All GLG News Analyses Filed Under: Insurance & Risk Management
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Harnath SithamrajuConsultantHarnath Sithamraju
January 13, 2009
Obama's big idea: Digital health records | money.cnn.com
1. This idea if implemented would not only contribute to savings and employment but also organise health records of all. 2. Obviates the need to repeat yourself.
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January 12, 2009
Obama's big idea: Digital health records | money.cnn.com
The Health Care System and Health Care Financing System are going to drive the economy over the next few years. Consumers are vitally interested in their own health, wellbeing and financial security and that of their families and the standardizing and technological beefing up of the system meets these consumers needs. There is a positive synergy between consumers needs and demands for good quality care and insurers delivery of services to meet these needs.
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" All Market Opportunities for the Sale of Assets will be MATERIALLY Discounted in the Future"
December 28, 2008
Munich Re to Buy AIG’s HSB Division for $742 Million | www.bloomberg.com
Implications; 1.The Largest Plan for the Sale of Insurance Company Assets will miss all Goals as potential bidders are plaqued wiyh plunging stock markets. 2.Many U.S. Life Insurers basis of valuation will plumet as the basis of assets have declined , materially , and a "Fire Sale" may be necessary in the near future. 3.A need has been generated to resemble "Book Value" , in order to pay-down government debt and , still, maintain a capital base to generate earnings. 4.Book Value is defined as assets minus liabilities and have been trading between 62% and 94% - clearly not a value -added to the capitalization rate of the firm. 5.The Sale of Hartford Steam Boiler indicates that a publically traded book value a has, clearly , delineated in value between the years of 2000 to the year 2008. 6.The question , at hand: "Is the loss of value due to failure of the Financial Markets or Operational Capacity?"
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" AIG's Rescue will take a LONG TIME: An Irrelevent " Kill List"!
December 28, 2008
Lloyd’s of London Insurers Defy Market Gloom, Gain on AIG Woes | www.bloomberg.com
Implications: 1.The government , simply, cannot agree to extend credit to this firm with Management intact. 2.Management has shown a clear pattern of ineptness that has created a pattern of destruction of one of America"s Greatest and Largest Firms! Poor Management and Undercapitalization!!!! 3.An illustration expressing the extreme stress racking the company and expanding, globally!!! 4.The Financial Statements illustrate a deficiet of almost $50 Billion of distressed assets and a monumental governmental debt. 5.The Market Value of the firm has depressed from $180 billion in 2007 to the , now, $5 billion.A gaining los that a Mark to the Market May Not Salvage! 6.The ONLY OPTION: Keep AIG afloat while it reemerges as a "Stand -Alone Private Company and gains the ability to Work-Out a Solution to Debt related issues!!!!!
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Probability Through Rose-Colored Glasses
November 10, 2008
Why Risk Models Failed to Spot the Credit Crisis by Adam Davidson | www.npr.org
This article should bring to light a common misconception in attempting to evaluate risk of financial loss which is that probability estimation techniques are often falsely relied upon as precise measures. One must remind oneself that in most cases probability of future financial loss cannot be precisely estimated. Such estimates are imprecise largely due to difficulties in accurately assessing dispersion around expected losses based on historical averages for an individual risk or aggregation of risks. The possibility of sustaining a financial loss under most circumstances generally ranges from remote (e.g., earthquake insurance) to likely (e.g., life insurance). While risk models are helpful decision-making tools, they should be relied upon only to the extent the financial arrangement allows enough flexibility so that the counterparties can equitably share in the risk of mis-estimating the probability of loss.
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Japanese companies better equipped than US European counterparts to whether the storm ?
October 20, 2008
Sumitomo Life Will Limit Overseas Investments on Currency Risk | www.bloomberg.com
Japanese top institutional investors asset allocation change justified by fundamentals. Domestic eqities allocation increase versus US or European equities to further support Yen implied volatility historic reversal ( as expected anyway).
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October 3, 2008
Why Risk Models Failed to Spot the Credit Crisis by Adam Davidson | www.npr.org
The eyes of the world are focused on Washington where the SEC, the FED and Congress debate how they are going to execute the massive bail out announced last week. As a derivatives trader who sits in the trenches, I am more concerned about a larger issue. Where were the Risk Managers of these firms as they doubled down on exotic derivatives and traded credit default swaps as if they were shares of IBM? How in a world of endless quantitative models could we have ended up here in the midst of the largest credit crisis of all times? Washington would like us to believe the short sellers created this fiasco. Short sellers may have exasperated the present situation but the storm has been brewing for years. I strongly believe there has been a systematic failure in the area of Risk Management.
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No Black Swans Here, just termites.
October 3, 2008
Why Risk Models Failed to Spot the Credit Crisis by Adam Davidson | www.npr.org
Programs run on information Information has value Unless purchased or forced, accurate, timely and complete information will not be disclosed Bad information, bad results
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Joseph SmithPresident and CEODefault Mitigation Management
Blame the models and Risk Based Pricing
September 30, 2008
Why Risk Models Failed to Spot the Credit Crisis by Adam Davidson | www.npr.org
Models only cover certain variables and the crisis involved much more than mortgage pricing and a few macroeconomic issues. Risked based pricing as used in the mortgage industry had an underlying flaw that caused the models to fail. Greed played the other part.
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September 29, 2008
Why Risk Models Failed to Spot the Credit Crisis by Adam Davidson | www.npr.org
Don't blame risk models for the financial crisis. The root cause was a failure of management. Risk management, as a discipline, did not fail -- it was never really tried.
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