What enables Florida’s staggering growth against environmental odds? The answer, in part, comes down to how property insurance protects the state’s real estate against disasters. In 2015, Floridians spent US$10.8 billion on homeowners’ insurance to protect more than 6m properties. The total insured value protected by the state’s homeowners’ market is a soaring $2.1 trillion, roughly equal to the annual economic output of India
Newfie wrote:Re Buffett...
Exactly what I would say if I was over extended and wanted to reassure investors, while I quietly worked to reduce those risks and prayed for a couple of quiet years.
Newfie wrote:“We continue to decline business when we believe prices are inadequate,” the company said in the quarterly report.”
That’s is the salient point. To stay ahead of the risk curve.
The two hurricanes aren’t just drawing attention for their devastating financial toll. Irma and Harvey highlight a Category 5 problem slamming the insurance industry: how to manage the emerging climate-related risks for homes, businesses and governments as global warming fuels bigger and more costly catastrophes.
The insurance industry, which is responsible for managing society’s risks, has been vocal in acknowledging the threat of climate change. But two reports issued last December by a group of the world’s largest insurers also concede that they remain largely unprepared to address climate risks in the communities they serve.
Buffet wasn't lying when he talked about a calm decade for florida. Florida insurance companies had years to build up reserves because of a decade of no hurricanes.Newfie wrote:Re Buffett...
Exactly what I would say if I was over extended and wanted to reassure investors, while I quietly worked to reduce those risks and prayed for a couple of quiet years.
Florida's Record-Smashing Hurricane Drought Is Due to EndAug 31 2016 - No hurricane has made landfall in Florida in nearly 11 years. This non-Florida hurricane landfall streak more than doubled the previous record from the late 1970s to mid 1980s. This is remarkable given the state has 1,260 miles of coastline, the longest of any state along the Gulf of Mexico or the Atlantic Ocean. According to the National Hurricane Center, 40 percent of the landfalling U.S. hurricanes from 1851 to 2010 have impacted the Florida coast. That's a total of 114 hurricanes in about 160 years. The percentage of hurricanes impacting the U.S. since 2006 is a record low for any 10-year period.
In other cases, particularly in recent seasons, some combination of dry air, wind shear (the change in wind speed and/or direction with height) or land interaction in the Caribbean has weakened or completely dissipated any tropical cyclones threatening Florida.
Chantal (2013)
Danny (2015)
Erika (2015)
Florida has been extraordinarily lucky to have at least one of these factors either weakening or steering away hurricanes consistently since late 2005.
So Buffett's insurance companies booking a record breaking 14 straight years of profits worth more than $28 billion, snooze fest. 1 year of losses in 2017, the sky is falling.Newfie wrote:What’s happening is the losses are going up faster than premiums. Then they are loosing the bet.
Berkshire’s 14-Year Insurance Win Streak Comes to an EndWarren Buffett’s Berkshire Hathaway’s combination of insurance entities have recorded 14 consecutive years of underwriting profit worth more than $28 billion.
The streak ended in 2017 as three big hurricanes hit Texas, Florida and Puerto Rico and wildfires ravaged California. Buffett’s re/insurance businesses generated after-tax losses from underwriting of $2.2 billion in 2017 compared to after-tax gains of $1.4 billion in 2016 and $1.2 billion in 2015. There were no significant catastrophic events in 2015 or 2016. Writing in his annual letter to shareholders, Buffett took some comfort in knowing that the $2 billion net cost from the three hurricanes reduced Berkshire’s GAAP net worth by less than 1 percent.
Buffett is confident about Berkshire’s ability to withstand even worse catastrophes than those 2017 brought. “no company comes close to Berkshire” in being financially prepared for a $400 billion mega-cat. Buffett figures Berkshire’s share of a $400 billion loss might be $12 billion, an amount far below the annual earnings from its non-insurance activities.
For all of Berkshire Hathaway including insurance and non-insurance business, net income rose 87 percent to $44.94 billion in 2017. Operating profit, however, fell 18 percent to $14.46 billion, hurt by the insurance underwriting loss.
Newfie wrote:Re Buffett...
Exactly what I would say if I was over extended and wanted to reassure investors, while I quietly worked to reduce those risks and prayed for a couple of quiet years.
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