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Strategies & Market Trends : Buffettology
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To: Jacques Newey who wrote (2742)1/20/2001 2:56:23 PM
From: Moominoid  Read Replies (2) of 4690
 
If the combined ratio is less than 1 then the float is like a loan with a negative interest rate and the excess premia are added to current profits. But there is nothing more to it than that. Very cheap, free, or negative cost long term loans with occasionally unpredictable high interest payments needed when insurance losses are high.

I've read those posts on Yahoo about float and in my opinion they are plain wrong. Float isn't earnings or anything like it. Nobody says that new deposits with banks are earnings. There is no difference except banks usually have to pay more for the money.

The second post is about right.

I have BRK/B :)

David
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