BRAVE Partners monthly newsletter
On the Sunday before the first Monday of each month, BRAVE Partners distributes an E-Mail giving a brief review of the firm's views of the markets, current project and the commentary that has been posted on the website during the previous month.
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December 2011: Hardening up
November has been a full month at BRAVE Partners. We expect December to be the same. Regardless of your view of the England rugby team's performance in the World Cup, reinsurance rates are hardening up and that is good news for the market. Over the last month key moments in our industries have been:
Insurance: As the floods in Thailand start to come in with the latest round of big losses, reinsurance pricing is rising - at last.
Energy: Warm weather and a slow economy are keeping power prices down, but the search for new energy sources is gathering pace.
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As the queue of European governments set to default grows ever longer, the Bank of England announces quantitative easing 2 (QE2). Pension schemes are afraid – very afraid.
In a rare, but welcome development, the State of California has made strides toward implementing cap-and-trade legislation in the State.
As energy prices in Europe soar with the approaching winter and trigger a political storm, BRAVE Partners looks at the factors driving this. The bottom line is that Europe needs energy independence and that requires investment in both new energy sources and in the infrastructure to diversify supply away from Russia.
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November 2011: Christmas lights
The chill of late autumn and the Christmas lights are a firm reminder of the energy issues facing the UK, Europe and other developed countries. BRAVE Partners is seeing a sharp rise in projects and investor interest. Over the last month key moments in our industries have been
Insurance: With the industry still overcapitalised, reinsurers continue to shy away from peak zone risks. Collateralised reinsurers thrive as pension and institutional money starts to pour in.
Energy: As in recent autumns, domestic power prices in the UK are a political hot potato. BRAVE Partners believes that only substantial investment in energy independence will solve the problem.
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October 2011: Q4 not a bore
October brings us into Q4 and the scramble to close deals for year end. Over the last month key moments in our industries have been:
Insurance: Reinsurance rates are starting to stabalise the the market counts the losses, but without bigger losses a hard market is some way off.
Energy: Commodity prices continue to tumble, but overall the world remains short of power.
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A stand-off is developing between insurers and regulators over the grandfathering rules for some hybrid Tier 1 capital securities issued by insurers. Under the Solvency II rules, all Tier 1 capital must be able to absorb losses on a going concern basis. That is to say that the investors must be in a position where they take losses without being able to wind-up or liquidate the company. In many ways this is the fundamental difference between equity and debt that was perhaps missed in the go-go markets where innovative Tier 1 capital instruments first appeared for financial institutions.
There are more tax advantages than meet the eye in some renewable energy investments.
Hurricane Irene grabbed the headlines, but savvy insurers know that the earthquake that struck Richmond Virginia was the true risk event.
September 2011: Setting sun - rising sun
As the sun sets on summer holidays, the sunshine focuses on closing deals for year end. The BRAVE partners are feeling the tempo pick up in the business environment. Over the last month key moments in our industries have been:
Insurance: The arrival of hurricane Irene on the NE coast of the USA. It is rare to get a hurricane hitting that far north, but it does happen.
Energy: The stock markets took it upon themselves, perhaps prematurely, to announce the end of the world. Commodity prices and stocks were hard hit.
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Motor (or Auto for our American brethren) insurers are suffering from claims inflation. BRAVE Partners comments.
As another oil company struggles with a new but, significantly smaller, leak - BRAVE Partners asks: who can take this risk?
Hurricane Irene has been and gone and most of the trees in the NE of the USA are still pointing skyward, but it all could have been very different. If nothing else Irene is a powerful reminder that hurricanes do hit the NE and what could happen if a big un gets into the wrong places.
August 2011: New Partner, New Office
BRAVE Partners has moved to offices at 3 Lloyds Avenue. Please see the website for the full contact details and updated 'phone numbers.
Chris, Chris and Veronica are also delighted to welcome Anna Milic to the firm. Anna's role includes keeping in contact with our client base.
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Hurricane season is upon us. The reinsurance industry is highly geared to this period and this year more than most.