Tag Archives: insurance
Abu Dhabi Fund Involved In $1bn Tokyo Build Deal
on Aug 7, 2013 A group including an Abu Dhabi sovereign fund and former US insurance magnate Maurice “Hank” Greenberg have agreed to buy a prominent Tokyo office building for $1bn, the biggest property deal in Japan since February, people with direct knowledge of the transaction said. The decision by the foreign and Japanese investors to acquire the ageing but distinctive structure in central Tokyo highlights expectations that real estate values will revive as Prime Minister Shinzo Abe’s pro-growth economic policies boost investor sentiment and risk appetite. It will be Japan’s biggest property investment including foreign investors since the 2008-09 global financial crisis. The group, led by property investor by Asia Pacific Land, includes Abu Dhabi Investment Council, Japan’s Secured Capital Investment Management Co and C.V. Starr & Co Inc, which is run by Greenberg, the billionaire former chief executive of American International Group Inc, the sources told Reuters. For the purchase for more than 100 billion yen ($1.01 billion) of the 14-storey Shiba Park Building, the investors will inject about 10 billion yen in cash, said the sources, who asked not to be named because the deal is not public yet. Lenders including Mizuho Bank, Shinsei Bank and Commerz Japan Real Estate Finance Corp, a real estate lending unit of Commerzbank, will extend a combined 90 billion yen in loans, the sources said. The investors and banks declined to comment or could not immediately be reached. Japan’s real estate market, which fell sharply after the late 1980s asset price bubble, crashed again in the global financial crisis and rents in Tokyo have fallen steadily ever since. But there are growing signs of an upturn: vacancy rates in Tokyo’s quality buildings started falling last year, according to real estate services company CBRE. Monthly rents in central Tokyo, which had dropped since 2008, have been flat since last year. The Shiba Park Building deal is a sign of confidence that the 31-year-old building will keep attracting tenants and maintain steady rental income as Japan’s economy is expected to grow. Investors generally prefer newer buildings whose rental income is higher. Property values are expected to rise under “Abenomics”, a programme of heavy government spending and massive monetary easing meant to end 15 years of deflation. The Bank of Japan has been pumping money into the financial system to keep interest rates low, enabling investors to borrow money cheaply. Anticipating rising property values, US-based Westbrook Partners led the acquisition in April of a majority stake in a Tokyo office tower for about 30 billion yen. Tokyo’s Tiffany Building has been put up for sale as the owner Asia Pacific Land, leader of the Shiba Park Building group, bets on a recovery in property prices. The long, imposing Shiba Park Building – nicknamed the “Gunkan”, or “Warship”, building – has more than 83,510 square metres available for rent, much more than other buildings in its neighbourhood near Tokyo Tower. Its total floor space of 102,300 square metres puts it in the same class as the iconic Marunouchi Building, a prime commercial property in the capital’s hottest business district near Tokyo Station, at 159,720 square metres. One benefit of a big building is that it can host the headquarters of a large company. Daiei Inc, which once was Japan’s largest supermarket chain, is a former tenant of Shiba Park Building. The structure was bought by a fund managed by K.K. daVinci Holdings, once an aggressive property investor, in 2006 – near the height of the pre-crisis boom. It paid 143 billion yen in a deal with a fund managed by Morgan Stanley. The building went under lender control when the daVinci fund defaulted on the loans as the global crisis depressed property values worldwide. Continue reading
Europe: Draining Energy
by Steve Kingshott 27 Jun 2013 Europe was fast out of the blocks with its carbon emissions schemes but the financial downturn and the emergence of Asia and Latin America is threatening its future, Steve Kingshott writes. The number of countries and regions proposing cap-and-trade carbon emissions schemes is growing. Australia, India, the US and China are among those who have established or proposed plans to rival Europe. Yet while the EU Emissions Trading Scheme was the first to be established, its long-term future is in jeopardy. The start of the financial crisis has lowered industrial production, resulting in a significant oversupply of carbon allowances. This has caused the price of carbon to plummet and served to question the viability of the trading scheme. This uncertainty is threatening Europe’s ambition to become a world leader in renewable energy. Falling prices From a high point of €30 a tonne, the carbon price fell to the all-time low of €2.75 the day after the European Parliament voted to reject a plan to “backload” allowances. This would have involved withholding 900 million allowances from the market over the next two years in an attempt to boost the carbon price. Since that setback, energy and environment ministers from nine EU states – including the UK, France and Germany – have published a joint statement calling for a new timetable for ETS reform. These calls need urgently to be heeded. The EU should work quickly to address the surplus of ETS allowances and send a clear signal that Europe is committed to a low-carbon economy. “This uncertainty is threatening Europe’s ambition to become a world leader in renewable energy.” The EU’s vision for the ETS extends as far as 2020 but not beyond. Without a defined carbon incentive, investors are understandably wary of making appropriate commitments. Large-scale projects such as offshore wind farms can take up to ten years from planning to operation and so are dependent upon long-term stability. For the insurance industry, this uncertainty and lack of investment will mean lower insurance premium revenues from the renewable energy sector. An increase in carbon emissions is also likely to mean insurers will more frequently have to take account of climate change risk factors such as major weather events and flooding. Significant investment Focused properly, the ETS has the potential to drive significant investment in low-carbon energy and renewables. This would help to stimulate economic growth as well as enable Europe to achieve security of supply and meet its carbon-reduction targets. Extending the scheme beyond 2020 would send positive market signals while a strategic Europe-wide approach to support energy-intensive industries will prevent carbon leakage to less regulated parts of the world. However, as long as the glut of carbon permits continues to depress the price and while MEPs stall on the issue of backloading, the viability of many projects will be in doubt. With the European Commission estimating the renewables sector could create five million jobs across the region by 2020, it is clear that action is needed now to ensure we do not miss out on opportunities for green growth. Investment in renewables can have significant economic impacts, both directly and indirectly through the supply chain. For example, it is estimated that the UK onshore-wind sector alone could contribute £1.2bn through the supply chain by 2020. “For the insurance industry, this uncertainty and lack of investment will mean lower insurance premium revenues from the renewable energy sector.” New jobs are being created in the insurance industry itself, and firms are recruiting and training underwriters specialised in renewable energy. By taking the initiative to insure renewables in the early stages of development, the industry can build a cluster of expertise and established market-leading positions across the globe including in offshore wind. However, continued job creation and growth will only be realised if there is a stable regulatory and policy environment to support investment in the transition to a low-carbon economy. If we don’t keep up with the rest of the world, then competitors will grow in emerging markets and capitalise on this opportunity. Not enough The UK Government, for its part, has introduced a carbon floor price. This move is very welcome, but unilateral action is not enough. We need politicians across Europe to see the opportunities that exist and realise that any further delay and uncertainty is bad news for business, investors and most of all for consumers. With rapid reform, the ETS can return to being a flagship scheme for carbon trading around the world and help put more economies on a shared low-carbon pathway. Ministers need to work quickly to address existing problems with the ETS while also setting out a vision for the scheme beyond 2020. That is the right way to go and UK Energy Secretary Ed Davey should be supported in this ambition. “UK Energy Secretary Ed Davey should be supported in this ambition.” Ministers need to work quickly to address existing problems with the ETS while also setting out a vision for the scheme beyond 2020. If they do not, investment in renewables will increasingly flow to other territories, including Asia and Latin America, and the UK and Europe will miss out on the significant benefits this can bring. Steve Kingshott, global director for renewables, RSA Continue reading
Senate Passes Half-Trillion Dollar Farm Bill; Ball’s In House’s Court
Posted: Tuesday, June 11, 2013 12:00 am | Updated: 9:24 am, Tue Jun 11, 2013. 0 comments WASHINGTON (AP) – The last time Congress passed a farm bill, Democrats had control of the House and the food stamp program was about half the size it is today. That was five years ago. Conservatives calling for an overhaul of the domestic food aid program will try to trim the nation’s nearly $80 billion grocery bill when the House weighs in on farm legislation in a few weeks. The Senate overwhelmingly voted Monday to expand farm subsidies and make small cuts to food stamps in a five-year, half-trillion dollar measure. But passage in the House isn’t expected to be so easy – or so bipartisan. House Speaker John Boehner, R-Ohio, said Monday that his chamber will take up its version of the farm bill later this month. He made clear his own dislike for generous farm subsidies included in the bill, saying his “concerns about our country’s farm programs are well-known.” But Boehner acknowledged that the rest of the chamber might not agree with him. “If you have ideas on how to make the bill better, bring them forward,” Boehner said in a statement directed to his colleagues. “Let’s have the debate, and let’s vote on them.” House consideration will come after more than a year’s delay. The Senate passed a similar version of its farmbill last year, but the House declined to take it up during an election year amid conflict over the amount to cut from food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP. One in seven Americans now use the program. The Senate bill would cut the food stamp program, now known as the Supplemental Nutrition Assistance Program, or SNAP, by about $400 million a year, or half a percent, and Senate Democrats have been reluctant to cut more. The farm bill approved by the House Agriculture Committee last month would cut the program by $2 billion a year, or a little more than 3 percent, and make it more difficult for some people to qualify. In his statement Monday, Boehner signaled support for the House bill’s level of food stamp cuts, saying they are changes that “both parties know are necessary.” Other Republicans are expected to offer amendments to expand the cuts, setting up a potentially even more difficult resolution with the Senate version. At the same time, Democrats are expected to try and eliminate the cuts. Food stamps were added to the farm bill decades ago to gain urban votes for the rural measure, which sets policy for farm subsidies, programs to protect environmentally sensitive land and other rural development projects. But with the program’s exponential growth during the recent economic downturn, food stamps are now making passage harder. “I expect it to come from all directions,” House Agriculture Committee Chairman Frank Lucas, R-Okla., said last month, acknowledging the complications of moving the bill through his chamber. On the Senate floor, senators rejected amendments on food stamp cuts, preserving the $400 million annual decrease. The bill’s farm-state supporters also fended off efforts to cut sugar, tobacco and other farmsupports. Senators looking to pare back subsidies did win one victory in the Senate, an amendment to reduce the government’s share of crop insurance premiums for farmers with adjusted gross incomes of more than $750,000. Sens. Dick Durbin, D-Ill., and Tom Coburn, R-Okla., said their amendment would affect about 20,000 farmers. Currently the government pays for an average 62 percent of crop insurance premiums and also subsidizes the companies that sell the insurance. The overall bill expands crop insurance for many crops and also creates a program to compensate farmers for smaller, or “shallow,” revenue losses before the paid insurance kicks in. The crop insurance expansion is likely to benefit Midwestern corn and soybean farmers, who use crop insurance more than other farmers. The bill would also boost subsidies for Southern rice and peanut farmers, lowering the threshold for those farms to receive government help. The help for rice and peanuts was not in last year’s bill but was added this year after the agriculture panel gained a new top Republican, Mississippi Sen. Thad Cochran. Critics, including the former top Republican on the committee, Kansas Sen. Pat Roberts, said the new policy could guarantee that the rice and peanut farmers’ profits are average or above average. The House has similar provisions expanding crop insurance and rice and peanut subsidies. Dairy programs could also be contentious on the House floor. Both the Senate and House bills would overhaul dairy policy by creating a new insurance program for dairy producers, eliminating other dairy subsidies and price supports. The new policy includes a market stabilization program that could dictate production cuts when oversupply drives down prices. The program faced little opposition in the Senate but a similar overhaul in the House bill is expected to face resistance in that chamber, where Boehner last year called the new stabilization program “Soviet-style.” Boehner reiterated those concerns in his statement Monday, saying he will support an amendment on the floor to challenge the proposed policy. The Senate bill also would: Overhaul dairy policy by creating a new insurance program for dairy producers, eliminating other dairy subsidies and price supports. The new policy includes a market stabilization program that could dictate production cuts when oversupply drives down prices. The program faced little opposition in the Senate but a similar overhaul in the House bill is expected to face resistance in that chamber, where Boehner last year called the new stabilization program “Soviet-style.” He reiterated those concerns in his statement Monday, saying he will support an amendment on the floor to challenge the proposed policy. Make modest changes to the way international food aid is delivered, a much scaled-back version of an overhaul proposed by President Barack Obama earlier this year. Senators adopted an amendment that would slightly boost dollars to buy locally-grown food close to needy areas abroad. Currently, most food aid is grown in the United States and shipped to developing countries, an approach the Obama administration says is inefficient but that has support among farm-state members in Congress. Consolidate programs to protect environmentally-sensitive land and reduce spending on those programs. Expand Agriculture Department efforts to prevent illegal trafficking of food stamp benefits. Continue reading
