Warren Buffett's Berkshire Hathway earns almost 30% of its total revenues (that's $70B) from its insurance business.

How did insurance come to be a money-minting machine for the conglomerate?

A thread👇 (1/10)
First, we need some context on how insurers operate.

Insurance companies generally earn money through two routes. Perhaps the most obvious one is to charge premiums to customers in exchange for the provision of insurance. (2/10)
But insurers also make a large chunk of revenues from investments made through their 'insurance float'. (2/8)

What’s this 'float' you ask? (3/10)
Insurance floats are basically large stacks of money kept, to pay up insurer claims as and when the need arises.

Keeping this money as is makes no sense so every insurer hedges their bets and invests their float elsewhere. (4/10)
Sometimes this may be the sole profit maker so they may buy low-risk government bonds or invest in listed shares or commercial properties.

Now Warren Buffet was a seasoned investor, so he knew how to make money, well, make money. (5/10)
But for that, he needed deep pockets and insurance companies were perfect.

Warren understood the opportunity and used the float from these companies to make strategic investments that led to Berkshire becoming the conglomerate it is today. (6/10)
But Warren’s insurance companies not only made money from the float, but also by underwriting its customers, which actually is pretty rare in the insurance market. (7/10)
One of Berkshire's biggest insurers- GEICO, has been profitable since 2000 from an underwriting perspective. In contrast, its largest competitor, State Farm, has consistently generated billion-dollar underwriting losses.(8/10)
Thus, Berkshire Hathaway’s crown jewels are its insurance businesses, giving Warren and his team of investors money they can invest as they see fit. (9/10)
Now, we couldn't possibly match Warren Buffett's investment advice, but we sure can help you select the most suitable health & term insurance policies.

Drop us your insurance queries on WhatsApp- bit.ly/3eIrQy6 (10/10)

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Ditto Insurance

Ditto Insurance Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @joinditto

13 Sep
Here's a simple guide on how you can effectively claim your health insurance👇

Part 1- Cashless claims.

A thread.🧵(1/10)
#Insurance companies have tie-ups with a number of hospitals to manage cashless claims, you might have heard them, cause insurers love to brag about them. (2/10)
They are called network hospitals and here, the hospital and the insurance company settle the claim amongst themselves, with little to no effort from your part. (3/10)
Read 11 tweets
9 Sep
America's richest billionaires are using #insurance to escape paying up their fair share of taxes.

How exactly?

A thread👇 (1/9)
The Biden administration is coming for rich Americans.

The plan is to extract $1.5T in taxes from the top 1% over the decade.

So are these folks going to cough up more in taxes?

No, they’re called tax-savvy for a reason. This time, insurance is coming to their rescue. (2/9)
We are talking about "private placement life insurance."

PPLI is a glaring loophole that can help billionaires not pay up their fair share of taxes.

And here’s the fun part - it’s totally legal. So how does it work? (3/9)
Read 9 tweets
4 Sep
Did you know you can get FREE health check-ups from your insurer?

(1/8)👇

#insurance
☀️It's a lazy Saturday afternoon. You've been waiting for almost an hour now and you can't help but look at the receptionist intently hoping he will call your name.

And then suddenly when you least expect it, you hear your name called out loud. (2/8)
😷You walk into the doctor's room. He directs you to a certain spot and measures your height. He then checks your weight.

He makes you sit straight and then takes your blood pressure. He listens to your heart & lungs and orders a blood test for cholesterol & blood sugar. (3/8)
Read 8 tweets
2 Sep
A simple checklist to select the best health insurer for you.

A thread🧵(1/12)
1.) Network hospitals:

You may have seen this word plastered on every insurer's website, but what it basically means is that if you're hospitalized in one of the insurer's network hospitals, you can avail cashless payment from your insurer. (2/12)
The insurer pays to the hospital directly without you having to pay up and be reimbursed later. So an expansive hospital network is always a good thing. (3/12)
Read 12 tweets
31 Aug
How Ping An became the world's largest insurer.

A thread🧵 (1/8)
How far would a brand go to make sure that customers are always engaged?

That’s Ping An – the world's biggest insurer, at least when measured by its total assets. (2/8)
At first look, they have invested in sectors and technologies that have nothing to do with insurance but on second look, they have everything to do with insurance. (3/8)
Read 9 tweets
26 Aug
Insurers can give you BONUS coverage every year you don't make a claim. How?

An important read👇 (1/8)
Insurers will tell you they want you to stay fit and healthy. In fact, they will even incentivize you in a bid to achieve this objective. (2/8)
For instance, how would you feel if somebody told you they’ll up your cover (above and beyond the sum insured) by 50% each year in the event you don’t claim insurance. That would be amazing, right? (3/8)
Read 8 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

:(