Williams: Farmers Insurance had nearly 50 balance sheets and $1B in cash
Karyn Williams · Karyn Williams – Measuring Risk Practically at Hightree Advisors (Capital Allocators, EP.163) · Nov 9, 2020 · at 23:00
Karyn Williams, founder of Hightree Advisors, describes the state of Farmers Insurance's balance sheets when she joined as Head of Investments after the 2008 financial crisis.
0:00 / 0:07exact quote · 7.9s
720p mp4 · rendered on demand · StarZero watermark
“Balance sheet that had grown by acquisition. There was something like almost 50 balance sheets. And, you know, there's a billion dollars in cash.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Karyn Williams
Williams: Asset classes correlate during a crisis, while risk factors do not
“If you shifted from an asset allocation approach to a factor approach, And you really wanted to get very clear on what the unique risks are, that if you ended up in a crisis, would tend to not be correlated. Asset classes are. Factors by construction are not.”
Karyn Williams: Smaller banks drive FX price discovery, not large banks
“The analysis that I ran suggested that the prices were being updated by the smaller players, not the larger players. And that made sense to me because if you're going to put information in the market, move that market, you had a trade to make and somebody on t…”
Williams: Mean-variance optimization is a conceptual framework, not a direct tool
“Really surprised that the mean variance optimization framework was applied directly and simply. Like, even from early days, it didn't make sense to me that these concepts, really, the point was to say something about how risk should be perceived, that it's sys…”
Williams: Standard deviation rarely reflects the actual risks institutional investors face
“So the expected return being a point estimate May connect well into, I want to cover expenses, and I want to grow, and I want to pay fees, but the risk, meaning of variance and their standard deviation, only by some strange coincidence would be connected to th…”
Williams: Granular trading risk models are a bad fit for institutional allocators
“Well, that's helpful to someone who's trading A portfolio, say, of a number of stocks and bonds, multi-asset class, we brought those models to institutional investors, but that's not at all the right way to approach the problem. They have different purposes. S…”