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Every insurance company actually has two businesses in one: - An insurance business where they hope to underwrite risk intelligently to pay out less than they
by TuringNYC 8y ago
Every insurance company actually has two businesses in one:
- An insurance business where they hope to underwrite risk intelligently to pay out less than they make in premiums.
- An investment company where they investment insurance reserves (to keep them safe, but also to gain extra $ beyond what is required for reserves)
The insurance reserves follow state insurance "stat" guidelines and are usually spread across corporate bonds, government bonds, and real estate debt (with a bit in riskier assets.)
A housing crisis very much affects insurance companies. AIG's Securities Lending fiasco of 2008 is a perfect case study of this.
https://www.americanbanker.com/opinion/aigs-collapse-the-part-nobody-likes-to-talk-about https://www.americanbanker.com/opinion/aigs-collapse-the-par...