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The Once and Future C&F
4. How can any company still be standing from before that time? When all else fails, get adopted by lenient parents. Most companies that are still around from the old days had significant support from above. As you have read, C&F needed both Xerox and Fairfax — plus a legion of talented people - and some good luck and fortunate timing! F ifty years from now, when C&F’s new CEO finishes reading this book, I wonder what they will think. Did we complete our journey to excellence? Are we a great place to work? Are our partners still working with us? Did we show discipline in the face of the market cycle? Did we set the company up for long-term success? Did the next generation step up? Did we successfully wrestle with the chaos? I’m working on all that. But I’m done with this book. I hope you enjoyed reading it as much as I enjoyed writing it!
the asbestos issue back in the 1980s — or more recently, the COVID-19 shutdown. Beyond which, cyber villains and third–party litigation financiers have models that make them feel better too. On the other hand, some of C&F’s self-inflicted wounds had more to do with human nature than wrestling with the unknowable. There is some hope that the models can moderate the collective delusion that drives the market cycle. Although that might still be aspirational — some things are eternal. Could the industry have another 20-year stretch with a 200-plus combined ratio, operating with many companies being technically bankrupt without recognizing it? Probably not. We have learned some lessons from history. The controls in place today are simply better. I don’t think the industry could go through that kind of extended period of pain without recognizing it, although I would characterize the COVID-19 shut-down as a near-miss for the industry. I would also point out that a trillion dollars of capital is a lot of money — until you start seeing $100-million bread-and-butter personal injury verdicts. 3. How can anyone function in a business with that much uncertainty? I was gifting a fellow insurance company executive my dinner table version of the C&F story (I am fun that way as a dinner companion!). And they said, “How can you function in this business if you are churning in your head all the ways it can go wrong?” I feel that thinking about “all the ways it can go wrong” while still banging the cash register is what makes this business fascinating and exciting. Even so, if you find yourself arguing about where to book your current accident year loss ratio, go high!
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