Ladies and Gentlemen:
Judge Sarah Vance has busted Allen Kanner’s balls badly as Ex Rel Branch has been dismissed. Nowdy will have the particulars with respect to the insurers named, Allstate in particular. The Travelers and the insurance bastards at Liberty Mutual skate unscathed.
I recently met with a group of political strategists that noticed our little blog in Soggy Bottom and the information exchange was very enlightening for me. I’m as interested in the mechanics of the story as the story itself and the tales I was told of how these folks manipulated the traditional media were very interesting. More than any other skill set these folks had a keen understanding of human behavior which is a shared passion with us at Slabbed.
The garden variety bashing I sometime engage in to drive traffic sometimes obscures the fact Slabbed is in reality a quest for knowledge as in getting all the facts that surrounded the blanket denials of insurance coverage after Katrina no matter where those facts may lead. This may sound elementary, indeed even simplistic, but I’d submit we stand in stark contrast to our own insurance regulators that ignored all the evidence of fraud on part of their corporate benefactors from the insurance industry after Katrina, Mike Chaney even going so far as to attack the Rigsby sisters, who exposed the fraud perpetrated by State Farm on the US Treasury here in Mississippi. This frankly came as no surprise to me, especially after it came out that the lawyer who ran the market conduct study for Mr Chaney left the Mississippi Department of Insurance for State Farm’s Jackson based law firm.
Insurance companies have lots of money to throw around and spend vast sums of money on shills, propagandists and their own in-house PR departments. These folks are mostly rent an opinion hookers that dispense half-truths in furtherance of their own paychecks. Armed with lots of factoids and ready made quotes, deadline pressed journalists flock to them in droves, often uncritically lapping up the intellectually dishonest drivel folks like the III’s Robert Hartwig, who this past summer passed off a bogus poll about the NFIP to the media. To her credit, Becky Mowbray over at the T-P busted Hartwig and frankly I was amused at Mike Chaney’s blatant duplicity in the Sun Herald’s reporting on the same topic. I guess Chaney tells so many whoppers he can’t keep them all straight but that is another post.
I mention all this because Ashby Jones and Joanne Lublin recently wrote a story for the Wall Street Journal on the topic of corporate whistleblowers and the new financial re-regulation legislation which is so full of self-serving corporate PR spin these two journalists should be ashamed, Continue reading “And the Wall Street Journal put two reporters on the story and still managed to butcher it. An Allstate Hurricane Katrina Fraud Update.”
I’ve known Dave pretty much all my life. He comes from a fine family and is a fine choice for the insurance industry advisory board to the NFIP. Being from Bay St Louis he had a ring side seat after Katrina to the myriad of ways insurers defrauded the NFIP for example and witnessed first hand the human toll of the bad faith claims handling procedures employed by certain insurers, so he takes the human equation with him to the quarterly DC meetings as well. Dave’s business acumen means he also has a good understanding of the internal controls needed at NFIP, most notably a bit of oversight, to insure that major retail insurers never defraud the program again.
Anita Lee has all the details at the Sun Herald and in a great example of a broken clock being right twice a day, she even snagged some quotes from Jimbo the Clown’s sidekick, Mississippi Insurance commissioner Mikey “The Cook” Chaney who shares our sentiments about Dave and what he brings to the table. Unfortunately for the citizens of Mississippi, Mikey does not recognize fraud even when it bites him on the ass unless it is an individual defrauding a major multinational insurer. Fortunately for us at Slabbed, Mikey doesn’t know when to shut his mouth but such is a common trait with the political class. We’ll be visiting on him again soon.
Again our congratulations to Dave Treutel and we’re delighted to have in him as our voice within the NFIP. Well done Dave!
These past 2 weeks we’ve periodically gotten a huge number of worldwide referrals from what appears to be a pornographic website, based on the verbage contained the referring URL. Running the link through a Whois search reveals it is in reality a Forex scam site. As is my custom I checked the wiki entries to see if the explaining could be made easy for me and sure enough the two wiki entries had a wealth of great information. (Those wondering about the Forex proper can click here.) For the balance of this post we’re going to concentrate on the scam I linked first and the implications therein so is there we now visit:
A forex (or foreign exchange) scam is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading “has become the fraud du jour” as of early 2008, according to Michael Dunn of the U.S. Commodity Futures Trading Commission. But “the market has long been plagued by swindlers preying on the gullible,” according to the New York Times. “The average individual foreign-exchange-trading victim loses about $15,000, according to CFTC records” according to The Wall Street Journal. The North American Securities Administrators Association says that “off-exchange forex trading by retail investors is at best extremely risky, and at worst, outright fraud.”
With the scam set let’s visit with the assertion it is possible to beat the Forex. I’ll note these same concepts apply to the stock markets too in varying degrees:
The forex market is a zero-sum game, meaning that whatever one trader gains, another loses, except that brokerage commissions and other transaction costs are subtracted from the results of all traders, technically making forex a “negative-sum” game.
…………..there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.
Retail traders are – almost by definition – undercapitalized. Thus they are subject to the problem of gambler’s ruin. In a “Fair Game” (one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Since the retail speculator is effectively playing against the market as a whole – which has nearly infinite capital – he will almost certainly go bankrupt. The retail trader always pays the bid/ask spread which makes his odds of winning less than those of a fair game. Additional costs may include margin interest, or if a spot position is kept open for more than one day the trade may be “resettled” each day, each time costing the full bid/ask spread.
Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. This is because the arbitrages are essentially drawn from a pool of finite size; although information about how to capture arbitrages is a nonrival good, the arbitrages themselves are a rival good. (To draw an analogy, the total amount of buried treasure on an island is the same, regardless of how many treasure hunters have bought copies of the treasure map.)
So it is the middle men who always make the money. Often the middle men also are taking a trade position too so the game truly is rigged. I mention this because the entry properly mentions information advantages. Indeed in my closest circle of stock trading friends we often discuss price/volume movements in issues we own in terms of buyers/sellers “with superior knowledge” or “access to information” the retail investor simply does not have. Properly analyzed the data can confirm previous buys or signal that it’s time to sell. These concepts also underpin the business of insurance where “information advantages” has a more proper name: Information asymmetry. Continue reading “A peek inside Slabbed as we set up some important financial concepts and introduce the ol’ Forex Scam. Anyone else remember Russell Erxleben?”
With a hat tip to a Slabbed reader I was sent a link to a new twist on an old case, Turner v Pleasant that was presided over by impeached (but not yet convicted) LAED Judge Tom Porteous. I hope the Slabbed Nation joins me in welcoming lawyer Dick Chopin here as we begin with a story by Michelle Massey at the Louisiana Record.
A Louisiana couple is asking a federal court to overturn a previous judgment, claiming the presiding judge acted improperly because of his relationship with defense counsel and a witness.
Ada D. Turner and Ronnie Turner filed suit against Neal E. Pleasant, RPIA of Delaware, Neal E. Pleasant Living Trust, The Travelers Insurance Co. and Standard Fire Insurance Co. June 25 in federal court in New Orleans.
The case was previously tried before New Orleans federal Judge G. Thomas Porteous, Jr. without a jury in April 2003. Continue reading “Did Dick do it? Slabbed examines the case of Turner v Pleasant, Dick Chopin and Tom Porteous.”
I count myself as a lucky guy this morning as a very busy day is still ahead for me and I really don’t have the time to write a comprehensive post on yesterday’s insurance roundtable sponsored by Senator Wicker and his staff. I’m lucky because Anita Lee was also there and she did a fantastic job reporting the events. Before I chime in with a bit of analysis and a personal touch let’s visit with Anita:
Frustrated by Senate inaction, U.S. Sen. Roger Wicker stepped up his role in the coastal insurance debate Thursday, hosting an insurance forum that presented ideas for an overhaul of the National Flood Insurance Program that were new to the audience.
Approaches to insure against catastrophic risk varied, but two thoughts appeared universal: The current insurance system does not work for low-frequency, high-severity events such as Hurricane Katrina, and property owners can expect a stable and affordable insurance market only if they fortify their homes against hurricane damage.
Wicker said after the forum he hopes to build momentum for a Senate hearing on comprehensive coverage for catastrophic events. Christopher Dodd, D-Conn., has not followed through on promises that the Banking Committee he chairs will hold a hearing on the issue.
Mentioning Chris Dodd here on Slabbed is like featuring Loyola Law Professor Dane Ciolino as it represents red meat for the slabbed nation. Luckily for everyone, the good people in Connecticut agree with our assessment as Dodd’s poor poll numbers spelled doom for any chance at re-election so he retires this year, no doubt to the revolving door. Continue reading “Anita Lee covers Senator Wicker’s Insurance Roundtable. Slabbed adds a bit of analysis.”
Just to show you guys we’re not complete hicks how about I strike up some Yeats and bid a hale and hearty Mississippi coast welcome to Lloyd Dixon, Greg Toczydlowski, Howard Kunrether and Erwann Michel-Kerjan.
THE SECOND COMING
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand. Continue reading “Slabbed welcomes our insurance industry visitors coming for Senator Wicker’s insurance forum.”
Turbulence in the Mississippi Wind Pool Underwriting Association propelled its way into federal court in Hattiesburg last week. The suit is over the Wind Pool Board’s decisions about 2005 reinsurance coverage.
Plaintiffs bringing suit are Association Casualty Insurance Company; Benchmark Insurance Company; Georgia Casualty & Surety Company; and National Security Fire and Casualty Company.
Allstate Insurance Company; Mississippi Farm Bureau Mutual Insurance Company; Nationwide Mutual Fire Insurance Company d/b/a Nationwide Insurance Companies; State Farm Fire and Casualty Company; and St. Paul Travelers Companies are the Defendants.
The case was filed September 15, 2006 in federal court, Southern District Mississippi. Here’s the docket report, the Complaint, and Amended Complaint. The background quoted below is from the Plaintiff’s Opposition to Defendant’s Motive for Summary Judgment:
On August 29, 2005, Hurricane Katrina caused widespread damage to life and property when it made landfall on the Gulf Coast of Mississippi. Many of the most vulnerable properties on the Gulf Coast were insured by the Mississippi Windstorm Underwriting Association (―the Association or ―MWUA). Continue reading “Turbulence in the Mississippi Windpool Association”
I may not know much about insurance but I know my surety bonding. AIG isn’t happy with Travelers and Chubbs and they claim the state regulators aren’t either. Phil Gusman reported these breaking developments for the National Underwriter:
An AIG executive said recent changes in some competing companies’ positions regarding writing excess policies over AIG primary policies, or co-surety policies with AIG, are not based on market realities.
Competitors are trying to take advantage of the uncertainty surrounding the AIG liquidity crisis, suggested John Doyle, president and CEO of Commercial Insurance at AIG.
His remarks came during a Risk and Insurance Management Society (RIMS) webinar, “Risk Management Strategies in an Unsettled Financial Market.” Continue reading “Survival of the Fittest Part Deux: AIG Strikes Back UPDATED”
It didn’t take long for AIG’s competitors to make a play for nervous contractors and project owners. Phil Gusman at the National Underwriter filed this report:
Chubb Group of Insurance Companies and Travelers will no longer participate as partners on co-surety bonds with American International Group, according to a Marsh brokerage executive.
That news emerged during a telephone conference call held today by Marsh to provide an update on the global commercial insurance market in light of the turmoil in the financial markets.
Mark Nickel, who is with Marsh’s surety practice, said Travelers is not willing to participate on co-surety on any bonds not approved by last Friday 19.
Clients will need to replace either Travelers or AIG, he said. He added that, up until Nov. 19, in order to allow for an orderly transition, “Travelers is prepared to absorb AIG’s share of the co-surety exposure if the client needs that additional time to find additional surety capacity or to replace either Travelers or AIG.”
This development is of interest to me professionally. Continue reading “Survival of the Fittest: Travelers and Chubb Take a Shot at AIG's Surety Business”