Twenty Third Floor

Figuring out the future and the now

Category: measurement

Actuarial and Risk, alternative investments, business tools, credit risk, data analysis, economics, Equity Risk Premium, financial risk, investments, market risk, measurement, news, optimisation

Implied Pension Return Assumptions and the Equity Risk Premium

14 October 2010

David Kirk

When companies value pension obligations and required contribution rates, they make assumptions about the expected future investment returns. (Accounting standards require market-based rates reflecting fixed interest returns, but that’s a separate point). So what assumptions are pension funds making? The WSJ has an interesting article showing that the average US pension fund is assuming future…
Read more: Implied Pension Return Assumptions and the Equity Risk Premium
alternative investments, data analysis, market risk, measurement, property, statistics

Interactive house price data (including South Africa)

14 October 2010

David Kirk

The Economist has a brilliant interactive chart showing nominal house price growth across a range of countries, including South Africa. It’s clear, as we already know, that South African house price increases have been dramatic. Somehow though, seeing it on a graph with a range of other countries brings it into sharper focus. Our property…
Read more: Interactive house price data (including South Africa)
communication, economics, Emerging Markets, Equity Risk Premium, insight, managing uncertainty, measurement, news, statistics

The Power of Misconceptions

13 October 2010

David Kirk

In broad terms, we are all mostly ignorant. Worse than ignorant, we have notions and views, firmly held, that are entirely incorrect. We only complain about what we don’t like Nobody complains to their boss that they are overpaid. Nobody complains that their pension or social security increases were above inflation last year. We don’t…
Read more: The Power of Misconceptions
Actuarial and Risk, alternative investments, economics, Equity Risk Premium, financial risk, insight, investments, market risk, measurement

Why you’re mis-estimating the Equity Risk Premium #1

27 September 2010

David Kirk

You base your estimates of the ERP on US history alone Your ERP estimate is too high because your calculation suffers from survivorship bias and errs by including the largest economy for which the most data is currently available rather than a random sample. The US has been a spectacularly successful economy over the last…
Read more: Why you’re mis-estimating the Equity Risk Premium #1
business tools, creating value, customer value, economics, insight, measurement, news

Lower interconnect not the promised panacea

27 September 2010

David Kirk

Decreasing interconnect fees was supposed to lower telecoms costs, promote competition and create world peace. It’s done none of these because the logic underlying it was flawed. Analysts focused on interconnect as an expense, happily ignoring the revenue side (since it was a fee paid to another company within the industry). Never has a telecoms…
Read more: Lower interconnect not the promised panacea
communication, economics, insight, measurement, news, statistics, unemployment

Unemployment, mystified

18 September 2010

David Kirk

Shocking unemployment statistics (but what do they mean?) Someone threw a shocking figure at me today. They said that the unemployed under age 35 in South Africa comprise 75% of the unemployed population. I believe the figure comes from Adcorp. Like many statistics that are bandied around for shock value, this one is more fluff…
Read more: Unemployment, mystified
communication, economics, measurement, news, remuneration strategies

Paid how much?

5 September 2010

David Kirk

The ongoing public sector strike has raised several interesting points. Not least of which is what teachers actually earn. A full-page advert in newspapers last weekend gave some very respectable figuresÂ for teacher salaries.Â A teacher just starting out, with a 4 year qualification has a total cost to employer of around R229,000 per year.…
Read more: Paid how much?
business tools, creating value, data analysis, insight, investments, managing uncertainty, market risk, measurement, modelling, news, predictive modelling, property, statistics

Property investment – the value of data over opinions

1 September 2010

David Kirk

Lightstone have a trick up their sleeves. Their raison d’Ãªtre is collecting, analysing, understanding and packaging data for themselves and others to use to understand past, current and future property valuations. Their housing price index is more robust (and more independent) than those of the banks based off their own data and target markets. Rather…
Read more: Property investment – the value of data over opinions

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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