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URL:  http://boards.fool.com/either-i-am-missing-the-joke-or-the-person-who-22400904.aspx

Subject:  Re: Catastrophe Modeling: A New Approach to Mana Date:  4/25/2005  2:18 AM
Author:  activeREinvestor Number:  292 of 297

Either I am missing the joke or the person who posted does not understand.

The insurance company was a FL company. They are part of a larger insurance company but operate in FL as a separate legal entity. They have many 'offices' so location of the 'office' was not the issue.

The FL business sustained losses that were larger then expected. It was true for almost all the P&C insurance companies in FL at the time. Many were going to pull out of FL rather then write new coverage. This was up until the FL laws and rules were changed (some to force the insurance companies to stay and some changes to make the risks more manageable). I believe the state said if you are not going to write P&C then you can not write auto and other forms that are more profitable. No cherry picking.

FL does have a problem with the weather and the risks involved. The amount they can collect in FL does not cover the pay-outs in many situations. Hence the risks are hard to manage if taken on a FL basis only.

The national company bailed out the FL entity for a number of reasons. I believe the company was State Farm, Alstate or one of the other well known brands so this was not a local or junior player who go caught out by above average claims.

John B. Corey Jr.

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