Capital implications of infrastructure assets for insurers under SAM

Infrastructure as an asset class is hardly a new idea. Retirement funds are attracted to the promise of higher turns, long-dated cash flows, and consistency with increasingly important ESG factors.  Insurers, unlikely retirement funds, have to hold risk-based capital against the risks inherent in their investments. This makes it more difficult to underestimate the risks […]

Ghosts of bullets dodged

I have never owned Steinhoff shares. I was surprised then, when going through some old blog uploads (dealing with a separate copyright issue that I may touch on in another post) to find this share price graph of Steinhoff from 2007 I don’t remember looking at this, but the blog entry was actually about insider […]

ERP update – delayed response to a blog reader

I reader asked why so many practitioners use high Equity Risk Premiums in their valuations and fairness opinions. In particular, he mentioned a specific assumption set he had seen including: ERP of 6.8% company specific risk premium of 4% He also commented on how haphazard the use of risk premiums can be and referenced a […]

Modelling one side of a two-sided problem

Ah models, my old friends. You’re always wrong, but sometimes helpful. Often dangerous too. A recent article in The Actuary magazine addressed whether “de-risking in members’ best interests?”¬† I say “recent” even though it’s from August because I am a little behind on my The Actuary reading. In the article, the authors demonstrate that by […]

Argentina in default for second time in 13 years

S&P declares Argentina to be in default for the second time in 13 years and the third in 25. Inflation is likely to hit 40% this year and the Peso has already lost a quarter of its value this year, measured against the US Dollar. Messages? This time isn’t different, sovereign debt crises happen all […]

Progress on tax free savings vehicles, but scathing words for life insurers

Read the latest (14 March 2014) document from National Treasury on tax free savings vehicles for South Africa. I think it’s a fantastic idea – both from a policy perspective with carefully designed incentives to promote long-term savings and from a personal perspective. I’m definitely going to use one for my own savings. However, one […]

Credit Suisse annual update on market performance

Credit Suisse has for several years now put out an annual¬†Credit Suisse Global Investment Returns Yearbook 2013 is out now. It’s worth reading in its entirety for the insights. I don’t agree with everything there, and I certainly don’t agree with the widely held view (not among the authors) that the universe of countries included […]