Day: July 4, 2008

Oh Insurer Where Art Thou? Part 3 Reinsurance

Song Alison Krauss
Lyrics: Sop81_1
Peformed by: Warren Buffett and Hank Greenberg

As I went down to Bermuda to play
Studying about that new cat model way
And who shall win the profit crown?
Accu Weather show me the way!

O insurers let’s go down
Let’s go down, come on down
O insurers let’s go down
Down to Bermuda to play Continue reading “Oh Insurer Where Art Thou? Part 3 Reinsurance”

Warren Buffett is the cat's meow in Florida

Not that Warren Buffett wouldn’t be the cat’s meow anywhere; but, in Florida we’re talking “cat” as in catastrophe bonds – and according to this story from Reuters (h/t CLS)

Florida officials agreed to pay Warren Buffett’s Berkshire Hathaway Inc …$224 million for a conditional pledge to buy $4 billion of state hurricane bonds during 2008, a state spokesman said on Thursday.

Vulnerable to big storms, Florida runs a reinsurance operation called the Hurricane Catastrophe Fund that can issue tax-free bonds to pay insurers’ claim losses beyond agreed caps.

The Berkshire agreement, approved on Wednesday by Florida’s governor, chief financial officer and attorney general, requires Berkshire to buy $4 billion of 30-year tax-free bonds with a 6.5 percent coupon, if the state fund incurs total storm-related claims this year of more than $25 billion.

A related article in the Orlando Sentinel added local color. Continue reading “Warren Buffett is the cat's meow in Florida”