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Buy for 9 and sell for 3

Dear friend

I must commend the high quality of a lot of regional US journalism.
Here’s a great piece from Florida Today all about the Cat fund.

This article implies that Mr Grist may have had second thoughts about taking the weight of the reinsurance world on his shoulders.

Much more likely is that the market has softened so quickly that it has taken him by surprise and his officials know that they could probably get a cheap Cat bond away on Wall Street while the going is still good.

Everyone I speak to says that Grist shouldn’t have messed with the market — natural competitive forces were ready to give him a big discount this year — until he stepped in!

And I love the bit about buying cover for 9 cents in the dollar and selling it on to insurers for 3 cents — to produce an average discount to Floridian consumers of only 10%!!!

It takes a politician to work that one out!

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