We’ve shared many of these insurance thoughts before, but not all in the same place. Today, we’ll be staying out of the “weeds,” not because “there be snakes,” but we don’t want “detail” to drown out some basic messages.

Insurance is a credit enhancement. If you have a lot of money (think Exxon, Bill Gates, etc.), you can cover your own obligations, pay your own liabilities. You don’t need a sugar daddy back-up. And no one should require you to have one. A landlord who does an absolute-net lease of an entire $100 million building to Exxon, doesn’t need Exxon to buy property insurance from insurance companies. Exxon can buy the insurance companies. It can handle the loss. Its net worth is about $500 Billion. It has more than $50 billion of cash on hand. Chubb Insurance has equity of about $16 Billion. We would have said “only,” but that’s “only” when compared to Exxon. [Read more…]