Posts Tagged ‘Risk’
Posted by Larry Doyle on March 12th, 2009 6:30 PM |
The world of insurance occupies almost every corner of our lives. Life, home, auto, disability, long term care, personal articles. Rather than addressing what is insured, an easier question may be to ask what isn’t insured.
Given the intricate web of products and accompanying risks, we clearly are not currently dealing with your grandfathers’ insurance companies.
All that said, insurance is a relatively simple business. A policy is underwritten, premiums are collected and invested, and on and on we go. In fact, with major policies incorporating outsized risks, insurers can “lay off” risk with reinsurers, such as Munich Reinsurance, Swiss Reinsurance, and General Reinsurance. One would think this should be a steady and stable, if not quiet, industry. It would be such if companies did not reach for outsized returns through ever greater risks, primarily in the products in which they invested. While The Quiet Company, Northwestern Mutual invests primarily in high quality corporate bonds, entities like AIG trafficked in esoteric CDS. Hartford Financial Services played in the lower credit sectors of the commercial mortgage space, sub-prime mortgages, and junk bonds. (more…)
Tags: AIG, commercial real estate, corporate bonds, Fannie Mae, Freddie Mac, General Reinsurance, Hartford Financial Services, insurance companies, junk bonds, Met Life, Munich Reinsurance, Northwestern Mutual, reinsurers, Risk, sub-prime mortgages, Swiss Reinsurance
Posted in American Consumers, Banking Institutions, Credit Risk, Current Affairs, Economy, Education, Fannie Mae, Freddie Mac, General, Insurance Industry, Wall Street | 4 Comments »
Posted by Larry Doyle on March 10th, 2009 2:37 PM |
The stock markets are having a very robust, broad based rally today. All major market averages are up almost 5% or better. Gold is down approximately 3%. Foreign stock markets also had significant rallies. Can we put this pain behind us? Is it finally over?
In dealing with markets and the economy, it is never over. The critical, mental acuity in dealing with the markets and economy is understanding the dynamics at work and the associated risks. Along with a host of other goals, I firmly hope that my work here at Sense on Cents is able to help people understand those dynamics and the accompanying risks. It is a process, but I will keep after it and I hope you find it enlightening and informative. If so, please comment and share Sense on Cents with your friends. (In fact, you can share this piece, and any other piece here at S o C by using the “ShareThis” link underneath the title line of each story). Let’s assess today’s market action. (more…)
Tags: day trading, earnings, Economy, EU, foreign stock markets, global economy, gold, government bonds, housing, Martin Feldstein, rallying market, Risk, Sense on Cents, Unemployment, Vikram Pandit
Posted in American Consumers, Business, Citigroup, Commerce, Credit Risk, Economic Stimulus, Economy, Employment, Equity Markets, European Union, Global Finance, Housing Crisis, Insurance Industry, Real Estate, Risk, S&P 500, Stimulus Tax Package, Wall Street | 8 Comments »
Posted by Larry Doyle on March 5th, 2009 5:50 AM |
I always maintained that Fannie Mae’s risk management was horrendous. Having engaged this organization in business for many years, it was obvious that their risk was managing them rather than vice versa. While the organization mismanaged risk, their former CEO, Franklin Raines, obviously knew it was prudent to keep expenses down. Franklin Raines, however, knows how to play politics with the best of them and has never let his reputation get in the way of developing marketable relationships.
I wrote about Mr. Raines specifically and Freddie Mac and Fannie Mae in general in a piece last October. I followed that up with a review of Mr. Raines Returns to Washington in mid-December. (more…)
Tags: Angelo Mozilo, Congress, Countrywide, Fannie Mae, Franklin Raines, Freddie Mac, Risk, Wall Street Journal, Washington D.C.
Posted in American Consumers, Barack Obama, Christopher Dodd, Congress, Economy, Fannie Mae, Freddie Mac, Mortgages, Wall Street | 2 Comments »
Posted by Larry Doyle on March 2nd, 2009 4:24 PM |
On the heels of the news about AIG, Berkshire, and HSBC, the equity markets have found no support today and are down 4%. While the malaise of the markets has much of the focus, let’s review a few other items that I see on today’s menu:
1. In regard to AIG, current CEO Edward Liddy and former CEO Hank Greenberg have started some public feuding over the nature of AIG’s problems. Greenberg is trying to make the case that the risks underwritten at AIG occurred after his departure. Liddy responded that the culture, the compensation system, and the division housing the bulk of AIG’s risk all developed under Greenberg. Wow!! When our country is screaming for leadership, we have senior executives playing the blame game and pointing fingers. How pathetic!! (more…)
Tags: 12th Street Capital, AIG, Berkshire Hathaway, California housing, CMBS, compensation, consumer finance, DJIA, economic activity, Economy, Edward Liddy, Hank Greenberg, housing, HSBC, Risk, RSI, Washington D.C.
Posted in Bailout, Banking Institutions, Business, Commerce, Credit Risk, Current Affairs, Deficit, Economic Stimulus, Economy, Employment, Equity Markets, General, Global Finance, Government funds, Housing Crisis, JP Morgan, Mortgage Crisis, Mortgages, Real Estate, Reputation, Unemployment, Wall Street, Warren Buffet | 8 Comments »
Posted by Larry Doyle on February 27th, 2009 10:45 AM |
It is widely believed that the weakest link in the global economy centers on Eastern Europe. In light of that, the leaders of 12 eastern European countries are holding an emergency economic summit this weekend. From that summit, it is expected that these countries will request an international bailout.
As of now it appears the countries in greatest degree of stress are Hungary, Ukraine, and Serbia. The expectation is that the group of countries will request the European Union to arrange a $230 billion bailout package. Who would provide the funding? A conglomerate of European Central Banks, the International Monetary Fund, the World Bank, European Investment Bank, and European Bank for Reconstruction and Development.
A major issue for eastern Europe is that their creditors, largely western European banks along with western European countries, are not exactly in great shape themselves. These countries may look to accelerate their entry into the EU and the full adoption of the Euro along with it.
As the pressure and stress builds, the chance of political dislocation also grows.
For further details on how Hungary Seeks $230 Billion Bailout for Eastern Europe. I will be monitoring this situation as it develops. As our global economy is very much interconnected, the increase in sovereign credit risks is a very serious concern.
LD
Tags: Bailout, billion, conglomerate, credit, dollars, eastern, Economy, Europe, finance, global, Hungary, international, package, political, pressure, Risk, Serbia, stress, summit, Ukraine
Posted in Bailout, Credit Risk, Eastern Europe, Economy, Euro, European Union, General, Global Finance, Hungary, International Monetary Fund, Serbia, Ukraine | 2 Comments »
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