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Collection: Mohnish Pabrai - #119 'Lesson From Owning An Insurance Company'


Video Link: https://youtu.be/H2f9gMXr2eY


In this episode, Mohnish Pabrai was asked what kind of insurance activities that his insurance company is involved and how it might relate with his investment fund?


In this episode, you’ll learn:

  • What Mohnish Pabrai learned from owning an insurance company?

To check out all Collection: Mohnish Pabrai <click here>

 

[Transcript]

(Source: https://youtu.be/jfxOvdiac94)

AUDIENCE MEMBER 00:00

Hi, so I read that you have an insurance focused company, and this is kind of similar to what Warren Buffett has done with his insurance companies. I was wondering what kind of insurance activities you’re involved or operations you do and how this might relate with your investment fund?


MOHNISH PABRAI 00:19

Yeah, we bought an insurance company, it’s based in Louisiana. It does workers comp insurance in five states around the South and it does $60 odd millions in premiums, and it’s a nice business.


But one of the reasons I wanted to buy the company that I felt that I would really learn the insurance business and I’m getting a big education on the insurance business and quite frankly, I think there are – I’d rather own See’s Candy. (Laughter)


That’s what I learned is I’d rather own See’s Candy than the insurance business. So I’m – that’s why one of the reasons I did that talk is to get my head focused on Coke and not insurance.


So insurance is a good business because it obviously you get other people’s money to hold but also it has attributes of a commodity business because whenever our insurance company is trying to sell a policy, the people who are buying a policy, think of it like a tax, none no one thinks they ever going to file a claim. So they want a low price and they take the cheapest bid. And so the economics are very different from the economics of Coke.


And so one of the things I learned from owning the insurance company is that I really want See’s, so that’s what I’m going to do is focus more on See’s, less on insurance. That’s what I’d recommend to you as well.

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