Shohei Ohtani recently signed the biggest contract in baseball history at 10 years for $700M. However, it wasn’t quite as big as it seemed. He deferred most of his money for ten years which, at a 4.4% discount rate, means he will earn the equivalent of $460M over ten years. Continue Reading
Providing Life Support to AIG
To make an (perhaps poor) analogy, AIG is like a patient with a lot of pre-existing conditions. It’s overweight (expenses are too high), has high blood pressure (too much operational leverage), and eats too much processed sugar (in too many underperforming businesses). With AIG’s recent decision to separate the P&C Continue Reading
AEL’s Corporate Governance Failure
Normally, when a company receives an acquisition offer they don’t want, they do one of two things: sell to someone else or stubbornly refuse to sell, usually due to a belief that they are being undervalued by the acquirer. When faced with these two choices, American Equity (AEL) opted for Continue Reading
Ian’s Brief #7: AI, AEL, and ESG
Back with another Brief since too many things to talk about and not enough time to write them all up separately… That Didn’t Take Long! It was only a few weeks ago I outlined a new business model for life insurers. I suggested established insurers should focus their energy on Continue Reading
A New Business Model for Life Insurers
Life insurer valuations continue to languish to the point where one wonders if the market doubts these are going concerns. At a minimum, it reflects a belief that interest rates will never go up and earnings are severely overstated. This view is at odds with the prices paid for blocks Continue Reading
Private Equity, Annuities, and the Future of Cash Flow Underwriting
With the KKR acquisition of Global Atlantic, it has now become table stakes for the large private equity firms to own an annuity platform. Apollo, Blackstone, Carlyle, KKR are all in the game now. The question at hand is how will this change the annuity business? There is the old Continue Reading
A Potential New Hybrid Life Product
Summary:It can make sense for life insurers to offer a new UL policy that also has a cancer treatment benefit. Hypothesis: Life Insurers Should Pay for Costly Cancer Drugs I came across an interesting op-ed recently in the Wall Street Journal, written by two professors at USC. Their argument is Continue Reading