Sweeter PR not enough to revitalize M&A deal 1 Aug 2011 U.S. reinsurer Validus may hope that by switching flacks in the heat of battle it can persuade its shareholders to like the bid for $3.2 bln rival Transatlantic they have so far scorned. But messaging doesn’t win deals, numbers do. On that score, Validus isn’t far enough ahead.
Insurers get euro stress tests off to a duff start 5 Jul 2011 A tenth of Europe's insurance companies have flunked this year's stress test, though the regulator won't name them. The tests were based on rules that don't take force until 2013. But they also weren't tough enough. European authorities would have been better off doing nothing.
Carlyle’s RAC buy points to racier use of debt 23 Jun 2011 The U.S.based investor bagged Britain's numbertwo roadside recovery firm despite using a slimmer debt package than rival bidders. But the auction highlights how leverage for European buyouts is shifting up a gear encouraging private equity firms to pay everricher prices.
Vote on Pru chairman makes his position untenable 19 May 2011 Nearly a quarter of shares in Prudential, the UK insurer, voted against the reappointment of Harvey McGrath as chairman. He is being held responsible for last year's botched AIA deal. Though it is a minority vote, McGrath should heed the clarity of the message, and walk.
Bank mis-selling charges point to Lloyds misdeeds 9 May 2011 Compensating UK customers who were missold payment protection insurance will cost Barclays and HSBC 1.3 bln pounds. That's less than half the hit taken by rival Lloyds. Even allowing for differences in market share and product mix, the gap suggests Lloyds has more to answer for.
Buffett inadvertently nails it evoking Salomon 30 Apr 2011 The Oracle of Omaha compared David Sokol's Lubrizol dealing to the scandal that rocked the Wall Street firm he partly owned 20 years ago. He described both as inexcusable and inexplicable. The link Buffett missed is that rogue trading at Salomon Bros exposed poor controls.
Buffett bungle restores a bit of M&A banker cred 28 Apr 2011 Bankers routinely seek credit for transactions on which they do squat. But Berkshire's David Sokol understated Citi's role in arranging the Lubrizol takeover. Given his exboss's views on bankers, it's the last place where Wall Street could have expected inadvertent image help.
Generali affair shows why Italy underperforms 27 Apr 2011 The seemingly lavish expenses and hefty payoff for Cesare Geronzi, the insurer's former chairman, give a glimpse of the complex tradeoffs that bedevil Italian corporate and political life. To pep up its lacklustre economy, Italy needs companies to start working for shareholders.
Berkshire board tries cleaning up Buffett’s mess 27 Apr 2011 The audit committee has taken a much tougher stance than the Oracle of Omaha on the Lubrizol shares scandal involving onetime heir apparent David Sokol. The latest assessment is sager and should help restore confidence in Berkshire. But Buffett is left looking incredibly naïve.
Pru/AIA shambles comes under welcome scrutiny 21 Apr 2011 The UK financial watchdog is probing Prudential's failed bid for Asian rival AIA. The ambitious deal was badly communicated and suffered hitches with regulatory approval. Pru, a worldclass institution, had top investment banks advising. A year on, questions still need answering.
Lubrizol provides smoking gun on the Sokol scandal 12 Apr 2011 The group added 30 words to a proxy filing to say its bankers at Citi informed the former Berkshire executive that its board would meet to discuss a possible deal. He then bought $10 mln of stock. Warren Buffett's contention that David Sokol did nothing wrong doesn't look right.
Geronzi’s 17 million euro pay-off sticks in craw 7 Apr 2011 Generali's exchairman undermined his chief executive and alienated board members. To force him out, the Italian insurer has now given him 1.5 million euros for each month he was in this post. This is an astonishing payment for being a nuisance.
Italy better off with Geronzi-less Generali 6 Apr 2011 The Italian insurer's chairman has been forced out by his own board. That's good for Generali, which was descending into civil war. But the ousting of the archpower broker is also good for Italy: it could signal a key moment in the evolution of its duff corporate governance.
Woodstock of capitalism just turned into Altamont 31 Mar 2011 At Berkshire Hathaway's April 30 annual meeting in Omaha, Warren Buffett will take queries from a trio of journalists. Without being too presumptuous, Breakingviews suggests a few he must answer to assuage concerns about succession, ethics and, well, whether he's lost his mojo.
Bond insurance zombie MBIA isn’t dead yet 25 Mar 2011 That's small consolation to Warburg Pincus, which pumped in funds as the crisis torpedoed the whole industry. If MBIA, with claims possibly climbing over $20 bln, can fend off a lawsuit by banks challenging its split, there might be hope for the investment but not the business.
Ping An’s too-clever financing may backfire 24 Mar 2011 The Chinese insurer's $2.5 billion placement to a single tycoon raised capital quickly, and helped it save tax. But selling at a discount negates the savings, and investors aren't happy. The falling share price shows bending the norms may not pay.
Insurers should withstand earthquake shock 14 Mar 2011 Estimates of insurance losses of $35 billion may prove conservative, but still fall short of other disasters like Hurricane Katrina. Yet the sector is well capitalised, and providers have learned from past catastrophes. Big claims can turn the cycle towards higher profitability.
Imagine Berkshire Hathaway as a hedge fund 28 Feb 2011 Warren Buffett is finding it harder to beat the market while Omaha's charms aren't getting any more appealing to potential successors. It might be heresy to contemplate a 2and20like fee structure, but rewards matter. Moreover, Berkshire shareholders might still do very well.
AIA just about deserves its lofty valuation 25 Feb 2011 The Asian insurer is throwing off cash, and grew earnings by 54 pct in 2010. But it could do better at winning new business. AIA's premium valuation rests on new CEO Mark Tucker applying the skill and aggression he previously showed when building Prudential's business in Asia.
Twist at Generali offers hope for Italian business 24 Feb 2011 A rebel board member has pushed the Italian insurer into saying it will retain cross shareholdings only if they make financial sense. It's a blow for chairman and power broker Cesare Geronzi but a welcome challenge to cosy ties in Italian business that harm shareholder value.