Originally Posted by
BlackPeter
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?