QuestionerReinsurance pricing is expected to be down at mid-year renewals this year, despite the fact that we've had a lot of catastrophes in recent years. The finger is being pointed towards alternative capital, entering the market, new capacity, hurting the market. How concerned are you about this new capacity? And, you know, what is the likelihood that this, that cheap reinsurance pricing soon leads to cheaper primary commercial pricing?
WarrenYeah, we hate dumb competition. And hedge fund, managed money, but particularly hedge funds, have entered the insurance and more particularly probably the reinsurance business quite aggressively in the last few years. For one thing, it gives them a chance to have a beard, in effect, to operate in a Bermuda someplace where the tax rates are low and where they defer their own income from U.S. income taxes for a long time, and it's a perfectly respectable beard. And it can be sold to investors. And people talk about it, you know, being an uncorrelated type of operation and all of that. Anything Wall Street can sell, it will sell. I mean, you can count on that. And they're like big words, too.
QuestionerYeah, and it's very saleable now.
WarrenAnd the money will flow in and the money will flow in and the money will may bring down prices, it may do stupid things in reinsurance. But that's happened before. And in the end, you know, we know what we're willing to do. We know what we think the prices should be. And we will do insurance business where we think that the odds favor us earning an underwriting profit. And if we can't do it, we'll watch for a while. You can't afford. you know, to go along with the crowd in investment or insurance or a lot of other things. And it can be irritating to have a dumb competitor. I mean, you know, if you've got a service station on a corner and you've got a guy across the street that is willing to sell gas below full cost, you know, you've got a terrible problem. That's why I got out of the gas station business a long time ago.