That old line, “The other guy is doing it, so we must as well,” spells trouble in any business, but none more so than insurance.
Many financial services businesses have this problem — managers can be incented, through fees and bonuses, to take on business that someone with a true owner mentality would turn down.
The more distributed the control of a large financial services enterprise, the more likely this problem is to occur. Hence there is a real advantage to having a CEO like Buffett with total control and a large ownership stake.
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