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On Lampert possibly getting into insurance
From Benedicte Gravrand, Geneva: Following yesterday’s article in the FT titled ‘Pitting Buffet versus Lampert’, which compared the professional ascension of the two titans, and lastly predicted that the next big investment move would come from Mr. Lampert, that he will do what Mr. Buffet did in the early 70s, namely, getting into insurance (suggesting Endurance Specialty Insurance or Markel), an hedge fund / insurance industry expert gave Opalesque his perspective.
“In insurance and re-insurance you are really betting on the future of under-writing, you are betting from today forward. When you buy shares in an existing company, you can have all kinds of hidden liability that you never knew about. So if pricing is good in the future, you have to worry about the past if you buy into an existing company. Whereas when you start a new one, there is no past. “
“If you look at the times when then there has been cataclysmic events in recent history, at the likes of Hurricane Andrew and the North Ridge earthquake in the early 90s, at 9/11, at Katrina, you’ll see massive amounts of capital has moved into the industry to take advantage of the higher prices of the industry. But they generally move in not with the existing guys but in to brand new start-ups. Part of it is the legacy liabilities and part of it is that you get to invest at book value, whereas if you buy into something ...................... To view our full article Click here
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