We're not intending to call out just Mr. Buffett's heavyweight property/casualty and reinsurance operations but rather the whole herd of porkers feeding at this particular trough.And today's story from Artemis:
It's just that since his comments at the 2002 annual meeting that the odds of a nuclear attack on Manhattan were "inevitable" by 2052, Buffett has carried water for the whole industry.
Page 9 of the BRK 2002 Annual Report has some more of his thoughts. It's all about the money.
Because the "temporary" 'Terrorism Risk Insurance Act' backstop is in place, the insurers and reinsurers are able to sell product that has brought in at least $40 Billion in profits in the last thirteen years.
(premiums paid with no claims pretty much drops straight to the profit line)
I understand the New York Congressional delegation, from Schumer down to the newest Rep. being all for the reauthorization, it's a pretty sweet deal if you can get the rest of the country to subsidize your real estate market but be forthright and say you're in favor of corporate welfare.
One last point. A nuke in NYC causes at least a $Trillion in damage and I'm guessing the insurers haven't squirreled-away that $40 Bil so they'll be able to meet their obligations when the time comes or as capacity to do more risk-management-good-works.
What I'm saying is, just be honest: the government will end up paying anyway so there's no reason to hand out $3 billion a year while we wait for the "inevitable". And at his core, Warren is an insurance salesman from Omaha....
In TRIA’s absence no shortage of terrorism reinsurance capacity: S&P
The United States Congress is not going to extend the Terrorism Risk Insurance Act (TRIA), the financial backstop for U.S. property insurers against terrorist attacks, this year but with reinsurance capacity high this may result in a shortage of terrorism reinsurance cover.I bolded that sentence because we sincerely disagree as to the benefit the insurers received. It allowed the property/casualty guys to sell "first dollar" insurance while telling the landlord that Uncle Sugar would make up any shortfall.
Ratings agency Standard & Poor’s believes that the longer TRIA remains absent from the market, the greater the chance that traditional reinsurance capital, and to an increasing degree alternative capital, could be deployed into the space to make up for lost capacity.
With politicians seemingly unable to agree on the future of TRIA, which again seems partly to do with the U.S. legislatures habit of stuffing unrelated policies into laws facing Congress, there is considerable uncertainty right now as to whether any agreement to extend or replace TRIA could be reached in the near future.
TRIA never benefitted reinsurance firms anyway, S&P notes, and the protection it offered actually competed with traditional reinsurance that offered similar coverage. Without TRIA in place S&P believes that there could be an increase in demand for terrorism reinsurance cover and that the market could, in its currently over-capitalised state, meet this demand easily.
Aggregate private-market reinsurance capacity can be anywhere from $3 billion to $4 billion per risk, S&P notes, while capacity in high-risk areas where insurers could have aggregation issues is still only around $1 billion per risk, which the rating agency views as underinsured....MORE