This blog aims to accomplish two things. Given how quickly events are reported, misreported, and dropped by the MSM, we want to go back and see if we can't find some answers to questions that were and were not asked. Second, because the lazy MSM's chief tool for what passes as journalism is to quote pundits without having done any homework,the right questions don't get asked. We want to provide our readers the contact information for these pundits so we can ask them directly.

Saturday, September 12, 2009

Insurers and the Financial Crisis - The Link

One major reason healthcare insurers and malpractice insurers are so adamant about 'tort reform' and 'junk lawsuits' and 'defensive medicine'(see previous post) is that focussing on these as the blame for their poor earnings performance of late gives them cover for their dismal investment performance.

Most insurers invest premium income either internally or on a contract basis with a money manager, ostensibly to 'maximize returns to shareholders.' The combination of financial dereg under Clinton/Bush II and persistently low yields on Treasury Bonds led insurers to the siren song of 'AAA' mortgage-backed securities (CDOs) and derivatives thereon (CDSs).

I imagine many of these losses have yet to be 'realized' in the open market or 'written down' on financial statements but sure as hell are keeping CEOs awake at night.

This is a huge motivator to keep the emphasis on small potato issues like 'junk lawsuits.'

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