Purpose: Many insurance companies vigorously pursue top-line growth even though it has the potential to develop unprofitably over time. The time lag (or tail) between when insurance is sold and when claims are paid generates risks unique to insurance companies. Furthermore, the insurance market...

This paper introduces the concept of super catastrophes, or Super Cats, as alternative investment opportunities. By way of the recent Pepsi Play For a Billion sweepstakes case we present a methodology for valuing Super Cats with a reasonable margin of safety. The methodology combines insurance...

There are three well-known phases of leveraged buyouts (LBOs): the initial or classic LBO phase, the breakup value phase and the strategic LBO phase. The start of each of these phases is subjective, but the general phase-by-phase progression seems clear. Following the phase progression through...

On February 14, 2013 it was announced that Heinz was being taken private by Berkshire Hathaway and their Brazilian private equity partner, 3G Capital, at a price approximately 20% higher than Heinz's February 13th stock price, which was eight times Heinz's book value. These are not the kind of...

The marketplace is frequently approached via direct head-to-head competition, which tends to drives prices to “sky-high” levels. All too often the winners in competition like this suffer from the “winner’s curse,” and its corresponding negative financial consequences. There is a better...

The performance of the property and casualty (P&C) insurance industry has suffered in recent years (as of the early 2000s), even prior to the losses incurred in the tragic events of September 11th. Part of the industry’s difficulties stem from its focus on premium generation, as measured by...

Environmental, Social and Corporate Governance is, as of mid-2021, a hot topic that many firms are grappling with, given an increasing level of investor and consumer focus on the sustainability credentials of their businesses, and what they are doing to improve them. For example, major...

Value investing generates a great deal of attention from the practitioner community; however no-one, to the best of my knowledge, has formally categorized the development of this influential school of thought over time. The consequences of this extend beyond the obvious losses to financial...

Despite differences of opinion regarding what to include as a “top risk” today, many executives agree that 2021 and beyond will likely be a period of uncommonly broad-based risks. Given the breadth of potential exposures, an alternative way to strategically approach both the challenges and...

No one in United States financial and business history is as misunderstood, and under-appreciated, as the late Jay Gould (1836-1892). There are a number of reasons for this, primary amongst them is that Gould earned a reputation as the most hated man in America. Two early episodes, the Erie...