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Isn't this how virtually all insurance companies work? I'm sure I read that in relation to Berkshire Hathaway once.
by desas 9y ago
Isn't this how virtually all insurance companies work? I'm sure I read that in relation to Berkshire Hathaway once.
- thaumasiotes 9y agoYes. It's also how banks work. Seems difficult to call Paypal an innovator in the field. Paypal is just a bank.
- noway421 9y agoInvestment banks. Regular banks would hold the funds in treasuries and other low risk securities.
- newfoundglory 9y agoThat was only because it was specifically regulated to be so by the Glass Stegall Act, which was repealed in 1999 which was right when PayPal was created. So they had good timing, but it's not like they came up with anything new.
- JumpCrisscross 9y ago> Isn't this how virtually all insurance companies work? The returns seem high. That implies extra risk.
- whatok 9y agoYeah, 30% of cash flow sounds absolutely ridiculous. Treasury should be happy to scalp a few bps here and there.
- arkades 9y agoYes. Warren Buffet discusses the elements of this strategy repeatedly in various iterations of his annual letter. PayPal most certainly didn’t “innovate” this.
- amalag 9y agoAn insurance companies funds will be subject to government regulation to make sure they can fulfill obligations.
- s73v3r_ 9y agoWould not AirBnB's? I mean, they can't really come out and say, "Sorry, we can't pay you for the booking, cause the market went down."
- blang 9y agoIt's certainly how life insurance works
- DamnYuppie 9y agoHealth insurance doesn't really work this way unless you have a MASSIVE book of business. Health Insurance has prompt pay laws and risk based capital risk factors that must be applied to calculate their reserves for those payments. The factors are weighted such that speculative investments such as stocks are hard to hold.