1. Clippings, June 2014

    Endurance Specialty gambles on Aspen shareholder support in takeover bid

    "The new proposal places Aspen’s fate in its shareholders’ hands, in hopes they will break with management and vote to sell the company. But it represents a risky play. If Aspen’s investors stand firm, Endurance could be forced to abandon its takeover attempt for good. The consequences of that high-stakes gamble will likely ripple through the rest of the reinsurance industry, analysts said, as companies try to weather a seismic shift in the sector’s competitive dynamics."

    McGee’s exit to end successful turnaround era at The Hartford

    "The insurer’s comeback was far from assured just five years ago. When McGee took the helm in October 2009, he inherited a company crippled by the financial crisis. The Hartford’s massive bet on variable annuities years earlier had backfired, draining its capital as equity markets plunged and the recession took hold. It took emergency financial support from Allianz SE and $3.4 billion in TARP funds to keep the company afloat. Even with that, The Hartford’s stock had at one point dipped below $4.00 per share, and analysts harbored concerns about its ability to rebuild.”

    House to release 5-year TRIA reauthorization bill, aims to scale back program

    "A discussion draft of Neugebauer’s TRIA Reform Act of 2014 obtained by SNL would extend the federal backstop through Dec. 31, 2019. However, it would progressively raise the industry aggregate loss threshold necessary to trigger the program. Insured losses from a certified terror attack currently need to exceed $100 million. The House bill would raise that level to $200 million in 2016. It would then increase the threshold by $100 million each year, eventually hitting $500 million in 2019."

    Insurance groups lukewarm on House’s TRIA reauthorization plan

    "The industry criticized new terms included in the proposal that would make it harder for insurers to receive financial support following a terror attack and argued that the bill would hurt competition and drive up coverage premiums. Some also worried that the measure would open the door to eliminating the federal program altogether, potentially destabilizing the terrorism insurance market and disrupting large-scale construction activity."

    Reinsurers’ pricing woes mean big bargains for P&C insurers

    "Property catastrophe reinsurance rates fell only about 5% in January 2013. In April and June, reinsurance brokers said renewal prices routinely dropped by 10% to 20%. Another period of similarly severe discounts would push rates below pre-Sept. 11, 2001, levels, Moody’s warned June 18, making it difficult for reinsurers to earn their cost of capital."

    House Financial Services Committee passes 5-year TRIA reauthorization

    "Neugebauer and Hensarling will now push for House consideration of the five-year renewal within the next few weeks. If it passes, lawmakers will likely have to reconcile it with a competing bill expected to be approved in the Senate. The Senate bill would reauthorize the program for seven years, and make only incremental changes to the government’s financial responsibilities.

    Though Neugebauer has threatened to hold up the process in favor of a short-term extension if he cannot secure “a good bill,” it is unclear how much support he could rally.”

     

  2. Racism, interrupted

    beganin96:

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    By Michael Bennett

    Donald Sterling is the latest in a long line of rich white racists, and a shorter line of those who were caught being rich white racists.

    I was sitting at a bar recently watching the Mavericks close out a win against the Spurs, stealthily eavesdropping on two young black men discussing the NBA’s headline topics.

    They started with clarifying that the Heat were the only team to sweep its first-round opponent. Concurred that Indiana was surely falling short of its top seed expectations. Disagreed as to whether Russell Westbrook was shooting too much for Oklahoma City to defeat Memphis. And finally, after a brief silence:

    “Man, how about that racist old man who owns the Clippers?”

    “That dude is crazy, but what are you gonna do?”

    “I guess we just have to wait for him to die.”

    They shook their heads, laughed, and washed down the last gulp of their beers.

    Read More

     

  3. One of these things is not like the other, FCC edition

    Federal Communications Commission, Sept. 23, 2011:

    [I]f broadband providers can profitably charge edge providers for prioritized access to end users, they will have an incentive to degrade or decline to increase the quality of the service they provide to non-prioritized traffic. This would increase the gap in quality (such as latency in transmission) between prioritized access and non-prioritized access, induce more edge providers to pay for prioritized access, and allow broadband providers to charge higher prices for prioritized access. Even more damaging, broadband providers might withhold or decline to expand capacity in order to ‘‘squeeze’’ non-prioritized traffic, a strategy that would increase the likelihood of network congestion and confront edge providers with a choice between accepting low-quality transmission or paying fees for prioritized access to end users.

    The Wall Street Journal, April 23, 2014:

    Developed by FCC Chairman Tom Wheeler, the proposal is an effort to prevent broadband Internet providers such as Comcast Corp. ,Verizon Communications Inc., and Time Warner Cable from blocking or slowing down individual websites served up to the consumer. The idea is that consumers should be able to access whatever content they choose, not the content chosen by the broadband provider. 

    But it would also allow providers to give preferential treatment to traffic from some content providers, as long as such arrangements are available on “commercially reasonable” terms for all interested content companies. Whether the terms are commercially reasonable would be decided by the FCC on a case-by-case basis.

     
  4. beganin96:

    The Associated Press, April 6:

    "Texas is the largest athletic department, earning more than $165 million last year in revenue — with $109 million coming from football, according to Education Department data. The university netted $27 million after expenses."

    The full out-of-state cost for a year at UT-Austin — which includes tuition and fees, room and board, books and supplies, estimated personal expenses and transportation expenses — is projected at $49,842.

    Multiplied by the total allowable number of football scholarships (85), that’s about $4.2 million a year. Or, 15.7% of the athletic department’s profits and just 3.9% of total football revenues.

    And that’s in the absolute most expensive case, given that players aren’t allowed to except anything of monetary value beyond their scholarships, not even pasta.

    Tell us again how universities are nonprofits giving their star (student) athletes equal educational value for the millions he brings in. Tell us again how (student) athletes aren’t employees

    We’ll wait.

     

  5. The crushing cycle of long-term unemployment

    (For part one on the employed, go here)

    Of the two storylines to come out of Glassdoor’s employee confidence survey, the one surrounding the unemployed is a little more complex. 

    That’s because the unemployed population itself is more complex. We’ve left behind the recession-era picture characterized by constant job losses and everybody worse off. That we’ve dug out of that is great, even if the unemployment rate is still stubbornly high. The economy averaged job growth of 194,000 in 2013 and 178,000 so far this year, and it looks like even those who dropped out of the labor market are starting to look for work again.

    From Business Insider:

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    Read More

     

  6. We are all the overworked

    If you don’t have a job, you’re getting even more desperate trying to find one. And if you do have a job, you’re desperately trying to keep it.

    That’s the takeaway from a recent survey done by Glassdoor on employee confidence and behavior, and it serves as the latest evidence that things aren’t nearly as good for everyday people as they are in the corporate world. The financial crisis cut deep, and it’s showing up ways that are both financial and psychological.

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    Let’s take the employed population first. People are feeling good-ish about climbing the ladder! About 44% of those surveyed think they’re likely to find a job that fits their skills and compensation needs in the next six months.

    But to get that job, we’re working ourselves to the bone and for not much reward (illustrated by the great speed-up coined by Mother Jones and elaborated on a bit here). In fact, workers in many cases are getting robbed of their wages and time. Glassdoor’s survey found that just a quarter of people take full advantage of their paid time off, and 55% take less than half of it. 

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    And even when we say we’re taking time off, we’re probably not really. Three out of every five people said that they work during their vacations. Why? Because we’re terrified. Of getting behind, of losing our jobs, or not getting that raise, of angering our boss. 

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    Predictably, those making more than $100,000 disproportionately work on vacation. Gone are the days when moving up in the world meant having to put in fewer hours. But that hasn’t meant the the lowest-income workers are punching their 40 hours and heading home. More than half of those making less than $50,000 said they work during their vacations.

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    A few last points. First, only in America do we place such little value in taking time off. The U.S. is one of the only developed nations that doesn’t require companies to give workers paid time off. Contrast that with the U.K., which mandates 28 days a year.

    The threshold for overtime pay is also ridiculously low and falling. If you make $23,660 a year or more, you’re not guaranteed compensation for working overtime. The poverty line for a family of four is $23,850 per year.

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    Last, even as workers (voluntarily and involuntarily) sacrifice wages, their companies are actively taking from them as well. The U.S. Department of Labor recovered $280 million of wages in 2012, which accounts for just a fraction of the amount robbed by making employees stay beyond their set working day for free. 

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    Here’s Joseph Williams on how wage theft works in The Atlantic:

    Irritated by my tardiness, Stretch lectured me on time management, including an Orwellian principle found in retail: If you arrive on time for work, you’re already 10 minutes late. Showing up early is necessary, he said, so you can “get ready to hit the floor.”

    […]

    I later realized Stretch was invoking the principle of “wage theft”—retailers expect employees to be in position ahead of time, making their life easier, even if the employees aren’t getting paid for coming in early. There’s even a website devoted to fighting the practice.

    More people are getting jobs, yes. That’s unequivocally a good start. But in the process, people are working harder and under more stress just to keep those jobs.

    Some words on the unemployed part of the equation coming up in part two.

     

  7. WAR explains the 2014 MLB season, in three charts

    beganin96:

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    By Adam Cancryn

    A primer on who’s a contender in 2014, and who isn’t, using Fangraphs WAR.

    Through six innings on a sunny Opening Day in New York, the Mets kept it together. 

    They entered the seventh frame up 4-2 on the Washington Nationals, thanks in large part to a three-run homer from left fielder Andrew Brown. Starter Dillon Gee struck out the first batter, allowed a single, but got the second out on a fielder’s choice.

    And then, disaster.

    Read More

     

  8. This week in clips

    Couple bigger SNL stories out from me this week:

    * An interview with the CEO of Wilton Re, an acquisition-happy insurer now backed by one of the world’s largest asset managers.

    "The planned partnership should give the insurer access to CPPIB’s vast financial resources, allowing it to look for and purchase major books of business at an even faster rate. The Canadian pension plan’s asset management arm boasted C$201.5 billion of net assets at the end of 2013 and will use Wilton Re as a platform for investing in the U.S. insurance industry."

    * A super-fun story with significantly less fun potential consequences: On the infighting, distrust and turf protecting that’s preventing the U.S. from taking a strong role in oversight of systemically risky insurance companies.

    "The U.S. represents the world’s largest insurance market, but its regulatory system is also the only one of its kind, a patchwork of state-specific oversight different from the rest of the developed world. The federal government tried to slightly alter that structure through the 2010 Dodd-Frank Act, creating the Federal Insurance Office and Financial Stability Oversight Council and giving them extensive, yet nonregulatory, power over parts of the insurance industry. But state regulators and politicians intent on defending their turf have largely allied with the industry in fighting the federal agencies every step of the way. Nearly four years in, Dodd-Frank’s attempt at creating a well-balanced, cooperative coalition of state and federal insurance supervisors has so far backfired."

     

  9. The billionaire’s guide to blowing $93 million

    Back in December, I lost the championship game of my fantasy football league by a few points. I was not happy. There was prize money on the line, and even though it was just just a small sum, it still hurt to come so close and come away with nothing. It’s a familiar feeling, something we experience when we lose a poker game, or bet on the wrong horse, or watch helplessly as our afternoon snack lodges itself halfway down the vending machine. No one likes to part with money for no reason. 

    Which is all a very circular way to say holy hell, can you imagine if you spent $93 million and ended up getting almost nothing in return? 

    If so, you know how Sheldon Adelson feels. The Las Vegas casino mogul poured at least that much into 17 different GOP-related groups during the 2012 election cycle, he told the Washington Postincluding $30 million to the super PAC for Mitt Romney’s presidential campaign. The result? Just two of the seven presidential and congressional campaigns he directly contributed to went his way (Arizona Gov. Jan Brewer and Texas Lt. Gov. David Dewhurst), and Barack Obama got another four years. 

    Adelson’s contributions outpaced the next biggest 2012 donor by more than $65 million. The total sum ranked just behind the 2012 nominal GDP of Morocco, and ahead of the Slovak Republic. But at least all that money gave us this iconic image:

    Adelson said “the bar for support is going to be much higher” come the 2016 cycle.

     

  10. Our air is getting worse

    Indoors, outdoors, it doesn’t matter. Pollution is coming to get you. 

    The WHO estimates that 7 million people, or an eighth of all fatalities, died prematurely from diseases caused by air pollution in 2012. That’s more than double its prior predictions, and makes air pollution the largest single environmental health risk:

    After analysing the risk factors and taking into account revisions in methodology, WHO estimates indoor air pollution was linked to 4.3 million deaths in 2012 in households cooking over coal, wood and biomass stoves. The new estimate is explained by better information about pollution exposures among the estimated 2.9 billion people living in homes using wood, coal or dung as their primary cooking fuel, as well as evidence about air pollution’s role in the development of cardiovascular and respiratory diseases, and cancers.

    In the case of outdoor air pollution, WHO estimates there were 3.7 million deaths in 2012 from urban and rural sources worldwide.”

    Unsurprisingly, low and middle-income countries got the worst of it. Southeast Asia and the Western Pacific regions accounted for 5.9 million deaths alone.