Latest news with #RoulaKhalaf
Business Mayor
26-05-2025
- Business
- Business Mayor
US life insurers' offshore reinsurance liabilities breach $1tn
Unlock the Editor's Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. US life insurers have shifted more than $1tn of liabilities offshore, offloading more risk to foreign jurisdictions despite regulators' concerns about protections for retirement savings and broader financial stability. Private capital-owned groups such as Apollo's Athene and KKR's Global Atlantic, as well as traditional insurers such as Prudential and MassMutual, last year moved more than $130bn of liabilities to offshore reinsurers primarily based in Bermuda, according to new figures from S&P Global Market Intelligence. US life insurers' and annuity providers' total reserves ceded abroad, including liabilities moved to jurisdictions such as the Cayman Islands and Barbados, reached $1.1tn by the end of 2024, S&P said. The reinsurance deals come despite regulators and credit rating agencies warning of rising risks, with questions about whether the reinsurers have adequate assets to back up their promises to policyholders. Scrutiny intensified last year after the meltdown of 777 Re, a private equity-owned Bermudian reinsurer that had taken on significant exposure to assets connected to Josh Wander's Miami-based investment company, which collapsed last year after a failed attempt to buy football club Everton. The fallout hit US insurers that had ceded billions of dollars in assets to 777 Re through risk-transfer deals, and Utah's insurance commissioner asked a judge to place an insurer and two reinsurers connected with 777 Re into rehabilitation in March. Life insurers have used the global reinsurance sector for many years to spread their risks, such as customers living longer than expected. Read More What if you can't afford long-term care? But so-called asset-intensive or funded reinsurance, where the risks associated with both liabilities and the assets backing them are sent offshore, is raising concerns among regulators. Insurers' growing ties with alternative investment managers could also create conflicts of interest, according to Fitch Ratings. Athene, acquired in 2022 by Apollo, had transferred the risk associated with liabilities worth $193bn to its offshore affiliates by the end of 2024, according to a Fitch analysis of regulatory filings for the Financial Times, in a strategy that helped to fuel a record-breaking year of US annuity sales for the insurer. But traditional insurers such as MassMutual, with asset manager Centerbridge, and Prudential, with private equity group Warburg Pincus, have also made greater use of vehicles, in a sign of how private equity groups have reshaped retirement savings. Following the 777 scandal, Bermuda's financial watchdog said that it would more closely monitor connected-party assets. Both the Bermuda Monetary Authority and the US National Association of Insurance Commissioners have also recently announced new supervisory measures, such as additional reporting requirements on insurers' investment portfolios, which analysts at Fitch told the Financial Times had helped to address their concerns. Suzanne Williams-Charles, chief executive of a trade body for Bermuda reinsurers, told the Financial Times: 'We believe that the Bermuda reinsurance market — specifically, the life sector — does not pose a systemic risk.' But fresh concerns have emerged in other offshore jurisdictions over capital requirements, with prominent Bermuda reinsurers recently seeking to distance themselves from practices in the Cayman Islands. Athene chief executive James Belardi warned investors earlier this year of 'unabated growth' in the Cayman Islands, where he said that $150bn of insurance reserves were 'supported by a fraction of the capital required by the US or Bermuda'. The research from S&P found that total reserves ceded by US life insurers and annuity providers to reinsurers, including onshore groups, grew to more than $2.4tn at the end of last year.
Business Mayor
25-05-2025
- Business
- Business Mayor
Daniel Loeb's Third Point Investors in deal to create London-listed insurer
Unlock the Editor's Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Billionaire activist Daniel Loeb's Third Point Investors Limited plans to acquire a reinsurance company, in a move that would lead to the creation of a new London-listed insurer for the first time since 2020. London-listed TPIL said on Wednesday that it would acquire Malibu Life Reinsurance, a Cayman Islands-based life and annuity reinsurer that Loeb's New York-based hedge fund Third Point launched last year. The Guernsey-based closed-end fund plans to acquire Malibu in an all-share deal that values Malibu at about $68mn. If the deal is approved by shareholders, TPIL said it would acquire Malibu Life Re from another Loeb vehicle in exchange for the issue of new shares, in what amounted to a reverse takeover. But the stock-for-stock deal has already been hit by opposition from Asset Value Investors Limited, which has a 7 per cent stake in TPIL and which said it planned to vote against the proposal. AVI, a specialist investor in closed-end funds, said in a statement that the planned transaction 'cemented' Third Point Investors' status as 'the poster child for appalling corporate governance'. Third Point declined to comment on the statement from AVI. The UK insurance market has not been immune to the broader dwindling of listings on London's stock market. The takeover would create the first new London-listed insurer created since Bermuda-based reinsurer Conduit Re's initial public offering in late 2020. Rupert Dorey, chair of TPIL, said in a statement that Malibu Life was 'a high-potential reinsurance platform with a robust pipeline of reinsurance and other origination opportunities that will enable it to achieve scale in the near-term'. Saba Capital Management, which had an approximately 1 per cent stake in TPIL, according to TPIL's Wednesday stock exchange filing, said it planned to support the transaction. Saba founder Boaz Weinstein said in a statement: 'We're pleased to see a board of directors responding to the inherent challenges within the UK investment trust market.' TPIL said the deal would give UK investors access to the booming US fixed-annuity market, which has been buoyed by broader market volatility. Athene, the annuity business wholly owned by US private capital group Apollo, has a so-called 'sidecar' reinsurance vehicle in Bermuda that has helped it raise equity capital offshore. JPMorgan said in a recent investor note that the strategy had helped build the insurer into 'the gorilla in the room' in private equity-backed retirement products. Athene earlier this month reported record quarterly inflows of $26bn. TPIL said that Malibu Life had access to a 'robust pipeline' of deals in the sector, including through a reinsurance agreement with a 'blue-chip' US life reinsurer covering about $3bn of premiums. A market participant familiar with the transaction said the US business was Aspida, which is backed by US private credit group Ares Management. Aspida declined to comment. The deal comes as reinsurers in the Cayman Islands, where Malibu Life is based, face growing scrutiny from regulators as well as criticism from US- and Bermuda-based rivals. 'Some companies are now looking to pivot to the Cayman Islands, where the regulatory framework is much less robust, capital requirements are much less defined and there's much more flexibility that companies have,' Marty Klein, Athene's senior adviser and former chief financial officer, told investors on a February call. Read More City watchdog raises concerns over £4bn life insurance market 'We don't think that's healthy for the industry. We think it's actually quite detrimental', he added.
Business Mayor
25-05-2025
- Business
- Business Mayor
This is not just any cyber meltdown: will shoppers forgive M&S?
Unlock the Editor's Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. A potential £300mn hit to profits; a month without online orders; gaps on the shelves; stolen customer data and now the chance the upheaval could last until July — this is the M&S cyber meltdown. The enduring fallout from the cyber attack on one of Britain's most beloved retail brands overshadowed an otherwise exemplary set of results this week. The numbers showed the City what every middle class female shopper already knew — M&S has finally got its mojo back in both food and fashion. But right now, if we want an Olivia von Halle cat print pyjama set we'll have to go to a store and fight it out for one. Investors, who have seen around £750mn wiped off the M&S share price since it was forced to pause online orders, were appeased with a 20 per cent dividend increase. But as the FTSE 100 retailer struggles to get its IT systems up and running again, the bigger question is how forgiving customers are going to be. The surprising conclusion I've reached, after spending hours chatting to shoppers in stores and on social media, is very forgiving indeed. Yes, customers are frustrated by not being able to order online and the poor availability of certain products. However, the most commonly expressed sentiment was that they were proud to support their beloved M&S, attacked by evil criminals. 'If there was ever a good time for M&S to have a crisis, it would be now,' says Richard Hyman, the veteran retail analyst, noting the 'deep well of goodwill' Brits still hold for the brand that many of our mothers shopped for treats at. Read More Macy's Stock Rises Off The Back Of Tighter Stock Control In the long years M&S spent struggling with its product ranges, its ability to leverage this affection was weaker. Today, paying 40 pence for a paper union jack bag may make our noses wrinkle, but its recent fashion collaborations, booming beauty business, revamped food halls and tie-up with Ocado have won shoppers back (did I mention the chocolate coated custard creams?) M&S did not divulge any post-cyber attack sales data this week. Despite all this sympathy, it is bound to be ugly. With the outage spanning two bank holiday weekends, two paydays and a heatwave, fashion rivals with fully functioning websites like John Lewis, Next and Boden will have stolen market share. When online orders finally return, will shoppers flock back? M&S knows how to do a crisis; it also knows how to do crisis management. After the chaos in the immediate aftermath of the attack, customers have been kept informed with frequent updates — and importantly, apologies — via email and social media. It was open about the theft of customer data, issuing warnings about scam attempts. Shoppers are angry, but relieved it did not include their bank details. The fact that the Co-op and Harrods have also been attacked, and that a third-party supplier is being blamed rather than weakness in M&S's own systems, helps with the optics. Management may claim it's a 'bump in the road' but this is a nasty wake-up call for all consumer-facing businesses. With web orders still paused, stores feel much busier than usual. M&S has sensibly responded by increasing the number of hosts stationed by tills and store entrances by 75 per cent. It claims it has a 'zero wait time' for shoppers calling its customer service hotline (I rang to test this and got through to a human straight away). Staffing up will be expensive, but experts think the investment will pay off. 'Many organisations not as focused on the customer as M&S would not survive a £300mn hit to profits,' says Jo Causon, chief executive of the Institute of Customer Service. Incredibly, M&S remains top in YouGov's latest customer trust rankings, which polled shoppers after the hack. The true extent of the financial damage rests on future fines, insurance payouts and how quickly systems come back online. Analysts agree M&S should not risk customer fury by rushing things: 'They've got one chance to get this right,' says one. For all his cool handling of the crisis, the dent in the M&S share price means chief executive Stuart Machin faces a £1mn hit to his pay package. However, if anyone deserves a bonus, it is the frontline staff. They have done more than keep the stores open; they have protected the brand, greeting disgruntled customers with stoicism and a smile. These human interactions are crucial and should not go unrewarded. Given shopper loyalty, it is ironic that Sparks, the M&S customer loyalty programme, is truly pants. There have been no offers in the app for weeks following the hack, but before they disappeared they were rarely very tempting. When the online business finally reopens, rewarding the patience of its faithful 18mn Sparks members with a decent promotional event would be a very good look for M&S indeed. Claer Barrett is the FT's consumer editor and author of the FT's Sort Your Financial Life Out newsletter series; ; Instagram and TikTok @ClaerB
Business Mayor
24-05-2025
- Business
- Business Mayor
Rating agencies in public brawl over scores for private credit
Unlock the Editor's Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Two US credit rating agencies have become embroiled in a rare public dispute over the reliability of scores for insurance companies' growing stash of private credit investments. The dispute involves a study, since withdrawn by its publisher, purporting to find that small credit rating agencies assign more generous scores to private credit investments than the larger and more established ones. Kroll Bond Rating Agency has accused Fitch Ratings of misleading market participants by relying on the study to raise doubts about the quality of its ratings. Fitch on Monday published a report critical of Kroll and other groups, based on the 2024 study, issued by the National Association of Insurance Commissioners. A Fitch spokesperson stood by its report, arguing the insurance commissioner's group reached similar conclusions in prior studies. 'If the (association) provides new information, we will update our analysis.' The unusually overt quarrel highlights the intense competition in the fast-growing and lucrative $1.6tn private credit industry to carve out turf — not just among lenders, but among the groups paid to referee creditworthiness of the market's opaque investment offerings. 'There's a build-up of risk in the insurance industry and also potentially in the collateralised loan sector that is not being properly monitored,' said Ann Rutledge, a former senior Moody's analyst and now chief executive of rating agency CreditSpectrum. 'The opacity and the risk are both attributable to the fact that there are cracks in the foundation of the current SEC-regulated credit rating industry.' Read More Prudential to launch $2bn share buyback Insurers and other investors use the types of ratings in question, known as private letter ratings, when no public ratings are available. Larger ratings firms historically have eschewed issuing these types of scores for private credit products, leaving the market dominated by smaller agencies. Private letter investments were 'inherently more risky given the lack of transparency and potential ratings inflation', analysts at JPMorgan said in a recent note, adding 'there is an inherent challenge in assessing credit quality from the outside as no part of the process, analysis, or information is transparent from the outside'. Kroll, which was among the first to challenge the establishment credit agencies with its launch after the global financial crisis, said it was troubled by its larger rival's boosting of 'statistically unsound' research. It said Fitch's criticism appeared geared towards supporting its own grab for dominance. 'In seeking relevance to increase its market share in private credit, Fitch appears to have undercut two foundational principles for any rating agency — integrity and analytical rigour,' Kroll said in a statement. The study by the NAIC focused on the rise of private letter ratings for insurers' private credit investments, which totalled about $350bn at the end of 2023. It found confidentially-issued grades from smaller rating shops were more likely to deviate from scores by the association's own securities valuation office and were notably higher on average. According to the original report, smaller groups such as Kroll tended to offer ratings three notches higher than the association's internal score, while larger agencies such as Fitch offered ratings about two notches higher. Read More The sporting weekend in pictures Recommended The study also showed that the number of privately rated securities held by US insurers grew from 2,850 in 2019 to 8,152 in 2023, and that the share of securities rated by small credit rating providers such as Egan-Jones, Kroll and Morningstar had grown to 86 per cent in 2023. The report also noted that Fitch is the leading provider of private letter ratings among the big three US rating agencies, ahead of S&P Global Ratings and Moody's Ratings. But earlier this month, the insurance association announced it was removing the report from its website 'to undergo further editorial work to clarify the analysis presented'. Without naming names, the insurance association said it would 'evaluate how the information we provide to the public could be misconstrued or otherwise utilised in inappropriate ways'. The NAIC declined a request for comment.
Business Mayor
24-05-2025
- Business
- Business Mayor
UK considers taxing pensioners to claw back winter fuel payment
Unlock the Editor's Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The contentious winter fuel payment could be restored to all pensioners under plans being considered by Downing Street, with the sum being recouped from higher income pensioners through their tax returns. Government officials confirmed the idea is being looked at after Sir Keir Starmer this week announced a U-turn on last year's decision to scrap the benefit for all pensioners, limiting it to those already in receipt of pension credit. Starmer said last week he wanted more pensioners to receive the payment after about 10mn were stripped of the benefit last winter, a reversal of a policy that proved highly unpopular with voters in this month's English local elections. But Downing Street said that it was still looking at how and when this might happen and that final decisions would be taken at 'a fiscal event' — expected to be this autumn's Budget. Creating a new means test for the winter fuel payment would be highly complex and ministers are considering a simpler option, the officials said, which is restoring it as a universal benefit and then recouping the money when high income pensioners fill in their tax returns. 'There are a number of options being considered and that is one of them,' said one official close to the discussions. The payment is worth either £200 or £300 a year per recipient. A similar approach was taken by former Tory chancellor George Osborne when he reduced the eligibility to child benefit for better off parents and it was this week endorsed by former Labour shadow chancellor Ed Balls. Read More Frasers' concept store at Overgate set to open in May 'What they should do is a big U turn — just say, we're going to restore the winter fuel allowance to everyone and then withdraw it through the tax system from the highest-income pensioners,' Balls said. Speaking on the Political Currency podcast, which he co-hosts with Osborne, Balls told the former Tory chancellor; 'That's what you did with child benefit — and you can do that because the higher income pensioners will be doing their tax return, you have got their income information.' The winter fuel payment cuts were announced by chancellor Rachel Reeves last July, just weeks after the general election, and limited the benefit in England and Wales to pensioners who receive means-tested pensions credit. The reforms removed the benefit from people with incomes of more than £11,800 a year or £18,000 for a couple. Analysts said widening the eligibility for the payments would be complex, because there was no simple way to identify households with income just above the cut-off for pensions credit. Recommended Modelling access to the winter fuel payment on the way child benefit has been withdrawn from higher earners would not be without problems, analysts said. The high-income child benefit charge (HICBC), which child benefit recipients pay if their income goes past a certain threshold, has proved controversial since its introduction in 2010 and has resulted in several high-profile cases at the tax tribunal against the levy. Emma Rawson, director of public policy at the Association of Taxation Technicians, said the government would be 'unwise' to use the HICBC as a model for restricting access to winter fuel payment, adding there were many outstanding problems with the policy. Read More Интернет-казино без первоначального взноса Not all higher income pensioners need to fill in a self-assessment tax return, as Balls had suggested, she added, only those who have additional income to pay or capital gains to report.
