors invested a lot of money and trust and David Linker’s affection for Mortgage backed securities. White mountain advisors had in my opinion a heavy investment in these securities. For White mountain insurance, certainly they yield more than safer more traditional fixed income investments, I really am curious to peak at the loss or gains connected with WTM investment portfolio, which was over 11 billion in assets. If they did take a big hit this year, I am curious about what affect it would have on their parent company. White mountain Insurance.

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In your car driving a lot? Learn a language

If you are a commuter why not learn a language? I use to drive maybe 2.5 hours a day on my way to work and back, not including time going to the gym or other places. If I had spend that time listening to language CDs I would have been much better off today. Years latter after I gave up commuting for a tele commute I wrote an mp3 language learning program. Its the best way to optimizes your time while in a car and make the commute less stressful.

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White mountains insurance WTM stock in a downward trend

Since 2004 White mountains insurance stock has been in a strong downward trend. I believe the trend is your friend. That is unless there is a strong reason to reverse the trend the trend will continue. In 2004 they moved a lot of things (IMO smoke and mirrors) around in the company internally and it gave White mountains insurance (WTM) a nice short term boast in terms of stock price. However, the company for 4 years has been in a strong downward trend, since its dizzing highs around 600 dollars a share. I do not understand why fully, however, I do know the investment company of WTM was invested in large stock positions of mortgage back securities. These were approved by John Gillespie as he is the head of the WTM’s investment management firm. However, John sold 1.4 million dollars of WTM stock in the spring of 2008. I do not know why, it could have been for personal reasons. Overall I personally would not buy this stock for a long time to come until it shows any signs of life from this large downward trend. I am not an expert but rather an observer.

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Anne Hathaway dumps boyfriend

Everyone now knows that Anne Hathaway has left her boyfriend day before he was arrested for various financial crimes, such as coning people of their money posing as a Vatican representative. The question is why the FBI did not also charge Anne Hathaway? She was his boyfriend for 4 years, flew on private jets and lived the life of a princess with his money. How could she not know about his? Why did she leave just before he was arrested? It all sounds very strange to me.

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How insurance companies make money

So you think you know how insurance companies make money? Guess again. Most companies do not make a profit on the premiums they get from you, in fact many have an operating loss. Its all about something called the ‘combined ratio’. This is a measure of profitability from the core business. Many insurance companies have combined ratios of greater than 1.00, (1.07 for example) which means they in theory are paying out more than they earn.

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Auto insurance Massachusetts

Every website and blog talks about cheap auto insurance rates, compare auto insurance in Massachusetts, where to find the best auto insurance in Massachusetts etc. I think Auto insurance comparision, is a little like mutual fund comparsion, that is people look at what is the ‘hot fund of the month’ and often times its not the same next month. Therefore, when you go for auto insurance do not just look at the rate but other factors like ease of payout and how the company will work with you.  In my opinion the best Auto insurance in Massachusetts is Liberty Mutual. Liberty Mutual is a very well run company which in my experience offers very good rates and service. I was insured my Liberty mutual and only had positive experiences with Liberty mutual. I actually worked for OneBeacon insurance, which in my opinion was a little high in terms of rates and I even could get a discount, but just in other ways. However I thought all around if you are shopping for Auto insurance in Massaschusetts, Liberty mutual insurance is the company I would choose again.  I am not going to throw numbers at you, rather I think experience speaks louder, however, if you want a quote finder go to msn money, there you can compare auto insurance rates in Massachusetts. This post is not a quote finder post or scientific analysis this is the feedback I have herd from others and has been my experience.

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