Friday, November 30, 2007

The subprime liquidity problem, interest rates, and insurance companies

So... just how bad is the subprime mess? In my opinion, it's pretty bad, but it's not nearly as bad as its press. I think that the absence of a secondary market for mortgages and fear of draconian federal regulation has iced up the lenders a bit, but in the long run I think that the market forces at work here are simply going to encourage smarter risk-taking. I think that's a good thing.

The bad news for insurance companies is that it sounds like we may be looking at yet another rate cut, due to concerns about slowing economic growth related to the subprime debacle. It's shaping up to be another tough year for the carriers with more potential for drain on surplus. The carriers who are still running old batch systems won't be in a position to make a technology investment, they're going to miss the start of the $41T revolution, and they may never get a chance to recover. Ditto those who dumped huge dollars into the technology flavor-of-the-month, and are continuing to do so, despite little progress.

There are a couple of technology solutions that can help. I can help you sort through the noise and the hype. You can reach me at my gmail account. My user id is keithguard.

Don't wait. And if you do wait, please don't say I didn't warn you.

Thursday, November 29, 2007

Ping An invests $2.7B in Fortis

Chinese insurance company Ping An has paid $2.7 billion US (about 1.8 billion euros) for a 4.2% stake in Dutch insurer Fortis.

This deal gets Ping An's President a seat on the board. Ping An says they may increase their stake to 4.99%.