Subscribe Feed (RSS)The cost of the winter comes home to UK insurance companies.
March 15th, 2010 by tom | 0 Comments | Filed in Central banks, Daily News, Debt, Employment, Global Credit Crisis, Money Management, Recession, Retail, Stocks and shares, UK Banks, World Banks
Recent figures have shown that insurers paid out £650 million from 335,000 claims, with most of them were caused by the wintry weather in the UK this year. According to the Association of British Insurers (ABI), the biggest chunk of the payout was to motorists whose vehicles were damaged vehicles on the slippery roads during January, which was the eighth coldest month on record and the UK’s worst since 1987. The ABI went on to confirm most of the £650 million claims were from 18 December to 13 January when the number of homes, vehicles and businesses all experience damages as a result of the winter weather. Specifically, £395 million was paid out to motorists from 268,400 motor insurance claims.
A new round of tougher stress tests have been ordered by regulators for the UK banks to make sure that if a forecasted "double dip" in the UK economy should occur , they will be able to withstand it in better shape than they did in the " first dip." The banks will be required to prove that their "tier core one capital ratio" would be capable of remaining above the minimum four percent level even if the economy contracted an additional 2.3 percent. These figures were part of a projection provided by the Financial Services Authority said in their annual Financial Risk Outlook.
Official statistics revealed on Thursday that UK industrial output fell 0.9% in January, making for the first drop in five months. The news out a damper on speculation of continued expansion of industrial output, and put further strain on the pound which is still hovering around the $1.50 mark.
The British Property Federation (BPF) has warned against possible abuse of insolvency practices in Britain’s frail real estate market as profitable tenants seek to renegotiate leases signed in better economic times.
The industry body, representing blue chip landlords such as Land Securities and British Land, has condemned the trend. A spokesperson for the BPF explained their standpoint as follows. "Landlords are caught between rock and a hard place when it comes to bailing out occupiers at the expense of their shareholders or facing the prospect of empty space and the costs that come with it,"
BPF has called for tightening of insolvency rules that she said unfairly penalised property company shareholders, among them under fire pension funds, for badly negotiating leases.
Sterling continued to be in the doldrums, with the pound closing yesterday up slightly on $1.5123 while falling against the Euro to €1.1011.
On the FTSE, the star of the show was undoubtedly the Tullett Prebon Company. Tullett Prebon are an interdealer broker, whose shares rose by 25.7% as speculation mounted that the company was in the throes of talks regarding a possible sale of the company to with the Bank of China being marked as potential bidders.
UK equities continued to rally in midweek, despite the weaker-than-forecast manufacturing data. Investors appeared to be focusing their efforts on the financial and mining sectors.
The FTSE 100 index took on 23.0 points to close on 5617. 26 it’s highest level since June 2008, closing at 5,617.26.
The US government announced that they had recorded a budget deficit of $221 billion (£147.6 billion) in February, making for their largest monthly deficit in s history.
Figures from the US treasury now show that the United States total deficit since the beginning of the fiscal year which began in October 2009 now stands at $651.6 billion, putting it well on track to beat last year’s record annual budget deficit of $1.4 trillion, with Treasury Secretary Timothy Geithner calling the deficit "unsustainable".
On the Wall Street the Dow Jones Industrial Average dropped back a little, down 21 points to close on 10,566.95. The NASDAQ Composite was still climbing, rising just 9 points to close on 2,356.27
China’s exports jumped by 46% in February compared with a year ago, raising hopes of a strong recovery in global trade.
The increase was higher than analysts’ expectations of a rise of between 35% and 40%.
It is likely to increase pressure on the Chinese government to raise the value of the yuan, which the US in particular complains is undervalued.
China’s imports also rose strongly, increasing by 44.7% last month
Microsoft founder Bill Gates must have been feeling a little dizzy yesterday after it was announced that he had been knocked down from one of his many pedestals, This one was to second place in Forbes magazine’s billionaire’s list, and not by his close friend US investor Warren Buffet who was in third, but by Mexican telecom giant Carlos Slim, which made for the first time since 1994 that an American has not led the who has got the most cash rankings. Mr Slam’s fortune rose by $18.5 billion (£12.4 billion) from last year to $53.5 billion. The Gates fortune now totals $53 billion, while investment guru Buffet has fallen on hard times, now worth only $43 billion.
2009 was all in all a tough year for billionaires with 332 of them being reduced to being mere multi-millionaires, while around two hundred news ones being accepted to the club, according to the Forbes list.
In the UK, the sixth Duke of Westminster Gerald Grosvenor remained the wealthiest Briton with a net worth of $12 billion as he improved his finances by $1 billion despite the UK property slump. The improving health of the global economy meant that 55 countries were represented in the Forbes, among them China. In fact if you take in Hong Kong, the Chinese now account for 89 of the world’s billionaires, second only to the United States with 403 billionaires.
One or two of them must come from the Chinese automotive industry, which increase capacity at an alarming rate in order to meet demand. Changan Automobile, the 4th largest domestic producer by sales (and a strategic partner of Ford) announced 2009 total revenues up by 88.4%, with an almost two-thirds increase in total units sold. Announcing the figures, the company also said that they expect liberal government policies will continue to support industry growth at the present pace for the foreseeable and that facility expansion will likely continue. Changan is not alone in ramping up capacity, with the Chery Company announcing the launch of a new factory in Mongolia despite the fact that their new facilities in Wuhu and Dalian have not yet been completed. Chery are best known for their range of compact cars.
Signals from Beijing do seem to indicate that the automotive industry will continue to receive special support even as tightening measures are implemented broadly. In a newspaper interview yesterday, a spokesperson for the Ministry of Industry reaffirmed the Chinese government’s commitment to provide subsidies for green automotive technology to help achieved the official target of half a million green cars before 2013.
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Expressing his fears that interest rates being charged to small businesses may be too high, Chancellor Alistair Darling is set to meet with top management of the major UK banks poste haste to discuss how much they charge small firms for loans. 
