FT - Financial Times

  • ft.com
  • youtube.com/@FinancialTimes
  • 2012 0618 / 19 - FT (Financial Times) - Insurance products too complex, says Aegon, by Alistair Gray -
    • CEO Wynaendts of Aegon N.V.–the parent company of Transamerica and World Financial Group

2020s

  • 2023 0502 - FT - Financial Times - US approach to financial regulation is set up to fail:  Oversight based on innumerable detailed rules misses the point on risk management, by Richard Bookstaber - 
    • Regulators don’t understand the nature of risk. Sure, there are the pedestrian notions of risk-like market volatility and its many variants. These look at risk based on what the market has done in the past. But the risks that matter are the ones we don’t see coming, that emerge from the ever-changing nature of the markets and catch us unaware.
    • You won’t see those with a 20-page risk report or a model filled with esoteric statistics chomping on gigabytes of data. Indeed, if you model it, you’re wrong. The key is simply to be looking in the right direction for the right institutions. Do that, and it is hard to miss a risk that rises to the level of being systemic.
    • Every systemic risk I have encountered can be uncovered with a few questions, and can be explained in a few sentences. Once it is identified, that is. This time around that would be: What might happen to the small and regional banks if interest rates go up? What might happen in the face of social media if there is a crisis of confidence in a few banks? (Hint: run the meme stock scenario in reverse.) Where could a large-scale rollback of bank credit hit the markets?
    • So, it’s not that hard. The nature of risk requires us to rethink the way we go about risk management in the regulatory sphere. We don’t fail because of mismeasurement at the second decimal point or a poorly drafted subsection. We fail because our regulatory approach misses material risks wholesale

2000s

  • 2007 0119 - FT (Financial Times) - The Unease Bubbling in Today's Brave New Financial World, By Gillian Tett
  • Monoline meltdown?:
  • 2008 0123 - FT (Financial Times) - Banks Pressed to Bail-Out Bond Insurers
  • 2008 0123 - FT (Financial Times) - Banks Urged to Bail-Out Bond Insurers - 
  • 2008 0124 - FT (Financial Times) - Credit Market Cheered by Monoline Bailout Plan 
  • 2008 0124 - FT (Financial Times) - Realities of Monoline Rescue Attempt Sink In
  • 2008 0124 - FT (Financial Times) - SocGen raises questions over Fed rate cut - 
  • 2008 0125 - FT (Financial Times) - The Bond Insurers, a $200bn Problem and Wilbur Ross, by Helen Thomas -
  • 2008 0128 - FT (Financial Times) - Fed Quiet on Bond Insurers Rescue
  • 2008 0129 - FT (Financial Times) - To Bailout or Not to Bailout, Monoline Edition, by Sam Jones - x
  • 2008 0129 - FT (Financial Times) - Banks Seek Value in Monoline Rescue Plan
  • US Bond Insurers Expected to Fall Further
  • 2008 0130 - FT (Financial Times) - Thain Doubts Monoline Bailout, by Gwen Robinson -
  • 2008 0130 - FT (Financial Times) - Municipal Bonds Hit by Monoline Uncertainty
  • 2008 0131 - FT (Financial Times) - Standard & Poor’s Casts Doubt on MBIA rating
  • 2008 0131 - FT (Financial Times) - Bill Ackman’s Letter to the Regulators in Full, and his Monoline Model
  • 2008 0131 - FT (Financial Times) - MBIA: Another Morning, Another Monoline Crisis, by Gwen Robinson - 
  • 2008 02 - FT (Financial Times) - Monoline Bailout?, by Sam Jones - 
  • 2008 0216 / 0215 - FT (Financial Times) - Monolines Explained, By Paul J Davis, Cynthia O’Murchu, Steve Bernard and Ingram Pin -
  • 2008 0228 - FT (Financial Times) - Markets assess the costs of a monoline meltdown, by Gillian Tett - [link]
    • But the monoline issue has raised anxiety about whether other counterparties in the CDS world, such as hedge funds, will be able to honour their contracts if corporate defaults rise.
      • While the International Swaps and Derivatives Association, the main trade body, vehemently insists this risk should be offset by the fact that most trades are backed by collateral, levels of investor unease are nevertheless rising.
  •  
  • 2008 0304 - FT (Financial Times) - Monoline Investors Hit Back on Split Plans
  • 2008 0312 - FT (Financial Times) - Regulators Will Feel Loss of a Risk-taker -
  • 2008 0313 - FT (Financial Times) - AIG Urges 'Fair Value' Rethink -
    • 2008 0313 - email - AIG - Bob. We should discuss tomorrow if you are available. This is clearly inconsistent with what Martin told the Board, and "inconsistent" is a kind characterization. Thanks. Mike (FRBNY-TOWNS-R1-193865) - 2p
       
  • 2008 0731- FT (Financial Times) - Tackle False Rumours About Insurance Companies, by Eric Dinallo, New York Insurance Commissioner - 2p
  • 2008 0915 - FT (Financial Times) - Downgrades Deepen AIG Woes - 
  • 2008 0917 - FT (Financial Times) - Hundreds of AIG Policyholders Throng Asian Offices, Agence France Presse, brecorder - [link]
    • 2010 0610 - COP - Report - The AIG Rescue, Its Impact on Markets, and the Government’s Exit Strategy - 337p
  • 2008 0917 - FT (Financial Times) - US to Take Control of AIG - 
  • 2008 0921 - FT (Financial Times) - The Shadow Banking System is Unravelling, Nouriel Roubini
    •   A generalised run on these shadow banks started when the ... lending: Fannie Mae and Freddie Mac, AIG and more than 300 mortgage lenders. -
  • 2008 0924 - FT (Financial Times) - Rumours Trigger Bank Run in Hong Kong -
    • Thousands of panicked depositors queued outside Bank of East Asia’s branches across Hong Kong on Wednesday to withdraw their life-savings on rumours that the lender was in financial trouble.
    • Bank of East Asia said its total outstanding exposures to Lehman Brothers and AIG, HK$422.8m and HK$49.9m respectively, were small.
    • But that did not stop the panic withdrawals. In mid-afternoon, hundreds of people lined up outside the bank’s main branch in Central, Hong Kong, with policemen keeping order.
  • 2008 1012 - FT - AIG Continues Lobbying Despite Bail-Out 
  • 2009 0216 - FT (Financial Times) - The Kanjorski Meme and the End of the World Redux, by Sam Jones 
  • 2009 0501 - FT (Financial Times) - Genesis of the Debt Disaster, by Gillian Tett -

2010s

  • 2010 0113 - FT (Financial Times) - Global Insight: Still Bristling Over AIG Haircut: Row Over Pay-off Strategy Rumbles On, by Gillian Tett - 
  • 2010 0325 - FT (Financial Times) - Regulators Move In On Troubled Ambac -
  • 2010 0326 - FT (Financial Times) - It’s Official: Ambac’s CDS Triggered - 
  • 2010 1026 - FT (Financial Times) - Death Throes of the Monolines, by Tracy Alloway - 
  • 2011 0322 - FT (Financial Times) - MBIA Loss Estimates $10bn Short, Say Banks - 
  • 2012  0411 - FT (Financial Times) - A Tragedy the Monolines Hath Wrought, by David Murphy -
    • * There is a case to be made that this whole tragedy could have been avoided if insurance accounting had required financial guarantee policies to be mark-to-market.
  • 2015 0104 - FT (Financial Times) - Permanent Capital: Perpetual Cash Machines, by Stephen Foley and Henny Sender -
  • 2015 1012 - FT (Financial Times) - Regulators set their sights on insurance

January 22, 2013 8:14 pm
Aegon head warns over guaranteed returns

By Alistair Gray in London and James Wilson in Frankfurt

The head of Aegon has issued one of the starkest warnings yet of the threats to the life assurance industry posed by the “very dangerous” practice of rivals offering relatively high guaranteed returns at a time of low interest rates.

The warning by Alex Wynaendts comes amid rising concerns among credit rating agencies, investors and regulators about the systemic risks posed by the level of guaranteed life assurance products.

More
On this story

Insurers struggle to reassure investors
Guarantees at heart of Solvency II delays
Insurers and brokers wrangle over claims
Aegon offers rare Dutch bright spot
Aegon and Danske Bank lead risers

On this topic

Insurance products too complex, says Aegon
Cost cutting helps Aegon boost profits
Aegon agrees life expectancy swap deal
Aegon surprises with €60m profit

IN Insurance

Resolution names next chairman
Aon rethinks plan to defer bonus payout
UnitedHealth eyes higher earnings in 2014
Aviva sells Malaysian joint venture

“It’s very dangerous and you continue to see market players that are pricing products that are not aligned with the reality of today,” said the chief executive of Amsterdam-listed Aegon, which operates as Transamerica in the US. “The guarantees can be too generous.”

Standard & Poor’s this week said that low interest rates were “adversely affecting insurers’ credit quality and challenging their business models”. It was among the risks “likely to place downward pressure on insurance ratings globally”.

A recent report by Barclays analysts also argued: “Many of the challenges facing insurers are reminiscent of the Japanese crisis – this crisis really hit earnings six-seven years after the initial bubble burst.”

In Europe alone, the industry wrote €415bn worth of “non-linked” life business – under which insurers rather than consumers bear investment risks – in 2011, the European Insurance and Occupational Pensions Authority said. The extent and levels of guarantees vary considerably between markets. In the UK, insurers moved away from offering guarantees to policyholders since Equitable Life ran into trouble 12 years ago.

The head of the financial sector supervisor in Germany, which analysts have identified as having among the most generous and widespread guarantees in Europe, on Tuesday warned insurers to adapt to low rates by changing the products they offer. “I hope we manage in the short term to find a good settlement between the collective interest and those of individual policyholders,” said Elke König, head of BaFin.

“But it is also true that low interest rates might be with us for many years yet.”

Since 2000 Germany has cut the guaranteed rate for new life business from 4 per cent to 1.75 per cent, a rate introduced a year ago. But because this rate applies only to new business, the average guarantee rate from all outstanding policies is declining less slowly. S&P estimates it was last year about 3.1 per cent of German life assurers’ book. It says Germany could consider a further cut in the guaranteed rate by 2015.

Mr Wynaendts added: “You need have the courage to withdraw product lines, just say we stop selling these products. In this low interest rate environment it just doesn’t work.”

Aegon said it had sought to focus on products that were less sensitive to interest rates while de-emphasising those that offer financial guarantees.