Forbes Magazine has and excellent article – well worth the read – here’s the synopsis:
“French insurer Aviva wrote a life insurance contract which allows policy holders to switch funds this Friday based upon the prices of those funds last Friday – which was fine and common back in the 80s and 90s but since then there have been a few technological advancements which allows us to look up asset prices in seconds. Many policy holders noticed this and started aggressively managing the savings in their funds and thought if I can trade today (Thursday) on last Friday’s prices I’m likely to do pretty well.
I said it gets better: and it does. Herve-George (a policy holder) is, under the terms of the contract, allowed to add more funds under the original terms of the contract. He’s made arrangements with a hedge fund or two (who wouldn’t like 70% per annum returns?) to inject perhaps a further €20 million….”
Click here to read full article.