All GLG News Analyses Filed Under: Insurance & Risk Management
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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Alliance: Operating Profits Fall!!Core Operations of Insurance is Not the Problem!
May 11, 2009
Allianz operating profits fall 41% | www.ft.com
Implications: 1.The Institutions Solvency Ratio was Flattered by a SHift in Accounting Procedures.Insurance Operations are stable. 2.The Hedging Of the Firm's Equities exposure and Regulatory Rulings on Bond losses were , to some extent , a salvation. 3.The salient problem at hand is the Insitutions "discontinued" Banking Operations. A viable issue as the Firm's Management diverted Assets to Bank Acquisitions! A Major Error! 4.The Firm's Management provides assurances of a retention of the Firm's Capitalization. 5 Cash generative property and casuality insurance products will ensure a sound capital base. "Time Sensitive Environment"!!!
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Risk Management can not be done with total emphasis on being Politically Correct...
May 4, 2009
Street-Smart Risk Management | www.rmmagazine.com
The value of studying history is in the lessons learned from the past. In financial history, that does not appear to be the case. In my financial lifetime, I have lived through the bear markets of the 70's, hyper and stagflation, the revaluing of corporate assets in the 80's, the crash of 1987, the growth of the derivatives markets, the RTC Savings and Loan crisis, the "Long Term Capital"debacle, mortgage-backed derivatives, Enron, and now the mortgage credit market crisis. Most of these had the best and the brightest right in the middle. What was the common element: -NO CHECKS AND BALANCES, OR INCENTIVES TO PROVIDE THEM. -NO OVERSIGHT, EITHER LACK OF REGULATION OR ENFORCEMENT. -NO PROPER MEASUREMENT OF COUNTER-PARTY RISK, DUE TO GUARANTEES FROM GOVERMENT. -NO APPARENT PENALTIES FOR PEOPLE PUTTING DOWN INCORRECT OR FRAUDULENT INFORMATION. All of these were under the guise of being Politically Correct, without consideration given to plain common sense.
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The Standard Market Risks have been Ignored: Diversification Strategies are no longer Viable!
May 4, 2009
Street-Smart Risk Management | www.rmmagazine.com
Implications: 1. The that the value of an Investment will Decrease due to moves in Market Factors has been delineated. 2.The Basic Factors: (A) Equity Risk, (B) Interest Rate Risk, (C) Currency Risk and (D Commodity Risk have been ignored in many situations and are , now, fatal. 3.The assumptions of Value at Risk are no longer valid - Limited by managerial assumptions! 4.The question at hand is: "What is normal?" There are Normal Business activities and, also Business activities that fall out of the Norm! 5.The probability of adverse circumstances are here and there is A COST associated with not calculating the variables!!!!
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May 1, 2009
Street-Smart Risk Management | www.rmmagazine.com
Sufficient internal controls were lacking and financial statements were misstated. Risk taking authority had been disproportional to accountability. Risks of the cycle can be better managed with the optimal blend of practical risk assessment and incentive alignment. Service fee business income can help relive the overall capital burden.
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Pandemic Risk for Health Insurers, Reinsurers, and Self-Funded Plans
May 1, 2009
FACTBOX: Economic costs of a flu pandemic | www.reuters.com
Actuarial rate projections for health plans generally do not consider the risk of an epidemic or pandemic. A pandemic could easily increase health insurer MLR's or loss ratios by 10%. The impact on health reinsurance loss ratios would generally be leveraged, i.e. significantly greater.
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Global Supply Chain Operators Are Key to Flu Pandemic Response
April 28, 2009
FACTBOX: Economic costs of a flu pandemic | www.reuters.com
HHS, CDC, FDA, WHO, and other public organizations are aggressively implementing emergency response plans. Who are the key actors?
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Swine Flu financial and operational impacts.
April 27, 2009
FACTBOX: Economic costs of a flu pandemic | www.reuters.com
Supply chain disruption Loss of shareholder value Stock market drop Drop in pork demand Travel Restrictions Triggerring corprate and state pandemic plans Increase in Tamiflu/antivirals demand Screening of air passengers from Mexico Increased saftey precautions for import & distribution of Mexican goods Blacklash for government response
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Nathaniel FinkinManaging Partner and PrincipalFinkin Capital Advisors
April 22, 2009
Employers to close more pension schemes as funding shortfall hits record | www.telegraph.co.uk
1) The nature of the employment landscape has so fundamentally changed over the last 30 years that the retirement vehicles put into place to help employees are nearly obsolete. 2) Pensions, in addition to their nearing obsolecence, are becoming significant liabilities for firms, who are struggling with record violatility in the value of their pension funds 3) Firms are finding and utilizing alternative solutions to provide employees with enhanced retirement benefits
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April 21, 2009
ING to shed €8 billion of assets | business.timesonline.co.uk
Also here it will be important to watch their retail reach in the US as they have put limits on new sales of insurance products because of capital concerns. They are also looking to possibly unload the retail broker dealer in the US.
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Pension Funding Shortfalls : A Challenge for UK Regulators
April 20, 2009
Employers to close more pension schemes as funding shortfall hits record | www.telegraph.co.uk
Implications: 1.Companies collapse - workers seek recourse by way of the Pension Protection Fund. 2.Pension Protection Fund surpluses ar falling - an immediate Impact for Employers an Employees. 3.Major cause of disruption is the reliance of Stock Market Performance, which is NOT likely to be favorable to any party. 4.Final closure will be the fact the money pool will not be available for employeees , who are dependent upon upon benefits. 5. Identified Public entities shoud, indeed, seek Alternative Investment vehicles for funding - If provisions are provided for the same by the Authorities.
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