Nick Martin (Polar Capital) - Insuring A Richer Future

Far From The Finishing Post

In this episode of Far From The Finishing Post we speak to Nick Martin. Nick manages Polar Capital's Global Insurance strategy and has been investing in the insurance industry for 20 years. Nick does a great job of demystifying a complex industry and explaining why the best property & casualty insurers are strong and durable compounding machines.
Show notes:
[ 1:30] Nick talks about becoming an investor and joining Hiscox
[4:08] Thinking about the downside and not taking excessive risk
[5:34] Mapping out the non-life insurance industry
[6:56] Focusing on underwriting rather than macroeconomic conditions
[8:05] The importance of diversification for managing cycles and risks
[10:17] Knowing when to be aggressive and when to be patient and defensive
[12:11] Greater pricing discipline in specialty commercial versus personal lines
[13:58] The ingredients of a good insurer
[14:58] Will underwriters be replaced by machines
[16:32] Being outward-facing and open-minded to change
[18:27] How technology is changing the industry
[20:34] Success in insurance is cultural
[21:44] Berkshire Hathaway and decentralised models based on trust
[24:16] The importance of an owner mentality
[25:28] Incentivisation structures that encourage a long-term perspective
[27:07] Leveraging innovation to create competitive advantage in personal lines
[28:06] Network effects and pricing advantage
[29:58] Price-to-book as a key valuation metric for insurers
[31:52] The critical role insurers play in addressing climate change
[35:31] Assessing risk in a world where climate change is making historic data sets less relevant
[37:05] Encouraging risk mitigation rather than simply just putting up prices
[38:48] Low valuations and rising premiums
[40:44] The power of compounding in all aspects of life