Sorted Weekly Tweets

Life Insurance Secondary Guarantees


  • Hartford Mulls Client Buyouts to Cut Risk Buffett Called Ungodly Advice: don’t take the Variable Annuity buyouts $$ Aug 10, 2012
  • The original: Buffett Says Insurers Took ‘Ungodly Amount of Risk’ Warren Buffett again is prescient cc: @PlanMaestro $$ Aug 10, 2012
  • @PlanMaestro Thanks4 flagging this. Together w/companies scaling back gtees 4 new prods, the buyout offers show the probs in the life biz $$ Aug 10, 2012
  • @PlanMaestro I am not in favor of peer review. Actuaries call themselves a “profession,” but they really technicians. Aug 09, 2012
  • @PlanMaestro Regulators not crazy for this, because they can’t understand it, & almost makes the companies self-regulating. Peer Review? $$ Aug 09, 2012
  • @PlanMaestro But actuaries are trying to get regulators to cmove to a Canadian-style principle based approach. In Actuaries we Trust! $$ + Aug 09, 2012
  • @PlanMaestro But the devil is in the details, and GAAP reserving does not always reflect antiselection. Stat tries to do that, but + $$ Aug 09, 2012
  • @PlanMaestro But you’re right, the 10Ks do contain approximate partial sensitivity data on economic value for most important variables $$ Aug 09, 2012
  • @PlanMaestro In 1999, I saw a VA that guaranteed 7% minimum return if held till death or annuitization $$ Aug 09, 2012
  • @PlanMaestro I said “Wow, how do you guarantee the better of 5%/yr and performance of the underlying 4 just 2.25%?” $$ Aug 09, 2012
  • @PlanMaestro I have a friend who is a $PRU agent. One day he showed me his hottest-selling VA product, and ask me how I liked it. $$ + Aug 09, 2012
  • @PlanMaestro Acctg can get really screwy if you hedge NPV or FMV; gets really noisy because the results pile up in the current year $$ Aug 09, 2012
  • @PlanMaestro hedging long-dated options, w/complex contingencies built into them. Do you hedge next few years, or NPV sensitivity? $$ + Aug 09, 2012
  • @PlanMaestro I was an ALM actuary for many years, typically we hedged partial durations; fixed income hedging is easy, what’s hard is $$ + Aug 09, 2012
  • @PlanMaestro many exposures are impossible to hedge b/c the contracts r long-term, and hedge instruments r usually far shorter $$ Aug 09, 2012
  • @PlanMaestro That’s one of my concerns about the life industry; secondary guarantees r virtually impossible to reserve, getting big now $$ Aug 09, 2012


Insurance Industry

  • @ReformedBroker Good post, same thing happens with young life insurance agents to a degree $$ Aug 10, 2012
  • @Bonfire_Sherman P&C – P/TB vs ROTE, adjusted 4 business mix, reserve life & conservatism, mgmt quality, U/W cycle, never premiums $$ Aug 09, 2012
  • @Bonfire_Sherman Most of it is change in required capital. Life actuaries typically calculate “distibutable earnings” reflting stat & RBC $$ Aug 09, 2012
  • Anytime anyone talks about Financial Cos & tells u about Free Cash Flow, ask how they did the calc. C if they mention chg in req capital $$ Aug 09, 2012
  • Wrong: 3 Life Insurance Stocks Undervalued By Levered Free Cash Flows GAAP financials don’t have data4 FCF calcs $$ Aug 09, 2012
  • Aviva profits fall as it cuts the value of its US unit Amerus IR was annoyed @ me 4saying the orignal deal expensive $$ Aug 09, 2012
  • @PlanMaestro HIG is next on my list Aug 09, 2012
  • @PlanMaestro Thanks, I know where to get them, but I have enough GNW on my plate for now, I took me two weeks to write my AIG piece. $$ Aug 09, 2012
  • @PlanMaestro Have not looked at HIG, after I am done with GNW may take a look. If u r looking at stat acctg, look @ pg 5 indiv annuities $$ Aug 09, 2012
  • @PlanMaestro That’s the thing, like AIG prior to the crisis, and Scottish Re, they are capital constrained; things have 2go right 4 them $$ Aug 09, 2012
  • @PlanMaestro & not so sure about the rest if investing for more than five years. $$ Aug 09, 2012
  • @PlanMaestro Aye, agreed. Oddly, my interest stemmed from a reader who asked me if I would invest in GNW bonds. Yes 4 GIC-MTNs + Aug 09, 2012
  • @PlanMaestro I’m going to write a broad piece about it, but follow it up, with a narrow piece focusing on the specific problems. $$ Aug 09, 2012
  • @PlanMaestro Intercompany surplus notes and preferred stock too. Aug 09, 2012
  • @PlanMaestro There’s a ton. Underreserving, capital stacking, capital interlacing, intercompany reinsurance, & I’ve ony been looking 2 hours Aug 09, 2012
  • @Bonfire_Sherman Good guess, I need to look at the life co stmts someday, esp. page 5 for Indiv annuities Aug 09, 2012
  • Ding! We have a winner! RT @RennieScinto: @AlephBlog gnw? Aug 09, 2012
  • I’m a fun guy, looking @ statutory statements of a major US insurer, though AIG in 2008 looked worse, this company doesn’t look good $$ Who? Aug 09, 2012
  • Online Dating for Homes Stumps Insurers Y not have both deposit $$ w/the insurer plus a premium payment? #wouldwork Aug 08, 2012
  • Regulators Probe ‘Captives’ How to bend life insurance reserves. Catch my comment: $$ Aug 06, 2012
  • Berkshire Trims Municipal-Debt Bet Meredith Whitney, no. Buffett, yes. But even he is only selectively reducing $$ Aug 05, 2012


Poway School District


  • Article near issuance of Poway School District CAB Letter from CA AG: cc: @munilass @jamessaft $$ Aug 06, 2012
  • @jamessaft I’m not a muni expert like @munilass, but no, I would try to find another way to refinance prior debts. $$ Aug 06, 2012
  • Ideal buyer4the preceding bond would b Buffett, or a P&C company w/long-tail liabilities. Prospectus 4 wonks only $$ Aug 06, 2012
  • Where Borrowing $105 Million Will Cost $1 Billion: Poway Schools Paying 7.6% IRR at a duration of 25. Astounding! $$ Aug 06, 2012
  • @munilass Also, I found the prospectus here: Last Q: Do county tax levies into a sinking fund ever fail to work? $$ Aug 06, 2012
  • @munilass I get the holder taxes now. Poway was structured as a series of zero coupon notes, followed by 2 series of long lottery bonds $$ Aug 06, 2012
  • @munilass Used to be an asset-liability manager, so I look for that. 1 question: do you know how holders are taxed on a deal like that? Aug 06, 2012
  • @munilass This is just a crude estimate, but the IRR on the Poway deal is around 7.7%, and is nonrefinancable. Duration estimate 25 years $$ Aug 06, 2012


Rest of the World


  • China Export Growth Slides as World Recovery Slows China sneezes & the world catches a cold? no, important anyway $$ Aug 10, 2012
  • India’s Biggest Corporate Loss Shows Singh’s Dilemma on Deficit Force oil company to lose $$, eventually lose oil co. Aug 10, 2012
  • Housewives With Frying Pans Protest Japan Tax Hike as Debt Soars Taxes to double; can’t keep borrowing 4ever $$ Aug 10, 2012
  • Virus found in Mideast can spy on finance transactions Can spy on financial transactions, email & social networking $$ Aug 09, 2012
  • Toronto Condo ‘Roller Coaster’ Peaks as Flaherty Acts Is Canadian housing a basketball (sss) or a bubble (pop)? $$ Aug 08, 2012
  • Iran’s Big Crisis: The Price of Chicken Describes some the economic difficulties of Iran under sanctions $$ Aug 08, 2012
  • Article makes a good point. The industries where China has overcapacity are power-intensive & are shrinking. Simple. Aug 08, 2012
  • China’s answer to subprime bets: the “Golden Elephant” Illiquid investments touting high returns w/lousy business $$ Aug 07, 2012
  • RE: Things are getting less equal in the US, because we allow more freedom here.  Globally, things are getting more e… Aug 07, 2012
  • Presidential candidate up by 15%+ in August will win. If merely ahead, 9 times out of 12 he will win the Presidency Aug 08, 2012
  • Swiss Banks Face Slow Death as Taxman Chases Assets Life’s tough when u can no longer help people cheat the taxman $$ Aug 06, 2012
  • Germany has the most to lose from a meltdown Basically encourages an inflationary “solution.” Prob won’t work $$ Aug 06, 2012
  • If policymakers are worried about this, they are worried about the wrong thing. EU does not have that big… Aug 06, 2012
  • Summary: greater structural unity, mutualization of sovereign debts and a weak euro $$ Tough order for the… Aug 06, 2012
  • Rogoff Sees World Wishing It’s America Year After S&P Downgrade Relative flexibility pays off $$ Aug 06, 2012


Fixed Income


  • Lending in the offshore markets developed because of bad regulations here. It is outside US control & we should not m… Aug 10, 2012
  • In hunt for yield, hybrids flourish anew Credit rally revsup ppl grab yield in exchange 4 higher poss loss severity $$ Aug 09, 2012
  • Please, no $$ RT @CapitalCityIFR: In hunt for yield, hybrids flourish anew Aug 09, 2012
  • For a bad 30-yr Tsy auction, nice rally since then $$ Aug 09, 2012
  • A Greek banker, the Shah and the birth of Libor ht: @alea_ Started w/a loan 2 the Shah. Inauspicious start 4a big # $$ Aug 09, 2012
  • Definitely a weak auction, surprised long end not selling off $$ RT @ritholtz: 30 yr bond auction weak as well $$ Aug 09, 2012
  • “Credit default swaps are easily manipulated. Rather, watch the bond market; it’s much bigger. $$” — David_Merkel Aug 09, 2012




  • The Neocon War Against Robert Zoellick If Romney wins, pragmatic Zoellick could be influential on foreign policy $$ Aug 11, 2012
  • Christie Does Tenure Tenure is one of those sacred cows that hides the intellectually weak from consequences $$ Aug 10, 2012
  • In New York City, Microsoft Really Is Watching You Interesting partnership w/NYC & $MSFT Civil liberties? $$ Aug 09, 2012
  • Postal Service $1 Million-an-Hour Loss Puts Abyss in View Raise stamp prices & costs 2 $FDX & $UPS $$ #simple Aug 09, 2012
  • Here’s The Real Reason The Feds Are Furious At The NY Regulator Going After Standard Chartered Made Feds look dumb $$ Aug 08, 2012
  • RE: @bloombergview Dream, the Republicans will block this because it favors blue states over Red. $$ http://www.bloom… Aug 08, 2012
  • I think it is a fair tradeoff to lose 2% of GDP in 2013 in order to get the economy growing. I agree with… Aug 07, 2012
  • The Numbers Inside a Hot-Button Issue Something to make everyone unhappy. Me: Don’t focus on rates, but deferral $$ Aug 07, 2012


Pensions & Endowments


  • State Pensions Get High Fees, Low Profits-Study Add to that the lack of adequate funding &you have a serious crisis $$ Aug 10, 2012
  • Cornell, MIT Scale Back Aid Even as Endowments Rise Endowments provide less when rates r low, future cashflows smallr Aug 10, 2012
  • Defined contribution assets hit all-time high despite conservative shift Amazing 2c bond alloc rising w/low rates $$ Aug 06, 2012
  • U can say that again $$ RT @e_d_sanders: @AlephBlog now this is an issue I know something about. Public pensions for execs are a nightmare Aug 05, 2012
  • Police Chief’s $204,000 Pension Shows How Cities Crashed Sloppy pension negotiating leads2 L-T cash flow crises. $$ Aug 05, 2012




  • Let the market decide.  If people want to pay a lot for gas, let them.  Why is Obama discouraging consumer spending? Aug 10, 2012
  • Refiners Awash in Shale Oil Offer 10 Times Exxon Returns Buy cheap shale oil, ship to coasts, refine, sell & make $$ Aug 10, 2012
  • Louisiana sinkhole roils local natural gas network Now, who could have seen that coming? Risk is pervasive. $$ #sloorp Aug 09, 2012
  • Coal stocks typically have a lot of debt, beware $$ RT @MKTWBurton: Don’t mine this coal stock – Chuck Jaffe – Aug 09, 2012




  • Passed 10,000 tweets today. I quit Twitter after my first month, but came back to it after I saw its usefulness. Thanks 4 reading me $$ Aug 10, 2012
  • Heavy rain in Baltimore w/sleet and sunshine. Really weird weather. Sleet is neat, is hard to beat & will repeat, to make me tweet. $$ #ugh Aug 09, 2012
  • After Moods & Markets, Bailout is my next book to review. Aug 09, 2012
  • 5 Questions Great Job Candidates Ask Questions show initiative, intelligence, & give u good jump pts 2 sell yrself $$ Aug 09, 2012
  • Novel Cure for Ailing Hearts Nanotech combines w/vascular endothelial growth factor to grow new heart muscle $$ Aug 09, 2012
  • Wrong: Business Is Booming in Empirical Economics U might get cute papers out of it, but nothing that generalizes $$ Aug 07, 2012




  • Yahoo Reviewing Business Strategy, Alibaba Proceeds; Shares Tumble Marissa Mayer has plans, & they require $$ Aug 09, 2012
  • Why Honda’s New Accord Looks Like the Old One FD: + $HMC Designers tire of their designs long b4 users do $$ Aug 09, 2012
  • The WARN Act dilemma Defense, Fiscal cliff, DOL Guidance Letter saying ignore WARN act on 11/1, & elections $$ Aug 09, 2012
  • Hewlett-Packard’s Whitman Dismantles Hurd-Era Empire FD: + $HPQ She seems 2b evaluating each biz separately $$ #good Aug 09, 2012
  • The New York Times Is About to Say Goodbye to About,com gives more details on the lossesv$$ Aug 08, 2012
  • New York Times Shares Rise on Deal to Sell About,com Amazing how much $NYT lost on it, capital losses, neg income $$ Aug 08, 2012
  • Judge in Google, Oracle case seeks names of paid reporters, bloggers Fascinating 4bloggers 2b paid $$ by corps quietly Aug 08, 2012
  • I do not get how could be worth $270M. What’s the revenue model? Ads? $$ Aug 08, 2012
  • Wrong: The PC looks like it’s dying Like most tech, when it matures, it finds & stays there. Think of “dead” radio $$ Aug 07, 2012
  • Amazon Is No Wal-Mart…Yet Relatively neutral article on $AMZN by Martin Sosnoff; prob: treats AMZN as retailer $$ Aug 07, 2012
  • Why FedEx and UPS Want the Postal Service to Survive Solution: raise stamp prices, and prices to $FDX and $UPS $$ #easy Aug 05, 2012


Monetary Policy


  • Fisher Says More Stimulus May Overburden Central Banks 3-time winner of coveted “FOMC loose cannon award” speaks $$ Aug 08, 2012
  • Economic Musings – Fed eyeing a new kind of twist? $$ Extending duration in MBS; creating larger losses later $$ Aug 08, 2012
  • RE: @bondtrader83 That’s not all that much different than the 1st Twist. It’s duration extension in MBS. Wait till ra… Aug 08, 2012
  • How about quantitative easing for the people? Would work better than current QE/Twist etc, but this frightens me. $$ Aug 08, 2012
  • Wrong: Bernanke to Economists: More Philosophy, Please Been down this road; utility theory doesn’t explain mankind $$ Aug 07, 2012


Housing & Related


  • Public-Housing Parking Lots Make Everyone Poorer Set rates to achieve 15% vacancy; Rather than lots, have garages $$ Aug 08, 2012
  • Home Prices Climb as Supply Dwindles Good news for the low end of the market, high end will take time $$ Aug 08, 2012
  • Fannie Mae profits rolled into rainy day fund Good for Fannie & Freddie preferred, not worth anything 4 the common $$ Aug 08, 2012


Financial Companies & Markets


  • NYSE in talks with SEC to settle data probe Wow, faster data feeds 4 some special clients; level the playing field $$ Aug 09, 2012
  • Are Diamonds an ETF’s Best Friend? Bad things happen when you take something illiquid and try to make it liquid $$ Aug 08, 2012
  • Richest Family Offices Seeing Fastest Growth as Firms Oust Banks UberWealthy get $$ talent; tax savings >> costs Aug 07, 2012
  • 4 ETF Lessons From Knight Lead Market Makers matter, Markets Work, Settlement Works, Illiquid ETFs Need Helpers $$ Aug 06, 2012
  • Other problem: active etf gives away trading information it might rather not divulge, leading to front-running. $$ Aug 06, 2012
  • A Tale of Two Fund Giants: American Funds vs Vanguard Key advantage for Vanguard was embracing ETFs early $$ Aug 06, 2012




  • Banks’ Liquidity Hinges on Risky Assets Repo lending is subject2runs during credit panics which depress collateral $$ Aug 08, 2012
  • Good one $$ RT @pdacosta: Watch out for the grim repo-er RT @cate_long Banks’ liquidity hinges on risky assets Aug 08, 2012
  • The danger of repo Repo is weak financing in crisis; 3-mo T-bills would b a better index 4 Tsy floating rate notes $$ Aug 06, 2012


The Equity Premium


  • That would get the advantage of stocks over high quality bonds down to ~1-2%/year. Outperforms with a *lot* of noise $$ Aug 11, 2012
  • Bill Gross Is Wrong About Stocks: GMO Truth inbetween; have GMO adjust 4 $$ -weighted returns, not time-weighted Aug 11, 2012
  • Bonds for the Long Run @ritholtz nails it. Advantage of stocks over bonds is ~1%/yr over the long haul. Limited data $$ Aug 10, 2012





  • @LDrogen After reading this, I have more certainty that airbnb has already worked out some of the bugs $$ Aug 10, 2012
  • @LDrogen Fine, Leigh, I hope it works. When single party lending gave way to securitization, it was unstoppable, until lending stds died. $$ Aug 10, 2012
  • RE: @ldrogen Multiple party economic dealings have their issues.  Consider:… Aug 10, 2012
  • ‘ @TheOneDave In a word: depletion. Costs are rising to incremental barrels of oil, and ounces of gold. $$ Aug 09, 2012
  • @PlanMaestro $CLD LTD/E ~89%, take a look at $HNRG Hallador Energy. I’m not looking @ coal names until I see a few go BK, like steel 2002 $$ Aug 09, 2012
  • @PragCapitalist Depends on slope of demand curve 4 Tsys. Compare it2the former on-the-run. Jump of 6 bps high for that spot on the curve $$ Aug 08, 2012
  • @groditi Effective Yield series. Was trying to show that junk yields don’t compress as much when HQ-yields are low. Would have liked OAY $$ Aug 08, 2012
  • @PragCapitalist If it gets enough assets to survive $$ Aug 08, 2012
  • @footnoted …and maybe adjs for a year, but large writeoffs mean that prior earnings were overstated; testifies to bad mgmt quality $$ Aug 08, 2012
  • @footnoted That’s one reason why I tell investors to look at LT growth in BV + Divs rather than op income. I accept adjustments 4 a qtr + $$ Aug 08, 2012
  • RE: @bloombergview The single period cost to fix might be small, the continuous transfer cost would be considerably l… Aug 08, 2012
  • RE: @bloombergview When games change from two players to three players, things get messy if no single player has most… Aug 08, 2012
  • Most pessimistic he’s been on China debts RT @groditi: Wow. I’m used to Pettis’ Euro-pessimism, but he’s not holding back here. U MAD, PROF? Aug 07, 2012
  • Always a great read RT @groditi: yaaaaaay new Pettis! Aug 07, 2012
  • @AnaCapMgmt Ain’t true. The foolish models of economists do not take into account political realities, and when inflation runs, no ammo. $$ Aug 05, 2012
  • @LisaCNBC Ask him how confident he is in India’s power grid. After that, the water supply. $$ Aug 05, 2012
  • ‘ @pvitha Gold moves inversely to real interest rates, a.k.a. cost of carry, that’s all I know. $$ Aug 06, 2012
  • ‘ @WTOP Romney shouldn’t worry about the Fed; they are out of ammo. QE is a joke, as is Operation Twist, and forward fed funds guidance. $$ Aug 05, 2012
  • +1 I like to say that 🙂 RT @BarbarianCap: “there are more debt claims than resources to pay them at par” Aug 05, 2012