At a recent event hosted by this organisation a prominent
scientist made an interesting observation based on detailed
analysis of the best historical data on extreme windstorm events.
Despite the evidence of a long-term trend for global warming, the evidence suggests that its effect one way or the other is relatively modest when set against the wild swings in the frequency and severity of windstorm formation and the probability of landfalling major hurricanes and typhoons.
This is good news for the property cat industry. People don't like uncertainty and are willing to pay a premium to have it removed from their life or business choices. Nobody wants to see their holiday home blown away any more than they wish to see their livelihood ruined by the excesses of Mother Nature.
Hence, the (re)insurance industry exists to remove this uncertainty for a fee, usually levied at a profitable level comfortably in excess of the actuarial sound probable rate of loss.
(Re)insurers have to be a contrarian lot to be willing to price and accept risk and volatility, but for those with the right temperament and skill, it can be a lucrative occupation over the medium-to-long term.
However, if the trend of global warming somehow made the world more certain one way or the other - whether by removing the risk of major storms, or by making their appearance a near certainty - people would alter their behaviour.
Either they would cease building and owning assets on tropical coasts, or they wouldn't buy any windstorm insurance at all.
And just as windstorms are subject to volatility, so too are equity valuations.
The stock market trader's adage "when the Vix is low, it's time to go" is one of the truest, but also one the hardest to follow, except for steadfast (and highly liquid) contrarians.
The Vix is the ticker Chicago Board Options Exchange Market Volatility Index - a measure of the implied volatility of the S&P 500. When volatility is low, it means that market consensus must be high and that participants are in agreement.
This usually comes after a sustained bull run in stock prices. And, of course, the higher stocks go the less of a bargain they are and the less likely they are to keep going up - hence the rhyming recommendation to sell.
The converse is also true. History has shown that the best bargains are always to be had when stock market volatility is at its peak - think Swiss Re at below SFr10 per share back in early 2009.
And who are some of the best contrarians in the stocks game? Private equity players.
Because they have raised their dedicated capital up front, the "barbarians at the gate" have the liquidity to make conviction calls, take unloved listed firms private and see plans through to fruition.
It is interesting that in a volatile global equity market that is causing IPOs to be pulled and delayed across continents, it is the private equity market that is once again stepping into the breach, sensing an opportunity to profit.
See the latest story on the UK's Direct Line and how its IPO travails have attracted the attention of the private equity sector once again.
In Direct Line's case, back at the height of the global financial crisis private equity players showed themselves to be the only group capable of living with the volatility of owning an insurer.
In addition, they offered what, with hindsight, would have been top dollar prices into the bargain.
Following the Achilles consortium's successful purchase of Brit last year, some in the industry worried that further attention from private equity might cause unwelcome cultural changes in their quarry.
However, given the contrarian nature of the two sectors perhaps there is a greater cultural affinity between them than is often thought.
As nervous investors continue to shun our sector, could it be that private equity is a model of ownership whose time has come?