Surely that works in reverse as well. ie they have liabilitiy to other insurance companies when they have big claims.
I don't think so.
Companies such as TWR lay-off part of their risk with reinsurers, generally large international companies who don't operate in "retail" markets. I'd be surprised if TWR was in that market.
Companies such as TWR lay-off part of their risk with reinsurers, generally large international companies who don't operate in "retail" markets. I'd be surprised if TWR was in that market.
TWR is no where near the re-insurance market and neither should it be! Their business is insurance origination both general, health and life and savings and investment.
You need to be very large to survive the ups and down in the re-insurance market. Some of the major providers are Berkshire Re and Swiss Re both owned by Warren Buffet's Berkshire Hathaway. One closer to home that also plays in this market is QBE of Australian.
Its generally a good industry to be in long term so long has you have the financial wherewithal to withstand the odd catastrophe. Even then, re-insurers will often spread their risk amongst themselves. The risk ends up being effectively spread far and wide internationally of which the likes of IAG and TWR are only the first line.
The "Names"--as the investors are known--didn't really invest anything at all. They merely pledged their assets, while the assets themselves--stocks, bonds, or land--continued to make money, for many years the "names" recieved money in dividends merely for pledging their money.
However it all went belly up after a series of natural disasters and asbestos claims meant Lloyds could not meet the claims and had to ask the "names" for money. Many had no idea of the risks they had been taking and lost their ancestral fortunes
Lloyds insurance methods and re-insurance are not the same thing though Ratkin.
Lloyds style of insurance as you said allowed unlimited liability for its names.
Re-insurance is the placing of specified limited risks with another insurer who is larger, and not exposed to the same risks due to location etc.
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