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April 9, 2010

Time for a little politics

On 9th April, Alex Ferguson wrote for The Weekly:

On Monday the UK Government told the country that on May 6, it was going to be having a General Election.

For some of the country, it's about asking who they actually want to guide this country through the recession/recovery, for others, it's about who they are going to choose out of the three evils standing before them, wanting their vote.

As usual, Reinsurance Towers took the approach of speaking to an underwriter about the oncoming election.

"Do you really want to put the Labour Government back in? Not only did they unilaterally fail to eliminate boom and bust, but they sold our gold at the wrong price. Why should we trust them again? And then there's the waste. 40% of this country's GDP is made up of civil servants, which means eliminating waste should be easy. Just fire anyone with the name "coordinator...The unfortunate fact about that is that it'll be like cockroaches. One dies, 400 more appear. Gordon Brown talks about green shoots of recovery, but everyone knows that the manure on top - and coming out of the politicians' mouths- stinks to high heaven. And one other thing - as someone who earns well over six figures, I just can't wait to be taxed 50%. Oh, and my house is expensive too. Thanks, Gordon!"

How about voting Conservative, we ask, to the cheer of an assembled few listening in on this dynamic rampage from 'Joe I don't Know'.

"Love David Cameron. Knew some chaps who went to Eton with him. He loved talking about change in his opening speech, but guess who the other person who talked about change was but doesn't seem to be getting a lot done. Barack Obama! Seriously though, he's still going to charge us well-earning chaps 50%, and does he really think that cutting the National Insurance Bill is going to help me? And how are they going to start making moves to scythe through the bureaucracy. The other thing that winds me up about him is that we City types meet these type of people every day - they are called our senior managers. They are the type of people who make speeches in December about "a great year" and a month later he's giving out severance cheques. Wouldn't trust him as far as I could kick him. And that George Osbourne chap. Chancellor? Really?"

Then how about the Liberal Democrats? "Waste of Vote!" chants the audience, which is getting bigger by the second.

"I like Nick Clegg, I really do. Although his surname makes him sound like someone Fagin would hire in Oliver Twist, he's a rather straight-talking chap. I really appreciated his originality when saying how unfair it was that a rich banker pays less tax than his cleaner. I've never heard it before. But people laugh and say: "Do nothing, think nothing, vote Liberal," and maybe that's a little harsh. They don't have a prayer of winning, but I like the Vince Cable chap. Can't he become Chancellor whoever gets in?? He might actually do some good. Unfortunately, though, you get the feeling that under the Lib Dems, the income tax would go from 50% to 60% in two twists of a lamb's tail, and we'd all be on the first flight to Zurich (a far nicer place than Zurich, I might add!)".

At that, the crowd disperses. We at Reinsurance Towers are none the wiser about who our friend will vote for. Then again, most of the UK aren't any the wiser about they should vote for, either.

We at Reinsurance Towers would like to get your opinions about the political issues on the table. If you could spare a couple of minutes to answer a couple of questions (anonymously of course) please follow the link below

(Now time for a little disclaimer to keep the boss happy - these quotes do not represent the views of Reinsurance Magazine or Incisive Media)

April 16, 2010

Another bad day for Goldman Sachs

On Friday 16th April, Alex Ferguson wrote:

If volcanic ash didn't disrupt the steady increase of the Dow Jones Industrial Average (DJIA), the 'train' well and truly halted after the SEC accused arch-nemesis Goldman Sachs of fraud today.

At the time of writing, the DJIA was in nosebleed form, off over 100 points and descending rapidly (note- airline stocks weren't doing so well either!), and S&P was off nearly 1.5%. Not nice reading if you're an investor.

According to the SEC, Goldman created a subprime fund called Abacus, which was bet against by the bank itself as well as major hedge fund Paulson (no connection to former Treasury Secretary and former GS CEO Hank Paulson, we might add) to fail. The investment bank would make money if it fell in value.

And being sub-prime, that's exactly what happened.

Reading the SEC accusation, it's pretty hard not to get angry about this sort of thing.

If you're an insurer, it's pretty hard not to worry, either.

If Goldman takes this to court, the power of the SEC will probably win the case. Despite screaming from investors and the mainstream media Goldman won't want this to happen - they'll probably settle, and have to give back investors all of their original investment. And they may well have to hand back their winnings, too. If you think punitive damages were bad for the Greenberg family when Elliot Spitzer got to them, this is going to be worse.

What are the ramifications for the insurance industry?

According to one US underwriter, this might cause a wave of worry in the insurance industry. Think House of Cards, except worse. You can forseeably see every company with a subprime book to get asked questions by the SEC- and investors. When one group of investors manages to successfully sue, then suddenly you've got a D&O and E&O tidal wave.

We'll have more discussions on the legal ramifications next week for you. Keep reading...

April 29, 2010

Another Blog Is Born

A guest blog from Tom Johansmeyer

When I found the new Willis blog,, on LinkedIn last week, I rushed over to take a look. Maybe it's because I'm a social media nerd ... or it's the fact that I can't shake my interest in how insurance and reinsurance brokers are marketing themselves. Either way, I clicked over immediately to see what was going on. I'm still trying to decide how I feel about it.

In all honesty, I noticed the flaws immediately, but I'll get to that in a bit. I'd rather focus on the positive for now. I was excited to see another company in our industry take the blogging plunge. There are far too few corporate blogger in the re/insurance space, though more than when I got started (thankfully). Most tend to be from smaller firms, and while I'm thrilled to see them engaged (I'm now one of the little guys, in fact), there's a clear need for the big guys to launch blogs and use them consistently. With the launch of Willis', I saw the industry take a step in the right direction.

Back in February, I wrote on my blog that I figured Willis would be next (in some form), especially given the property-catastrophe price index it announced. I guess I was right, but I never expected the company's foray into social media to come in the form of a single-issue blog. Contingent commissions may be a hot issue right now, but it has a limited life. So, Willis is sacrificing a certain amount of longevity. I'd have rather seen the company launch a Willis blog and build in contingent commissions as a category or tag and highlight it on the home page. Coming up with regular, insightful content on a single issue is going to turn into a pain fast, making the blog more labor than investment.

There's a hidden problem, too. The greatest value I've seen in running a corporate blog for a major firm is the diversity of content available. The variety makes it easier to link back to previous stories as a way to cut through all the other stuff - it adds value to the experience. A single-issue blog leaves little opportunity for linking back, because all the posts deal with the same topic. This means that traffic will be lower (in pageviews, if not unique visitors), translating to less brand visibility and reinforcement per visitor.

It's easy to be critical, and by delving into the details, I risk obscuring the most important lesson from Clients Before Commissions - and it's a positive one. Someone at Willis decided that the way to push its message on contingent commissions was through a corporate blog. This is a giant leap forward for our industry. Willis could have used a press release, pitch letters and interviews or a white paper. Instead, it went with social media. Two years ago, when I was taking my first steps into reinsurance blogging, it's unlikely that anyone would have come up with the idea of using a blog to tackle this issue, let alone actually get it off the ground. Last week, we saw it in action.

I hope that the next step for Willis is to grow its social media footprint, as I hope the rest of the re/insurance industry will do. Even companies in direct competition should encourage the overall evolution of blogging, LinkedIn communication and even voracious tweeting. The maturity of social media will benefit all of us, and it's the content, ultimately, that will decide the winners - not merely the boldness to bet on the untested.

Tom Johansmeyer blogs about social media and the (re)insurance industry at Before that, he was a key player in launching one of the first corporate blogs in the industry. Tom also blogs about travel for Gadling [] and cigars and the art market for Luxist []. He's located in New York, as you can probably tell from his writing style.

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