Shiftless2
Well-known member
Now I know you're trolling - nobody can be dumb enough to actually believe either statement.
Financial statements for insurance companies are all available on line.
Anthropogenic Global Warming ... how hot is it ?
- Thread starter sear
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Financial statements for insurance companies are all available on line.
Do you have stats to quantify the trend? Over the past decade? In the new millennium?
Clarification:
Bankruptcies may or may not indicate lack of profits, may instead be a scam to avoid payouts.
Right?
S2, I'd hoped CitizenVoice.us to be a reader-friendly / poster-friendly cyber-oasis on the infotainment superhighway, a refuge from acrimony.
Do we need the ad hom for that? I'm not sure potty-mouth helps either.
Besides, we can accord a little extra leeway with any post numbered #420. Right?
Shiftless2
Well-known member
Bankruptcy of an insurance company means that their debts exceed their assets. That means that their shareholders lose everything (i.e., get nothing back).
There are basically two ways this can happen: (i) losses (claims) exceed premiums (and that has to be often enough and by a sufficiently large margin to exceed the insurer's capital and surplus) or (ii) their investment portfolio goes bust - that happened to a number of companies that were heavily invested in asset backed securities when the market tanked.
Of course there are insurance companies that guarantee the performance of investments - i.e., issue guarantee bonds of one sort or another and they got nailed when the market tanked - and others that guarantee that companies will complete projects on time (Surety bonds).
Speaking of the market tanking - it only took a Gaussian copula formula to do it
Recipe for Disaster: The Formula That Killed Wall Street
In the mid-’80s, Wall Street turned to the quants—brainy financial engineers—to invent new ways to boost profits. Their methods for minting money worked brilliantly… until one of them devastated the global economy.
BTW, the formula wasn't wrong - the problem is the people using it didn't really understand what it meant or how it worked.
Yes.
But the term R5 used is "bankruptcies", not "Bankruptcy of an insurance company". However,
S2 expertise on matters actuarial, second to none @CV, and second to few if any any cyber-elsewhere.
This formula includes anthropogenic global warming? Interesting."- it only took a Gaussian copula formula to do it
BTW, the formula wasn't wrong - the problem is the people using it didn't really understand what it meant or how it worked." S2 #423Recipe for Disaster: The Formula That Killed Wall Street
In the mid-’80s, Wall Street turned to the quants—brainy financial engineers—to invent new ways to boost profits. Their methods for minting money worked brilliantly… until one of them devastated the global economy.www.wired.com
I'd like to see that formula, and particularly, which factor/s quantify the rate of change.
Hospitals are expensive, so used to originally all be owned by the government of large charities like religions.
Now insurance companies are buying them all up, which takes a great deal of money.
Insurance used to almost not exist.
In the 1950s, almost no one had health insurance or car insurance.
In 1957, the IRS allowed companies to deduct health insurance for employees from their profits.
Which I consider illegal because it raised health care costs enough to force poor to also buy insurance, even though they had to pay higher rates as individuals.
Only then did insurance companies start to take off.
Then in the 1970s, car insurance started to be become mandated by law, which I consider illegal because there was no fairness regulations.
Bankruptcy of an insurance company means that their debts exceed their assets. That means that their shareholders lose everything (i.e., get nothing back).
There are basically two ways this can happen: (i) losses (claims) exceed premiums (and that has to be often enough and by a sufficiently large margin to exceed the insurer's capital and surplus) or (ii) their investment portfolio goes bust - that happened to a number of companies that were heavily invested in asset backed securities when the market tanked.
Of course there are insurance companies that guarantee the performance of investments - i.e., issue guarantee bonds of one sort or another and they got nailed when the market tanked - and others that guarantee that companies will complete projects on time (Surety bonds).
Speaking of the market tanking - it only took a Gaussian copula formula to do it
Recipe for Disaster: The Formula That Killed Wall Street
In the mid-’80s, Wall Street turned to the quants—brainy financial engineers—to invent new ways to boost profits. Their methods for minting money worked brilliantly… until one of them devastated the global economy.
BTW, the formula wasn't wrong - the problem is the people using it didn't really understand what it meant or how it worked.
Bankruptcy is not when their "debts exceed their assets".
Trump bought companies all the time, with the intent of declaring bankruptcy for a profit.
The point is that bankruptcy is when your liquid cash is less than your current debt minimum payment.
It has nothing to do with assets, since they usually are not liquid.
People like Trump look for companies with high assets but low cash on hand.
Then he can declare bankruptcy, void all the debts, and keep the cash from liquidating the assets.
Shiftless2
Well-known member
Insurance companies don't work like that. If you want to talk about insurance and bankruptcy you start with the material covered in these exams.
Credential Requirements
And insurance company becomes insolvent when its liabilities exceed its assets - that simple. Has nothing to do with "liquid cash". The company will end up being taken over by the relevant state regulator and, once they've finalized all the numbers they'll start paying claims - typically on a pro-rata basis so each claimant will (hopefully) get a percentage of their claim - unfortunately that process may take years.
Insurance companies don't work like that. If you want to talk about insurance and bankruptcy you start with the material covered in these exams.
Credential Requirements
www.casact.org
And insurance company becomes insolvent when its liabilities exceed its assets - that simple. Has nothing to do with "liquid cash". The company will end up being taken over by the relevant state regulator and, once they've finalized all the numbers they'll start paying claims - typically on a pro-rata basis so each claimant will (hopefully) get a percentage of their claim - unfortunately that process may take years.
What I have read is that insurance companies deliberately declare bankruptcy because they have been pre-paid by customer premiums, and they want to "take the money and run" before they have to actually pay off the future claims that have not happened yet.
Insurance companies invest those premium assets, and that prevents them from being "liquid cash" if something comes up that requires payment.
So whether or not assets are liquid is extremely important.
If the company has liquid cash, then they can't declare bankruptcy and don't need to.
If they have no assets, then people like Trump would not be interested in buying them.
They only become a target for acquisition if they are short of liquid cash, have a debt load greater than their liquid cash, but have large value assets that can not be liquidated in time.
Shiftless2
Well-known member
Doesn't work that way - if the company hasn't collected enough premium to pay those claims where is the money supposed to come from? Looking back to my consulting days more than once I had the unfortunate duty of telling a small start up specialty insurer that the premiums they had collected didn't come close to being enough to pay the claims under the insurance policies they'd issued. [To quote the CEO of one of those companies "we just sold $50 million in insurance for $30 million" - how can they pay those claims.
And that's hardly the worst I've seen - I've seen blocks of business where the loss ration was over 600% (a company's "loss ratio" is the ratio of losses to premiums so a 600% loss ratio means that losses were 6 times premium).
In which case the company has to liquidate some assets to pay claims. Happens all the time.
Again - Insurance companies don't work that way - in the US they're regulated by the relevant state's insurance department and can't be simply sold off for parts until everything is settled.
That said, there are companies that specialize in buying "distressed" companies and make a profit in the process but that's because they manage to cut deals and convince insureds to take a percentage of their claim value now rather than wait around till the dust settles and maybe receive nothing.
We are not talking about selling $50 million in insurance for $30 million, because until the claims actually filed, there is no payout at all.
So there is nothing to "settle" if no claims have been filed yet.
Its a gamble.
They might feel lucky, and believe there won't be a lot of claims.
UUHHHGGGG !
I'm guessing (wildly?) that's because their formula for calculating premiums did not adequately account for the actual manifest liabilities.
The example that comes to mind is Florida, hurricane Andrew.
related?
Reminds me of Romney / LBO.
Shiftless2
Well-known member
They were a medical malpractice insurer and they didn't take into account how long it takes for claims to be reported let alone paid.
Shiftless2
Well-known member
And you've got a legitimate reference for that? Or did you just pull that claim out of your nether reagion.
https://pnhp.org/news/big-corporati...ctors-and-experts-say-its-ruining-healthcare/
{...
Big corporations are quietly taking over your medical practice. Some doctors and experts say it’s ruining healthcare.
Share on FacebookShare on TwitterBy Shelby Livingston
Business Insider, April 11, 2024
- Big businesses such as hospital systems, insurers, and PE firms are gobbling up medical clinics.
- Some doctors and industry experts fear corporate owners could prioritize profits ahead of patients.
- The federal government is dialing up scrutiny of PE firms and other corporate owners in healthcare.
Independent doctors are almost a thing of the past.
UnitedHealth Group struck a deal in March to buy the nine-state doctor group of the struggling hospital system Steward Health Care. The same month, the powerful healthcare conglomerate, which owns the nation’s largest health insurer, got the green light to take over a decades-old independent Oregon medical practice, adding another 100 healthcare providers to its roster. It picked up a 400-doctor group in New York about a year before.
...}