Florida, Berkshire Hathaway Strike $224 Million Deal on Insurance Fund
Southeast News • July 31, 2008
Florida will pay $224 million to Berkshire Hathaway Inc. for a guarantee that the state can borrow up to $4 billion if necessary to help cover future losses by its emergency hurricane insurance ...
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Subject: RE: RE: Time to get out of the insurance business in Florida
Posted On: August 1, 2008, 7:08 am CDT
Posted By: Ratemaker
Comment:
Richard-
Companies are only buying "reinsurance" (and I use the term loosely) from the Florida Cat Fund because they are mandated to in order to do business in the state. The premiums paid in buy insurance companies are insufficient to cover a loss should it occur any time within the next 5 or so years.
One of the main concerns with the cat fund is that, in the event of a hurricane, the fund will raise capital to pay its claims by selling "catastrophe bonds." Many analysts feel that the Florida government has overestimated the size of the market for these bonds, and it is hurting the credit rating of the state.
Berkshire Hathaway has done the state a huge favor by guaranteeing a market for the cat bonds.
Subject: RE: RE: Time to get out of the insurance business in Florida
Companies are only buying "reinsurance" (and I use the term loosely) from the Florida Cat Fund because they are mandated to in order to do business in the state. The premiums paid in buy insurance companies are insufficient to cover a loss should it occur any time within the next 5 or so years.
One of the main concerns with the cat fund is that, in the event of a hurricane, the fund will raise capital to pay its claims by selling "catastrophe bonds." Many analysts feel that the Florida government has overestimated the size of the market for these bonds, and it is hurting the credit rating of the state.
Berkshire Hathaway has done the state a huge favor by guaranteeing a market for the cat bonds.