[thaumasiotes]

> No, their job is to accurately calculate the expected value of the losses, then collect a premium slightly higher than the expected value, turning an unpredictable, potentially high loss into a predictable small one. Reverse gambling, basically.

No, premiums don't need to cover payouts. You have to pay the premiums before you get any payouts, so the company invests them and makes money that way.

[gruez]

That's still basically the same thing if you take into account the opportunity cost of the premiums rather than the raw dollar value.

[hansvm]

Off-topic, I find people have a similar misunderstanding of FAANG compensation. Functionally, the salary + RSU + bonus + refresh structure is equivalent to a larger salary (enough to cover fees for the following procedure) where you take out 4-yr loans every year to invest in the company stock. With that in mind, listing the realized stock growth when describing total compensation always felt a bit disingenuous.

[pkteison]

Nobody will give you an unsecured loan for 100 percent of your salary, but tech companies will happily grant you rsus for that much.

[hansvm]

100% is a bit uncommon. Take that at face value though. BigCo tech companies have much lower salaries than what you can get elsewhere. Compare a salary of X/yr plus a 4-yr RSU grant of X/yr to a salary of 3X. You absolutely can get a 50% partially secured loan for 4X to obtain similar payment characteristics to the BigCo offering (speaking in round numbers to keep the math simple, and ignoring fees, hedging, ... because they change exact thresholds and other minutiae rather than the core of the argument).