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Strategies & Market Trends : The coming US dollar crisis
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To: Secret_Agent_Man who wrote (6047)4/10/2008 3:30:18 PM
From: Tommaso  Read Replies (1) of 71463
 
>>>The premiums are “free” money – free until the bond actually goes into default, when the hedge fund could be on the hook for $100 million in claims. And there’s the catch: what if the hedge fund doesn’t have the $100 million?<<<

As I have previously posted on SI, I had the opportunity in 2001 to see a speeded-up model of this process in action. I knew one of the principals involved, and what happened was well covered in national, international, and, as you may imagine, our local press.

Kenny Kornfeld and his partner built up an enormous reinsurance business over maybe ten or fifteen years, bringing in Japanese banks and insurance companies as partners or members of the insurance pool. They insured a great many airliners. Everything went wonderfully until 9/11 when four planes went down on one day. This wiped out everything. Kornfeld's personal loss came to something like $400 million.

The effect of that much money on the family had its remarkable aspects. To catalog the things that went on is to sound vindictive. Let one example suffice. Once Kornfeld was on his way home from Europe and did not feel likw talking to anyone on the airplane. So he booked nine seats on the Concorde to make sure no one was sitting beside him or in front or in back of him.

google.com

Anyway, these financial reinsurance arrangements sound rather like Fortress Re.
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