tag:blogger.com,1999:blog-4815867514277794362.post4152233906501361635..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: From the comments - believing in MagicJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-4815867514277794362.post-8455510851285908002008-09-01T11:26:00.000+10:002008-09-01T11:26:00.000+10:00I assume these "loss triangles" plot the annual in...I assume these "loss triangles" plot the annual inflow of losses by loan book year on the y-axis and the # of years post-origination on the X-axis. <BR/><BR/>I guess the logical next step is sum up the loss triangles to get a plot of annual cash outflow due to losses?<BR/><BR/>My concern with this model is that something may have fundamentally changed with recent losses. The worse case scenario is that lifetime default rates are higher than historicals, and these losses are coming in much earlier. Even if the MIs can cover the long-term losses, I am not sure they can survive the short-term cash-flow squeeze. <BR/>It is also questionable whether the re-insurers can pay up when capital is needed, since everybody else will be collecting too.Anonymousnoreply@blogger.com