Financial Reviews

Clearly, the Greek patient is ailing. Financial spin doctors in Germany and France seem certain that a further injection of cash will be needed to avoid a Greek default and behind the scenes discussions are going on at the European level to secure the required funds.

The issue of financing sovereign debt is all about confidence. Nations such as the USA, Germany and Japan are perceived to be at negligible risk of a default on their borrowing and so the interest rates that they need to offer are low. The market perceives the risk associated with a Greek bond as being very high now and consequently, were Greek to approach the bond market for further funding, it would be charged punitive levels of interest – this was the issue which prompted the IMF/EU bailout in the first place. <

Full article…

The Association of Financial Advisers (AFA) has continued its attack on the Federal Government’s financial reforms program, with research saying people want to decide how they pay for advice.

Using research house Coredata, the AFA says consumers do value advice on life insurance matters and have realistic levels of cover; but they want a choice on remuneration options.

AFA CEO Richard Klipin says the research confirms the Government’s Future of Financial Advice (FOFA) reforms are acting against consumers’ wishes.

“What we discovered is that people who receive life insurance-related financial advice are happy for their adviser to be remunerated via commissions and prefer to have choices,” he said.

“The research findings confirm that some of the FOFA reforms run counter to its primary objective – to create better outcomes for consumers.”

Mr Klipin has called for life insurance to be part of the national agenda on risk protection, saying it plays an important role in protecting individuals.

“The fires, floods, earthquakes, tsunamis and nuclear leaks of the past 12 months are bringing into stark focus the issues of risk for the Australian community,” he said.

“Risk management must be part of the national agenda for families, businesses, companies, governments and regions.

“Our research indicates that if bans on commissions go ahead, fewer people may get financial advice, and therefore fewer may have appropriate levels of life insurance.”

The argument for reform was again emphasised by Assistant Treasurer Bill Shorten in a speech to a Financial Services Council event in Canberra last week.

“When it comes to financial advice we think the FOFA package gets the balance right and is absolutely in the interests of consumers – giving them a better deal and building greater trust,” he said.

“So we also think it’s in the longer term interests of the financial services industry.”

– Singapore is on Friday scheduled to release May numbers for industrial production, setting the pace for a modest day in Asian economic news. Output is expected to rise 5.0 percent on month and fall 9.3 percent on year after declining 16.3 percent on month and 9.5 percent on year in April.

Malaysia will announce consumer price index data for May, with analysts expecting the inflation rate to come in at 3.3 percent, up slightly from 3.2 percent in April.

Japan will release its index for corporate service prices, with forecasts calling for an unchanged reading of -0.8 percent on year.

Target Corp. led all Minnesota companies in advertising spending last year, according to a new report.

Each of the Minnesota companies on the list increased its ad spending last year.

>Click here to see the entire list.

Minneapolis-based Target was the 18th-largest advertiser last year, spending $1.5 billion, up 12 percent from 2009. Target was ranked No. 20 in 2009.

General Mills was ranked 35th, four places higher than 2009. The Golden Valley company spent $987 million on advertising in 2010, up 15.5 percent from the previous year, according to the magazine.

Richfield-based Best Buy was ranked No.

Full article…

The Australian life insurance industry faced a tough final six months last year, with falling premiums and rising claims.

According to the latest Australian Prudential Regulation Authority report, net premiums for the 12 months ending December 2010 were $39.5 billion compared to $40.1 billion in the previous 12-month period ending in June last year.

Net policy payments for the December 2010 year were $37.4 billion, compared to $36.9 billion in the year ending June 2010.

Reinsurance premiums for the life industry were $3.3 billion for the 12 months ending December 2010.

The life companies did a better job during the December year, with expenses down from $25.1 billion in the 2010 June year to $19.1 billion in the 12 months ending December 2010.

Despite cutting costs, the changes to premiums and claims did have an impact on the bottom line of the industry with after-tax profits down for the December year.

After-tax products in the December full year were $2.746 billion compared to $2.765 in the 12 months ending June 2010.

The financial health of the life industry improved in the December 2010 year with total assets reaching $234.8 billion.

This compared to $231.3 billion in the 12 months ending June 2010.

The December result gave life companies a total solvency of $224.4 billion for the year ending December and a solvency reserve cover of 1.81 times.