The organisers of Wimbledon, the All England Lawn Tennis & Croquet Club, revealed they had been paying pandemic insurance since the 2003 Sars outbreak. Insurance had cost £26m over 17 years, but last year, paid out a £174m payout when the tournament had to be cancelled.
AELTC’s revenue totalled £295.7m in 2019 but fell to £4.9m last year. The insurance payout meant it only suffered a loss of a few million £.
What has this to do with the price of pork?
Allianz CEO recently said: “S’pore market is a pond”
This put the ranking that S’pore is now the most competitive economy in the world, something our constructive nation-building media, and even anti-PAP alt media like TOC are trumpeting, into some kind of context and perspective.
Allianz is one of the world’s biggest reinsurers. The CEO was recently interviewed by the FT (Emphasis mine).
The group continues to be linked with more deals. In the last two weeks, it has been touted as a potential buyer for some of the Asian businesses put on the block by Aviva as well as insurance operations being sold by Spanish lender BBVA.
Mr Bäte is quick to play down any interest in Aviva’s Singapore operation. “The Aviva business is a good one but it is the smallest of four large ones in Singapore,” he said.
“Why would I buy a small follower business in a small country that is fully consolidated?”
FT
My point is that its meaningless to compare the economies of city-states (HK was third after the USA) to the economies of countries the size of continents, just as its meaningless to compares the economies of medium sized countries with those of city-states and continental countries like the USA, Russia and India.
Compare apples with apples, not with durians.
He sold too soon a huge stake in Tencent.
From an FT reader commenting on an article on Richard Li who is now in the biz of building a major Asian life insurer (FWD) to challenge the likes of AIA. (Btw, his insurtech, subset of fintech, biz is based here.)
Richard Li never made it as a tech investor. But he came tantalizingly close, once. Back in the late 1990s his company PCCW happened to invest in a small nobody company in what was then the Wild West Chinese border town of Shenzhen. This nobody company was called Tencent. At one point, Mr Li owned something like 40% of it, for which of course he paid peanuts. But then, in 2001, he sold his entire stake to a bunch of nobody South Africans that no one had ever heard of, doubling his amount of peanuts in the process. We know the South African buyer today as Naspers, whose investment in Tencent entered the record books as the most successful venture capital investment ever made.
Really unlucky chap despite being born with a silver spoon in hisa mouth.
But first, why China is great again: Chinese insurer Ping An once had HSBC as a large shareholder but is now the largest shareholder in HSBC.
Besides insurance, it’s into banking, securities broking, asset management and has a trust biz.
In recent years Ping An has invested heavily in the development of new technologies including artificial intelligence, facial recognition and cloud computing.
So it’s becoming a tech co, like Goldman Sachs (At least that is what ex-CEO claimed that is what Goldie is).
Here in Welfarism the PAP way I gave an example (share of taxes paid) that the PAP did welfare: corporates get welfare, not the people
Here’s another: the new requirement that Integrated Shield Plans (IPs) with riders have a co-payment portion of at least 5%.
When the PAP introduced this welfare scheme for insurers, a minister talked about “buffet syndrome” of policyholders.
Well the insurers should have allowed to wallow in their own urine and shit.
The problem was self-created. The “free” riders were created to increase their profits, or so they tot. Now that it was not working for them, the PAPpies should not be riding to their rescue. They should simply stop marketing the products. And start increasing the premiums for existing holders to reflect previous pricing mistakes.
But to be fair to the corporate loving PAP govt: the change has not mandated any change for the 1.1m people who already have full riders for their Integrated Shield Plans (IPs) – which means they still will pay nothing for hospital bills.
But the freeloaders and scroungers that are the insurance industry will not stop lobbying for this to change. They had wanted the co-sharing to apply to the existing contract, or so Secret Squirrel and Morroco Mole tell me.
But the PAP govt didn’t want another public row what with its plans to raise GST after the next GE.
“A 22-year-old driver who parties a lot and drives 10,000 miles a year, or a 40-year-old teetotaling mom who drives 40,000 miles? I might think the mom is riskier.”
– Dan Preston, the chief executive of Metromile, on how insurers calculate risk.
From an FT article
One of the worries in the market is that insurers might have exposure to cyber risk via existing, non-cyber policies. “There are people with old products such as liability insurance or property damage insurance where the wording has not changed for decades,” said Simon Kilgour of law firm CMS.
“There are no specific exclusions in those policies so there is a question of whether a cyber loss would be covered. If you can’t prove that you have excluded cyber, then you have to assume you could be exposed.”
Mr Buffett’s A$500m ($386m, £247m) investment in one of this country’s biggest insurers, Insurance Australia Group (IAG), has spurred speculation about other companies he might invest in.
Mr Buffett does not like taking risks, a senior analyst at investment research firm Morningstar, David Ellis, told the BBC.
“He wants a reliable return, and that’s what the Australian market gives him. It is very mature and well run,” explains Mr Ellis about why the American investor from Omaha has invested in IAG.
This 90-yr old makes one Harry look like a wimp. At 80, he started an insurance co. and in his 80s, he sued the US govt. From NYT Dealbook:
GREENBERG STILL IN THE RING In 2005, Maurice R. Greenberg was forced to resign from American International Group under the shadow of an accounting scandal, which he is still battling in court as he gets ready to turn 90 on Monday. And Mr. Greenberg is also the driving force behind a four-year-old lawsuit claiming the federal government unconstitutionally seized A.I.G.’s assets during the financial crisis. “Few people would choose to spend their golden years surrounded by lawyers, facing subpoenas and hostile cross-examination. Yet, if anything, Mr. Greenberg seems to have been energized,” James B. Stewart writes in his Common Sense column.
Mr. Stewart recounts Mr. Greenberg’s activities in the 10 years since he resigned from A.I.G. at age 80: He helped build the privately held C. V. Starr & Company into a global insurance company with over 3,000 employees, and he is the director of the Starr Foundation, which has bestowed over $2.2 billion in grants to New York charities alone. Mr. Stewart decided to pay the former A.I.G. chief executive a visit to learn the secret of his longevity. Mr. Greenberg credited his health to good genes, plus he exercises regularly and gets adequate sleep. But what carries him through the prolonged legal battles is his desire to set the record straight, Mr. Stewart writes. “I’ve always believed that if you do something wrong, you should admit it,” he told Mr. Stewart. “But if not, you fight for what you believe in.”
“Age doesn’t matter to me,” he said. “No one is invincible, and I might not wake up tomorrow. But I don’t think about that. I’m doing what I want to do, and that’s what’s important.”
No not LKY but Tidjane Thiam who FT reports got a 36% pay rise to £11.8m in his previous job at Prudential.
Thiam was born in Ivory Coast in 1962. His mother was the niece of Ivory Coast’s first president, while his uncle on his father side is Habib Thiam, who was president of Senegal for 10 years.
Thiam himself worked in the Ivorian government from 1994 to 1999, working as the head of the National Bureau of the Technical Studies and Development and a personal economic adviser to Ivorian president Henri Bédié.
When he became minister he was not paid for six months (as was everyone else in the ministry: there was a financial crisis) and a military coup meant he wasn’t paid. He ended up in prison for a few months He left his country with nothing except his brains and a good name: for example the World Economic Forum named him one of the 100 Global Leaders for Tomorrow.
More on him from sometime back
RISK EXPERT TO LEAD CREDIT SUISSE Shareholders responded positively on Tuesday after Credit Suisse announced that Tidjane Thiam, the chief executive of the British insurer Prudential, would succeed Brady W. Dougan as chief executive, Jenny Anderson reports in DealBook. Shares of Prudential slumped 2.6 percent, while shares of Credit Suisse closed up 6.7 percent. The positive reaction reflects the rise of Mr. Thiam’s reputation in London financial circles and expectations that he will change the course of the Swiss bank, which in recent years has had large legal expenses, largely as a result of its role in helping Americans evade taxes.
Mr. Thiam, an African francophone, has never worked for an investment bank, though he has completed stints at McKinsey, the World Bank and two insurance companies since 2009. And while it remains to be seen whether someone with virtually no banking experience can turn around one of the world’s biggest banks, the need for a leader with Mr. Thiam’s skills and knowledge “speaks volumes about the state of global banking today,” Ms. Anderson writes. “More and more, regulation is pushing banking to be more like insurance: cautious and focused on costs and the allocation of capital.”
In interviews on Tuesday, Mr. Thiam played down his lack of experiencein investment banking. “If you talk about investment banking, Prudential has an $800 billion balance sheet, and we deal with exactly the same issues, whether it’s interest rates or markets,” he was quoted as saying on Bloomberg Television. “There is a lot of overlap.” Still, his lack of ties to the investment bank could mean he will be able to make cuts that Mr. Dougan may have been reluctant to make, Ms. Anderson writes. The change at Credit Suisse will be effective in June.
NYT Dealbook
Asean round-up
Indonesia
This two-timing was predicted:
Despite Indonesia committing to ratify the regional pact on transboundary haze pollution by early next year, at the latest, and agreeing to share digitised concession maps with other governments, Singapore’s Minister for the Environment and Water Resources Vivian Balakrishnan left yesterday’s regional meeting on the haze problem “disappointed (but) not surprised”, in his own words …
Only two of the four outcomes that Singapore had sought were fully met after the four-hour meeting: Getting the participating countries — Singapore, Malaysia, Indonesia, Brunei and Thailand — to involve high-level officials from all relevant ministries and agencies from each country in the MSC process, and getting a commitment from Indonesia to ratify the ASEAN Transboundary Haze Pollution Agreement “expeditiously”.
Singapore was unable to get an agreement from Indonesia to renew their collaboration to reduce forest fires at Jambi and other provinces if possible, with Indonesia issuing a noncommittal response to offers of bilateral collaborations from Malaysia and Singapore.
While it welcomed the offers, Indonesia is “currently identifying the areas of cooperation which will maximise and bring mutual benefits for all parties concerned”, a press released issued after the meeting said.
Singapore had also hoped to get the participating countries to submit their concession maps and agree a date for the public launch of the ASEAN Sub-Regional Haze Monitoring System (HMS) platform to enable identification errant companies engaging in slash-and-burn practices.
Maps from the Indonesian govt are the only way S’pore can establish whether S’pore-based companies are telling the truth about where the fires are burning. If the accounts of the S’porean (mostly controlled by Indonesians) are taken at their face value, the fires are almost always anywhere except on their land. Note that despite the allegations by Indon officials that S’pore companies started fires , only one co, a M’sian co,has been charged.
Related post: https://atans1.wordpress.com/2013/06/26/why-plan-suffocate-sporeans-failed/
Thailand/ Insurance
Meiji Yasuda Life Insurance Co is expected to acquire a 15% stake in Thai Life Insurance Co. in what would be one of the biggest investments ever in Asia by a Japanese life insurer With the planned investment worth about ¥70 bn (US%700bn), Meiji Yasuda wants to make the major Thai insurer into an equity-method affiliate and dispatch executives, the sources said.
Like other Japanese insurers, Meiji Yasuda is looking to expand overseas earnings, especially in Asia, amid sluggish business at home due to the aging of society.
Sumitomo Life Insurance Co. has made a ¥28 bn investment in Vietnam’s top insurance group, while Dai-ichi Life Insurance Co. in June announced a ¥34.3 bn investment in Indonesia.
Sumitimo which lost out to Yasuda is now looking to Indonesia where Bank Negara is looking to sell up to 40% of its life business for up to $800m, according to the FT.
Japanese banks have been active too. https://atans1.wordpress.com/?s=Mitsubishi
American International Group becomes free after September 4 to sell a US$7.6 bn stake in former unit AIA. If AIG does decide to sell the entire18.6% , the deal would be Asia’s biggest-ever block offering ever.
AIG could decide not to sell anything or it could sell off a small chunk. But expectations are that it wants to sell everything and soon.
AIG spun off two-thirds of AIA in 2010, raising US$20.5bn in the world’s third-largest IPO ever at the time. AIG agreed not to sell its remaining stake until this yr. In March it sold some, raising US$6bn.
AIA’s shares are up 9.5% so far in 2012 (the Hong Kong financial services sub-index finance/market is up 4.7% in 201) and are up by 35% since its IPO. It is seen as a proxy to Asia’s growing wealth and booming demand for insurance and other financial products.
But AIA is not expensive compared to its peers. It trades at 16.3 times its 12-month forward earnings, according to Thomson Reuters data, while Asia-Pacific insurers on average trade at forward price-to-earnings ratio of 15.3.
AIA shares have remained resilient despite the stock overhang issue and just a week before the March selldown, the stock came within striking distance of its all-time high. AIG sold the AIA shares at HK$27.15 in the March selldown and on Friday the stock traded flat at HK$26.55.
As usual the underwriters are expected to line up a large investor or strategic buyer to take up a big chunk of the deal. GIC or Temasek? Temask is a cornerstone investor, I think.
In fact sounds harder than flogging life insurance. ING’s attempts is case in point.
ING may break up its Asian life insurance operations and is holding talks with buyers interested in the business in different countries.
The company is currently in discussions with Manulife Financial and AIA Group Ltd or the Southeast Asian operations, and with both firms as well as KB Financial Group Inc for those in South Korea.
ING is also in talks with a consortium led by Mark Wilson, the former head of AIA. Backed by Blackstone and Swiss Re. Wilson bid for the entire Asia business. m Richard Li, son of Hong Kong’s richest man, bid for ING’s operations in Southeast Asia and Japan.
Two private equity funds have bid for the Japanese operations.
Meanwhile UOB, among many others, are interested in ING’s fund mgt unit.
Financial institutions that were peddling subprime loans and derivatives thereof have moved on. They are now peddling products that will lose you money each yr (say 15%), but which they claim will make it up and more when a Black Swan happens. And BTW, they use derivatives.
But there are people in this business that have gd track records. Nassim Taleb, author of “The Black Swan”, has a fund which has grown from uS$300m in 2007 to around US$6 billion today.
And, bond funds, PIMCO and BlackRock (who largely avoided subprimes) have similar funds. They also advise clients on this issue.
[Update: AIG tells Pru, “Bugger off on yr new price” ]
Reducing the price to 1.3 times its own estimate of AIA’s embedded value of $22bn (from 1.69 times) would be US$29bn, down from US$35.5bn*. Even at this new price there are UK investors unhappy with the deal.They say execution is difficult, or why risk it? But according to press reports, the Pru’s largest investor, Los Angeles-based Capital Group, indicated it will vote in favour of the deal if the price drops to US$31bn-US$32bn. Prudential declined to comment.
FT’s Lex reports Whispers among underwriters suggest AIG could sell just under half of AIA at 1.6 times its disclosed embedded value**, netting the group about $15bn.
*BTW GE Life is trading at 1.23X 2009 embedded value at its current price of $ 16.20.
**AIA’s 2009 EV is US$18.75bn but Pru has a higher number US$21.01 — 12% higher. No wonder shareholders are upset even though AIA is more traditionally more conservative than Pru. BTW at 1.6x GE is worth $21.
RiskMetrics, an international share proxy advisory service, issued a critical assessment of the AIA takeover bid, saying while a deal had “a sensible strategic rationale”, Prudential was paying a heavy price.
FT reported that RiskMetrics said Prudential was paying US$35.5bn for a company with US$1.6bn in post-tax operating profits.
“For this to work, profits have to grow substantially beyond the expected cost synergies. Our analysis indicates that Prudential needs very high growth rates at AIA to only meet a reasonable return on invested capital, something that seems a stretch when managing a difficult integration process.”
Let me know when our local media report this story.
BTW GIC’s interest in this stock shows that its analysis is different: it is willing to forgo jam today for jam tomorrow (maybe). Hmm must be MM’s 30-yr view at work. Wonder who is right. Remember shortly after he last said this , Temasek sold its BOA stock, just before the market recovered. GIC held on to its UBS and Citi investments.
“You sell billions of cheap stuff to buy billions of expensive stuff,” James Clunie, manager of the 1.5 billion- pound Scottish Widows fund, said in an interview in Edinburgh on May 7. “It’s a bad deal. It doesn’t look sensible,” reported the FT.
He was referring to fact that Pru is trading at around 1 x Embedded Value* and in return Pru is buying AIA for 1.69 X EV, when AIA’s two major markets S’pore and HK are not inmature insurance markets . The Pru is paying in their view for blue skies in China, where AIA has a presence but nothing to shout about unlike the big Chinese insurers who are trading at 2 X EV.
He is not the only one upset. The largest single shareholder with 12%, Capital Mgt is upset. One of its fund mgrs has set up a site advocating that someone pls bid for Pru and split it up.
Warren Buffett if he had been a Pru shareholder would agree with them. “You simply can’t exchange an undervalued stock for a fully-valued one without hurting your shareholders,” he recently said. And he had earlier criticised Kraft for placing out its shares at lower prices than it had earlier bot back shares, in order to finance the Cadbury takeover, illustrating the problem companies face when buying back in what in retrospect is a bear market. https://atans1.wordpress.com/2010/03/03/buybacks-problematic-in-bear-markets/
*“Embedded value” (the sum of net assets plus the current value of future profits from existing policies) assumes that an insurer will write no more new business, nor make any gains on its investments. That is why most recent deals in mature markets have been completed at about 1.2 times – a small premium for control, for cost synergies, and for growth potential. The 1.69 times that the UK insurer is proposing to pay seems bullish, given that AIA’s two biggest markets by gross written premiums are Hong Kong and Singapore, already overrun by agents. FT
Thoughts of a Cynical Investor 