James Carthew: don’t bet the house on reinsurance casino
2017 was one of the worst years on record for natural catastrophes. Three massive hurricanes (Harvey, Irma and Maria), two typhoons (Hato and Tembin), cyclone Debbie, California wildfires, monsoon flooding in South Asia, earthquakes in Iran, Iraq and Mexico and landslides in Sierra Leone and Peru left a trail of devastation.
Sadly, many lives were lost. Worldwide, the economic losses from natural catastrophes are expected to add up to $330 billion according to Munich Re. They say the only costlier year was 2011, when the Tohoku earthquake hit Japan.
The investment companies sector contains two funds, CatCo Reinsurance Opportunities (CAT) and Blue Capital Alternative Income (BCAI), that provide reinsurance across a wide range of potential disasters. They earn income from premiums and pay out in the event of a catastrophe.
You could make an analogy between the reinsurance industry and the managers of a casino. If they have … read more here
Investment Trust Insider on reinsurance