Comments for Sector & Sovereign LLC http://www.sector-sovereign.com Providing in depth research leading to usable conclusions at the sector and subsector level Wed, 01 Feb 2012 15:36:55 +0000 hourly 1 http://wordpress.org/?v=3.2.1 Comment on Quick Thoughts: Amazon Still Don’t Care About Your Quarterly Results by Sandy Sanders http://www.sector-sovereign.com/2012/02/quick-thoughts-amazon-still-don%e2%80%99t-care-about-your-quarterly-results/#comment-437 Sandy Sanders Wed, 01 Feb 2012 15:36:55 +0000 http://www.sector-sovereign.com/?p=6915#comment-437 well said Paul! - Sandy well said Paul! – Sandy

]]> Comment on Quick Thoughts: Cable Myopia by sagawa http://www.sector-sovereign.com/2011/11/quick-thoughts-cable-myopia/#comment-79 sagawa Tue, 22 Nov 2011 15:10:18 +0000 http://www.sector-sovereign.com/?p=5667#comment-79 I believe that the long and undistinguished record of indifferent customer service at the nation's largest cable operators is an enormous achilles heel for the industry. Years of monopoly has a terrible impact on company culture - I've seen it first hand at telephone companies, electric utilities, and cable companies. The satellite companies, by virtue of their competitive position, have had to nurture a more customer responsive culture. I believe that the long and undistinguished record of indifferent customer service at the nation’s largest cable operators is an enormous achilles heel for the industry. Years of monopoly has a terrible impact on company culture – I’ve seen it first hand at telephone companies, electric utilities, and cable companies. The satellite companies, by virtue of their competitive position, have had to nurture a more customer responsive culture.

]]> Comment on Quick Thoughts: Cable Myopia by Gman http://www.sector-sovereign.com/2011/11/quick-thoughts-cable-myopia/#comment-77 Gman Mon, 21 Nov 2011 18:19:27 +0000 http://www.sector-sovereign.com/?p=5667#comment-77 There are fewer people cutting the cord than anyone thought and I believe the explanations as competition is drawing more people away from one provider and contributing to another. Even though both Comcast and DISH Network have seen a subscriber loss, the difference is that Comcast’s image continues to be tarnished with the Consumerist’s online publication of two alleged emails encouraging Comcast employees to vote numerous times for Charter as the worst company in the country. I have seen consistent ethical practices at DISH in the last 6 years I have worked for them and I am never shocked when someone says they are leaving Comcast because of poor customer service. There are fewer people cutting the cord than anyone thought and I believe the explanations as competition is drawing more people away from one provider and contributing to another. Even though both Comcast and DISH Network have seen a subscriber loss, the difference is that Comcast’s image continues to be tarnished with the Consumerist’s online publication of two alleged emails encouraging Comcast employees to vote numerous times for Charter as the worst company in the country. I have seen consistent ethical practices at DISH in the last 6 years I have worked for them and I am never shocked when someone says they are leaving Comcast because of poor customer service.

]]> Comment on A Note About The Short and Long-Term Differences in Our Non-Life Insurance View by bault http://www.sector-sovereign.com/2011/10/a-note-about-the-short-and-long-term-differences-in-our-non-life-insurance-view/#comment-46 bault Mon, 24 Oct 2011 20:46:13 +0000 http://www.sector-sovereign.com/?p=5532#comment-46 I think you're exactly right, Dave, particularly with respect to rates and levels. There is an awful lot of looking at changes without knowing where one started. And, some of the changes are inaccurate as well (e.g. agent surveys). You're correct that I have not mentioned this recently, but it is a running theme throughout my research. And, I agree with your forecast more than what companies are suggesting right now. May we both be wrong and the companies right! Thanks for the comment. I think you’re exactly right, Dave, particularly with respect to rates and levels. There is an awful lot of looking at changes without knowing where one started. And, some of the changes are inaccurate as well (e.g. agent surveys). You’re correct that I have not mentioned this recently, but it is a running theme throughout my research.

And, I agree with your forecast more than what companies are suggesting right now. May we both be wrong and the companies right! Thanks for the comment.

]]> Comment on A Note About The Short and Long-Term Differences in Our Non-Life Insurance View by DW http://www.sector-sovereign.com/2011/10/a-note-about-the-short-and-long-term-differences-in-our-non-life-insurance-view/#comment-45 DW Mon, 24 Oct 2011 16:26:35 +0000 http://www.sector-sovereign.com/?p=5532#comment-45 I think a theme of the recent posts has been that we haven't been in a soft market at all. It's just beginning now. You haven't said this but maybe it's because people confuse rates and levels. The market can be softening without being soft. If there hasn't been ferocious competition yet then there hasn't been a soft market yet. Maybe we start the clock on your T&C meltdown right now, then. That implies a hard market starting in Q4 2014. Long way off. I think a theme of the recent posts has been that we haven’t been in a soft market at all. It’s just beginning now.

You haven’t said this but maybe it’s because people confuse rates and levels. The market can be softening without being soft. If there hasn’t been ferocious competition yet then there hasn’t been a soft market yet.

Maybe we start the clock on your T&C meltdown right now, then. That implies a hard market starting in Q4 2014. Long way off.

]]> Comment on A Conversation About Capital: Which is Supply—Capital or Exposure? by bault http://www.sector-sovereign.com/2011/09/a-conversation-about-capital-which-is-supply%e2%80%94capital-or-exposure/#comment-13 bault Fri, 23 Sep 2011 22:33:30 +0000 http://www.sector-sovereign.com/?p=5051#comment-13 Jim Lynch, thanks for approved comment #1, and for the detailed response at your blog. You've launched an era. Two responses: 1) I am greatly constrained on the loss trend data available to me. But I've had better access in the past, and with that data I've found, roughly, that loss trend (frequency and severity) has something of a negative correlation to the pricing cycle. This in itself is an interesting finding that I'll likely discuss in the future. I did note this in the loss trend post, and concluded that missing this aspect would mostly dampen the extremes of trend, but not change the shape, and thus would not really distort the conclusion. 2) I'm afraid I don't see why the fact that premium = price x exposure means they are intrinsically negatively correlated. It's totally possible that companies would like to sell more insurance at a higher price, and conversely. But this does not seem to happen--the demand side rules, and insurers sell less insurance at higher prices (well, at least compared to the prior period before the price change). Further, capital has the wrong relationship no matter how you look at it. Please keep tuning in. I hope I can convince you that all these behaviors make sense once we have the right model of how insurers actually use capital. It will take some time to get there, but I hope it will be worth it. Todd Bault Jim Lynch, thanks for approved comment #1, and for the detailed response at your blog. You’ve launched an era.

Two responses:

1) I am greatly constrained on the loss trend data available to me. But I’ve had better access in the past, and with that data I’ve found, roughly, that loss trend (frequency and severity) has something of a negative correlation to the pricing cycle. This in itself is an interesting finding that I’ll likely discuss in the future. I did note this in the loss trend post, and concluded that missing this aspect would mostly dampen the extremes of trend, but not change the shape, and thus would not really distort the conclusion.

2) I’m afraid I don’t see why the fact that premium = price x exposure means they are intrinsically negatively correlated. It’s totally possible that companies would like to sell more insurance at a higher price, and conversely. But this does not seem to happen–the demand side rules, and insurers sell less insurance at higher prices (well, at least compared to the prior period before the price change). Further, capital has the wrong relationship no matter how you look at it.

Please keep tuning in. I hope I can convince you that all these behaviors make sense once we have the right model of how insurers actually use capital. It will take some time to get there, but I hope it will be worth it.

Todd Bault

]]> Comment on A Conversation About Capital: Which is Supply—Capital or Exposure? by jimlynch9999 http://www.sector-sovereign.com/2011/09/a-conversation-about-capital-which-is-supply%e2%80%94capital-or-exposure/#comment-12 jimlynch9999 Fri, 23 Sep 2011 19:35:55 +0000 http://www.sector-sovereign.com/?p=5051#comment-12 I think that once you've declared your model (premium change = exposure trend * price change), you've pre-determined a negative correlation between exposure and price. More at: http://actuarialopinions.wordpress.com/2011/09/23/supply-and-demand-in-pc-insurance/ I think that once you’ve declared your model (premium change = exposure trend * price change), you’ve pre-determined a negative correlation between exposure and price. More at: http://actuarialopinions.wordpress.com/2011/09/23/supply-and-demand-in-pc-insurance/

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