Perhaps three months ago, I met with a Florida insurance company CEO. Like usual, he told me all the advantages of his firm, etc. However, mid way through (in response to my questions–after I thought I spotted an interesting thread to pull) he told me about the aggravating, "opportunistic" element to the Florida Property insurance market. This CEO's firm, like most "real" companies, is "in it for the long haul" to last through the various insurance pricing cycles.

The annoying element he described–after a hurricane or weather event, when premiums are extra nice and his firm (and other conventional Florida insurers) should be set to profit mightily if they were alive, an "opportunistic" element enters the market. A bunch of "rich old guys" set up companies overnight and begin selling the elevated premium. These "opportunists" would then stop writing policies as soon as premiums fell below a generous threshold, and indeed wind down the company(s). The CEO's attitude was, "these lousy operators…. Sure, they make 500% on their capital in 4-5 years, but they never even build out a real IT department!" Then they do it again the next time the pricing is right.

I wanted to ask if he had any particular references on how to meet these shrewd operators. I would much rather invest with those clever folks than the "usuals" who make money only to get caught selling cheap premium at the wrong time in an effort to make the next quarter's earnings expectation.





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