It might surprise many subscribers to know that Warren Buffets investment conglomerate Berkshire Hathaway is the largest insurer in the US in terms of net premium written but obviously it’s got lots of strings to its particular bow. Importantly we are not saying this stocks, or other US names, are a sell but simply that Australian names look ready for some performance catch up after having the proverbial kitchen sink thrown at them.
It’s also important to remember after horrendous events like the recent bush fires and now floods much of the claims are pushed onto the reinsurers and premiums moving forward simply increase as the actuaries calculate the risk over the years ahead. However, I would caution that if things go too far on this particular front we could see some government intervention, it’s a very hot topic today with a very uncertain election looming on the horizon – many Australians already simply cannot afford current premiums hence they’ve lost everything over the last few weeks.
