- Joined
- Apr 14, 2006
- Messages
- 23,147
My understanding of the capital structure of insurance companies is generally the same as Brewer's, although I am not certain as to whether the regulated insurer issues the annuity or another subsidiary of the holding company.
Corporate structure has been a hot topic of discussion in the context of the monoline bond insurers. The creditors and equity holders of the holding company want the (profitable) municipal bond insurance sub and the proposed (unprofitable) CDO insurance sub to be sister companies just below the holding company, so the holding company will continue to have access to the dividend from the muni insurance business. The CDO insurance policy holders call foul, because they want access to the muni bond insurance dividend before it gets up to the holding company. Accordingly, they argue that the muni insurance company should be a subsidiary of the CDO insurance company. It's all about who is closest to the valuable assets
In any event, I really have no dog in this fight. I'm sure that for the right people, in the right circumstances, for the right reasons, an annuity might be appropriate. However, I have determined that I am not among that group.
Rather, my point was more generally directed to those who invest in preferred stock of any company. In my opinion, the yield on a preferred stock issue rarely compensates for the fact that you will likely recover squat in a bankruptcy.
Corporate structure has been a hot topic of discussion in the context of the monoline bond insurers. The creditors and equity holders of the holding company want the (profitable) municipal bond insurance sub and the proposed (unprofitable) CDO insurance sub to be sister companies just below the holding company, so the holding company will continue to have access to the dividend from the muni insurance business. The CDO insurance policy holders call foul, because they want access to the muni bond insurance dividend before it gets up to the holding company. Accordingly, they argue that the muni insurance company should be a subsidiary of the CDO insurance company. It's all about who is closest to the valuable assets
In any event, I really have no dog in this fight. I'm sure that for the right people, in the right circumstances, for the right reasons, an annuity might be appropriate. However, I have determined that I am not among that group.
Rather, my point was more generally directed to those who invest in preferred stock of any company. In my opinion, the yield on a preferred stock issue rarely compensates for the fact that you will likely recover squat in a bankruptcy.