A very condensed article to understanding how insurers think, from an investor's point of view.

Bear in mind when reading the article below, that policyholders are not investors, even when the insurer is a Mutual company like Hal's company, because even then they can't 'cash out or sell the stock'.

Policyholders have no say in how an insurer 'invests' money. They contract with insurers to indemnify them against loss, so in my opinion, an insurer's poor investment performance should never reflect back to policyholders in the form of higher premiums because insurers weren't contracted as investors, and insureds weren't assuming risk of investing; quite the opposite, they were contracting to avoid the risk of loss.

Personally, I think this demonstrates one of the dramatic conflicts of interest inherent in insurance: the need to satisfy investors, vs the contract to indemnify insureds. Tough line to walk, until you realize that the insureds have a contract to eliminate risk of loss, and the investors chose to risk loss, or gain. The priority is the insured, not the investors. Conflict solved.

JMHO

http://www.fool.com/personal-finance/insurance/2006/12/29/a-closer-look-at-insurance-stocks.aspx