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At the end of the day we will be selling "conviction and confidence" related
to the politcal risk about a particular topic that keeps our clients up at
night. (we will help them answer the phone at 3am . . .)

Identifying all of the potential outcomes is table-stakes and not incredibly
difficult but at some level valuable - this keeps a lot of consultants
employed to do the research and clearly articulate someone's options (i.e,
European Sovereign Debt - 3 options: default, they make their payments,
their terms are amended and extended). So out of the gate there is a 33.33%
chance each could occur (a bit oversimplified, but you get it)

Our offering should help our client (bank, fund, trader, corporation,
investor, reinsurance, whomever) pick the option that will likely occur and
have an 80-90-100% confidence and conviction level in that decision.

Now how they act on that level of confidence and conviction is up to them
(buy, sell - not our call, not our place - unless we are managing our own
money and we are our own client). So we make our money by getting paid a
fair price for the value we provide - short term and long term.

And it's not a single event, but helping them look at multiple past, current
and future events that are forming for them to develop this high degree of
confidence and conviction pertaining to the political risk element of their
particular topic/interest/risk that they are managing.

Decision makers spend their whole lives seeking a higher degree of
certainty. I think that is the core value proposition of anything we may
do. And the good news is that decision makers are insatiable (and by
definition control resources/budget) - the market is infinite - wide and
deep like we like them. We just need to start narrow, then expand if we
feel like it.

Good quote from this acticle below: “Nobody has any conviction. We go
through rallies and we go through sell-offs and nothing is well sustained.”

http://www.ft.com/cms/s/0/44c8f4ea-ab1d-11df-9e6b-00144feabdc0.html


On Wed, Sep 15, 2010 at 8:50 AM, Michael Andrews <mandrews@ips.edu> wrote:

> From experience in the privacy debate where the EU had strict privacy
> regime and would not permit US firms doing business in EU to simply use US
> privacy standards which the felt were inferior. In this case the EU
> recognition process will likely be as cumbersome. Vide can map the elite
> interaction of key players in EU and their proximal networks to gain an
> insight into what they feel the policy should be. At the same time we could
> map EU-US interaction on th subject from governent officials, business
> execs, academics and others discussing the subject. We can talk about what
> the customer may want but a reinsurance company will want as much certainty
> as is available to understand the tax implication. It could impact
> crossborder acquistions and it might (I do not know the tax issues involved)
> impair profits when a US reinsurer is insuring a EU based company.
>
> At the very least the leadership of reinsurance customer would know who the
> key players are in th debate , where they stand, which ones could still be
> educated and what a lobbying effort might need to address. We can go much
> deeper into this in a conversation. It might be useful to discuss.
>
>
> On Sep 14, 2010, at 5:49 PM, Hunter Biden wrote:
>
> So do I, but what is the question Vide can answer that we or a client can
> trade on? And I mean that in the literal sense. What input does the
> technology require to provide RSP Analytics with an answer that money can be
> made from?
>
> R. Hunter Biden
> 202-333-1880
>
>
> On Sep 14, 2010, at 12:17 PM, "Neil Callahan" <
> ncallahan@rosemontseneca.com> wrote:
>
> Agreed, very timely. I love the Reinsurance segment.
>
>
>
>
> ------------------------------------------------------------------------------------------
>
> Neil Callahan
>
> Rosemont Seneca
>
> 401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 |
> 212-796-4037
>
> 1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880
>
> 917-945-9516 (mobile)
>
> 866-749-8879 (fax)
>
>
>
> *From:* Michael Andrews [mailto:mandrews@ips.edu <mandrews@ips.edu>]
> *Sent:* Tuesday, September 14, 2010 12:05 PM
> *To:* Thad Brown; Ronnie Mainieri; curt@ips.edu Hastings; Chris Heinz;
> Hunter Biden; Devon Archer; Eric Schwerin; Neil Callahan; Rob Mitchell
> *Subject:* Reinsurers face taxing time on premiums - FT - Regulatory
> tensions between US and EU
>
>
> I know we have discussed the political risk facing reinsurers but this is
> one we have not discussed but appears to be significant. - Michael Reinsurers
> face taxing time on premiums
>
> By Paul J. Davies
>
> Published: September 12 2010 22:23 | Last updated: September 12 2010 22:23
>
> The insurance industry is facing political and regulatory tension between
> the US and Europe that threatens to make life more difficult for companies
> doing business in the US – and more costly for US consumers.
>
> The issues are particularly acute for the reinsurance industry and are
> likely to be hotly debated at its annual gathering in Monte Carlo this week.
>
> First is the threat of *heavier domestic taxes on reinsurance premiums*<http://www.ft.com/cms/s/0/984f03a4-63f4-11df-ad7c-00144feab49a.html> paid
> by US insurers to affiliated foreign reinsurers, which is aimed at raising
> up to $16bn of extra revenue while cutting out perceived tax advantages
> enjoyed by companies based in Bermuda, Switzerland or other lower-tax
> jurisdictions.
>
> Second is the issue of how quickly – or even whether – US insurance
> regulation can gain recognition by European Union rule makers for being
> sufficiently robust once *Brussels’ new capital rules*<http://www.ft.com/cms/s/0/dea7d3fc-2d77-11df-a262-00144feabdc0.html> come
> into force in two years’ time.
>
> The issues are not yet directly linked, but each is seen as highly
> protectionist by people either inside or outside of the US. If the taxation
> change is enacted, the regulatory issue could become a heated political
> battleground.
>
> “There is a very real possibility that some of the things we’ve seen here
> have sown the seeds of future friction between the US and Europe,” says
> Howard Mills, a former New York state insurance regulator and now chief
> adviser on insurance at Deloitte.
>
> In the middle of this, large multinational insurers on both the life and
> non-life sides, could face higher costs and less ability to move capital
> round the world.
>
> The taxation of foreign reinsurance premiums has already led to protests,
> including strongly worded letters from the EU, and the Swiss, German and
> British governments.
>
> Alex Kaplan, a vice-president of US regulatory affairs at Swiss Re, says
> the proposal in President Barack Obama’s budget is less onerous than similar
> measures in a bill sponsored by Congressman Richard Neal.
>
> The former is estimated to raise $2.3bn over 10 years, while the latter
> predicts more than $16bn. “[But] both are an attack on reinsurance and on
> the free movement of capital,” he says.
>
> Peter Skinner, a member of the European Parliament’s economic affairs
> committee, says the tax plans misrepresent reinsurance as being some kind of
> off-shore dodgy dealings solely to avoid tax.
>
> “I’m hopeful that the US treasury and others will see this as a restrictive
> and unnecessary act,” he says.
>
> Indeed, a hearing before the House Ways and Means Committee this summer
> revealed that many in the US were against the tax, including Floridian
> politicians, US tax groups and consumer representatives, who fear higher
> insurance premiums for ordinary people would result.
>
> But with a huge budget deficit and mid-term elections looming, many fear
> the Democrats could try to force something through as part of a spending
> bill.
>
> Mark Watson, chief executive of Bermuda-based Argo, which has a large US
> insurance business, says the reality for US insurers is that many cannot buy
> enough reinsurance within the US. “The first adjustment the industry would
> make [to higher taxation] is to raise its prices,” he says.
>
> Foreign reinsurers already face costly collateral rules on writing
> contracts in the US. This came from the idea that US regulators could not
> trust the supervision standards of other jurisdictions. Ironically it is now
> one of the obstacles in the way of US regulations gaining recognition, or
> equivalency, under the incoming European standards.
>
> European regulators recently recommended to Brussels that both the
> Bermudian and Swiss regimes be tested for equivalence ahead of other
> jurisdictions, but not the US.
>
> Sean McGovern, general counsel at Lloyd’s of London, the insurance market,
> says the fear was that the US would be found non-equivalent, which could
> have tricky ramifications. Big insurance groups would likely have to hold
> extra capital in Europe against their US businesses because of deficient
> regulation there.
>
> “Everyone knows that there is a particularly steep climb for the US to
> demonstrate equivalence because of two main issues,” Mr McGovern says. “One,
> the unfair collateral rules and two, the low development of group
> supervision.”
>
> Group supervision is where one regulator – or a collaborative college –
> oversees all the various operations of a large, multi-national company. This
> is especially tricky in the US where each state still has its own insurance
> regulator.
>
> But Mr Mills says state regulators may begin to work together more now that
> there are moves to create a Federal Insurance Office. He says: “I think
> there is going to be greater efforts by the state regulators to work from
> the same page and I think they will do this out of a sense of political
> survival.”
>
>
>
>
>


--
Neil Callahan
Rosemont Seneca Partners
917-945-951