For those of you who haven’t paid attention, the crunch time on your automobile and homeowners’ insurance rates is about to hit.
A newly formed consortium of insurance companies, assembled for the sole purpose of running a sleazy, misleading advertising campaign, is all over the radio telling consumers that if Senate Bill 31 passes next week, your insurance rates won’t go down.
Well, yes, they probably won’t go down for the average car or homeowner. But they certainly will go up — if they haven’t already — for those who don’t have the best of credit scores. And if you do have an excellent credit score today but run into a personal problem and miss a mortgage payment or two, you’ll end up paying higher insurance premiums.
That’s because there currently is no law in Delaware that prohibits insurance companies from using individual credit bureau scores to set insurance premiums.
Senate Bill 31, sponsored by Sen. Margaret Rose Henry on behalf of state Insurance Commissioner Matt Denn, would change that and the insurance companies are running scared.
By some cockeyed reasoning, insurance companies believe that people who don’t pay all their bills precisely on time, every month, are more apt to file claims against their auto and home insurance policies. The brokers don’t particularly care if you’ve never filed a claim for car damage or there’s never been a fire in your house; they only care if you’ve paid your Sears bill on time. Miss a month of paying Sears, make it up the next month and pay a late fee, and there’s a good chance your next annual insurance contract will jump.
Insurance has nothing to do with credit
United Bank puts IPO plan on hold
KOLKATA: United Bank of India (UBI) has shelved plans to tap the market with an initial public offering at least for a year. This follows the union government’s lack of support to the bank’s Rs 1,200-crore capital recast plan.
If approved, the recast would have enabled the bank to have attractive ratios once it hit the stock market.
“We will not look into a fresh capital restructuring plan this year and hence going public will not happen now. Anyway, with good profitability expected and enough capital, we are in a comfortable situation,” P K Gupta, chairman and managing director, UBI, said.
The bank has posted a 31% increase in net profit for the year ending March 31, 2007, at Rs 267.28 crore. Operating profit rose 11.7% to Rs 719.10 crore. The total business grew by 32.3% to Rs 59,808 crore. While deposits increased by 27.1% during the year, advances grew by 41.8% to Rs 22,641 crore. Net NPAs of the bank have decreased to 1.5%.
UBI expects a growth of at least 25% in the current year.
“We expect to grow by at least 25% in the current year. Advances grew by over 41% last fiscal. Although we may moderate growth, it would be higher than average as the bank has ample liquidity and scope to leverage growth,” Gupta said.
Banking industry sources hinted that the government is not too comfortable treating UBI as a special case when it comes to restructuring its capital and allowing a relaxation on preference capital.
The RBI guidelines place a 40% cap on preference capital. In UBI’s case, the amount put forward for conversion happens to be over 75% of equity capital. If the government goes ahead, this may set precedence for other banks too.
Insurance costs rise faster than earnings
Health insurance premiums are grabbing an increasingly larger share of Hawai’i workers’ paychecks, rising 4.2 times faster than median earnings in the past six years, according to a report from a Washington-based nonprofit group that advocates for affordable healthcare.
The report by Families USA said health insurance premium costs for families rose to $9,952 per year from $6,047 between 2000 and 2006, an almost 65 percent increase. That compared to median income for workers in Hawai’i rising 15 percent.
“Healthcare costs are absorbing an ever-larger portion of family budgets, and it is clear why many Hawai’i families feel worse off economically than they did six years ago,” said the report.
Workers and employers typically split the costs of coverage, with employers paying most of the premium.
The report showed workers’ payments more than doubled over the six-year period, rising to $2,727 from $1,311.
Employers’ portion of the costs rose to $7,206. They had paid $4,735 earlier.
The report said a growing number of employers are trying to hold down healthcare costs by offering coverage with fewer benefits, higher deductibles and co-payments.
Hawai’i’s increase in healthcare premiums compared to median income gains was slightly below the national average. For the country as a whole, the costs went up 6.4 times the increase in median income.
Families USA said the report was based on data from the U.S. Census Bureau, the U.S. Department of Labor and U.S. Department of Health and Human Services.
Key to Success in M&A Transactions
The biotechnology sector enjoyed a banner year for building capital during 2006—raising $29.6 billion, compared with $20.2 billion in 2005. Although this fundraising activity is a positive sign for emerging companies seeking capital to support drug development programs, the challenges that early stage companies face today are more daunting than ever.
The costs to bring a successful drug candidate to market from discovery through launch continue to escalate. Moreover, the IPO window has not been an inviting one for most emerging life sciences companies. On the regulatory front, the FDA has adopted a more conservative approach requiring life sciences companies to meet additional regulatory hurdles to get product candidates approved. This environment is forcing companies to spend more on drug development.
To support their products in development, emerging biotech companies need to obtain global clinical, regulatory, and medical affairs expertise. This has led to multimillion dollar partnering deals and a record number of acquisitions of emerging biotech companies by large pharma or big biotech firms. Over 300 merger and acquisition (M&A) deals were completed during the year 2006.
For large pharma and biotech companies, acquisitions of emerging biotech companies allow them to expand their product pipelines with new, cutting-edge technologies, or drug candidates that were not invented through internal R&D efforts. This strategy—to grow pipelines through acquisitions—was stimulated, in part, by the American Jobs Creation Act of 2004. This legislation has enabled US-based pharmaceutical companies to repatriate approximately $100 billion of dererred foreign income, at a 5.25% US corporate tax rate and many of these pharma companies are using these repatriated earnings to finance M&A deals.
Going Public? The Right IPO Advisor Could Hold the Key to Success
Congratulations! You’re taking your company public. An initial public offering (IPO) could be your company’s most rewarding—and challenging—capital markets transaction, an opportunity to reward your investors and attract the capital you need to grow.
Although you know you’ll be needing help from investment bankers, lawyers and accountants, when do you bring them in? How will you know if their interests align with yours? And how are you going to manage the challenges of going public without taking your eye off the business?
These are just some of the issues an IPO advisor can help you resolve. While perhaps not the first outside resource you think of when selecting your deal team, an experienced IPO advisor could be the deciding factor in making your IPO smooth and successful.
Too often, IPO teams are fragmented. While lawyers, bankers, and auditors bring different levels of expertise that can help a company head off certain issues, they often have diverse agendas that compete for management’s time and can challenge management’s ability to control the transaction. Effective IPO advisors, by contrast, share the company’s goals and can anticipate and resolve a broad array of transaction challenges before they affect value.
Before we get too far, you may be asking who, specifically, is an IPO advisor, and what is their role? Typically, an IPO advisor is a CPA with strong SEC registration experience and project management skills. In the past, a company’s external auditor may have filled this role. But with current independence rules limiting the external auditor’s roles and responsibilities, it may be more efficient to have another service provider help plan the IPO, manage the preparation of the financial statements or orchestrate the registration process. Engaging an IPO advisor early in the process to perform these functions allows top managers to focus on those aspects of the IPO process, such as marketing, where they can add the most value.
Delays and unforeseen problems are the biggest deterrents to a successful IPO, as they require management to invest more of its time and company resources in the transaction. If not resolved quickly, unanticipated issues can diminish the market’s confidence in management, damage brands, cause key employees to leave, raise the company’s cost of capital, and ultimately lower the value of the IPO as market pricing windows are missed. Even worse, the company may have to abandon its IPO.
Investment Banking Career and Job Information
Investment Banking Career Overview
Investment banks are in the business of providing governments and corporations with investment services, including buying, selling, and trading securities, managing assets, and giving financial advice. The five leading investment-banking firms fill the Bulge Bracket of investment banking: Morgan Stanley-Dean Witter, Merrill Lynch, Salomon-Smith-Barney, and Goldman Sachs.
Regional investment banks like Piper Jaffray fill the middle of the market, while small investing ‘boutiques’ are organized on the local level and specialize in M&A advisory, bond-trading, program trading, and technical analysis. Investment banks are made up of departments that hand specific areas of investment. Sales and trading departments serve securities holders, investment banking departments serve governments and organizations that issue securities, and capital markets departments help mediate the securities exchange process. A review of the services offered ad Goldman Sachs can help you understand how investment banks are structured.
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Investment Banking Career Insights
Work Ethic, You Got it? They Love it?
Those who work in investment banking will tell you there’s a lot of risk, and a lot of work, but also a lot of satisfaction. Entry-level employees should expect long but stimulating work days in which the mood can regularly shift from energetic elation to frantic frustration, depending on the situation.
Not an Easy Boat to Catch!
It is difficult to get started in investment banking, and those who make it do so by getting all the education and experience they need, and then relentlessly engaging the investment banking industry.
Bankers: Less Scrooge Than you’d Think!
The ‘bah humbug,’ view of bankers is for the most part blown way out of proportion. In fact bankers do a great deal for society by providing companies with the funding necessary to create products that make our lives better.
Get Your Foot in the Door with Analysis
A great place to begin in the investment banking industry is working as an analyst. Successful analysts work hard, understand spreadsheets, and have fine analytical skills. Analysts can be promoted to associates who do similar work, but more of it.
Wanted: A People Person Who Finishes What They Start
Further advancement in investment banking is based on how well you can negotiate with clients and close deals. In addition, professionals wishing to move beyond mid level positions should understand the political changes, macroeconomic variables, and market trends that all affect deal outcomes.
Math Ability is a Plus
There are well-paid, well-respected research positions available in investment banking for mathematicians. If you plan on a graduate degree in stochastic calculus, differential equations, or other advanced mathematical fields, taking classes in advanced financial theory like bond valuation and options pricing can increase your job competitiveness. Some of the most elite financial training available is offered through the Carnegie-Mellon FAST program.
