Twenty Third Floor

Figuring out the future and the now

Category: credit risk

Actuarial and Risk, alternative investments, banking, capital, capital structure, credit risk, economics, financial risk, investments, optimisation

Junk bonds in place of an IPO

25 September 2010

David Kirk

The 30 second intro to Junk Bonds Junk Bonds, also known as High Yield Bonds, are debt instruments issued by companies with poor credit ratings, or are the debt instruments of companies that were issued as high quality bonds from strong companies that have since fallen on hard times (“Fallen Angels”). Typically these are any…
Read more: Junk bonds in place of an IPO
Actuarial and Risk, alternative investments, creating value, credit risk, economics, financial risk, insight, investments, market risk, news, operational risk, property

Risk, liquidity and the triumph of economics over alchemy

6 September 2010

David Kirk

Sharemax appears to be spiralling to its doom. Multiple stories today report that they are late on dividend payments to investors and may not be able to pay dividends in the forseeable future. Cash has run out. The overvalued, over-geared properties cannot support the income stream that was demanded from them. No surprises here then.…
Read more: Risk, liquidity and the triumph of economics over alchemy
banking, credit risk, currency risk, data analysis, economics, insight, managing uncertainty, market risk, news, predictive modelling

CPI at 3.7% for July 2010

25 August 2010

David Kirk

From Stats SA The headline inflation rate in July 2010 (i.e. the Consumer Price Index for all urban areas in July 2010 compared with that at July 2009) was 3,7% The official inflation rate (i.e. the percentage change in the CPI for all urban areas in July 2010 compared with that in July 2009) was…
Read more: CPI at 3.7% for July 2010
Actuarial and Risk, book reviews, credit risk, economics, financial risk, hedging, market risk, operational risk

Book Review: The Big Short

4 July 2010

David Kirk

Michael Lewis, of Liar’s Poker fame, has written an engaging account of the role that subprime lending played in the global financial crisis. The new book is called The Big Short: Inside the Doomsday Machine The jargon that Lewis uses is generally explained and shouldn’t prevent non finance geeks from understanding the role of subprime…
Read more: Book Review: The Big Short
Actuarial and Risk, banking, Basel III, capital, creating value, credit risk, economics, financial risk, insight, market risk, measurement, news

Basel III likely to be tempered

24 June 2010

David Kirk

The FT has an article (Banks†‰win battle to tone†‰down Basel III) describing how the proposed new rules for banking capital requirements might have some of the new requirements around liquidity removed or weakened. Key amongst these new considerations is the limitation of mismatches between the term of assets and liabilities, which would limit the danger…
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Actuarial and Risk, banking, capital, credit risk, currency risk, financial risk, insurance, life insurance, managing uncertainty, market risk, measurement, operational risk

Allocating capital to insurance products

16 October 2009

David Kirk

A friend “volunteered” me to answer an insurance question from Aardvark on allocating economic capital across different insurance products. After writing a short response, I received the frighteningly useful message: “Error”. Having written a brief summary of the different techniques used in this really important area, I thought I should use it as a blog…
Read more: Allocating capital to insurance products
banking, capital, credit risk, economics, financial risk, news

69th bank failure in the US for 2009

2 August 2009

David Kirk

The US Federal Deposit Insurance Corporation closed the 69th bank of 2009 recently. The rate of closures has increased recently, leading some analysts to believe that well over 100 banks could be closed this year. The Savings and Loan crisis of the 1980s in the US started at about the same pace, with 100 closures…
Read more: 69th bank failure in the US for 2009
credit risk, currency risk, economics, financial risk, hedging, managing uncertainty, news

Good economic news for Lebanon

2 April 2009

David Kirk

I blogged before about some medium-term concerns I have around Lebanon’s currency stability. A story I saw today shows an opposite view, so I’m linking it here.Â Moody’s have upgraded Lebanon’s bond ratings due to improved external liquidity. My original post was to temper the irrational optimism around the currency peg, rather than to say…
Read more: Good economic news for Lebanon

About David Kirk

Featured Posts

The “Indemnity Trap”: Why Outdated Legal Models are Deferring the Promise of Parametric Insurance
by David Kirk
Parametric insurance is often marketed as the “clean” alternative to traditional risk transfer. The pitch is compelling: if a hurricane hits a specific GPS coordinate… Read more: The “Indemnity Trap”: Why Outdated Legal Models are Deferring the Promise of Parametric Insurance
The Complexities of Comparing SCR Cover Ratios Across Insurers
by David Kirk
In the insurance industry, we often use Solvency Capital Requirement (SCR) cover ratios as a key metric for comparing insurers’ financial strength. While these ratios… Read more: The Complexities of Comparing SCR Cover Ratios Across Insurers
One answer could be pet insurance
by David Kirk
I firmly believe major demographics shifts are going to have massive social, political, economic, financial market and commercial impacts in the coming decades. The balance… Read more: One answer could be pet insurance
A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
by David Kirk
Every failure hits policyholders’ savings or cover, impact their lives and their livelihoods. They destroys shareholder value and decrease confidence in the entire financial sector.… Read more: A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
How and why insurers fail
by David Kirk
I’ve been updating my presentation from 2021 on “How and Why Insurers Fail”. I now estimate the annual failure rate (or at least getting into… Read more: How and why insurers fail
The hidden dangers of opinion shopping and trusting good news.
by David Kirk
I had a recent discussion on the value of getting a second opinion. There’s the old line that “if you want five opinions, ask three… Read more: The hidden dangers of opinion shopping and trusting good news.
40,000
by David Kirk
40,000. That’s the ballpark figure I usually work with as the minimum number of micro insurance policies required for scale. The expenses of running even… Read more: 40,000

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