Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Mark Adams who wrote (41173)	11/9/2003 4:12:49 PM
From: Mark Adams	of 74559

The Insurance pool manager buys Worldcom debt. When Worldcom blows up, the insurance company raises rates due to 'low returns' on their float. Rates paid by individuals mandated by law to buy their products. (auto liability, homeowners) In a perfect world, more than one insurance company hires managers skilled enough to negotiate the icebergs (Enron/Worldcom/Adephia/Globalstar) of the world. These companies are able to offer lower rates due to superior investment acumen, resulting in a competitive pricing environment. If only one insurance company engages the talent to avoid these icebergs, then the resulting pricing improvements falls to their bottom line as profits. Global yield convergence- could it happen on planet Earth? www2.jpmorgan.com (see the graph 1/3 of the way down, or search the term convergence, which gets you to the scenic vista pronto )

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