I have not researched it in detail, but I surmise you are correct in the split scenario. There are laws in place (states vary in this) concerning insurance companies that go broke, and how other insurance companies must assimilate those policy holders in this event. I do not know about brokerage firms, but I suspect you get a big fat zero back on these monies.
Here is a response I gave on SI. Why I even bother sometimes I don't know.
To:Jeff who wrote (12053)
From: KevinMark Wednesday, Oct 23, 2002 10:44 PM
View Replies (2) / Respond to of 12060
>>>and yes doc....you still haven't posted anything useful to back up your new bull claim.....still waiting....<<<
No need, I posted all the reasons for a major rally several weeks ago while everyone was so ready to short this thing down to 1000.
I'm still waiting for a 1000(maybe next year, not this year). BTW...there's only one indicator that is even close to getting overbought, and I do mean "only" close. Therefore, we're going higher.
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To:KevinMark who wrote (12057)
From: SOROS Thursday, Oct 24, 2002 12:07 AM
Respond to of 12060
Exactly, what is the PE ratio on the semi's now? Do you see this group of stocks as raging values right here? Do you see this segment of industry in a ramp-up phase with business going through the roof from now through all of next year? What indicators do you use for determining when the semi's are "overbought"? Do you view bad economic news always as good news based only on the perception of what Greenspan "might" be able to do to help the bad situation? Do you think if something does not work 10 times, that means the "odds" are really better that the next time it will -- i.e. if you wrongly call heads or tails ten times, that your odds of being correct the 11th time are actually better than the first ten times? I'm really interested in your answers and stand to be corrected in my perception of you. You just seem to be a "new era" economist who bases everything on "pro-forma" data. The entire market and CNBC-type thinking has evolved just as the education system for the children has. That is, there is no right and wrong, only perception, and that can be changed at the drop of a hat. The problem with this type of reasoning is that some laws are immutable. They can be bent for only so long, and then they snap back quickly and severely, rather than gradually and comfortably as nature intended.
I remain,
SOROS
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