Car Insurance

I should start a reinsurance company. Whatever the 2006 hurricane season brings, rates are climbing and will be, well into 2007. Premiums up, claims down; hell, a fool could make money. I am therefore perfectly qualified. Here’s how it would work

You need a million dollars to kick things off. You put up some collateral and borrow it. It’s not that hard. My car cost almost that. Hock the kids. Then bang the million into a letter of credit trust, and borrow $50 million against it. Now we’re off to the races.

A fast dog-and-pony show for the private equity boys; a call to Stone Point Capital (motto: “Have we got millions for you!”); lunch with some hedge-fund heavyweights. Before you know it, you’re staring down the business end of a billion dollars.

You rent a crumbling rat hole on the wrong side of Hamilton, the reinsurance capital of the world. Telephone, the Internet, some desks and notepads; Bob’s your uncle.

You ask around for who’s looking for a fat raise and some share options (almost everyone). You hire a chairman with a famous face and a secret drug problem. He’s so grateful to be back in the business, he works for nothing. You hire two or three lukewarm bodies that go by the sobriquet of “underwriters,” find an accountant who hasn’t been struck off recently and a couple of secretaries. You buy the three catastrophe computer models and phone A.M. Best, who hand you an A-because they gave everyone else one. Besides, your prospects are rosy.

Then you take a long lunch because the hard part is coming up. You need a name for this venture.

Quite a few good ones are taken. You want something that indicates sturdiness, purpose, single-mindedness and a spot of pizzazz. You reject Lotta Re, Robber Re and Rocker Re, and settle instead on Forever Reinsurance Holdings. On the way back from lunch you hire an ad agency and tell them to come up with some pictures of forts and castles and a cutline. You settle on: “Re. Re. Re. Re. Re. Re. Re. Re-spect. When I get home.”

You fly to Monte Carlo and become epically drunk at all the parties. Everyone notices. They think, “Man, he must be on top of things if he can behave like that in public.” Back in Bermuda, you receive the brokers and their clients, and buy them all a boozy lunch. They buy as much reinsurance as you can dole out. Led Zeppelin plays your Christmas party.

I know what you’re thinking. You’re thinking, “This guy is an idiot. His low-quality approach is bound to fail. Within a year or two, he’ll be making huge losses and his name will be mud.”

Exactly.

You’re not in this for the long haul. That’s for truck drivers. Year One, you take a salary of $2 million, and award yourself a bonus of $3 million more. Share options all round. Dish out press releases about how great you are, and drop hints about acquiring Munich Re.

Here’s the beautiful part. If you fail, so what? You’ve got several million, everyone else gets jobs at other reinsurers, the backers shrug their shoulders and that’s the end of that. If the hurricane season is friendly and you actually make a profit, up your salary by 100 percent, your bonus by 200 percent, marry Paris Hilton, and 15 minutes later get divorced for even more millions.

You go on Oprah and cry. Time magazine puts you on the cover, “How it all went wrong.” Al Pacino plays you in the movie, “Reinsure This!” You consult on the movie, and for the Class of 2008, at $50,000 an hour. You live like a king. A year later, you do it all again. Sweet.