Robert Marshall says small brokers should not be forgotten in the current climate.
Either you have been buried away in a cave for months or just chosen to ignore everything deciding la la land was a more comfortable place to live; particularly if there was plenty of sand to stick your head in!
For those prepared to keep their eyes open and see the real world for what it is, one thing that on everyone’s lips is ‘sub-prime’ or more importantly ‘asset classes’.
A key problem now is assessing what is and isn’t an asset.
When a debtor is seen as an asset even though they have little intention or ability to pay something doesn’t seem quite right.
When buyouts and external funding are based on supporting assets with limited ability to increase income, the borrower then suffers from the dual handicaps of writing down goodwill and the new extra premium cost of funding. Again, something is not right.
Whilst banks have shown an incredible ability to screw things up, through greed and short-termism, only topped up by over bloated salaries and bonuses, insurance has strangely (save for AIG and a few reports elsewhere) avoided the key issue of updating on declared assets, toxic bonds, special investment vehicles held and true solvency. Why?
Surely such information would be seen, if good, as an oasis of calm and assure the public and brokers who stands where.
“No one will invest on hope any more, there has to be real substance not loads at the bottom line - so beware consolidators.
Robert Marshall
Goodwill needs re-addressing as does the issue of what constitutes an asset. Certainly in the light of what is asked for via RMAR returns and what shows at Companies House these disparities must be reconciled.
Until then we need to be mindful of what spin machines tell us.
When pre-tax is wiped out by write-downs, lower renewal retentions and interest charges we need to think who exactly is kidding who where success is concerned!
The City is struggling to tread water and find answers at the same time, and we have now seen that the smartest don’t know any more than those deemed of a lesser intelligence; much as they have always sought to suggest otherwise!
No one will invest on hope any more, there has to be real substance not loads at the bottom line - so beware consolidators.
I worry when a contemporary is unable to file the previous year’s figures until the last available reporting month. Some large firms are still doing this as I write and we need to be worried why that is.
We are now in a market where big is no longer better, greed is not good and with bets going on who is next to fall taking more money than who can survive, old fashioned good house keeping is integral.
“Being small and in control is where the good money is going, and it will not be hard to see small brokers rank on a higher premium to their larger contemporaries simply because they have nothing to hide!
Robert Marshall
Being small and in control is where the good money is going, and it will not be hard to see small brokers rank on a higher premium to their larger contemporaries simply because they have nothing to hide!
Simple disciplines do not need FSA consultation papers and dictates just plain good earthly common sense; an area Small Brokers have plenty of experience of and are exceptionally good at.
The regulator needs to see that their present approach panders too much towards larger companies at the expense of smaller ones!
My advice in these chequered times is look to Companies House for the true picture, where larger industry contemporaries are concerned and talk openly with counterparties on where they stand, question everything and be cynical to trust on word of mouth is dead, and will be seen as a sign of weakness.
The days of bull are gone and the more we have real time information on assets the safer we will all be in protecting both our interests and those of our customers.
Free markets must be allowed to work effectively and no government has sufficient to bail out industry en masse as some are assuming. So we can expect to see some brokers and insurers kick the bucket. What mustn’t happen is that this takes us by surprise any more.
The small broker must not be taken as a joke but as a high level example to follow. Once that is accepted better regulation will follow and the better our industry will be as a whole.
