Two U.S. scandals evoke Galbraith’s bezzle 9 Feb 2016 Bad practices led to CEO departures at Blackstone-backed mall owner Brixmor and HR software unicorn Zenefits. It’s a useful reminder of a Depression-era observation that good times mask bad behavior, but hard times expose it. These examples may be just a taste of what’s to come.
Generali CEO exit bearish sign for corporate Italy 26 Jan 2016 Mario Greco’s imminent departure from the Trieste insurer to rival Zurich is a direct transfer of Italian talent across the Alpine border. His new employer could use the help. But concerns that Generali’s board was returning to its “salotto buono” days would be worrisome.
AIG makes late push toward mediocrity 26 Jan 2016 The mega-insurer unveiled plans to sell businesses, slash costs and return $25 bln to shareholders. That’d be a lot for most companies under siege from an activist like Carl Icahn. It’ll only get AIG to a subpar return on equity of 9 pct. This breakup story has further to go.
MetLife spinoff plan hedges SIFI and activist risk 13 Jan 2016 The $50 bln insurer may offload its U.S. retail arm. Boss Steven Kandarian is fighting watchdogs over the systemic label, but carving out the parts most vulnerable to capital hikes lessens the impact of losing. And Carl Icahn’s agitation at AIG shows insurers need to stay alert.
Aegon investor cheer more about cash than capital 13 Jan 2016 The Dutch insurer has divulged a higher-than-feared position under Solvency II capital reforms. A strong showing is vital, but the real point is that it means Aegon can give clarity on dividends. The ability to make payouts is becoming the de-facto sign of insurers’ health.
L&G swells ranks of quarterly report refuseniks 11 Dec 2015 The UK insurer and asset manager has ditched quarterly reporting and will update the market on a semi-annual basis. Reduced transparency is forgivable: Legal & General’s business is long term and lumpy. Rivals could follow, though saying less rather than more isn’t for everyone.
Foreign insurers buy protection for Indian IPOs 10 Dec 2015 New rules have allowed giants like AIA and Sun Life to lift ownership of their Indian ventures to 49 pct. With no clear path to control, that means tying up more capital in minority stakes. At least bigger shareholdings will help them retain influence if the ventures go public.
Delta Lloyd waves white flag on insurer capital 30 Nov 2015 The Dutch insurer is raising capital equivalent to over half its market value to prepare for new Solvency II rules. But it’s also ditching its own solvency model for a tougher version supplied by regulators. If peers follow suit, insurer capital would be much more simple.
Time for Germany to let EU banking union fly 24 Nov 2015 The European Commission wants a mutualised deposit insurance scheme for banks by 2024. Berlin may be averse to the idea of financing non-German busts. But there are some safeguards, and unpicking the link between banks and states would better avoid trouble in the first place.
Allianz coal ban will change investment climate 24 Nov 2015 The German insurer is to pull $4.3 bln out of investment in coal companies, ditching its scepticism against blanket anti-carbon policies. This rethink suggests big asset managers are taking climate change seriously. Other carbon-heavy industries like oil and cement may be next.
Willis could kill merger-of-equals conceit 18 Nov 2015 The UK-based insurance broker’s $18 bln union with U.S. consultancy Towers Watson is on the rocks. Investors have turned some $5 bln of promised synergy value into $1 bln of value destruction. A rescue would probably unbalance the economics, undermining the promised equality.
China insurer adds U.S. to overseas M&A splurge 10 Nov 2015 Anbang has popped $1.6 bln Fidelity & Guaranty Life into its basket. In 12 months it has spent $4.4 bln on financial groups in South Korea, the Benelux and now America. The strategy is vague and funding opaque. For sellers, though, the Waldorf Astoria owner livens up any auction.
G-SIFI envy turns into G-SIFI ennui 3 Nov 2015 Not long ago, being on the list of 30 “global systemically important financial institutions” was a big deal. The lack of market reaction to the newly updated version shows times have changed. Gung-ho local regulators now make banks pile on capital, systemically important or not.
Dismal AIG earnings add fuel to Carl Icahn’s ire 3 Nov 2015 The activist wants the insurer to break up and cut costs. AIG boss Peter Hancock is pledging to do the latter. But a $231 mln Q3 loss emphasizes just how much work the company still has to do to get shareholders on board. A carve-up may be painful, but it’s not off the table yet.
AIG’s post-crisis babying days are over 28 Oct 2015 Carl Icahn has delivered the $80 bln insurer a rude awakening. The pushy investor isn’t satisfied with CEO Peter Hancock’s steps to boost performance and wants the company to split and shed its systemic tag. Say goodbye to any lingering sympathy for AIG’s near-death experience.
Insurer TBTF capital rules take baby step forward 5 Oct 2015 Regulators want to stop global insurance groups being too big to fail. New solvency add-ons make sense, and for now insurers don’t need extra capital. But the models are sensitive to volatile markets, and politics may impede a further leveling of the international playing field.
Garrett-Cox demotion could herald Alliance breakup 1 Oct 2015 The Alliance Trust CEO will step down to lead the struggling investment firm’s asset management division. Katherine Garrett-Cox will have to meet tough performance targets, or lose her mandate. Activist Elliott wanted more, but her probation is still a coup.
EU establishes bridgehead in capital markets push 30 Sep 2015 Brussels is to unpick self-defeatingly high capital charges against infrastructure and asset-backed bonds. It is capital markets union’s first tangible win. Yet other barriers like diverging insolvency regimes have been shelved, and tighter regulation is making trading harder.
Swiss Re deal sidesteps insurance bad-M&A trap 23 Sep 2015 The Swiss group is paying Cinven 1.6 billion stg for Guardian Financial, a closed-book consolidator. Recent mergers in the sector have tended towards the value-destructive. Speeding up the capital release from Guardian’s policies should mean Swiss Re avoids that bad habit.
Zurich’s loss of RSA nerve dents its credibility 21 Sep 2015 The Swiss insurer has binned plans to buy its UK peer - and issued a profit warning. A deal at the mooted 5.6 bln stg level could have worked, given RSA’s potential. If Zurich doubted RSA’s ability to recover, it shouldn’t have sniffed around in the first place.