Tom Johansmeyer
Manhattan - http://migrantblogger.wordpress.com
Tom Johansmeyer is a New York-based writer specializing in travel, cigars, art and finance.
Social Games Player Zynga Is #2 on PayPal
As social media companies realize they need to move to the next level -- from adoption to revenue -- the virtual goods market has emerged as a substantial revenue stream, and Zynga's environment appears to have been designed to capitalize on it. According to an estimate by Citigroup (C) analyst Mark Mahaney, PayPal took care o$500 million in virtual goods payments last year.
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U.S. Insurers Addicted to Corporate Bonds
According to Judy Greffin, Allstate's (ALL) chief investment officer, tells Bloomberg News, "It has paid off very nicely," as evidenced by the 20% growth in Allstate's corporate debt holdings last year, which reached $33.1 billion. She continues, "With the benefit of hindsight, I would have loved to have bought more." Likewise, Buffett indicated that he should have invested more. MetLife (MET) and Prudential Financial (PRU) also benefited from the corporate debt rally, which has helped them recover much of the capital lost from the financial crisis of September 2008.
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Bermuda Readies Itself for New Insurance Regulation in Europe
So, what's on the table? Well, gross written premium hit $104 billion in Bermuda last year. If you use Lloyd's of London as a reference point, Bermuda is four times larger. Though the U.S. leads in throwing business to insurers in Bermuda, Europe isn't far behind in second. This is why Bermuda is thinking about Solvency II. Even though the directive only applies directly to European carriers, secondary effects will be evident around the world.
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Chubb CEO Says Bailouts Cost Insurers Opportunity
Finnegan wrote in his annual letter to shareholders, "The opportunities for financially strong companies to absorb the business of weakened competitors were initially compelling." This is the natural result of a disproportionately depressed capital base in the reinsurance business. He continued, "This is as it should be in a free market unimpeded by federal intervention. But the willingness of the federal government to prop up weakened competitors by artificially injecting capital is troubling."
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Bank Death Toll Approaches 40
Advanta Bank, in Draper Utah, wasn't able to attract a buyer. The FDIC stepped in and approved payouts for insured deposits, with checks to depositors expected to be mailed on Monday. Advanta had $1.6 million in assets and $1.5 million in deposits.
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Q1 Cats Likely to Have Reinsurance Earnings Impact
After weeks of speculation, the financial damage from the Chile earthquake and Windstorm Xynthia in Europe is starting to emerge. According to a recent report by Moody's, 16 global reinsurance companies have reported their net insured losses (before taxes) from the catastrophe event, and the damage has already reached $3.5 billion, increasing an already high tally. The firm expects these events to have a noticeable impact on first quarter results for the industry.
According to the report, the first quarter of 2010's results "will have many moving pieces, including the possibility of favorable loss reserve development." It continues, though, that "we would expect a number of reinsurers to post both operating and net losses for the quarter."
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Sex.com Sale Stalled by Involuntary Bankruptcy Filing
The creditors' petition, filed in U.S. Bankruptcy Court shortly after noon yesterday by Washington Technology Associates, iEntertainment, Inc. and AccountingMatters.com LLC, claims that Sex.com owes them $10,092,118.68, according to a report by adult entertainment industry trade publication AVN (NSFW).
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Twitter May Chirp Its Commercial Accounts Next Month
Twitter's a pretty lucky company. Few get two bytes at the hype apple in rapid succession, but this social media platform has found a way to make up for its disappointing announcement about its advertising model. According to VentureBeat, Twitter might unveil its long-awaited, heavily-hyped and possibly investor-satisfying corporate accounts. Next month, at its inaugural Chirp developer conference, we could finally see what might just be the foundation of Twitter's business model.
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New Insurance Product Protects Media
Now if you blame the media, someone else will have to share in the losses.
Insurance company Aviva (AV) is taking the side of camera-wielding, microphone-thrusting pushy press folks with a new form of protection that will cover everything from electronics to foot-in-mouth syndrome (i.e., liability). The insurance product will be available to a variety of companies, including both online and print publishers, broadcasters, photographers and marketing and advertising companies. So, if you're responsible for the news, the ads or the process of putting them in front of eyeballs, Aviva probably has you in mind.
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State Farm Planning Monster Cat Bond
Merna Re, the largest catastrophe bond of all time, is set to mature in June, and State Farm is already putting together its replacement, the creatively named Merna Re II. The successor, planned for issuance in April, is said to be for $400 million in risk capital, though investor demand could push it as high as $700 million. This still pales in comparison to the $1.2 billion that the original brought in the door.
If State Farm is able to stimulate demand for Merna Re II, which would protect the company from non-California earthquake risk in the U.S., it will be third cat bond to come to market in 2010, which is expected to be a strong year for this form of risk transfer. The cat bond market fell silent after the near-collapse of American International Group (AIG) in September 2008 but was still the third busiest in terms of capital issued in the history of the cat bond market. Heading into 2009, prospects for the cat bond space seemed uncertain, but a robust fourth quarter eventually resulted in a year-over-year increase, driven mostly by repeat issuers.
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AIG to Hit Feds for Another $2 Billion
American International Group (AIG) has gone back to the feds. The insurer pulled another $2.2 billion from its Treasury Department facility to support the property-casualty business units that will comprise the restructured company. AIG used the cash from Treasury to redeem some securities held by its insurance subsidiaries to increase liquidity and address rating agency considerations.
According to David Havens, managing director of credit trading at Nomura Securities (NMR), "AIG still needs to be cognizant of where the rating agencies stand on their solvency." He adds, in Bloomberg News, that the funds may have been sought after the company got "feedback from the rating agencies that the regulatory capital within the operating companies doesn't muster up."
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Hartford to Repay TARP Cash
Hartford is going to issue $1.45 billion in common stock and $500 million in mandatory convertible preferred stock presented by depository shares. The debt offering will entail senior notes of $425 million. Hartford will pre-fund the repurchase of senior debt that matures in 2010 and 2011 with the issuance of an additional $675 million in senior notes.
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From Bermuda: Insurers Need to Ink Mergers with Caution
According to Brian Duperreault, president and CEO at Marsh & McLennan (MMC), "You are always going to run into problems during a merger so you need to make sure your interests are aligned. If you are divided when you start you will be still be divided at the end. Aligned management interest is what makes for a successful acquisition."
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Twitter Getting Six Figures a Month for Data
Back in October, Twitter inked high-profile data-licensing deals with Google (GOOG) and Microsoft (MSFT), which brought in $25 million and put the social media service on the revenue map. Since then, it has brought more clients into the fold through its data-licensing program, including Kosmix and Scoopler, by opening up what it calls the "firehose"; i.e., unfettered access to the Twitter data stream.
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Assessing the Tab for Q1 Catastrophes
Catastrophe modelers, insurers and reinsurers are still sorting out the damage from Windstorm Xynthia in Europe and the earthquake in Chile. Taking only the highest of high-end estimates, the damage from these two catastrophes could exceed $12 billion, resulting in fairly steep property-catastrophe losses long before hurricane season begins. With three more major property reinsurance renewals remaining for the year -- at April 1, June 1 (Florida) and July 1 -- there is plenty of time for the impact of these events to be absorbed into reinsurance pricing.