Category 5
Apr 24, 12:30 PM
Regarding climate change, sometimes I hear people saying “The earth will be just fine…” and I think, “what do I know?” It is a complicated system that’s really hard to experiment with and I really think hype and trying to draw simple conclusions from complex systems we don’t fully understand can sometimes really screw up good science.
But then every now and then you a clear signal that’s hard to deny… I was reading through Warren Buffet’s annual letter to shareholders of Birkshire Hathaway for 2006 and he mentioned his view of climate change:
Were the terrible hurricane seasons of 2004-05 aberrations? Or were they our planet’s first warning that the climate of the 21st Century will differ materially from what we’ve seen in the past? If the answer to the second question is yes, 2006 will soon be perceived as a misleading period of calm preceding a series of devastating storms. These could rock the insurance industry. It’s naïve to think of Katrina as anything close to a worst-case event.
Neither Ajit Jain, who manages our super-cat operation, nor I know what lies ahead. We do know that it would be a huge mistake to bet that evolving atmospheric changes are benign in their implications for insurers.
I think this is interesting because he’s the kind of guy who a.)has a lot of money at risk b.) has a pack of just about the smartest people working for him and c.) has the best track record of any investor. Food for thougth.
