January 7, 2025 • 35 mins
John Augustine, CIO at Huntington Private Bank, on why the housing market could be the Achilles heel to the US economy. Bloomberg News Senior Finance Reporter Sri Natarajan on JPMorgan Planning to Bring Staff Back to Office Five Days a Week. Vince Tizzio, CEO of AXIS Capital on how insurers are managing today’s risk landscape. And we Drive to the Close with Sylvia Jablonski, CEO & CIO at Defiance ETFs
Hosts:Carol Massar and Tim Stenovec. Producer: Paul Brennan and Sebastian Escobar
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg Business Week Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio.
Speaker 3 (00:26):
Stocks are down, use treasure yields moving up yields we've
seen moving up this after this morning's US economic data
amped up bets at the Fed will not cut interest
rates again before July amid offlationary pressures, and even Michael
McKenzie saying it's like a point in a smidge is
what the market is expecting in July ten.
Speaker 4 (00:46):
With more joining us as John Augustine Cio over at
Huntington Private Bank. It's a division of the public held
twenty four billion dollar Huntington Bank shares based in Ohio.
John oversees about twenty seven billion dollars in assets under management.
He's back here in the Bloomberg Business Week studio in
New York. John, how are you great?
Speaker 5 (01:03):
Great to be here again.
Speaker 4 (01:04):
Wappy New Year. You walked into the studio and you
said it's the trifecta and that is what's hitting stocks.
What are you seeing out there?
Speaker 6 (01:11):
Interest rates up, dollar index up, and price of crude
oil up?
Speaker 5 (01:15):
And when those three are up.
Speaker 6 (01:16):
Now, they've been controlling the stock market now for about
a month, and the newest member of that is crude oil,
and stocks have a tough time with that. Think of
it this way, the automatic stabilizers. When things go bad,
when the US economy slows, dollar comes down, yields come down.
Now they're both going up. They're actually trying to slow
things down.
Speaker 3 (01:37):
So what happens. What's like if this trend continues, because
we are in a market environment where I feel like,
you know, you get a dump of certain news on
a day and you get a trade a certain way,
and then you come in the next day or two
days from now, and it's a completely different narrative, especially
in the treasury trade. I feel like we've been all
over the place. So tell me, does this continues and
if so, what are the implications it continues?
Speaker 5 (01:59):
Likely?
Speaker 6 (01:59):
And to earn season fifteenth officially we started earning season used.
Speaker 3 (02:04):
To be ge Now it's jp market.
Speaker 5 (02:05):
And all the banks that roll out. But it's going
to continue.
Speaker 6 (02:09):
We're going to get this uneven economic news, The jobs
reports are going to be very big on Friday, right,
But it's the economic news is going to see to
the earnings news. The earnings news is probably eventually going
to be the arbiter, because earnings have been very good
for two years.
Speaker 4 (02:28):
The S and P five hundred in twenty twenty three
up more than twenty four percent, in twenty twenty four,
up more than twenty three percent. Are your clients just
calling you, being like, throw it all in the S
and P five hundred? Why wasn't everything in the enough yet? When?
Speaker 5 (02:42):
When?
Speaker 6 (02:42):
So? You're saying box for the only thing Americans do
not like to buy on sale.
Speaker 4 (02:46):
I've heard that before. Funny, But are they saying, wait
a second, why wasn't I just in the S and
P five hundred? You have me in this diversified portfolio
that doesn't return what the S and P five hundred
index returns? What's going on here?
Speaker 5 (02:58):
We we know?
Speaker 6 (03:00):
What we know is Americans are overcashed still, bank deposits
up still.
Speaker 5 (03:05):
Market assets up. Still.
Speaker 6 (03:08):
If you look at the national numbers, Americans are over
We find in our own customers.
Speaker 4 (03:12):
The highering customers.
Speaker 5 (03:13):
Yes, we've been weighted towards equities.
Speaker 4 (03:16):
Hiring the income spectrum, high.
Speaker 6 (03:17):
Income spectrums, we've been weighted towards equities, not all the way.
Speaker 5 (03:22):
We want to see what yields are going to bond
yield you're going to do.
Speaker 6 (03:25):
But nobody's coming at us yet and saying, even after
two years, throw at all inequities.
Speaker 5 (03:31):
It's just not there.
Speaker 3 (03:33):
Anybody coming in and saying, you know what, I'm done
two great years. In terms of the equity play, we're
being so kind of plain vanilla because we know private
markets and a lot of things are in play in
a lot of people's portfolios, especially at the higher income strata.
But is anybody saying, I'm out, I want to be
in something safe. I look at the treasury trade. I
can kind of get a decent return there. So, you know,
(03:53):
get into the investor's psyche right now.
Speaker 6 (03:55):
They they like the four percent yields and treasuries, but
wants six eight percent, six eight ten percent increases in
that and that you got to go to the stock.
Speaker 5 (04:06):
Market in the US this year. Though.
Speaker 6 (04:09):
What you're right on, Carol, is this year income may
be the best mitigator against volatility.
Speaker 3 (04:18):
Right, protecting yourself against downside right and giving yourself.
Speaker 5 (04:20):
You're always gonna have fuel.
Speaker 3 (04:22):
John, do you think that we're going to head into
you know, you guys are as we mentioned publicly held
division of Huntington Bank shares twenty four billion dollar institution,
and I am curious. I know you are in the
institutions a lot bigger than that, a lot bigger. I'm
talking about the market cap, forget me, but in terms
of like you're you're in, you know, the private bank.
But I am curious. You know, if you talk with
(04:42):
some of the other colleagues, what they are seeing in
terms of lending in the environment and our people taking
out loans or is the bank willing to loan? Like,
give us an idea. Is anybody thinking slow down concerns
about recession.
Speaker 6 (04:55):
Now, especially after the election, there's more optimism now, there's
more loan demand now, business small business is ready to go,
even though in the stock market nobody likes small and
good caps, but businesses are getting ready to go.
Speaker 3 (05:10):
There's probably and the bank ready to the banks ready.
Speaker 5 (05:13):
Banks are ready to go. Banks are over.
Speaker 6 (05:15):
Capitalized arguably, and I'm not just talking about the one
I'm with, but in general that the optimism has come
into the business community right or wrong, right or wrong.
And we have a FED now that's not a headwind.
We have a new administration that wants to speed things up.
(05:35):
So the FED and the fiscal policymakers are in unison
now to move forward on the economy. That's the playbook.
And and then how much how much inflation will that generate?
Speaker 5 (05:46):
That generate out of that and nobody knows that yet.
Speaker 4 (05:50):
That's the concern though, right, yeah, talk a little bit
about protecting clients against consecutive quarters of inflation moving higher
if we get another jobs report. We got the Jolts
report today that came in hotter than expected.
Speaker 5 (06:03):
And sent services, etc.
Speaker 6 (06:05):
So now last year, importantly, let's be back up. You'll
curve now is normalized tenure yield as well over the
inflation rate, official inflation rate, the headline CPI that most
people follow.
Speaker 5 (06:21):
Now there's some cushion.
Speaker 6 (06:24):
So now there's some income cushion, real income now that
we haven't had for ten years or so. So people
like that, but they still want that six eight, ten
percent as mentioned earlier, Now there are sixty two some
stocks in the S and P five hundred that yield
over four percent. So income from all three groups. Cash
(06:46):
bond stocks you can almost get four percent or over.
Now that's a useful tool it but clients mostly still
want six eight ten.
Speaker 3 (06:57):
They're spoiled.
Speaker 5 (06:58):
They're spoiled.
Speaker 3 (06:59):
I mean historic you know what we got the last
two years, certainly on the equity trade.
Speaker 4 (07:03):
Is not six eight ten.
Speaker 6 (07:05):
Historically that stocks start to run, they generally keep running.
We might have two more years of this if earnings
estimates are right. Think of the earningssts, thick of the
Bloomberg earnings estimates thirteen this year, fifteen next year.
Speaker 3 (07:19):
Yeah, although Gina Martin Adams has been a little bit
more sanguine feeling or a little bit more excuse me,
pulling in in terms of expectations, the comparisons become really difficult.
And now that things aren't going to grow, it's just
not at the dynamic rates.
Speaker 6 (07:30):
No, and that's where productivity comes in, that's where AI
comes in, et cetera. But our our equity team, Randy Herren,
our equity team, Yeah, we're not seeing any slow down in.
Speaker 5 (07:42):
The overall beat level. It's still four or five hundred
basis points.
Speaker 3 (07:46):
What about the US housing market, that's in the mortgage
rates staying higher, Like, could that be something that causes
some problems wider problems in the US economy.
Speaker 6 (07:58):
I mean, arguably the USA com to be growing above
three percent, but housing starts are down year every year.
Everything's wrong in how the inventories are wrong, the pricing
is wrong. There's a mismatch of what kind of houses
are out there versus what millennials want who are now
forming households. So yes, the housing market is a risk.
(08:19):
But surprisingly, what we started to hear from National Association
reeltors over the last couple months is Americans, and we're
going to find this out in the spring, is that
Americans might be getting used to these higher mortgage rates.
Speaker 3 (08:34):
Yeah, there's a point where you're going to.
Speaker 5 (08:36):
Say they said it, We didn't say it. It's coming
from them.
Speaker 3 (08:39):
No, it's a good point. I do feel like that
that is something we started to talk about. Happy New York.
Great to have you back, John Augustine over at Huntington
Private Brank.
Speaker 2 (08:47):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (09:01):
All Right, everybody, it's a most read story on the
Bloomberg on this Tuesday. JP Morgan Chase just becoming the
last of Wall Street's biggest banks to abandon the industry's
largest climate finance alliance. That's going on. But really what's
most read is that he's saying JP Morgan, Hey, everybody, No,
mo're working from home. Come on back to the office
five days a week. So we wanted to get into it.
(09:23):
Bloomberg New senior finance reporter Shrinatta Rajan here in studio.
All right, so, first of all, let's talk about this
back to work. What took JP Morgan so long?
Speaker 7 (09:32):
Well, first of all, Jamie Diamond hasn't quite said it yet.
Senior executives of JP Morgan are talking about this. Can
we assume it's very fair to assume Jamie Diamond's on board?
Does anyone on board is Jamie Diamond? Everyone else has
to fall in line. But all the sense we're getting,
unless plans fallow out last minute, is sometime in the
next few weeks and then week or two, you could
(09:53):
very well see JP Morgan come out and say they
want everyone back in office five days a week. They
already had all their mds and above in the offic
as a lot of the that's what I was toating stuff.
Well what's the status right now?
Speaker 4 (10:03):
Like what change? What changes if this becomes policy.
Speaker 7 (10:06):
Roughly sixty percent of their workforce is full time, okay,
but going from sixty to I don't know, eighty five
ninety ninety five percent is still a lot because JP
Morgan employs three hundred thousand people globally, so there are
still a lot more people who supposed to come back
in full time.
Speaker 8 (10:20):
And you know, this is a portion pole you see,
especially on the tech side.
Speaker 7 (10:24):
Uh, It's it's a dynamic people have seen within JP Morgan,
but it's perhaps true across the board's that's one group
inside many corporations where it's proven the hardest to convince
them that five days in the office is the way
to go.
Speaker 3 (10:38):
And they need those workers, like pick your firm, right,
they're kind of at their core their tech firms right
in terms of needing that staff.
Speaker 7 (10:44):
And it's a question of where does the leverage lie.
And you can see that very easily in the tech sector.
Those are the companies that have the most flexible rules.
When companies like Amazon first said we want everyone back
in the office five days a week. There was a
lot of pushback against it, and they're to delay those plans.
And there are other tech films that will go out
there and out their flexibility.
Speaker 8 (11:06):
Much less so in the banking sector.
Speaker 7 (11:08):
I'd probably say City Group is the only one out
there who still speaks to its hybrid ethos. Everyone else
is pretty much back in the office time.
Speaker 4 (11:16):
But do they have to City Do they have to
in a sense to compete?
Speaker 7 (11:21):
Your point being that as one of the worst performing
banks in the country, you you might as well show
up your nice aside a different option.
Speaker 4 (11:30):
I'm curious. It's a fair point if you if your
compensation has been based on company stock price and it's struggled,
is it a retention issue and you have to come
up with other ways to keep employees happy.
Speaker 8 (11:41):
I think it's a fair point.
Speaker 7 (11:42):
But in my mind it's more a leadership ethos more
than stock market performance or your price to book ratio factor. Here,
I think that is more Jane Frasier's leadership style coming through,
and you can be fairly certain that she's not in
the Jamie Diamond, David Solomon amp Off. An office only
works when everyone's there five days a week. Could that change, Yes,
(12:05):
But she's certainly been out there sort of showcasing that city.
Is this nice, gentle place to work in.
Speaker 3 (12:11):
Listen. To be fair, I really think we all thought
coming off the pandemic that oh my god, our working
environment in every industry had changed. And what we've slowly seen,
whether it's banking, whether it's you know, kind of pick
your firm, everybody slowly coming back to their offices. I mean,
let's not say, did you even ask about, oh, you
did about the JP Morgan office building. It's an expensive building, right,
You don't.
Speaker 4 (12:30):
Build a building like that and not have people come
to work.
Speaker 3 (12:32):
It's down the street from us.
Speaker 7 (12:33):
It is one of the largest office buildings on the
construction in the world, if not the largest. From what
I understand, it's definitely safe to say one of the
largest buildings.
Speaker 3 (12:41):
It's new, New Man, It's shining and new, and.
Speaker 7 (12:44):
It does look fabulous. So I'm sure Jamie Diamond would
like to see it buzzing. But to me, it's also
interesting that when we look across over the last few years,
having covered the sector, having looked at the various announcements
that have flowed through. Over the last few years, we've
gone through fits and starts. First, it was the first
few months after the pandemic when we're like, can you
please start coming back into the office, not five days? One, two,
(13:05):
three days, let's start there. Then maybe a year or two, Okay,
not enough, let's go five days. Then it was pretty
please can you do five days. Now we're again in
this moment where with this new administration, and especially look
at the Trump administration and its doge boys Elon Musk
and vive Ramaswami training their guns at federal employees and
office buildings being empty. They're all talking about that. Jamie
(13:28):
Diamond himself has talked about how disappointing it is to
see some of these federal offices being empty. So I
think you will see the drumbeat of RT or at
least that cycle go on for a little while longer,
at least over the next few months.
Speaker 3 (13:39):
No, that's a good point, and from now we're always
going to call on the doors boys. Thank you so much,
stre for that. Hey, one other story you want to
ask you, JP Morgan quitting the Climate Finance Group. They're
following City, They're following Bava just you know, thirty forty
seconds on this what's going on here? Does it mean
that everybody's saying we don't care what happens to the
climate the environment or is it something more nuanced.
Speaker 7 (13:58):
Easiest parallel I can make for you was look at
Facebook or Meta adding Dana White to its board a
Trump ally Trump buddy. If you're a large bank, how
much do you want to be out there doubting the
fact that you care for the environment and esg Yes,
That's what all of them used to say. They just
want to shout a little less louder. They don't want
(14:19):
to be seen as in forefront of that revolution caring
about the climate or climate change.
Speaker 8 (14:24):
With the Trump administry, do they.
Speaker 3 (14:25):
Still care about the climate and like, will investments reflect
the or we don't know?
Speaker 8 (14:29):
Their also depends on who's in power.
Speaker 3 (14:34):
The doge boys never going to forget that making a
pats and T shirts as we speak. Thank you so much.
Rihna Raja and senior finance reporter here at Bloomberg News.
Check them out on Twitter, on x on the Bloomberg
and at Bloomberg dot com.
Speaker 1 (14:48):
This is the Bloomberg Business Week podcast. Listen live each
weekday starting at two pm Eastern on Applecarplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon al from our flagship New York station,
Just say Alexa play Bloomberg eleven thirty.
Speaker 4 (15:06):
Extreme weather throughout the US this week. Carol, Yes, she
tweeted this photo this morning. I loved it.
Speaker 3 (15:10):
It was so I can't say freaking, but I'm gonna say.
It was so cold.
Speaker 4 (15:15):
It was so cold.
Speaker 3 (15:15):
Oh my god, it was colder than Greenland. I put
that out there.
Speaker 4 (15:18):
Yeah, that's what you tweeted.
Speaker 8 (15:20):
I did.
Speaker 4 (15:20):
Yeah, I love that.
Speaker 3 (15:21):
I was just layer upon layer and a big hat
and you name it.
Speaker 4 (15:24):
It was just so Yeah, and days like this, I'm like,
I hope my pipes don't freeze. That's what I think
about it. Exact kind of scary stuff. Insurance companies don't
like that either. Our BN team reporting exceptionally powerful dry
winds expected across southern California this week that's set to
set wildfire risks skyrocketing in a region that's endured more
than eight months without significant rain. So you got fires,
you got hurricanes, you got floods, ri ken havoc on
traditional insurance, Yeah, I mean even if you don't live
(15:47):
in an area that's at risk. Look no further than
what's happened to your race.
Speaker 3 (15:50):
You and I talk about RATEL the time.
Speaker 4 (15:51):
Okay, So you add in risks from cyber attacks, pandemics,
marine war, and more, and that's where specialty insures such
as AXE come in. Vince Tizzio is president's CEO of Access.
It's a seven point three billion dollar market cap company.
It offers specialty insurance around the world. He joins us
from New York. Vince, you play sort of in all
these areas that I mentioned, but the specialty is really
(16:14):
specialty insurance. Talk a little bit about what your bread
and butter.
Speaker 9 (16:16):
Is, no doubt. Good afternoon, Good to be with you.
Speaker 10 (16:19):
You know, as a specialist insurer, we really fit the
bill that comes to the consumer that isn't in the
traditional landscape. Now you detailed in your outset com and
some of the natural catastrophe and weather related risks. But
as you mentioned as well, there's directors and officers and
liability insurance, there's environmental There's a whole host of products
(16:40):
that are not uniquely covered by traditional package policies sought
by commercial entities across the globe.
Speaker 4 (16:47):
What would you say is the biggest segment for you
when it comes to specialized insurance. Just to give our
viewers and our listeners an understanding of the context here.
Speaker 10 (16:56):
Yeah, So I think, broadly speaking, think about industry first,
the marine industry. Within the marine industry, it's not only
about thinking about ships out in the water. It's also
about how goods and services are transported on land one example.
Second example energy, the energy sector, whether it be onshore
or offshore. There's a variety of specialist insurance needs that
(17:19):
are created and we deliver products and solutions. You mentioned cyber,
and gosh, cyber has taken its own form in shape
and is now a separate product that we, like other specialists,
underwrite and bring to consumers around the world. And then finally,
there's those professional liability products, whether they're E and O based,
Arizona missions, malpractice insurance, directors and officers liability insurance. Those
(17:44):
are some of the core capabilities that we bring to
the insurance marketplace and are really considered specialist offerings.
Speaker 3 (17:51):
All right, So when you know, you really kind of
cut across a bunch of different I feel like sector
segments of the global economy. I was just looking at
a story from Bloomberg that was back in about mid December,
and it pointed out you guys, among a couple of
other insurers that basically are providing credit risk insurance for
the private arm of the World Bank as it looks
(18:13):
to expand lending and emerging market economies. So help us
understand from what you are seeing. First of all, is
it getting more expensive to do that insurance? And I
realize you play into a lot of different markets, but
give us some color around that. And then what are
you seeing in terms of what is going on in
the global economy. Are there more risks out there? Is
it getting more expensive for entities to ensure it? And
(18:35):
that means just kind of higher costs on their organizations
or companies for that matter.
Speaker 10 (18:41):
Yeah, Carol, credit insurance is a very niche specialist insurance
offering we provided globally, and if you think about really
what it's solving for. As banks make loans to consumers
around the world, they want those loans to be insured
on some basis, they want to have alternative financing capability.
Specialist insurers like ourselves provide that capability. When you think
(19:04):
about that risk landscape and the origination of loans through
the banks around the world. It's a different marketplace between
Europe and the United States. And as a globalist in
this capability, we're fit for purpose really to suit any
of those different market dynamics.
Speaker 3 (19:20):
All right, so good to know. So is there anything
though from your point? Well, actually, let's pick apart some
of the markets, because I feel like we could talk
to you for a long time because you do play
into so much, you know, just kind of reading in
and doing some research ahead of you joining us. You know,
we saw that some underwriters are ware of cyber insurance,
given it's fairly new and could potentially clash with other risks.
What would you say to investors to make them more
(19:41):
comfortable with your company's cyber insurance book of business specifically?
Speaker 10 (19:46):
Yeah, So, first of all, it's the ability for insurers
to identify how large that exposure is on their balance sheet,
to recognize its inter relationship with other types of insurance
that it provides. And so company like Access that is
a specialist, it takes great care and how it brings
its cyber product to the market, making certain that its
(20:07):
other products really exclude exposures that would really relate to
cyber and I think additionally, this is a type of
insurance that's relatively recent in the risk landscape. It's a
twenty odd billion dollar marketplace. There's lots of specialist participants,
and the key consideration that consumers are facing when making
(20:28):
this important coverage is number one, whether or not the
coverage is specific enough to their unique exposures.
Speaker 9 (20:34):
Secondly, can the insurance.
Speaker 10 (20:36):
Company absorb a loss from their company because of the
concern that you raise? And then finally, do we have
enough consultive expertise with that underwriting company to help the
company mitigate their exposure to cyber What.
Speaker 4 (20:50):
About when it comes to regional difference when it comes
to cyber risk, for example, pricing outside the US versus
pricing domestically here in the US. Help us understand how
underwriters do that?
Speaker 10 (21:02):
Yeah, so, Tim, It's a very different risk landscape around
the world and made more complex by the size and
the industry of the consumer. And so broadly speaking, the
United States has a more developed marketplace with respect to
the purchase of cyber There are many more tools that
allow underwriters insights around the risk landscape here in North America.
Speaker 9 (21:26):
In Europe, there are any number of.
Speaker 10 (21:28):
Regulatory imperatives that are thrusted upon companies to be able
to show their wherewithal and in the United States, most recently,
the SEC has also promulgated certain new regulations on the
disclosure side.
Speaker 9 (21:42):
And so the risk landscape is varied.
Speaker 10 (21:45):
But I think more notably, depending upon the industry that
you're in, the size of your company, your cyber risk
varies greatly.
Speaker 3 (21:53):
All right, risk insurance, as you said, can vary greatly.
I got to tell you one of the topics that
we heard folks in the newsroom, Tim and I talked
a lot about was property insurance generally. I want to
ask you though about property reinsurance. You guys recently stepped
back from what's become pretty much a volatile business, like
the property reinsurance business right before that market saw dramatic
(22:14):
price increases. How do you feel about that decision a
few years removed?
Speaker 10 (22:19):
Yeah, we feel very good, Carol. We do our decision, Yeah,
we do. Let me tell you why.
Speaker 5 (22:25):
So.
Speaker 10 (22:25):
When we were making the decision, we made a decision
that was grounded in what our risk profile was. Frankly,
we liked the bet of making a property risk on
an individual insured basis looking at the risk in total
as opposed to a subscription, which is the approach that
we underwrote on the reinsurance side. Now, I would just
(22:47):
point out that the property business at ACCESS is a
very substantial business. It's highly accreative, and we think it's
a distinct value proposition, and so we are choice in
removing ourselves from the property cap market.
Speaker 9 (23:00):
It was less about whether the market would be good or.
Speaker 10 (23:02):
Bad and more a statement around how we wanted to
be understood by our investors.
Speaker 3 (23:07):
So no regrets at all. You're happy with the decision.
Speaker 10 (23:11):
We are, and we think our twenty twenty four financials
should encourage our shareholders on the bet that we made.
Speaker 4 (23:17):
Okay, talking a little bit about reinsurance and portfolio lost
portfolio transfer reinsurance. You guys recently announced this lost portfolio
transfer reinsurrement in reinsurance agreement. Explain what that exactly is
and why your company would want to do it?
Speaker 10 (23:33):
Sure, Tim, So, Access is a twenty odd year old company.
It has reserves that are essentially money to pay future
liabilities over ten billion dollars, and so we're an underwriting
company that has a leaning towards the insurance business, and
when we looked at our risk profile, we found that
our reserve pool in our reinsurance business was a little
(23:56):
bit more than half and we found that the portfolio
really wasn't right size the kinds of risks that we're
writing today. And so what we wanted to do was
bring balance balance to the revenue recognition on the front
end of our company, which is seventy five percent insurance
twenty five percent reinsurance, and we wanted to bring the
same to our balance sheet on the reserves. And so,
(24:18):
as you note, we engage in a transaction with a
company called Enstar where we essentially transferred our reserves to
this third party and retained twenty five percent of the
risk thereafter. That's essentially what we did and why we
did it.
Speaker 3 (24:34):
So you know, we are talking a lot, Vince, as
you might guess about the upcoming earning season. You guys
report towards the end of the month. I believe it's
January twenty nine. Just looking at my Bloomberg, I know
there's certain things you can and can say, but when
you look at the business environment, you guys had a
great year in terms of your share price up about
sixty percent in twenty twenty four. How are you thinking
(24:55):
about this year with a new administration with a lot
of talk about me be less regulatory oversight over some industries,
and I'm just curious about the impact of that, and
just how you're looking at the year where a lot
of folks come in investment folks or even heads of
companies like yourself are saying, too many questions still out there.
We're gonna have to wait and see how some things
(25:16):
play out.
Speaker 10 (25:17):
So we think that the risk landscape is fairly dynamic.
We took a number of actions in our company last year,
really positioning us for this changing insurance market that has
been spoken about. What we don't think will change is
number one. The risk landscape will remain challenging. You mentioned
that the outset around property insurance and the natural catastrophe events.
(25:40):
We don't think that that's going to change some one
hundred and thirty six odd billion dollars of damages in
twenty twenty four. Secondly, directors and officers liability insurance directors
and officers of public and private companies are facing increasing
severity associated with how they discharge their duties. You have
a bad drop of eight percent increase in bankruptcy you
(26:02):
rate filings in twenty twenty four, I think nearing the
levels of the financial pandemic. And then finally, you speak
about exposures like cyber, energy and marine that are critically
important to commerce generally around the world, and we have
a number of solutions to meet those expectations. So net
we think it's an environment that will be challenging. We
think we have a number of products to meet the
(26:24):
needs of our diverse global customer base, and we stand
ready to bring our capital to bear to meet those needs.
Speaker 4 (26:31):
Vince, thanks so much for joining us this afternoon. You
really do appreciate it. That's Vince Tizio, president and CEO
over at Access, seven point three billion dollar market COC company.
They offer specialty insurance around the world.
Speaker 1 (26:43):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five these during this
listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 10 (27:00):
Now.
Speaker 7 (27:00):
But you let me drive?
Speaker 6 (27:01):
Oh no, no, no no, this is not a toy, alright.
Speaker 8 (27:06):
Please travels. I don't want to drive.
Speaker 11 (27:12):
It's a question.
Speaker 2 (27:17):
This is the Drive to the Clothes for music jo
Don on Bloomberg Radio.
Speaker 4 (27:24):
Wow, Wow, what timelies When you're having fun, they say,
we are having fun. We are having fun. Yeah, yeah,
you know it's not having fun's having text talks. Taking
a real hit today. Yeah, look, perspective exactly, thank you.
Speaker 3 (27:37):
Everything doesn't go up everybody ways forever.
Speaker 4 (27:40):
Now i'zac one her down about one point eight percent
right now.
Speaker 3 (27:43):
Uh.
Speaker 4 (27:44):
This is Sylvia Jablonski's world. She also joins us on
days where markets move higher. Yeah okay, so yeah, that's
what they were doing earlier in the session. To be fair,
come on anytime we do. Let's Drive to the Clothes.
Is Sylvia Jablonski. She's CEO and CIO over at Defiance ETS.
They've got about four billion dollars in assets under management. Sylvia,
good to have you on the program. As always, for
(28:07):
people who don't know definance ETFs, you've got thematic ETFs.
They follow industries like travel Leverage gtfs, which provide leverage
exposure to companies such as micro Strategy, Broadcom, and even
commodities such as uranium. You've got income ETFs as well.
Joining us from New York this afternoon where would you
say in your business, the biggest area of growth is.
Speaker 11 (28:29):
Thanks for having me, And I actually prefer being on
when the markets are up because everybody's happy.
Speaker 4 (28:33):
But hey, maybe if you're maybe you get one of
those like leverage short ETFs for one of those companies
that's lower today that you guys offer than you're fine.
Speaker 11 (28:42):
Exactly totally, We've definitely got one of those. I would say,
you know, the biggest point of interest this year has
actually been in quantum computing. Okay, yeah, we've had a
quantum ETF since twenty eighteen, and I would just say
that you know, a whole lot of people maybe didn't
pay attention to it or didn't know about it or
work fully invested in the theme. And last year when
(29:02):
you had that chat Shept moment for Microsoft and you know,
all sorts of funds went to AI related funds, we
were kind of on the sidelines, and we knew it
was just a matter of time before you know, the
connection was made that you actually need quantum computers supercomputers
to process all of this vast data that we're going
to use to have AI actually you know work and
come to fruition and so that ETF went from you know,
(29:24):
being like a one hundred million dollar fund for a
long time to close to a billion in assets, and
it's just been like wildly interesting for retail and institutions
this year.
Speaker 3 (29:35):
That's what I wanted to ask you. I mean, as
you said, you can, you know, very specific trades. Where
is the money flowing in? And I want to ask
you especially kind of since the election, since the new year,
where's the money flowing in? Where's it flowing out?
Speaker 11 (29:50):
Yeah, I think that, you know, since the election, there's
just been this shift to risk on. I mean, we
had you know, twenty twenty four was really a great year.
I know that not the entire market participated, but if
you had broad based market exposure, which most people do,
you did pretty well. Right, You're up in the mid
twenty percent inches or more and some of the ETFs
(30:11):
you had and things like that, and so the.
Speaker 3 (30:13):
Consumer remains healthy.
Speaker 11 (30:15):
You know, we have an economy that's probably still going
to grow somewhere around two to three percent. Eventually rates
will come down, inflation will be under control, and so
when you have rates coming down, usually see double digit
returns in those years in the market. And so I
would just say broadly that I think it's going to
be a risk on market. You know, they also investors
like the idea of a new president coming in that
(30:38):
is going to be you know, kind of like low
on business regulation, supportive of markets and things like that.
And so I just think that the market is just
poised to have a good year this year, and so
the flows will go I think to quantum computing, quantum
computing stocks like AI.
Speaker 3 (30:54):
I have to jump in because I'm not sure if
you like got the day's memo, but like the economic
news today, now as people think or traders investing that
we're not going to get maybe a rate cut and
it'll be maybe a little bit more than a point
is what traders are you know, pricing in now come July.
So maybe it's not a lower rate environment or as
(31:14):
much lower as everybody was anticipating. Because you sound pretty upbeat.
If we don't have that, how does that, you know,
outlook change?
Speaker 11 (31:25):
Great question, and I think, you know, I would still
argue that we are going to be in a lower
we are at a lower rate environment. You know, rates
haven't come down all that much, but they're going downward directionally, right,
We're not expecting to have rate hikes. We're not expecting
the FED to kind of change course. And the market
has now kind of, you know, accepted this, right because
economic data is pretty good. I think that it's a
(31:47):
sweet spot. Honestly, Like I think that, you know, we
avoided this recession, the FED cut a little bit, we're
going to get another cut. We're not going to get
rate hikes this year. The market has kind of accepted that.
And then behind the scenes, you have excellent corporate earnings.
You have these quality companies that continue to grow again, but.
Speaker 3 (32:03):
They're not growing as fast. And again I'm just curious.
Speaker 11 (32:07):
If inflmation going as fast, but you know, not going
as fast. But I think that, you know, maybe if
we don't get twenty twenty five percent this year, I
think that the market would be okay with ten to
fifteen percent, right, and then you have some high flyers
and those would be those, you know, those kind of
like thematic that we talked about, the quantum and AI stuff.
But I still think you're going to have loavate double
(32:29):
digit returns in the broad based in disease this year.
Speaker 3 (32:32):
So let me go back to you. I know you
were saying were you think things are going to flow
like quantum and so on and so forth, But where
have they been flowing in and out? Give me an idea.
You guys obviously can track the data, you know, I'm
sure on a kind of daily basis. So where has
money been flowing in? Where has money been flowing out?
Speaker 11 (32:49):
Yeah, and so we've seen just on our side, I mean,
we've seen some shift from mag seven to quantum, to
AI to crypto. We've definitely seen a lot of flows
into names like micro Strategy, which I think, you know,
represent the crypto trade. I think the entire market has
seen more flows in terms of you know, breath expansion.
So for example, the x mag so the other four
(33:12):
hundred and ninety three stocks, like whether that's th the
x mag etf or whether that's through the next top
seven stocks, like you know, kind of like the broadcom
the the Lilyes, the Berkshire Hathaways of the world and
things like this. So I think you have a combination
of investors kind of cherry you know, cherry picking like
the ideas that they're going to support in terms of
like innovation, and I think, you know, maybe some of
(33:33):
the mag seven there's some fear that they could be overvalued,
so you know, broaden that out a little bit.
Speaker 3 (33:38):
So you are you guys are seeing as of late,
whether it's post election and kind of continuing into the
new year, you're seeing more money maybe move into something
like or you are into the defiance x MAG ETF.
Speaker 11 (33:49):
Yeah, we've seen more. We've seen more flows into x MAG.
I we the most, you know, the highest amount of
flows that we've seen are in micro strategy, right so
that crypto trade remains alive and well for us. Second
most would be quantum and then you know x MAG
x MAG Broadcom is another big one that we've seen
flows into, So you know, they're kind of sitting sitting there.
(34:10):
And I think if you look at the other ETFs too,
you have seen a lot of flow into the AI
machine learning stuff less so into some of the mag
seven types of ETF products too, So you're seeing a
little bit of diversification that way.
Speaker 4 (34:22):
When I was looking at your website earlier this morning
preparing for this at the ETFs, I was surprised I
didn't see an Nvidia leverage GTF. Why not?
Speaker 11 (34:30):
Yeah, someone got there before us.
Speaker 4 (34:33):
Okay, so it doesn't make sense.
Speaker 11 (34:35):
We would have one and if a bunch of other
people didn't.
Speaker 4 (34:38):
But yeah, so's business perspective. It doesn't make sense to
offer something that anyone else offers in your business.
Speaker 8 (34:43):
It has to be I think I think that.
Speaker 11 (34:45):
There are you know, I think that you know, in
the ETF world, like first mover usually gains a lot
of leverage, and then maybe you get a second and
third that can pick up a little bit. But but
at this point there, you know, there are many issuers
that have different Nvidia ETFs out there, single stocks or
other and so you know, I think that we probably
wouldn't launch the same thing. Not to say that we,
you know, aren't going to come up with something that
(35:05):
has to do with that video, but kind of a
classic single stock ETF trade is just just tough to compete.
Speaker 3 (35:11):
Totally get it, Totally get it. Hey, thank you so much.
I love the specificity. Sylvia, be well, Happy New Year.
By the way, Sylvia Jablonski, she's CEO and CIO over
at Defiance ETFs. They've got about four billion dollars in
assets under management.
Speaker 2 (35:25):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com,
the iHeartRadio app tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg Business Week Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio.
Speaker 3 (00:26):
Stocks are down, use treasure yields moving up yields we've
seen moving up this after this morning's US economic data
amped up bets at the Fed will not cut interest
rates again before July amid offlationary pressures, and even Michael
McKenzie saying it's like a point in a smidge is
what the market is expecting in July ten.
Speaker 4 (00:46):
With more joining us as John Augustine Cio over at
Huntington Private Bank. It's a division of the public held
twenty four billion dollar Huntington Bank shares based in Ohio.
John oversees about twenty seven billion dollars in assets under management.
He's back here in the Bloomberg Business Week studio in
New York. John, how are you great?
Speaker 5 (01:03):
Great to be here again.
Speaker 4 (01:04):
Wappy New Year. You walked into the studio and you
said it's the trifecta and that is what's hitting stocks.
What are you seeing out there?
Speaker 6 (01:11):
Interest rates up, dollar index up, and price of crude
oil up?
Speaker 5 (01:15):
And when those three are up.
Speaker 6 (01:16):
Now, they've been controlling the stock market now for about
a month, and the newest member of that is crude oil,
and stocks have a tough time with that. Think of
it this way, the automatic stabilizers. When things go bad,
when the US economy slows, dollar comes down, yields come down.
Now they're both going up. They're actually trying to slow
things down.
Speaker 3 (01:37):
So what happens. What's like if this trend continues, because
we are in a market environment where I feel like,
you know, you get a dump of certain news on
a day and you get a trade a certain way,
and then you come in the next day or two
days from now, and it's a completely different narrative, especially
in the treasury trade. I feel like we've been all
over the place. So tell me, does this continues and
if so, what are the implications it continues?
Speaker 5 (01:59):
Likely?
Speaker 6 (01:59):
And to earn season fifteenth officially we started earning season used.
Speaker 3 (02:04):
To be ge Now it's jp market.
Speaker 5 (02:05):
And all the banks that roll out. But it's going
to continue.
Speaker 6 (02:09):
We're going to get this uneven economic news, The jobs
reports are going to be very big on Friday, right,
But it's the economic news is going to see to
the earnings news. The earnings news is probably eventually going
to be the arbiter, because earnings have been very good
for two years.
Speaker 4 (02:28):
The S and P five hundred in twenty twenty three
up more than twenty four percent, in twenty twenty four,
up more than twenty three percent. Are your clients just
calling you, being like, throw it all in the S
and P five hundred? Why wasn't everything in the enough yet? When?
Speaker 5 (02:42):
When?
Speaker 6 (02:42):
So? You're saying box for the only thing Americans do
not like to buy on sale.
Speaker 4 (02:46):
I've heard that before. Funny, But are they saying, wait
a second, why wasn't I just in the S and
P five hundred? You have me in this diversified portfolio
that doesn't return what the S and P five hundred
index returns? What's going on here?
Speaker 5 (02:58):
We we know?
Speaker 6 (03:00):
What we know is Americans are overcashed still, bank deposits
up still.
Speaker 5 (03:05):
Market assets up. Still.
Speaker 6 (03:08):
If you look at the national numbers, Americans are over
We find in our own customers.
Speaker 4 (03:12):
The highering customers.
Speaker 5 (03:13):
Yes, we've been weighted towards equities.
Speaker 4 (03:16):
Hiring the income spectrum, high.
Speaker 6 (03:17):
Income spectrums, we've been weighted towards equities, not all the way.
Speaker 5 (03:22):
We want to see what yields are going to bond
yield you're going to do.
Speaker 6 (03:25):
But nobody's coming at us yet and saying, even after
two years, throw at all inequities.
Speaker 5 (03:31):
It's just not there.
Speaker 3 (03:33):
Anybody coming in and saying, you know what, I'm done
two great years. In terms of the equity play, we're
being so kind of plain vanilla because we know private
markets and a lot of things are in play in
a lot of people's portfolios, especially at the higher income strata.
But is anybody saying, I'm out, I want to be
in something safe. I look at the treasury trade. I
can kind of get a decent return there. So, you know,
(03:53):
get into the investor's psyche right now.
Speaker 6 (03:55):
They they like the four percent yields and treasuries, but
wants six eight percent, six eight ten percent increases in
that and that you got to go to the stock.
Speaker 5 (04:06):
Market in the US this year. Though.
Speaker 6 (04:09):
What you're right on, Carol, is this year income may
be the best mitigator against volatility.
Speaker 3 (04:18):
Right, protecting yourself against downside right and giving yourself.
Speaker 5 (04:20):
You're always gonna have fuel.
Speaker 3 (04:22):
John, do you think that we're going to head into
you know, you guys are as we mentioned publicly held
division of Huntington Bank shares twenty four billion dollar institution,
and I am curious. I know you are in the
institutions a lot bigger than that, a lot bigger. I'm
talking about the market cap, forget me, but in terms
of like you're you're in, you know, the private bank.
But I am curious. You know, if you talk with
(04:42):
some of the other colleagues, what they are seeing in
terms of lending in the environment and our people taking
out loans or is the bank willing to loan? Like,
give us an idea. Is anybody thinking slow down concerns
about recession.
Speaker 6 (04:55):
Now, especially after the election, there's more optimism now, there's
more loan demand now, business small business is ready to go,
even though in the stock market nobody likes small and
good caps, but businesses are getting ready to go.
Speaker 3 (05:10):
There's probably and the bank ready to the banks ready.
Speaker 5 (05:13):
Banks are ready to go. Banks are over.
Speaker 6 (05:15):
Capitalized arguably, and I'm not just talking about the one
I'm with, but in general that the optimism has come
into the business community right or wrong, right or wrong.
And we have a FED now that's not a headwind.
We have a new administration that wants to speed things up.
(05:35):
So the FED and the fiscal policymakers are in unison
now to move forward on the economy. That's the playbook.
And and then how much how much inflation will that generate?
Speaker 5 (05:46):
That generate out of that and nobody knows that yet.
Speaker 4 (05:50):
That's the concern though, right, yeah, talk a little bit
about protecting clients against consecutive quarters of inflation moving higher
if we get another jobs report. We got the Jolts
report today that came in hotter than expected.
Speaker 5 (06:03):
And sent services, etc.
Speaker 6 (06:05):
So now last year, importantly, let's be back up. You'll
curve now is normalized tenure yield as well over the
inflation rate, official inflation rate, the headline CPI that most
people follow.
Speaker 5 (06:21):
Now there's some cushion.
Speaker 6 (06:24):
So now there's some income cushion, real income now that
we haven't had for ten years or so. So people
like that, but they still want that six eight, ten
percent as mentioned earlier, Now there are sixty two some
stocks in the S and P five hundred that yield
over four percent. So income from all three groups. Cash
(06:46):
bond stocks you can almost get four percent or over.
Now that's a useful tool it but clients mostly still
want six eight ten.
Speaker 3 (06:57):
They're spoiled.
Speaker 5 (06:58):
They're spoiled.
Speaker 3 (06:59):
I mean historic you know what we got the last
two years, certainly on the equity trade.
Speaker 4 (07:03):
Is not six eight ten.
Speaker 6 (07:05):
Historically that stocks start to run, they generally keep running.
We might have two more years of this if earnings
estimates are right. Think of the earningssts, thick of the
Bloomberg earnings estimates thirteen this year, fifteen next year.
Speaker 3 (07:19):
Yeah, although Gina Martin Adams has been a little bit
more sanguine feeling or a little bit more excuse me,
pulling in in terms of expectations, the comparisons become really difficult.
And now that things aren't going to grow, it's just
not at the dynamic rates.
Speaker 6 (07:30):
No, and that's where productivity comes in, that's where AI
comes in, et cetera. But our our equity team, Randy Herren,
our equity team, Yeah, we're not seeing any slow down in.
Speaker 5 (07:42):
The overall beat level. It's still four or five hundred
basis points.
Speaker 3 (07:46):
What about the US housing market, that's in the mortgage
rates staying higher, Like, could that be something that causes
some problems wider problems in the US economy.
Speaker 6 (07:58):
I mean, arguably the USA com to be growing above
three percent, but housing starts are down year every year.
Everything's wrong in how the inventories are wrong, the pricing
is wrong. There's a mismatch of what kind of houses
are out there versus what millennials want who are now
forming households. So yes, the housing market is a risk.
(08:19):
But surprisingly, what we started to hear from National Association
reeltors over the last couple months is Americans, and we're
going to find this out in the spring, is that
Americans might be getting used to these higher mortgage rates.
Speaker 3 (08:34):
Yeah, there's a point where you're going to.
Speaker 5 (08:36):
Say they said it, We didn't say it. It's coming
from them.
Speaker 3 (08:39):
No, it's a good point. I do feel like that
that is something we started to talk about. Happy New York.
Great to have you back, John Augustine over at Huntington
Private Brank.
Speaker 2 (08:47):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (09:01):
All Right, everybody, it's a most read story on the
Bloomberg on this Tuesday. JP Morgan Chase just becoming the
last of Wall Street's biggest banks to abandon the industry's
largest climate finance alliance. That's going on. But really what's
most read is that he's saying JP Morgan, Hey, everybody, No,
mo're working from home. Come on back to the office
five days a week. So we wanted to get into it.
(09:23):
Bloomberg New senior finance reporter Shrinatta Rajan here in studio.
All right, so, first of all, let's talk about this
back to work. What took JP Morgan so long?
Speaker 7 (09:32):
Well, first of all, Jamie Diamond hasn't quite said it yet.
Senior executives of JP Morgan are talking about this. Can
we assume it's very fair to assume Jamie Diamond's on board?
Does anyone on board is Jamie Diamond? Everyone else has
to fall in line. But all the sense we're getting,
unless plans fallow out last minute, is sometime in the
next few weeks and then week or two, you could
(09:53):
very well see JP Morgan come out and say they
want everyone back in office five days a week. They
already had all their mds and above in the offic
as a lot of the that's what I was toating stuff.
Well what's the status right now?
Speaker 4 (10:03):
Like what change? What changes if this becomes policy.
Speaker 7 (10:06):
Roughly sixty percent of their workforce is full time, okay,
but going from sixty to I don't know, eighty five
ninety ninety five percent is still a lot because JP
Morgan employs three hundred thousand people globally, so there are
still a lot more people who supposed to come back
in full time.
Speaker 8 (10:20):
And you know, this is a portion pole you see,
especially on the tech side.
Speaker 7 (10:24):
Uh, It's it's a dynamic people have seen within JP Morgan,
but it's perhaps true across the board's that's one group
inside many corporations where it's proven the hardest to convince
them that five days in the office is the way
to go.
Speaker 3 (10:38):
And they need those workers, like pick your firm, right,
they're kind of at their core their tech firms right
in terms of needing that staff.
Speaker 7 (10:44):
And it's a question of where does the leverage lie.
And you can see that very easily in the tech sector.
Those are the companies that have the most flexible rules.
When companies like Amazon first said we want everyone back
in the office five days a week. There was a
lot of pushback against it, and they're to delay those plans.
And there are other tech films that will go out
there and out their flexibility.
Speaker 8 (11:06):
Much less so in the banking sector.
Speaker 7 (11:08):
I'd probably say City Group is the only one out
there who still speaks to its hybrid ethos. Everyone else
is pretty much back in the office time.
Speaker 4 (11:16):
But do they have to City Do they have to
in a sense to compete?
Speaker 7 (11:21):
Your point being that as one of the worst performing
banks in the country, you you might as well show
up your nice aside a different option.
Speaker 4 (11:30):
I'm curious. It's a fair point if you if your
compensation has been based on company stock price and it's struggled,
is it a retention issue and you have to come
up with other ways to keep employees happy.
Speaker 8 (11:41):
I think it's a fair point.
Speaker 7 (11:42):
But in my mind it's more a leadership ethos more
than stock market performance or your price to book ratio factor. Here,
I think that is more Jane Frasier's leadership style coming through,
and you can be fairly certain that she's not in
the Jamie Diamond, David Solomon amp Off. An office only
works when everyone's there five days a week. Could that change, Yes,
(12:05):
But she's certainly been out there sort of showcasing that city.
Is this nice, gentle place to work in.
Speaker 3 (12:11):
Listen. To be fair, I really think we all thought
coming off the pandemic that oh my god, our working
environment in every industry had changed. And what we've slowly seen,
whether it's banking, whether it's you know, kind of pick
your firm, everybody slowly coming back to their offices. I mean,
let's not say, did you even ask about, oh, you
did about the JP Morgan office building. It's an expensive building, right,
You don't.
Speaker 4 (12:30):
Build a building like that and not have people come
to work.
Speaker 3 (12:32):
It's down the street from us.
Speaker 7 (12:33):
It is one of the largest office buildings on the
construction in the world, if not the largest. From what
I understand, it's definitely safe to say one of the
largest buildings.
Speaker 3 (12:41):
It's new, New Man, It's shining and new, and.
Speaker 7 (12:44):
It does look fabulous. So I'm sure Jamie Diamond would
like to see it buzzing. But to me, it's also
interesting that when we look across over the last few years,
having covered the sector, having looked at the various announcements
that have flowed through. Over the last few years, we've
gone through fits and starts. First, it was the first
few months after the pandemic when we're like, can you
please start coming back into the office, not five days? One, two,
(13:05):
three days, let's start there. Then maybe a year or two, Okay,
not enough, let's go five days. Then it was pretty
please can you do five days. Now we're again in
this moment where with this new administration, and especially look
at the Trump administration and its doge boys Elon Musk
and vive Ramaswami training their guns at federal employees and
office buildings being empty. They're all talking about that. Jamie
(13:28):
Diamond himself has talked about how disappointing it is to
see some of these federal offices being empty. So I
think you will see the drumbeat of RT or at
least that cycle go on for a little while longer,
at least over the next few months.
Speaker 3 (13:39):
No, that's a good point, and from now we're always
going to call on the doors boys. Thank you so much,
stre for that. Hey, one other story you want to
ask you, JP Morgan quitting the Climate Finance Group. They're
following City, They're following Bava just you know, thirty forty
seconds on this what's going on here? Does it mean
that everybody's saying we don't care what happens to the
climate the environment or is it something more nuanced.
Speaker 7 (13:58):
Easiest parallel I can make for you was look at
Facebook or Meta adding Dana White to its board a
Trump ally Trump buddy. If you're a large bank, how
much do you want to be out there doubting the
fact that you care for the environment and esg Yes,
That's what all of them used to say. They just
want to shout a little less louder. They don't want
(14:19):
to be seen as in forefront of that revolution caring
about the climate or climate change.
Speaker 8 (14:24):
With the Trump administry, do they.
Speaker 3 (14:25):
Still care about the climate and like, will investments reflect
the or we don't know?
Speaker 8 (14:29):
Their also depends on who's in power.
Speaker 3 (14:34):
The doge boys never going to forget that making a
pats and T shirts as we speak. Thank you so much.
Rihna Raja and senior finance reporter here at Bloomberg News.
Check them out on Twitter, on x on the Bloomberg
and at Bloomberg dot com.
Speaker 1 (14:48):
This is the Bloomberg Business Week podcast. Listen live each
weekday starting at two pm Eastern on Applecarplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon al from our flagship New York station,
Just say Alexa play Bloomberg eleven thirty.
Speaker 4 (15:06):
Extreme weather throughout the US this week. Carol, Yes, she
tweeted this photo this morning. I loved it.
Speaker 3 (15:10):
It was so I can't say freaking, but I'm gonna say.
It was so cold.
Speaker 4 (15:15):
It was so cold.
Speaker 3 (15:15):
Oh my god, it was colder than Greenland. I put
that out there.
Speaker 4 (15:18):
Yeah, that's what you tweeted.
Speaker 8 (15:20):
I did.
Speaker 4 (15:20):
Yeah, I love that.
Speaker 3 (15:21):
I was just layer upon layer and a big hat
and you name it.
Speaker 4 (15:24):
It was just so Yeah, and days like this, I'm like,
I hope my pipes don't freeze. That's what I think
about it. Exact kind of scary stuff. Insurance companies don't
like that either. Our BN team reporting exceptionally powerful dry
winds expected across southern California this week that's set to
set wildfire risks skyrocketing in a region that's endured more
than eight months without significant rain. So you got fires,
you got hurricanes, you got floods, ri ken havoc on
traditional insurance, Yeah, I mean even if you don't live
(15:47):
in an area that's at risk. Look no further than
what's happened to your race.
Speaker 3 (15:50):
You and I talk about RATEL the time.
Speaker 4 (15:51):
Okay, So you add in risks from cyber attacks, pandemics,
marine war, and more, and that's where specialty insures such
as AXE come in. Vince Tizzio is president's CEO of Access.
It's a seven point three billion dollar market cap company.
It offers specialty insurance around the world. He joins us
from New York. Vince, you play sort of in all
these areas that I mentioned, but the specialty is really
(16:14):
specialty insurance. Talk a little bit about what your bread
and butter.
Speaker 9 (16:16):
Is, no doubt. Good afternoon, Good to be with you.
Speaker 10 (16:19):
You know, as a specialist insurer, we really fit the
bill that comes to the consumer that isn't in the
traditional landscape. Now you detailed in your outset com and
some of the natural catastrophe and weather related risks. But
as you mentioned as well, there's directors and officers and
liability insurance, there's environmental There's a whole host of products
(16:40):
that are not uniquely covered by traditional package policies sought
by commercial entities across the globe.
Speaker 4 (16:47):
What would you say is the biggest segment for you
when it comes to specialized insurance. Just to give our
viewers and our listeners an understanding of the context here.
Speaker 10 (16:56):
Yeah, So I think, broadly speaking, think about industry first,
the marine industry. Within the marine industry, it's not only
about thinking about ships out in the water. It's also
about how goods and services are transported on land one example.
Second example energy, the energy sector, whether it be onshore
or offshore. There's a variety of specialist insurance needs that
(17:19):
are created and we deliver products and solutions. You mentioned cyber,
and gosh, cyber has taken its own form in shape
and is now a separate product that we, like other specialists,
underwrite and bring to consumers around the world. And then finally,
there's those professional liability products, whether they're E and O based,
Arizona missions, malpractice insurance, directors and officers liability insurance. Those
(17:44):
are some of the core capabilities that we bring to
the insurance marketplace and are really considered specialist offerings.
Speaker 3 (17:51):
All right, So when you know, you really kind of
cut across a bunch of different I feel like sector
segments of the global economy. I was just looking at
a story from Bloomberg that was back in about mid December,
and it pointed out you guys, among a couple of
other insurers that basically are providing credit risk insurance for
the private arm of the World Bank as it looks
(18:13):
to expand lending and emerging market economies. So help us
understand from what you are seeing. First of all, is
it getting more expensive to do that insurance? And I
realize you play into a lot of different markets, but
give us some color around that. And then what are
you seeing in terms of what is going on in
the global economy. Are there more risks out there? Is
it getting more expensive for entities to ensure it? And
(18:35):
that means just kind of higher costs on their organizations
or companies for that matter.
Speaker 10 (18:41):
Yeah, Carol, credit insurance is a very niche specialist insurance
offering we provided globally, and if you think about really
what it's solving for. As banks make loans to consumers
around the world, they want those loans to be insured
on some basis, they want to have alternative financing capability.
Specialist insurers like ourselves provide that capability. When you think
(19:04):
about that risk landscape and the origination of loans through
the banks around the world. It's a different marketplace between
Europe and the United States. And as a globalist in
this capability, we're fit for purpose really to suit any
of those different market dynamics.
Speaker 3 (19:20):
All right, so good to know. So is there anything
though from your point? Well, actually, let's pick apart some
of the markets, because I feel like we could talk
to you for a long time because you do play
into so much, you know, just kind of reading in
and doing some research ahead of you joining us. You know,
we saw that some underwriters are ware of cyber insurance,
given it's fairly new and could potentially clash with other risks.
What would you say to investors to make them more
(19:41):
comfortable with your company's cyber insurance book of business specifically?
Speaker 10 (19:46):
Yeah, So, first of all, it's the ability for insurers
to identify how large that exposure is on their balance sheet,
to recognize its inter relationship with other types of insurance
that it provides. And so company like Access that is
a specialist, it takes great care and how it brings
its cyber product to the market, making certain that its
(20:07):
other products really exclude exposures that would really relate to
cyber and I think additionally, this is a type of
insurance that's relatively recent in the risk landscape. It's a
twenty odd billion dollar marketplace. There's lots of specialist participants,
and the key consideration that consumers are facing when making
(20:28):
this important coverage is number one, whether or not the
coverage is specific enough to their unique exposures.
Speaker 9 (20:34):
Secondly, can the insurance.
Speaker 10 (20:36):
Company absorb a loss from their company because of the
concern that you raise? And then finally, do we have
enough consultive expertise with that underwriting company to help the
company mitigate their exposure to cyber What.
Speaker 4 (20:50):
About when it comes to regional difference when it comes
to cyber risk, for example, pricing outside the US versus
pricing domestically here in the US. Help us understand how
underwriters do that?
Speaker 10 (21:02):
Yeah, so, Tim, It's a very different risk landscape around
the world and made more complex by the size and
the industry of the consumer. And so broadly speaking, the
United States has a more developed marketplace with respect to
the purchase of cyber There are many more tools that
allow underwriters insights around the risk landscape here in North America.
Speaker 9 (21:26):
In Europe, there are any number of.
Speaker 10 (21:28):
Regulatory imperatives that are thrusted upon companies to be able
to show their wherewithal and in the United States, most recently,
the SEC has also promulgated certain new regulations on the
disclosure side.
Speaker 9 (21:42):
And so the risk landscape is varied.
Speaker 10 (21:45):
But I think more notably, depending upon the industry that
you're in, the size of your company, your cyber risk
varies greatly.
Speaker 3 (21:53):
All right, risk insurance, as you said, can vary greatly.
I got to tell you one of the topics that
we heard folks in the newsroom, Tim and I talked
a lot about was property insurance generally. I want to
ask you though about property reinsurance. You guys recently stepped
back from what's become pretty much a volatile business, like
the property reinsurance business right before that market saw dramatic
(22:14):
price increases. How do you feel about that decision a
few years removed?
Speaker 10 (22:19):
Yeah, we feel very good, Carol. We do our decision, Yeah,
we do. Let me tell you why.
Speaker 5 (22:25):
So.
Speaker 10 (22:25):
When we were making the decision, we made a decision
that was grounded in what our risk profile was. Frankly,
we liked the bet of making a property risk on
an individual insured basis looking at the risk in total
as opposed to a subscription, which is the approach that
we underwrote on the reinsurance side. Now, I would just
(22:47):
point out that the property business at ACCESS is a
very substantial business. It's highly accreative, and we think it's
a distinct value proposition, and so we are choice in
removing ourselves from the property cap market.
Speaker 9 (23:00):
It was less about whether the market would be good or.
Speaker 10 (23:02):
Bad and more a statement around how we wanted to
be understood by our investors.
Speaker 3 (23:07):
So no regrets at all. You're happy with the decision.
Speaker 10 (23:11):
We are, and we think our twenty twenty four financials
should encourage our shareholders on the bet that we made.
Speaker 4 (23:17):
Okay, talking a little bit about reinsurance and portfolio lost
portfolio transfer reinsurance. You guys recently announced this lost portfolio
transfer reinsurrement in reinsurance agreement. Explain what that exactly is
and why your company would want to do it?
Speaker 10 (23:33):
Sure, Tim, So, Access is a twenty odd year old company.
It has reserves that are essentially money to pay future
liabilities over ten billion dollars, and so we're an underwriting
company that has a leaning towards the insurance business, and
when we looked at our risk profile, we found that
our reserve pool in our reinsurance business was a little
(23:56):
bit more than half and we found that the portfolio
really wasn't right size the kinds of risks that we're
writing today. And so what we wanted to do was
bring balance balance to the revenue recognition on the front
end of our company, which is seventy five percent insurance
twenty five percent reinsurance, and we wanted to bring the
same to our balance sheet on the reserves. And so,
(24:18):
as you note, we engage in a transaction with a
company called Enstar where we essentially transferred our reserves to
this third party and retained twenty five percent of the
risk thereafter. That's essentially what we did and why we
did it.
Speaker 3 (24:34):
So you know, we are talking a lot, Vince, as
you might guess about the upcoming earning season. You guys
report towards the end of the month. I believe it's
January twenty nine. Just looking at my Bloomberg, I know
there's certain things you can and can say, but when
you look at the business environment, you guys had a
great year in terms of your share price up about
sixty percent in twenty twenty four. How are you thinking
(24:55):
about this year with a new administration with a lot
of talk about me be less regulatory oversight over some industries,
and I'm just curious about the impact of that, and
just how you're looking at the year where a lot
of folks come in investment folks or even heads of
companies like yourself are saying, too many questions still out there.
We're gonna have to wait and see how some things
(25:16):
play out.
Speaker 10 (25:17):
So we think that the risk landscape is fairly dynamic.
We took a number of actions in our company last year,
really positioning us for this changing insurance market that has
been spoken about. What we don't think will change is
number one. The risk landscape will remain challenging. You mentioned
that the outset around property insurance and the natural catastrophe events.
(25:40):
We don't think that that's going to change some one
hundred and thirty six odd billion dollars of damages in
twenty twenty four. Secondly, directors and officers liability insurance directors
and officers of public and private companies are facing increasing
severity associated with how they discharge their duties. You have
a bad drop of eight percent increase in bankruptcy you
(26:02):
rate filings in twenty twenty four, I think nearing the
levels of the financial pandemic. And then finally, you speak
about exposures like cyber, energy and marine that are critically
important to commerce generally around the world, and we have
a number of solutions to meet those expectations. So net
we think it's an environment that will be challenging. We
think we have a number of products to meet the
(26:24):
needs of our diverse global customer base, and we stand
ready to bring our capital to bear to meet those needs.
Speaker 4 (26:31):
Vince, thanks so much for joining us this afternoon. You
really do appreciate it. That's Vince Tizio, president and CEO
over at Access, seven point three billion dollar market COC company.
They offer specialty insurance around the world.
Speaker 1 (26:43):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five these during this
listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 10 (27:00):
Now.
Speaker 7 (27:00):
But you let me drive?
Speaker 6 (27:01):
Oh no, no, no no, this is not a toy, alright.
Speaker 8 (27:06):
Please travels. I don't want to drive.
Speaker 11 (27:12):
It's a question.
Speaker 2 (27:17):
This is the Drive to the Clothes for music jo
Don on Bloomberg Radio.
Speaker 4 (27:24):
Wow, Wow, what timelies When you're having fun, they say,
we are having fun. We are having fun. Yeah, yeah,
you know it's not having fun's having text talks. Taking
a real hit today. Yeah, look, perspective exactly, thank you.
Speaker 3 (27:37):
Everything doesn't go up everybody ways forever.
Speaker 4 (27:40):
Now i'zac one her down about one point eight percent
right now.
Speaker 3 (27:43):
Uh.
Speaker 4 (27:44):
This is Sylvia Jablonski's world. She also joins us on
days where markets move higher. Yeah okay, so yeah, that's
what they were doing earlier in the session. To be fair,
come on anytime we do. Let's Drive to the Clothes.
Is Sylvia Jablonski. She's CEO and CIO over at Defiance ETS.
They've got about four billion dollars in assets under management. Sylvia,
good to have you on the program. As always, for
(28:07):
people who don't know definance ETFs, you've got thematic ETFs.
They follow industries like travel Leverage gtfs, which provide leverage
exposure to companies such as micro Strategy, Broadcom, and even
commodities such as uranium. You've got income ETFs as well.
Joining us from New York this afternoon where would you
say in your business, the biggest area of growth is.
Speaker 11 (28:29):
Thanks for having me, And I actually prefer being on
when the markets are up because everybody's happy.
Speaker 4 (28:33):
But hey, maybe if you're maybe you get one of
those like leverage short ETFs for one of those companies
that's lower today that you guys offer than you're fine.
Speaker 11 (28:42):
Exactly totally, We've definitely got one of those. I would say,
you know, the biggest point of interest this year has
actually been in quantum computing. Okay, yeah, we've had a
quantum ETF since twenty eighteen, and I would just say
that you know, a whole lot of people maybe didn't
pay attention to it or didn't know about it or
work fully invested in the theme. And last year when
(29:02):
you had that chat Shept moment for Microsoft and you know,
all sorts of funds went to AI related funds, we
were kind of on the sidelines, and we knew it
was just a matter of time before you know, the
connection was made that you actually need quantum computers supercomputers
to process all of this vast data that we're going
to use to have AI actually you know work and
come to fruition and so that ETF went from you know,
(29:24):
being like a one hundred million dollar fund for a
long time to close to a billion in assets, and
it's just been like wildly interesting for retail and institutions
this year.
Speaker 3 (29:35):
That's what I wanted to ask you. I mean, as
you said, you can, you know, very specific trades. Where
is the money flowing in? And I want to ask
you especially kind of since the election, since the new year,
where's the money flowing in? Where's it flowing out?
Speaker 11 (29:50):
Yeah, I think that, you know, since the election, there's
just been this shift to risk on. I mean, we
had you know, twenty twenty four was really a great year.
I know that not the entire market participated, but if
you had broad based market exposure, which most people do,
you did pretty well. Right, You're up in the mid
twenty percent inches or more and some of the ETFs
(30:11):
you had and things like that, and so the.
Speaker 3 (30:13):
Consumer remains healthy.
Speaker 11 (30:15):
You know, we have an economy that's probably still going
to grow somewhere around two to three percent. Eventually rates
will come down, inflation will be under control, and so
when you have rates coming down, usually see double digit
returns in those years in the market. And so I
would just say broadly that I think it's going to
be a risk on market. You know, they also investors
like the idea of a new president coming in that
(30:38):
is going to be you know, kind of like low
on business regulation, supportive of markets and things like that.
And so I just think that the market is just
poised to have a good year this year, and so
the flows will go I think to quantum computing, quantum
computing stocks like AI.
Speaker 3 (30:54):
I have to jump in because I'm not sure if
you like got the day's memo, but like the economic
news today, now as people think or traders investing that
we're not going to get maybe a rate cut and
it'll be maybe a little bit more than a point
is what traders are you know, pricing in now come July.
So maybe it's not a lower rate environment or as
(31:14):
much lower as everybody was anticipating. Because you sound pretty upbeat.
If we don't have that, how does that, you know,
outlook change?
Speaker 11 (31:25):
Great question, and I think, you know, I would still
argue that we are going to be in a lower
we are at a lower rate environment. You know, rates
haven't come down all that much, but they're going downward directionally, right,
We're not expecting to have rate hikes. We're not expecting
the FED to kind of change course. And the market
has now kind of, you know, accepted this, right because
economic data is pretty good. I think that it's a
(31:47):
sweet spot. Honestly, Like I think that, you know, we
avoided this recession, the FED cut a little bit, we're
going to get another cut. We're not going to get
rate hikes this year. The market has kind of accepted that.
And then behind the scenes, you have excellent corporate earnings.
You have these quality companies that continue to grow again, but.
Speaker 3 (32:03):
They're not growing as fast. And again I'm just curious.
Speaker 11 (32:07):
If inflmation going as fast, but you know, not going
as fast. But I think that, you know, maybe if
we don't get twenty twenty five percent this year, I
think that the market would be okay with ten to
fifteen percent, right, and then you have some high flyers
and those would be those, you know, those kind of
like thematic that we talked about, the quantum and AI stuff.
But I still think you're going to have loavate double
(32:29):
digit returns in the broad based in disease this year.
Speaker 3 (32:32):
So let me go back to you. I know you
were saying were you think things are going to flow
like quantum and so on and so forth, But where
have they been flowing in and out? Give me an idea.
You guys obviously can track the data, you know, I'm
sure on a kind of daily basis. So where has
money been flowing in? Where has money been flowing out?
Speaker 11 (32:49):
Yeah, and so we've seen just on our side, I mean,
we've seen some shift from mag seven to quantum, to
AI to crypto. We've definitely seen a lot of flows
into names like micro Strategy, which I think, you know,
represent the crypto trade. I think the entire market has
seen more flows in terms of you know, breath expansion.
So for example, the x mag so the other four
(33:12):
hundred and ninety three stocks, like whether that's th the
x mag etf or whether that's through the next top
seven stocks, like you know, kind of like the broadcom
the the Lilyes, the Berkshire Hathaways of the world and
things like this. So I think you have a combination
of investors kind of cherry you know, cherry picking like
the ideas that they're going to support in terms of
like innovation, and I think, you know, maybe some of
(33:33):
the mag seven there's some fear that they could be overvalued,
so you know, broaden that out a little bit.
Speaker 3 (33:38):
So you are you guys are seeing as of late,
whether it's post election and kind of continuing into the
new year, you're seeing more money maybe move into something
like or you are into the defiance x MAG ETF.
Speaker 11 (33:49):
Yeah, we've seen more. We've seen more flows into x MAG.
I we the most, you know, the highest amount of
flows that we've seen are in micro strategy, right so
that crypto trade remains alive and well for us. Second
most would be quantum and then you know x MAG
x MAG Broadcom is another big one that we've seen
flows into, So you know, they're kind of sitting sitting there.
(34:10):
And I think if you look at the other ETFs too,
you have seen a lot of flow into the AI
machine learning stuff less so into some of the mag
seven types of ETF products too, So you're seeing a
little bit of diversification that way.
Speaker 4 (34:22):
When I was looking at your website earlier this morning
preparing for this at the ETFs, I was surprised I
didn't see an Nvidia leverage GTF. Why not?
Speaker 11 (34:30):
Yeah, someone got there before us.
Speaker 4 (34:33):
Okay, so it doesn't make sense.
Speaker 11 (34:35):
We would have one and if a bunch of other
people didn't.
Speaker 4 (34:38):
But yeah, so's business perspective. It doesn't make sense to
offer something that anyone else offers in your business.
Speaker 8 (34:43):
It has to be I think I think that.
Speaker 11 (34:45):
There are you know, I think that you know, in
the ETF world, like first mover usually gains a lot
of leverage, and then maybe you get a second and
third that can pick up a little bit. But but
at this point there, you know, there are many issuers
that have different Nvidia ETFs out there, single stocks or
other and so you know, I think that we probably
wouldn't launch the same thing. Not to say that we,
you know, aren't going to come up with something that
(35:05):
has to do with that video, but kind of a
classic single stock ETF trade is just just tough to compete.
Speaker 3 (35:11):
Totally get it, Totally get it. Hey, thank you so much.
I love the specificity. Sylvia, be well, Happy New Year.
By the way, Sylvia Jablonski, she's CEO and CIO over
at Defiance ETFs. They've got about four billion dollars in
assets under management.
Speaker 2 (35:25):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com,
the iHeartRadio app tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal
Hosts And Creators
Tim Stenovec
Carol Massar
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com