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- Manlobbi
Halls of Shrewd'm / US Policy❤
No. of Recommendations: 0
Didn't Ajit write a big reinsurance policy for Florida, hoping/thinking there would not be a big storm in Florida this year?
Not sure that was the greatest idea.
No. of Recommendations: 0
No. of Recommendations: 5
'Didn't Ajit write a big reinsurance policy for Florida, hoping/thinking there would not be a big storm in Florida this year?
Not sure that was the greatest idea.'
Ajit is so disciplined and has made us dozens of billions over the years with his mind and assessment of risk, combined with WEB's judgement. This decision may not work out, but I for one will not 2nd guess Ajit. I recall WEB took all of a minute to say 'Go for it' when Ajit called and felt the pricing became more favorable.
No. of Recommendations: 1
Totally agree about not second guessing Ajit. The man obviously knows what he's doing and has made us tons of money.
My problem is I have some recency bias going on. My sailboat has been hit by hurricanes twice in Florida the past four years (and once in the Bahamas), and I seem to be running away from bigger and faster developing storms each year. Or, there's the possibility that I'm an idiot and always in the wrong place. 😬
If Berkshire keeps selling reinsurance in these areas we will get bitten eventually, but obviously Ajit knows that!
No. of Recommendations: 2
No. of Recommendations: 0
Yeah a big hit to Tampa would have been very costly. Sorry for the folks in the big bend area that are going to get smacked by this thing, but as you say it's mostly rural so better for Berkshire.
If it can somehow dodge Tallahassee and Jacksonville that would be a huge bonus.
No. of Recommendations: 9
I agree on separating the outcome from the decision making - we don't know the attachment points or rates or anything about the policies Ajit wrote. We was very transparent about the stakes for this season and explained the unbalanced situation well so all shareholders could understand. Prices sounded very healthy.
This hurricane Idalia seems to have been much less severe than feared. Hit a less developed area, could have been a strengthening Cat 4 when it hit but appeared to undergo an eyewall replacement cycle (ERC) just before landfall, delaying further strengthening. They are saying it was Cat 3 at landfall but I thought it was a Cat 4 just offshore. So far this morning, every bit of video I have seen out of the storm chasers shows little damage. I'm sure there is surge flooding on the barrier islands and some coastal areas but from what I am seeing so far this is not a major disaster. On to the next. The Atlantic hurricane season is just getting started. Lets hope this one doesn't re-emerge back into the Atlantic and get its act together again and hit the Northeast population centers.
As my username suggests, I have some experience with hurricanes, FWIW.
No. of Recommendations: 5
'Didn't Ajit write a big reinsurance policy for Florida, hoping/thinking there would not be a big storm in Florida this year?
Not sure that was the greatest idea.'
Ajit is so disciplined and has made us dozens of billions over the years with his mind and assessment of risk, combined with WEB's judgement. This decision may not work out, but I for one will not 2nd guess Ajit. I recall WEB took all of a minute to say 'Go for it' when Ajit called and felt the pricing became more favorable."You can't judge the correctness of a decision from the outcome. This is a concept that many people find nonsensical. But good decisions fail to work all the time ' just as bad ones lead to success ' simply because it's so hard to predict which alternate history will materialize.
... A good decision is one that's optimal at the time it's made, when the future is by definition unknown. Thus correct decisions are often unsuccessful, and vice versa." -- Howard Marks of Oaktree Capital
http://www.oaktreecapital.com/memo.aspx
No. of Recommendations: 18
When discussing the current Florida hurricane and it's ,hopefully lower than expected, impacts, NOLA modestly added: 'As my username suggests, I have some experience with hurricanes, FWIW'.
As a New Orleans guy, NOLA has certainly had the opportunities to see hurricanes. I appreciate his insights on the reduced Florida impact based on where it went ashore.
I grew up about an hour's drive (before Interstate) from New Orleans. After finishing college in 1955, I worked in Baton Rouge, Houston, NYC, New Orleans, and back to Houston before retirement. Along the way I saw several hurricanes myself.
Perhaps some of our group wouldn't object if I reminisce about some of my hurricane memories over the decades. They might provide some insights that aren't top of mind when thinking about hurricanes.
My first experience was in 1947 at age 12. A major hurricane (near Class 5) dropped in strength before hitting the Mississippi Gulf Coast about 25 miles from our home as a Class 1 or 2. This was before they started giving storms names so it was simply called the 'killer 1947 hurricane.' Some 50+ deaths along its path.
We had some advanced warning, not up to today's level, but enough. Our little home was on the last hill before the Gulf plains so we weren't worried about flooding. But winds were a different matter. We had a large hickory tree only a few feet behind our home. So we, and nearby neighbors, decided we had better go to town. And we headed out as a small convey.
The men packed axes and a crosscut saw to bring along. It was well that they did, because we encountered a large pine tree blown down across US Hwy 11 ' which our homes faced. We were about 5 miles from town. US 11 was the main highway from Chicago to New Orleans at the time. But it was only a two lane asphalt highway even so. So the tree had to be removed to get into town. It was and we did.
Picayune was small back then. The local owner of the only hardware/lumber store had opened it as a shelter. It had large plate glass windows across the front that were starting to flex due to the winds. So the men brought lumber and plywood from the lumber yard and built a shield. Fortunately wind and rain damage proved minor. What happened on the Gulf Coast towns were very difficult. The storm surge damaged many old Southern homes and washed fishing boats almost a mile inland. A friend my Dad knew who was a fishing buddy from a fishing camp was washed along, climbed up a tree, and spent the night along with snakes.
Those memories stick.
Started work in Baton Rouge after college. Fairly small storms would flood the city, much worse than New Orleans. New Orleans, below river and sea level, had these giant pumping stations that could cope with then storm and hurricane rains And they did for a long time.
As the decades passed, we saw many hurricanes. Most were relatively small. But a few stick out. I was in Houston when Carla hit the Texas coast. It was so large it almost filled the Gulf of Mexico. Galveston suffered a lot of wind damage even though it was 120 miles from landfall further down the coast. That was the 'dirty' (wrong) side of the storm. That hurricane launched Dan Rather's media career as he broadcast nationwide from the cut-off island of Galveston. I was standing in an apartment doorway in Houston ' many miles inland. I saw the roof being peeled off the apartments across the interior yard while our apartment escaped damage.
After other lesser storms, we went to NYC for a few years. We returned to New Orleans shortly after Hurricane Camille hit the Mississippi Gulf Coast. Hit, hell, it almost wiped it out. We escaped that, but had great difficulty finding an apartment in New Orleans. So many people had lost their homes along the coast that apartments were sold out in New Orleans.
New Orleans well knew that if Camille had taken a slightly western track, they would have been wiped out. But a bond election to erect flood barriers across the entrances to Lake Pontchartrain from the Gulf failed to pass.
The apartment we found near the Lake was below lake level in the base case. When driving to work, I would go up several feet to cross over a bridge at lake level. Had the bond passed and the flood gates installed , the later damage from Katrina would have been significantly reduced. Where we lived was flooded.
We moved from New Orleans back to Houston. (Really missed the food). Again small storms but we moved to North Texas before the really big storms hit Houston in the years after Katrina. Harvey was particularly bad in terms of flooding. But we were long gone by then.
Based on what I recall over the years, bad hurricanes now are not unique. But there sure does seem to be more of them.
No. of Recommendations: 13
"Based on what I recall over the years, bad hurricanes now are not unique. But there sure does seem to be more of them."Really?
"Berkshire Hathaway
CEO Warren Buffett on Monday said he has not yet seen sufficient evidence that climate change is affecting weather events to a degree that would make him change the way his conglomerate's insurance businesses write policies.
Events such as Hurricane Sandy have raised concerns that global warming is increasing the intensity and frequency of so-called superstorms.
'I have not seen anything yet that would cause me to change the way we look at evaluating quakes, tornadoes, hurricanes by atmosphere. Now, that may happen some day,' he told CNBC's 'Squawk Box.'
He added that the frequency of Florida hurricanes has been 'quite low' for roughly the last decade compared to historical trends, and storms in the Sunshine State, Texas and the U.S. Southeast have been 'remarkably benign.'
Buffett delivered a similar assessment in last year's annual letter to shareholders.
In that letter, he said climate change had not up until then 'produced more frequent nor more costly hurricanes nor other weather-related events covered by insurance.'
https://www.cnbc.com/2017/02/27/warren-buffett-glo...U.S. Hurricane Strikes by Decade:
https://www.nhc.noaa.gov/pastdec.shtml
No. of Recommendations: 0
let's just say this is a great example of why warren&charlie should never be COO of well-run BH companies.
policy writing, precision scheduling, etc... is being left the experienced and competent...
that's warren's real genius.
No. of Recommendations: 0
Thanks for the stories Tex. All very vivid and accurate! (except hwy 11 doesn't go to chicago but hey)
At least we have the food!
No. of Recommendations: 3
I always enjoy your posts Texirish. Thanks for telling us your hurricane stories. Sharing a night in a tree with snakes! Makes me thankful I live in Ireland. No hurricanes and no snakes, although we do have politicians...
No. of Recommendations: 1
(except hwy 11 doesn't go to chicago but hey)
Oops. Guess I was thinking about the City of New Orleans train. As a kid in grammar school, we used to stop classes to watch the "streamliner" pass on the nearby railroad tracks. School was in a small community a few miles south of PIcayune.
Picayune was the town near New Orleans where the northbound old steam freight trains would switch from one to two locomotives before facing the hills there and on to the MidWest. Perfectly flat from there to New Orleans for southbound trains.
Now back to BRK related discussions.
No. of Recommendations: 6
https://www.reinsurancene.ws/hurricane-idalia-expe...Here is a "Reinsurance News" article (no paywall) that posits that Hurricane Idalia will be largely a primary insurer earnings issue and largely spare the Reinsurance industry. The soaring price of cat Re in Florida resulted in higher retentions by the primary insurers. We'll see how it works out for Berkshire but so far I'm not concerned. It is still early in prime hurricane season though.
