I love it when the news cycle brings me home to blogging on financial topics, especially when I can make a connection. Now gather round and hear a good story:
But then something nasty happened called the 2005 Hurricane season. And when this powerful man went and checked his reinsurance cupboard for the Gulf Coast it was bare:
For instance, Allstate Corp. said it didn’t buy reinsurance in Louisiana because models showed a “one-in-500-year” risk of a Katrina striking Louisiana. A one-in-100-year event means there’s a 1% annual probability of such a strike; a one-in-500-year event means there’s a 0.2% annual chance. Instead, Allstate concentrated its reinsurance program on high-risk areas, such as Florida, where the company could recoup the cost of the reinsurance through premium increases.
Then what is a good insurance executive to do?
File a 10b5-1 trading plan and make do.
So with the help of his lawyer who can fix anything so the fleecing sticks,
Ed Liddy took the good advice and to the trading plan his name was affixed.
Then Katrina closed in.
What is Ed Liddy to do?
Some say he went on CNBC that day.
And to the world he declared that Allstate was covered
By Reinsurance contracts that were not in his cupboard!
Follow the money gentle Editilla ma bon amie,
straight to Form 4 for Ol Ed Liddy
Because when you follow this link to the trade
You’ll see on 8-29 Ol Ed sold and made…
A pile of money, $16.8 Mill before tax to be exact
And after that trade did Ol Ed relax!
And retire in style Ol Ed Liddy did.
To the Boards of Kroger and 3M where he served
Collecting Phantom Stock he no doubt richly deserved
But then his buddy Paulson called and told Ed he was needed at the federal reserve
“AIG has problems with subprime you know” he was told.
“But worry not for money ’cause AIG will take care of your billfold
For AIG is the company that made Hank Greenberg filthy rich
Until he was caught cooking the books that nasty bitch!”
So now Ol Ed Liddy is back in the saddle
Heading up AIG now that it is feeble
A natural question is will the taxpayers get a good deal from Ol Ed Liddy
Or will we take it on the chin and be left bloody?