It's useful to get a top-down view on the differences in balance sheet structures, business models, and philosophies. It's interesting to hear your points on the trend of hedge funds setting up insurance companies to mimic the float model. I'm not sure I fully understand why that hasn't been successful. Can you elaborate on why that setup doesn't seem to work?

The basic reason is that rating agencies don't favor that model, penalizing companies through the rating process. The issue arises when there's too much risk on the asset side, leading to potential liquidity risk. If claims need to be paid and reserves are tied up in equities or illiquid investments, you might have to sell those investments at an inopportune time, which is a concern for rating agencies.

It's useful to get a top-down view on the differences in balance sheet structures, business models, and philosophies. It's interesting to hear your points on the trend of hedge funds setting up insurance companies to mimic the float model. I'm not sure I fully understand why that hasn't been successful. Can you elaborate on why that setup doesn't seem to work?

The rating agencies are often referred to in the insurance industry as the de facto regulator. In the US insurance market, there are 50 state regulators, but they tend to think similarly. California is a bit of an outlier, as are some others. However, the de facto federal regulator tends to be the rating agency. If I'm an insurance broker and I can get capacity from Chubb or some hedge fund 2.0, I'm going with Chubb every time because of their solid rating, big balance sheet, and the confidence in their solvency and liquidity when needed.