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- Manlobbi
Investment Strategies / Mechanical Investing❤
No. of Recommendations: 2
well.... just got a call from my Farmers insuarance who tell me that they are withdrawing coverage over 1m dollars as policies renew. This includes Berkshire Guaranatee ? when I asked about berkshire hathaway. As I enquired further she said they are withdrawing all of Texas as most other southern states..... due to climate risks and resulting vlaims ... anyone else getting these calls ? she also said other insureres will be withdrawing as well.....
I believe BH withdrew already from much of Florida, and Geico too...but this is now multi state according to the call I literally just received. How is this going to affect BH ? ( and others) Float is very valuable and seems to me a lot of float just disappeared, with all the ripple effects that entails...
No. of Recommendations: 10
I believe BH withdrew already from much of Florida, and Geico too...but this is now multi state according to the call I literally just received. How is this going to affect BH ? ( and others) Float is very valuable and seems to me a lot of float just disappeared, with all the ripple effects that entails...
I don't know the answer to the more important question about whether BH is withdrawing agricultural insurance in Texas or other southern states, but I think the loss of a bit of float would not have much impact on Berkshire. One of the major concerns about Berkshire is that there has not been much to do with all that float, for the last 20 years or so, with a mixture of high valuations and Buffett backing off when there were chances to buy when things looked rough in 2008 and 2020. FLoat stood at $169b at the end of Q3, just part of the cash pile that was already $224b at the end of Q2 and is almost certainly much higher now. So as long as that cash pile is mostly idle, it is not crucial to Berkshire's net income.
dtb
No. of Recommendations: 2
In July ‘23 Farmers Insurance informed CA homeowners they were limiting renewals due to inflation. Oklahoma homeowners in “wildfire” areas too, received notices of non-renewals.
In May ‘24 Farmers that it would resume accepting new applications for commercial insurance policies in California, including Auto Service & Repair, Manufacturing, Real Estate, and Wholesale Distribution.
I humbly offer a a perspective that Farmers is pivoting or reshaping their insurance portfolio to simply reduce their risk.
Insurance “float” is a fundamental aspect of the insurance business model, and reducing it too aggressively can negatively impact the company's and an Industry’s financial stability and its ability to meet claims obligations. While the Insurance Industry can be cyclical, with profitability influenced by factors like natural disasters and economic conditions, Farmers Insurance has generally maintained a solid financial performance.
No. of Recommendations: 2
I believe Warren said in recent years that our float could diminish but he speculated no more than 3%/year (?up to $5B based on recent float). Further hardening of insurance markets should really be in our favor. Glad Ajit is at the helm to noodle and weigh in on all this mountain of claims data.
