Using Veritas to Construct the "Per…

29-04-2017 Hits:88570 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:82258 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:82151 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:86647 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:83078 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:85201 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:56305 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:84529 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:84239 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:84098 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:90587 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:88159 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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The National Association of Insurance Commissioners could revamp life insurers' regulatory capital requirements to eliminate redundancies in reserve requirements and adjust risk based-capital requirements to allow life insurers to reallocate funds for liquidity and capitalization purposes. (Following this news and a very slightly revised outlook by HIG management, HIG shares posted 91 percent gains.)  

 

We believe that in the "long-term" relaxing regulatory capital requirements would not be beneficial for the industry since this would allow these companies to keep the riskier assets on their balance sheet for a longer period of time without having to raise corresponding capital; further increasing the balance sheet risk if (or in this environment, when) the losses mount up. Also, lowering regulatory capital requirements would enable these companies to further increase their leverage and allow for increased speculation by way of providing additional leeway in terms of capital flexibility. Although by lowering regulatory capital requirements these companies would appear to be sound (through relaxed regulatory standards) in any true economic sense these companies would most likely end up more vulnerable. We believe that relaxing regulatory capital requirements is just a bailout with window dressing, and by that I mean the very light, low calorie dressing, not the fatty ranch stuff. Despite this, in the short run lowering capital requirements could be beneficial for those life insurance companies' shareholders who would otherwise have been required raise capital in the current capital markets conditions, thus significantly diluting those shareholders in some form or fashion. What the casual observer seems to miss is that the regulatory regime put the reserve requirements in for a very valid reason, and forgoing adequate capital reserves simply puts the policy holder at greater risk, the tax payer who may have to pay into an insurer guarantee fund, as well as the shareholder has now traded in the risk of dilution for the risk of insolvency.

 

With regards to impact on our analysis of HIG, since there was not any requirement for additional capital the decision to relax regulatory capital requirements would be more psychological in nature.  It could be beneficial for PFG only if it would be required to raise capital to adhere to regulatory norms in these market conditions. However since we have not performed a detailed modeling for PFG, the need for additional capital, if any, would be difficult to ascertain. With this in mind, remain cognizant of the fact that there is a distinct difference between economic risk and accounting risks, and the sprinkling of low fat Italian dressing on the window ledge does not change that fact.