Dueling Turkey Posts

Seeing a Turkey Cartoon, I could not resist and had to bring out the first grade big guns (or axe) version.

As set up to our Thanksgiving Story we will first recount Nassim Taleb’s now famous story of the fat and happy Turkey  (link):

Current trends and recent history can also be dangerously misleading. Taleb uses the example of the Thanksgiving turkey that is being fattened up for slaughter. As the turkey sees it, daily experience reinforces the image of the butcher as a benefactor who can be counted on to provide delightful delicacies on a daily basis — a good friend — right up until the day when the butcher reveals his true intentions. For the turkey the final day of reckoning is a personal black swan event. Leading up to the finale, the turkey clearly misinterprets what is happening around it.

“It is not a good idea to be a turkey,” Taleb said, but he adds that statistics and numbers often turn us into our own version of the proverbial turkey. “When you have numbers, you tend to take greater risks, even when the numbers are totally random.”

Our story is similar, but notes that sometimes the alert and quick thinking can avoid their fate.  But not if you are a chicken:

Continue reading “Dueling Turkey Posts”

Title Search in LA

Part of rebuilding New Orleans caused residents often to be challenged with the task of tracing home titles back potentially hundreds of years. With a community rich with history stretching back over two centuries, houses have been passed along through generations of family, sometimes making it quite difficult to establish ownership. Here’s a great letter an attorney wrote to the FHA on behalf of a client: You have to love this lawyer……..

A New Orleans lawyer sought an FHA loan for a client. He was told the loan would be granted if he could prove satisfactory title to a parcel of property being offered as collateral.

The title to the property dated back to 1803, which took the lawyer three months to track down. After sending the information to the FHA, he received the following reply.

(Actual reply from FHA): “Upon review of your letter adjoining your client’s loan application, we note that the request is supported by an Abstract of Title. While we compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin.”

Annoyed, the lawyer responded as follows:

(Actual response): “Your letter regarding title in Case No.189156 has been received. I note that you wish to have title extended further than the 206 years covered by the present application. I was unaware that any educated person in this country, particularly those working in the property area, would not know that Louisiana was purchased by the United States from France in Continue reading “Title Search in LA”

The Grasping Hands of Allstate (ALL)

From the latest Allstate (ALL) 10-Q Quarterly SEC Filing

P5- 

In July 2010, the FASB issued guidance requiring expanded disclosures relating to the credit quality of financing receivables and the related allowances for credit losses.  The new guidance requires a greater level of disaggregated information, as well as additional disclosures about credit quality indicators, past due information and modifications of its financing receivables.  The new guidance is effective for reporting periods ending after December 15, 2010.  The new guidance affects disclosures only; and therefore, the adoption will have no impact on the Company’s results of operations or financial position.

That should get interesting. Continue reading “The Grasping Hands of Allstate (ALL)”

Ties to Insurers Could Land Mortgage Servicers in More Trouble

Hat tip Naked Capitalism links

The insurance industry just seems to get demolished by the Wall Street Bankers.

In the American Banker, by Jeff Horwitz

Evidence of abuses and self-dealing in the force-placed insurance industry suggests that there may be far larger problems in how servicers are handling distressed loans than the sloppy document recording that has been the recent focus of industry woes.

Behind banks’ servicing insurance practices lie conflicts of interest that align servicers and their insurer partners against borrowers and investors. Bank of America Corp. owns a force-placed insurance subsidiary, and most other major servicers receive commissions or reinsurance fees on the very same policies they purchase on investors’ and borrowers’ behalf. Continue reading “Ties to Insurers Could Land Mortgage Servicers in More Trouble”

Leaders as Liars

The Tamara Woodbury.  CEO of the Girl Scouts, when asked what was the largest obstacle to inspiring girls to future leadership positions:

“The majority of girls feel that in order to be a leader in today’s society, they have to become liars and they do not want to compromise the values they are learning as Girl Scouts in order to become leaders.”

 

Now why is that not a big surprise?

The Insurance Industry’s GREAT ESCAPE

NAIC President Questions Motives of OFC Supporters

KANSAS CITY, Mo. (Feb. 15, 2008) — Sandy Praeger, President of the National Association of Insurance Commissioners (NAIC) and Kansas Insurance Commissioner, in a letter yesterday, reiterated the strengths of state-based regulation and reasserted opposition to federal legislation that would establish an optional federal charter (OFC).

A few relevant parts of the letter: Continue reading “The Insurance Industry’s GREAT ESCAPE”

Another Type of Insurance Problem

One insurance suit settled, one begun

The Desmoines Register
February 7, 2008

By S.P. DINNENREGISTER BUSINESS WRITER

Another Des Moines area insurance company has run afoul of Minnesota’s attorney general over the sale of equity-indexed annuities, and now Iowa regulators say they’ll look to see whether any similar action is warranted here.Minnesota Attorney General Lori Swanson on Thursday accused AmerUs Group and American Investors, both business units of what is now Aviva USA, of misrepresenting terms of annuities that it sells to senior citizens. She sued them in Minnesota state court for allegedly failing to disclose key terms and conditions of equity-indexed annuities that they market.

This type of thing has been going on for some time. The 2001 downturn brought a rash of problems with oversold variable annuities (whose accumulations were tied to stock market performance). Annuities are essentially reverse life insurance once the payout stage is reached. They have their good points, but their fees are often very high.

Florida Gets a Big Fat F

Florida gets an ‘F’ for insurance system
from the South Florida Business Journal
February 6, 2008

Florida has one of the least-effective property and casualty insurance systems in the country, a new study that gave Florida and four other states an “F” grade said.

The joint project of the Heartland Institute and the Competitive Enterprise Institute rated all 50 states on nine criteria, including how prominent the states’ roles are in the auto and home insurance markets, and the concentration of insurance companies writing policies in a particular state. California, Massachusetts, North Carolina and Texas joined Florida in getting an F. Connecticut, Idaho, Illinois, Utah and Vermont got A grades.

Florida scored at or above average in seven of the nine categories. But Florida had the worst rating in the residual homeowners category, which measures how much of the market is served by government-provided insurance. Jacksonville-based Citizens Property Insurance Corp., the state-run insurer of last resort, is No. 1 in statewide market share.

Florida also scored poorly in the regulatory environment category for having an outsized influence in the setting of rates.

I would love to see the formula. Florida is above average in 7 of 9 categories. But because the State Government holds a lot of the policies, they get an F. Apparently the fact that many insurers have not been interested in insuring Florida home owners does not matter. Amazing.

Texas, North Carolina, and California all have to deal with big natural disaster issues so I am assuming some form of state self insurance makes them a failure as well. Massachusetts probably banned personal property when Romney was governor in an effort to avoid paying out any insurance to anyone ever.

There no silver lining in the gold fields

From IOL online news:

‘Power cuts may damage insurance industry’
February 04 2008 at 04:35PM

Power cuts in South African mines will have a negative impact on the global insurance industry, risk assessment company Alexander Forbes warned on Monday.“If hundreds of South African mines were each to claim up to R250-million for business interruption caused by power outages, the impact on the local and international insurance markets would be profound,”Debbie Geraghty, Head of Risk Services at Alexander Forbes said in a statement.Given that South African mining and industrial debt was re-insured globally, the potential sums called upon to cover South African power-related loss could cause a global re-insurance shock, Geraghty said.

What makes those greedy minors think they can soak up all our huricane/earthquake relief money? Something just isn’t working right here.

Men working at 2,000′ below in South Africa’s Kimberley Diamond Mine. Taken a few years ago.