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Two years to live

Dear friend,

With only one or two exceptions, this quarter has been pretty ugly for results hasn’t it?

Well, get used to it. You knew it was going to happen sometime and that time has now come.

It’s only going to start getting worse from here.

I expect we’ve got one last year of genuine profitability, perhaps followed by one with profits of the more cosmetically-enhanced and surgically-altered variety before the red numbers start making their presence really felt.

First the reserve releases start drying up.
Then the reserves themselves start drying up.
Then the suits at the ratings agencies start notching up.
And then the run-off guys start mopping up
and the liquidators start adding up.

Only then can the market turn properly and reserve additions start flowering like desert cacti after rain.

Then we can all get down to business again.

Brokers are more cost-sensitive and always feel the pinch and show the pain first. I feel that the tough but necessary decisions we have seen taken this quarter by some of the big players are a presage of things to come for everyone else.

What can you do?

Keep you head down and your mouth shut, don’t leave where you are for some hair-brained start-up and whatever you do, don’t to talk yourself out of a job by declining too much, or blow yourself out of a job by underwriting too much.

Got all that?

Comments (1)


What has happended to GCFac ?

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