Reggie Middleton on ..... You Can Rest Assured That The Insurance Industry Is In For Guaranteed Losses!
insurance industry is next up for BoomBustBlog subscriber
scrutiny. Quite frankly, it’s amazing this industry has gone this long
without getting the bank treatment, ex. Shorted into oblivion. Just
imagine, and industry that is:
scrutiny. Quite frankly, it’s amazing this industry has gone this long
without getting the bank treatment, ex. Shorted into oblivion. Just
imagine, and industry that is:
1. extremely cyclical,
2. prone to booms and busts (the fodder of BoomBustBlog),
3.
and relies as much, if not more, on investment income borne from bonds
(primarily sovereign debt [whaaaat?] and bank/financial institution debt
[whoa!!!??] for earnings as much as their core business of underwriting
risk.
and relies as much, if not more, on investment income borne from bonds
(primarily sovereign debt [whaaaat?] and bank/financial institution debt
[whoa!!!??] for earnings as much as their core business of underwriting
risk.
If this is not a group of shorts made in investor heaven, I
truly don’t know what is! This article is the first in several to help
my subscribers make sense of the list of insurers that I posted for
download earlier this week (Addressing Risks In The Insurance Industry)
truly don’t know what is! This article is the first in several to help
my subscribers make sense of the list of insurers that I posted for
download earlier this week (Addressing Risks In The Insurance Industry)
Since
some of the lexicon in the insurance/risk management industry may be a
little jargon-ish, let’s take it from the top and work our way down –
courtesy of heavy excerpting from the web’s most useful collaborative,
groupthink knowledge utility, Wikipedia.
some of the lexicon in the insurance/risk management industry may be a
little jargon-ish, let’s take it from the top and work our way down –
courtesy of heavy excerpting from the web’s most useful collaborative,
groupthink knowledge utility, Wikipedia.
How Do Insurance Companies Make Money?
Insurance is a form of risk management primarily used to hedgeagainst the risk of a contingent, uncertain
loss. Insurance is defined as the equitable transfer of the risk of a
loss, from one entity to another, in exchange for payment. An insurer is
a company selling the insurance; an insured, or policyholder, is the
person or entity buying the insurance policy. The insurance rate is a
factor used to determine the amount to be charged for a certain amount
of insurance coverage, called the premium.
loss. Insurance is defined as the equitable transfer of the risk of a
loss, from one entity to another, in exchange for payment. An insurer is
a company selling the insurance; an insured, or policyholder, is the
person or entity buying the insurance policy. The insurance rate is a
factor used to determine the amount to be charged for a certain amount
of insurance coverage, called the premium.
The transaction
involves the insured assuming a guaranteed and known relatively small
loss in the form of payment to the insurer in exchange for the insurer's
promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.
involves the insured assuming a guaranteed and known relatively small
loss in the form of payment to the insurer in exchange for the insurer's
promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.
The insurance industry has it own lexicon of performance and risk, with the most pertinent being the following three measures:
http://www.zerohedge.com/contributed/you-can-rest-assured-insurance-industry-guaranteed-losses
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