Archive for February, 2010:
Parent of State Farm Florida posts $777 million profit for 2009
by Jeff Harrington, Times Staff Writer In Print: Saturday, February 27, 2010
State Farm, by far the largest property and auto insurer in Florida, posted a $777 million profit in 2009 thanks to improved underwriting results and investment returns. the profit reverses a $542 million loss in 2008 for the Bloomington, Ill., insurance giant.
The company’s property-casualty businesses reported a pretax operating gain of $393 million last year, despite an underwriting loss of $3.7 billion. Catastrophes cost the company about $3.6 billion.
Chief executive Ed Rust made $9.4 million, down from $13.7 million in 2008, with his compensation negatively affected by the financial results of 2008.
State Farm’s Florida unit in December struck a deal with regulators to boost its homeowners insurance revenue as a condition for not pulling out of the state. the company, which is dropping 125,000 homeowners policies statewide, received approval to raise rates for its remaining homeowners 14.8 percent.
Plus, it has filed for an average 9.2 percent rate hike for its 2.7 million auto policies in Florida.
State Farm is owned by policyholders and reports results once a year.
[Last modified: Feb 26, 2010 10:31 PM]
Parent of State Farm Florida posts $777 million profit for 2009
RBI may've to tighten banking licence norms
MUMBAI/CHENNAI:the Reserve Bank of India may have to revisit the present norms on new bankinglicence, or even tighten them, with some of the corporates and financialservices groups harbouring ambitions to float a bank.
the financeminister announced in the budget that RBI may issue fresh bank licences toprivate sector players and convert finance companies to banks. Under the currentguidelines, a new private sector bank should have a minimum net worth of Rs 300crore, and no single entity or group of related entities can hold more than 10%in a bank. There is a distinct possibility that RBI may increase the minimum networth requirement to at least Rs 500 crore. Most private sector banks alreadyhave a net worth of over Rs 500 crore.
“RBI might raise it. Itwould want to put in place a more stringent criteria. the existing norm of Rs300 crore was fixed years ago,” said Bobby Parikh, managing partner, BMRAdvisors.
among the large non-banking asset finance companies, theShriram Group had sought a banking license. S Natarajan, director, ShriramCapital Ltd, the closely-held holding company of Shriram group said: “Wewill certainly apply for a bank licence. Depending on the policy direction, wewill start a new bank or seek conversion of the NBFCs of the group into abank.”
Given the group’s strong presence in the financialsector, large customer base and extensive branch network, Shriram is wellqualified to become a bank, said Natarajan. “By becoming a bank, we willbe able to raise low-cost deposits and provide working capital support to alarge number of small enterprises,” he said.
Business housesincluding Religare, AV Birla group, Anil Ambani group and Bajaj Auto group haveevinced interest in acquiring a bank licence along with existing NBFCs likeShriram Group and Srei. Others like Indiabulls, Exim Bank, SIDBI and IFCI arealso expected to consider the possibility. at present there are 15 old and 7 newprivate sector banks. Interestingly, Sundaram Finance, one of the older NBFCs,has said that it is not interested in a banking licence. For many of thesegroups, banking is the only missing element among the range of products likeinsurance, asset management and brokerage which they have on offer, saidParikh.
but there are issues that RBI will have to think through.According to Janmejaya Sinha, chairman, Asia Pacific, Boston Consulting Group,”Will RBI allow the present NBFCs to convert themselves? Will theregulator give licenses to industrial houses? what will be the level of promoterstake that will be allowed initially? Will RBI allow niche banks to be set likea retail bank, wholesale bank etc or will they have to go for universal bankmodel? and, what capital level will be there and what will be the fit and propernorm.”
In January 2002, the regulator had granted an”in-principle” approval to Kotak Mahindra Finance Ltd (KMFL) andthree Indian finance professionals who had teamed up with Rabobank (laterrenamed Yes Bank) to set up commercial banks.
Van insurance » Blog Archive » Why Do You Need Auto Insurance …
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Van insurance » Blog Archive » why Do you need Auto Insurance …
The Most Common Myths When You Need Auto Insurance | Chillicious.com
the Most Common Myths When you Need Auto Insurance
All car owners need auto insurance because it is the law. however, many insurance policies are immensely complex and with so many wrong information all around, it is likely that some people will commit mistakes along the way. Confusion will lead to expensive mistakes and this is the reason why CarInsurance180 strives to help shoppers who need auto insurance come to a more informed decision every time they purchase car insurance. from rates for car insurance to premium, read some of the most common car insurance myths, debunked:
Myth Number 1: the most expensive cars to insure are red cars.
Debunked: This is a myth that has been around for a long time. Fortunately, this is exactly what it is, just a myth. Colour never played a part in determining the rates for car insurance. however, recent studies show that roughly around 25% of drivers believe that the colour of their car is a factor in determining their car insurance rates. it is widely believed that red cars mean higher insurance rates. the reality is, all insurance companies will not even ask about the colour of the vehicle you want insured when calculating quotes. they are likely to ask the car model, the body type, engine size and the age of your car.
Myth Number 2: New cars are likely to be stolen
Debunked: the truth is, it is the other way around. According to the National Insurance Crime Bureau, the top ten most stolen vehicles of 2008 were:
1. Honda Civic (1995) 2. Honda Accord (1991) 3. Toyota Camry (1989) 4. Ford F-150 (1997) 5. Chevrolet C/K 1500 (1994) 6. Acura Integra (1994) 7. Dodge Ram Pickup (2004) 8. Nissan Sentra (1994) 9. Toyota Pickup (1988) 10. Toyota Corolla (2007)
The reason why most thieves prefer older cars is that they are perceived as easier to steal compared to newer car models. in addition, since most car owners are keeping their cars longer because of the economic instability, it resulted in excellent markets for used parts. Most of the time, when older cars are stolen; they do not make it back on the streets in one piece.
Myth Number 3: Bare bones car insurance can provide coverage for stolen, vandalized or cars damaged by hail or fire.
Debunked: the minimum requirements for auto insurance in most states only require car owners to purchase liability coverage. This means that you are only covered for any damages you cause to other people. Unless you have comprehensive coverage, you are not fully protected from other occurrences.
Myth Number 4: Car insurance companies will pay off the policyholder’s loan or lease once a car is totalled.
Debunked: Most car insurance provider will not promise to pay off its customers’ loans once insured cars are wrecked. however, they will pay the actual cash value of the vehicle except for the deductibles. Any outstanding amount on the loan or car lease is the sole responsibility of the policyholder, not the insurance provider. On the other hand, if you bought gap coverage, you may be able to save yourself some grief. Gap coverage provides coverage to a policyholder once the insured car is wrecked before the loan is paid off when the accident occurred or before the term of the lease expires.
Myth Number 5: Sports car drivers get more violations; therefore, they pay higher premiums.
Debunked: that is not necessarily true. in fact, study shows that in 2009, people who drove Hummers H2/H3 have five times the number of violations than the average car owners. On the flip side, the most “well-behaved” vehicles are people who drive Jaguars XJ. Although insurance companies do not base their prices on this study, the type of car you own and your driving history are important factors that they will consider.
Why pay high rates for car insurance? If you need auto insurance at friendly prices, CarInsurance180 is the best place to shop and compare!
The Most Common Myths When you Need Auto Insurance | Chillicious.com
Ballot Materials Changed, Lawsuit Filed for California Auto Insurance Initiative
(Clarifies the position of Californians for Fair Auto Insurance Rates in the fourth paragraph.)
California Attorney General Jerry Brown changed explanatory language accompanying a controversial automobile insurance ballot measure, winning applause from consumer advocates and a threatened lawsuit from backers of the initiative.
Brown ordered new language in the title and summary that will be printed in booklets going out to California voters. It now says the Continuous Coverage Auto Insurance Discount Act will permit automobile insurance companies to raise rates on drivers, depending on their coverage history.
Opponents of Proposition 17, which will be on the June 8 primary ballot, welcomed the change. Harvey Rosenfield, founder of Consumer Watchdog and the author of the state’s Proposition 103, said, “It’s very important for the voters to know many people are going to see enormous surcharges if this goes through.”
Kathy Fairbanks, spokeswoman for the pro-Proposition 17 group, Californians for Fair Auto Insurance Rates, said the organization objects to the new language in the title and summary and threatened a lawsuit if the wording stays.
In a related development, CalFAIR filed a lawsuit in Sacramento Superior Court seeking to force opponents to make changes in their own ballot arguments and ballot rebuttals — included in the voter booklet — saying the argument that the initiative will raise rates is “patently false and misleading.”
“It’s included in the official ballot document, which has the stamp of the Secretary of State’s office,” Fairbanks said. “Advocacy is one thing, but false and misleading statements are another.”
Rosenfield said the filed lawsuit is frivolous. “We’re looking forward to seeing Mercury in court. I predict it’s going to be a judicial debacle for them,” he said.
According to CalFAIR, the proposition would allow insurance companies to lower premiums for drivers who have continuously maintained auto insurance coverage, even if they switch to a different insurer. Under current law, an insurer may offer discounts to policyholders who maintain “continuous” coverage only with their company. Insurers would still be required to base their rates primarily on driving safety record, miles driven annually and driving experience.
The Campaign for Consumer Rights, the nonprofit, nonpartisan advocacy and campaign affiliate of Consumer Watchdog, sees Proposition 17 as a trap. because those with lapses in payments may be disqualified from any discounts, the initiative would effectively invalidate a component of Proposition 103 that barred insurance companies from charging customers more for not having had automobile insurance coverage in the past, they maintain. the impact would be disproportionately felt by those who did not need insurance for certain periods — including those without cars for a time, military personnel, students and the temporarily unemployed (BestWire, Jan. 20, 2010).
CalFAIR is underwritten by Mercury General, which has contributed $3.5 million to the campaign. Mercury Insurance co. (NYSE: MCY), a member of Mercury General Group, currently has a Best’s Financial Strength Rating of A+ (Superior).
The top five writers of private passenger auto insurance in California in 2008, according to BestLink, were: State Farm Group, with a 12.9% market share; Farmers Insurance Group, 11.0%; Mercury General Group, 9.4%; Auto Club Enterprises Insurance Group, 9.0%; and Allstate Insurance Group, 8.4%. BestLink provides online access to a.M. Best’s Global Insurance & Banking Database.
(By Sean P. Carr, Washington Correspondent: sean.carr@ambest.com)
Ballot Materials Changed, Lawsuit Filed for California Auto Insurance Initiative
CURE Auto Insurance Ad | Auto Insurance
CURE Auto Insurance Ad that crosses the line re: language. Granted it is surprising and a little humorous but it lowers the line of where vulgarity is acceptable. this one aired during halftime of Rutgers vs USF, October 18, 2007. It was NOT the first time it has been aired. the full ad is a series of 3 mini-ads played one after the other. the first two were tame, then this was the last.
Duration : 0:0:10
[youtube Jgc_HyHOITA]
Tagged with: auto • commercial • CURE • Insurance • Rutgers • TV • vulgar
Filed under: Auto Insurance
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Buffett Says Housing Woes to Ease Next Year, Barring Explosions
February 28, 2010, 12:01 AM EST
Feb. 28 (Bloomberg) — Billionaire Warren Buffett said the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.
“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote yesterday in his annual letter to the shareholders of his Berkshire Hathaway inc. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”
The worst housing decline since the great Depression has left one in five U.S. mortgage holders owing more than their houses are worth. Record foreclosures last year flooded a real estate market already glutted with unsold property, causing new construction to fall to the lowest in at least 50 years. The fall in homebuilding is the only fix unless the U.S. decides to “blow up a lot of houses,” Buffett joked.
“People thought it was good news a few years back when housing starts — the supply side of the picture — were running about two million annually,” said Buffett, the chairman and chief executive officer of Omaha, Nebraska-based Berkshire. “But household formations — the demand side — only amounted to about 1.2 million.”
Berkshire, which owns a real-estate brokerage, a business that constructs pre-fabricated houses and units that make products used in homebuilding, has suffered amid the slump. Profit at Clayton Homes, the pre-fab housing business, fell about 9 percent to $187 million before taxes, while earnings at carpet manufacturer Shaw Industries fell 30 percent.
“High-value houses and those in certain localities where overbuilding was particularly egregious” will take longer to recover, he wrote.
‘Deeply Invested’
“He’s very deeply invested in this,” said Tom Russo, partner at Gardner Russo & Gardner, which holds Berkshire stock. “Across his industrial companies, he’s massively poised to gain” from a housing recovery, Russo said.
Buffett joked that curbing home construction was the best of three ways to reduce supply. The other two, he said, would be to explode homes in a “tactic similar to the destruction of autos that occurred with the ‘cash-for-clunkers’ program” or “speed up householder formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers.”
Buffett’s annual communications with shareholders have won him a following of professional money managers and the moniker “the Oracle of Omaha.” He’s written passages in past years that compare investing to baseball, derivatives to venereal disease, and Wall Street bankers to Pied Pipers. The letters have been compiled into a book for those who want to study his pronouncements.
Transformative
Buffett, 79, built Berkshire into a $198 billion company through investments in firms he believes have superior management and lasting competitive advantages. His deals transformed Berkshire from a failing textile mill into an enterprise that makes candy, produces power and sells flight time on private jets. The shares traded at about $15 when he took control in 1965; the Class a stock last closed at $119,800.
still, he and Vice Chairman Charlie Munger passed up opportunities when they weren’t able to evaluate the future of a business, even in a compelling industry, he said. that strategy has allowed the stock to perform better than the benchmark Standard & Poor’s 500 in every year when both Berkshire and the index have fallen.
Playing Defense
“In other words, our defense has been better than our offense,” Buffett wrote. last year, he said, Berkshire should have made more purchases of corporate and municipal bonds because they were “ridiculously cheap” when compared with U.S. Treasuries.
“When it’s raining gold, reach for a bucket, not a thimble,” he said. Corporate bonds returned 26 percent in 2009, compared with negative 11 percent in 2008, according to data compiled by Bank of America Corp. Merrill Lynch. State and local government bonds yielded 14 percent last year, compared with negative 4 percent in 2008.
Berkshire did extend financing to companies including Goldman Sachs Group inc., General Electric co. and Dow Chemical co. during the credit crisis as other investors were withholding funds. The private deals pay dividends and interest of $2.1 billion annually, Berkshire said in a filing disclosing 2009 results. Berkshire’s net income of $8.06 billion rose 61 percent from 2008.
‘Climate of Fear’
“We’ve put a lot of money to work during the chaos of the last two years,” Buffett wrote. “It’s been an ideal period for investors: a climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance.”
Buffett has used past letters to discuss plans for his successor, praise Berkshire managers and confess his failings. he admitted this year to a “very expensive business fiasco” with his move to issue credit cards to policyholders at his company’s Geico Corp. auto-insurance subsidiary. last year, he said the U.S. economy was “in shambles” after reckless lending caused the worst financial “freefall” he ever saw.
he chastised the media in the new letter for “terrible journalism” in seizing on that comment from the prior year without also reporting that he made no predictions about the direction of the stock market.
CEO Responsibility
Buffett said this year that the CEOs and boards of companies that failed during the credit crisis shouldn’t be allowed to pass blame to underlings. Boards should insist on CEOs taking full responsibility for the risk of collapse, he said. “If he’s incapable of handling that job, he should look for other employment,” Buffett wrote.
Shareholders weren’t responsible for the botched operations at some of the country’s largest financial institutions, Buffett said, “yet they have borne the burden with 90 percent or more” of their holdings wiped out in cases of failure.
still, he said, using year-to-year stock prices to evaluate a company’s progress can be an “extraordinarily erratic” measure. Even a decade can fail to give the proper picture, as Microsoft Corp. CEO Steve Ballmer and GE’s Jeffrey Immelt found when they took over with their shares at “nosebleed” prices.
GE shares have dropped about 60 percent since Immelt took over in September 2001; Microsoft has fallen about 47 percent under Ballmer’s tenure.
Berkshire shares have risen more than 160 percent in the past decade, compared to the 17 percent decline in the S&P 500. Buffett’s company joined that index this month when it completed the largest deal of his 40-year tenure, the $27 billion takeover of railroad Burlington Northern Santa Fe Corp.
‘We Sleep Well’
Berkshire had $30.6 billion in cash and so-called near cash like U.S. Treasuries as of Dec. 31, compared with $26.9 billion three months earlier, after Buffett sold stock to add to the company’s cash cushion in advance of the rail deal. Buffett used about $8 billion of that cash to help fund the acquisition.
“We pay a steep price to maintain our premier financial strength,” Buffett wrote. “The $20 billion-plus of cash- equivalent assets that we customarily hold is earning a pittance at present. but we sleep well.”
–With assistance from Jamie McGee, Hugh Son and Rick Levinson in new York. Editors: Erik Holm, Dan Reichl.
-0- Feb/28/2010 05:00 GMT
To contact the reporter on this story: Andrew Frye in new York at afrye@bloomberg.net.
To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net.
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Buffett says Housing Woes to Ease next Year, Barring Explosions
Toyota problems unlikely to hike insurance | Philadelphia Inquirer | 02/26/2010
As recalls and manufacturer defects continue to raise questions about Toyota vehicle safety, owners may worry that auto-insurance premiums may be affected, too.
Not necessarily, experts say.
Yes, insurance companies are closely monitoring the developments that led Toyota’s chief global executive to testify before Congress on Wednesday. But experts say the ongoing drama may not result in either markedly higher, or lower, insurance premiums for Toyota owners.
There is still too little known about the true extent of problems afflicting the vehicles, including popular versions of the Camry, Lexus, and Prius. But so far, the reported problems appear statistically too small to yield massive changes in insurance premiums.
“I don’t think it’s that big of an issue from an auto-insurance perspective,” said Michael R. Powers, professor of risk and insurance at Temple University’s Fox School of Business.
Powers said rates might increase “only very slightly,” but they could also be offset by declining resale values of some Toyota models as a result of the crisis.
In other words, it could cost a bit more to insure against accidents, while costing less to replace the vehicle in the event of a crash.
Full accident data about instances of unintended acceleration, braking problems, and floor mats remain unknown, and Toyota has not yet proclaimed a definitive resolution for all of the issues identified with some of its models, which means action from insurers would be premature, officials said.
“We, like everybody else, are looking very carefully at just how big the problem is, just how dangerous it is, just what the exposure is,” said Sam Marshall, president of the Insurance Federation of Pennsylvania, an industry trade group.
No single factor determines insurance rates, but some vehicles are associated with a greater number of claims being filed and a greater dollar value of claims filed than others, according to data compiled by the Insurance Institute for Highway Safety (IIHS).
Losses that insurance companies experience as a result of medical payments, which cover injuries to insured drivers and the passengers in their vehicles, could relate to potential road-safety issues with those models, said IIHS spokesman Russ Rader.
Among midsize, four-door models from 2006 to 2008, the Toyota Camry Hybrid scored best. Insurance companies experienced the lowest losses because of medical payments with the Camry Hybrid, followed by the Volvo S40 and the Volkswagen Passat. The conventional Toyota Camry, however, was rated “worse than average” in that category, ranking 13th, according to IIHS.
“If these defects do start to produce a lot of claims – more than expected in the historical data – then the rates will go up for those types of cars,” Marshall said. But only, he said, if the problems are not fixed by the manufacturer.
Comprehensive fixes, on the other hand, could keep rates right where they are.
“The insurance industry might be content with the notion that it’s been taken care of,” Marshall said.
Pennsylvania insurance regulators have received no requests from companies to approve rate changes for Toyota-specific brands, said Chuck Romberger, an actuary with the state Insurance Department who oversees product regulation.
While perhaps of interest to some, auto insurance is likely an afterthought for most consumers driving Toyotas.
“If you’re driving a Toyota right now, your big concern is, is it going to stop and accelerate correctly – not is your insurance rate going to go up or down or something like that,” Marshall said. “Let’s all take a deep breath.”
Contact staff writer Maria Panaritis at 215-854-2431 or mpanaritis@phillynews.com.
Toyota problems unlikely to hike insurance | Philadelphia Inquirer | 02/26/2010
Knowing The Facts About Your Auto Insurer Can Save You Money …
Most insurance companies have standardized official quotations for most general auto insurance policies that they offer. this standardized way of calculating policy quotes is the basis insurance companies use to charge their prospective policy holders and more importantly it is calculated in a way that factors coverage of all the possible risks and the overall profit that the insurance company wants to make with the quoted charge.
This already worked out charge on most insurance coverage policies has helped streamline insurance operations and at the same time reduced the complexity of the business model in regard to the day to day running of the business. on the other hand this standardized official data has also turned out to be a source of information on the company’s products and services in a counterproductive way to both the consumer and the insurance company’s competitors. many competitors and consumers doing research on the different auto insurance quotes in a sector turn to these official quotes as a source of data to be compared with other company’s quotes.
Many insurance companies have realized the sensitive nature of these official rate charts and hence many of the auto insurers have kept this rate chart data as confidential as possible. The insurers know that the details in this rate chart, from the factors that the insurance company considers when calculating risk to the final quotes and discounts offered will be used and compared against competitor’s rate charts. if not careful this information will result in material which competitors can use against them in advertisement and negative publicity.
Irrespective of all the attempts insurance companies have gone to hide this information, there are still many sources from which determined auto insurance bargain/discount hunters can turn to get this information. for starters there is the Internet. A lot of insurance companies with a competitive edge and consumer insight groups have set up insurance comparison search engines and programs for the public use. what most insurance companies have gone to great length to cover up is known to a large extent to the market for analysis.
Here’s a tip… most people know that the Best way To Get Cheap Car Insurance is to compare insurance rate quotes. I’ve done some research for you and found the CarInsurancePlace.com to have lowest and most accurate car insurance rates. Click this link and enter your zip code, you could save over $500.
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Knowing The Facts about Your Auto Insurer Can Save You Money …
Obama's Plan to Stem Foreclosures Will Do More Harm Than Good
The Obama administration is mulling a plan that would require lenders to make efforts to enroll homeowners in the government’s Home Affordable Modification Program (HAMP) before they pursue foreclosure.
According to a memo reviewed by Bloomberg, the proposal “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.”
If the program is implemented, banks would be unable to initiate foreclosure proceedings until they have tried to contact borrowers about HAMP at least four times by phone and at least twice by certified mail.
“Conceptually it is a good idea. Procedurally, it might create more havoc and confusion for the lenders and servicing agents due to lack of consistent processes and lack of manpower,” says Dale Robyn Siegel, a mortgage broker, real estate attorney, and the author of The new Rules of Mortgages in an email.
The problem is that many borrowers who face foreclosure simply can’t afford the house. Trial modifications and dragging out the foreclosure process won’t do much good, other than to let some people live rent-free for awhile. “The four main reasons for foreclosures and bankruptcies are death, divorce, illness or loss of job. recently, we must add a new one — shouldn’t have gotten the mortgage in the first place!” she says.
Forcing mortgage companies to aggressively court distressed homeowners with information about HAMP — four phone calls and two certified letters — will do little to help most homeowners, and will only burden loan servicers with useless bureaucracy that prevents them from devoting resources to people who need and want help.
Tagged: foreclosure, HAMP, Home Affordable Modification Program, HomeAffordableModificationProgram, homeowners, lender, loan, modficiations, mortgage, Obama, real estate
Obama's Plan to Stem Foreclosures will do more Harm than Good