Subject: Re: Numbers
insurance float is better than equity capital — if it’s cost free or profitable. Which it is now and has been for decades.

Actually I recall a lot more comments to the effect that it's worth a lot, very much more than its booked value which is zero. But "better than equity" makes no sense to me at all, personally. Equity has no liquidity restrictions or time horizon or regulators.

As for profitable underwriting, I count that separately as a multiple of cyclically adjusted underwriting profit, the value of the business activities that give rise to the float. I use a very conservative estimated negative cost of float because an insurance business can have the occasional *really* bad year, even though supercat is a smaller piece of the pie these days.

Jim