Just waiting for similar action with TTK got my offer from SPK in post today
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Just waiting for similar action with TTK got my offer from SPK in post today
Tower says it may need to raise capital to prop up its balance sheet during the takeover saga.
That could be interesting.
http://www.stuff.co.nz/business/9102...laims-holdouts
It's all their customers fault!
Picture a chart of a Turkey being fattened up for Christmas.
It starts in the bottom left hand corner on 1st January.Each day you feed the turkey, and it puts on weight,and each day you mark on your chart,and the chart starts heading for the top right hand corner.Looks fantastic.But then on the 13th December you chop off the turkeys head.Chart drops to Zero.Insurance companies are the same.Fat profits until a huge underwriting disasterous loss cuts off their head.!
Read the history of Lloyds.
Are you saying that it might not be a good idea to invest into insurance companies who underwrite life insurance policies for turkeys without excluding the risk of intentional cultural mass-killings of said turkeys?
I absolutely agree.
However - looking at the larger picture of insurance companies do I think that your post just highlights the problem of insufficient diversification combined with underestimating the likelihood and damage of one particular insured event.
I don't think that the insurance business is that much different to the finance business - and we both are quite heavily invested into some examples of the latter kind. The trick is in both industries to properly manage and cost risk - and to diversify sufficiently to make sure that one (or a series of) super accident(s) does not kill the business.
I probably need to do still some more research on CBL (and this is stuff for a different thread), but I don't see any reason why insurance in general should be more risky or less profitable than any other well managed business in the financial world.
Do you?