The insurance industry doesn't mind braving hurricanes and typhoons.
Equity options are another story.
Lately, insurance companies have had little choice but to be creative. Investing premiums has been the main moneymaking activity for years, but despite ideal market conditions, profit margins have continued to erode. Strong securities markets have more than offset declining underwriting revenues, but they've also left the industry so overcapitalized that margins are under severe pressure. Mergers and share buybacks have taken out some, but not nearly enough, capital. A stock market drop would shrink the capital surplus but also savage earnings, with insurers forced to rely on their unprofitable underwriting business.