"How long is that period?"
Leo thought for a moment. "Three months? Six months?"
"The average is three to six months."
Roosevelt said, "This means that at any given time, insurance companies have tens of billions in cash sitting on their books. And they don't have to pay any interest on that money."
"That's what's called 'float.'"
"Why does Buffett love buying insurance companies? It's precisely because he's after this cash flow that he can use long-term."
"What do the insurance companies do with these tens of billions of USD?"
"They buy government bonds, stocks, and real estate. They start hedge funds."
"Their real source of profit is the investment returns from this massive amount of capital in the financial markets."
"And, Leo, that's just the tip of the iceberg."
Roosevelt's voice grew deeper.
"Besides playing with time, they also play with structure."
