Thursday, February 28, 2008

Important day for ECM!

(1) R.H. Donnelley - the company behind Yellow Pages, drops 48% this evening. That means, they lost almost half of their company's market value in one day! That's some heavy selling!
Do you still use Yellow Pages? If you answered yes, you're probably among the last few ones to do so. People are moving more towards managing digital content, indexing and searching, and away from paper.

(2) AbitibiBowater, Inc. (ABH) - the 3rd largest pulp and paper company in North America and 8th largest in the world, also reported a Q407 loss of $250 M, with losses in both newsprint paper and specialty paper segments widening from a year before. Stock down 10%.

With more and more industries going paperless, like the news and magazines industry for example, there is more scope for ECM related products for scanning, e-faxing, ingestion, archival and retrieval of electronic documents, etc. The losses that these two big companies reported for Q407 clearly point in the direction of this trend. The Auto Insurance industry is also starting to make inroads into going paperless, if you've started receiving all your documents via email from your insurance provider.


AIG posts largest quarterly loss ever

Reuters Uncut

American International Group (AIG) Inc. today posted their largest quarterly loss ever when they reported their Q4 2008 earnings. They hugely, hugely missed the Street's expectations and reported a $5.29 billion or $2.08 a share loss, as compared to a profit of $3.44 billion or $1.44 a share during the year-ago quarter.

While we would attribute it to write-down of derivatives exposed to bad mortgage investments, closer analysis shows that if they exclude capital gains, losses and hedging activities, they still had a Q4 loss of $3.2 billion or $1.25 a share, as compared to analyst expectations of a $0.15 loss a share.

Their overall 2007 Annual Net Income dropped around 56% from $14.0 billion to $6.2 billion. More breakdown details from their Q407 financial reports that they released today, according to their different segments -

A. General Insurance : --2.9% to $2.11 billion (compared to Q406)
a. Domestic Brokerage Group (DBG): +14.1% to $1.66 billion
b. Personal Lines : from +$79 million in Q406 to --$184 million in Q407
- California wild fires
- unfavorable loss reserve development in prior accident years - primarily in agency auto
- increase in current year accident loss ratio
- transaction and integration costs in acquisition of minority interest, 21st Century Group.
c. United Guaranty Corporation (UGC) : From +$27 million operating profit in Q406 to operating loss of --$348 million in Q407
d. Foreign General : +2.2% to $805 million in Q407

B. Life Insurance and Retirement Services : Overall - Increased 9.2% to $2.66 billion
a. Domestic Life Insurance (+)
b. Domestic Retirement Services (-)
c. Foreign Life Insurance and Retirement Services (flat)

C. Financial Services - $10.25 billion operating LOSS (-)
a. Aircraft Leasing (+)
b. Capital Markets (---------------------------)
c. American General Finance, AGF (-)
d. AIG Consumer Finance Group (-)

D. Asset Management : --11.8% to $458 million

E. Other Operations : $400 million loss compared to $414 million loss in Q406

So, anyway - it seemz like the loss was distributed across all their segments, but heavily stemming from their Capital Markets segment. Other segments of interest to me, like Personal Lines, also reported huge losses, although they were positive last year on that. I don't know what they include in "Other Operations", but it looks like they are consistent in their losses in that segment - time to retire? Although it is nice to see that they've got their portfolio diversified with various insurance products (that's how they got to where they are now!) and hence were able to balance their risks/losses, I expect some spin-offs to come up soon, considering that they've been performing poorly in almost all the segments. Maybe they have been stretching it too far. Maybe it's time.

Shares fell 2.9% in the after-market trading, after having lost 4% in regular day trading.


Wednesday, February 20, 2008

Hillary is like an inverted yield curve with liquidation threat

...says supply-side economist and television personality Larry Kudlow (CNBC: Kudlow and Company,weekdays 7 pm EST). I thought that was a pretty interesting analogy. Larry says, and I agree completely, Hillary Clinton is finished. She needs to win in both Texas and Ohio in the upcoming caucuses. Although she has a chance in TX because of the strong hispanic population there, she does not stand a chance in OH. Obama has knocked her off. All her campaign investments gone, nevertheless she gave an interesting and tough, I must admit upto now, fight for the Democratic candidate. At the Republican side, McCain seems to be sailing smooth. In the last 10 years, Democrats have won the election only 3 times. Can Obama pull it off this year?

And also goes down hopes of John Mack, Chairman and CEO of Morgan Stanley, behind his stupidity in endorsing Clinton, although her campaigns were not pro-business. Mack's organization was hit bad by the credit market sluggishness and now will pay the price for the Clinton factor.


Tuesday, February 12, 2008

Faxing thro'

Faxing made easy through OpenOffice, without the need for a win-modem. I haven't tried it yet on my Ubuntu, but recently I bought a Brother 4-in-1, and am certainly inspired to try setting that up for fax through my OpenOffice, it's the question of time. Will keep you posted if I succeed.

But here's how to do it anyway - on Linux Journal


Things get worse for Allstate

On January 30th, Allstate reported their Q4 earnings in which they stated that their profit dropped almost 37% on higher catastrophe losses and increased costs. Net income was $760 million, or $1.36 a share, compared with $1.21 billion, or $1.93 a share, in Q4 2006.

Revenue declined 1 percent to $8.99 billion, from $9.1 billion a year earlier.

So that means their Profitability Ratio (Net Income / Revenue) fell by 58.3% from 0.133 (13.3%) to 0.084 (8.4%). That's certainly not good news for Allstate.

Allstate said unrealized losses from mortgage and asset-backed securities totalled $502 million due to illiquidity in those markets. Write-downs on those investments were $82 million.

I took a deeper look at their Q4 financials. Their Property-Liability combined ratio was 95.9 (vs 85.7 Q4 2006), and if they exclude their catastrophe losses, their combined ratio falls down to 88.6 (vs 84.3 Q4 2006). For Q4 2007, their combined ration consisted of:
- Claims and claims expense ratio - 69.6 (vs 60.6 in Q4 2006)
- Expense ratio - 26.3 (vs 25.1 in Q4 2006 - so not much change here, that is good)

Property-Liability premiums written declined 0.7% from Q4 2006, reflecting :

(a) growth in standard auto (+1.5% WPs and +0.9% in #PIFs) and
(b) decline in homeowners (-1.3% WPs and -3.4% in #PIFs)

Well, (b) was mainly due to catastrophe management actions including the increased cost of the catastrophe reinsurance program. Some more interesting numbers caught my attention, but these could be equally impacting for all players in the auto insurance fight.

(a) Standard auto property damage frequencies increased 2.8%. And, paid severity increased 2.2%
(b) Bodily injury gross claim frequencies decreased 2.8%, compared to Q4 2006. BUT, paid severities increased 9.3%

So, (b) brings out a nice trend that the severity paid per claim for bodily injuries has increased drastically compared to Q4 2006.

Anyway, what does it mean to you? If you're an Allstate customer, there's only one thing you can expect in 2008 as a logical derivation from their current reports. Your premiums could very well go much higher! They have to do the needful to survive and continue to operate. So, if you may, take the cue and do the needful too...


A mad ALLSTATE customer says...


I have been a loyal client of the [name removed] (Allstate Representative) in Colorado for over three years. The one time that I actually called her to make changes to my policy, she hangs up on me.

Allstate is more than happy to take your money but when it comes to customer service, they are horrible at it......."

For the full story, visit My3cents here.

It is because of these kind of stories that I think, 15 minutes may save you 15% or more on car insurance and then this is what you expect to pay later!


Monday, February 11, 2008

Breaking news! Another critical ubiquitous Blackberry RIM outage!

They are not the almighty! They need to fail too, only that everytime their outages hit the headlines, it ends up being majorly critical!

Research In Motion had a critical severity universal outage this afternoon for their Blackberry email. Members from Verizon, Cingular ATT, or T-mobile or be it any - if you're using a Blackberry, you wouldn't be able to get to your email. They have no estimate on the cause, how many people have been affected or when services will be restored. Certainly it's not going to do well on their already sinking stock...

More on The Guardian.


Cultural thing?

US President George W Bush holds hands w/ Saudi Crown Prince Abdullah while walking past some blue bonnets at his Crawford Ranch, 25th April 2005


Force India launches VJM01..for lack of better names

I was not sure if I didn't like the team name Force India, but am certain I don't like the car name VJM01 named after the sponsor Vijay Mallya, which is a repainted Spyker , although Ferrari-powered. Can't they think of something else? VJM01 ? blah blah...

However, the latest 2008 car to join the Formula One tracks was launched in Mumbai, India and I look forward to the season start already and see how this car performs, with Fisichella behind its wheels!

Autoblog posted on it too


Sunday, February 10, 2008

3 Industry trends to change Web Content Management in 2008

Sitescore, the leading provider of .NET Web Content Management system, based on their research and customer experience, recently announced that three major trends are driving how enterprises are better leveraging web content management to create more compelling websites and provide better customer interaction.

(1) Integration of Web CMS into the Enterprise
(2) Growth of .NET Framework
(3) Adoption of Mobile computing


White paper summary - What Legal Wants

I read this white paper sponsored by Contoural, Inc. called, "What Legal Wants...and 7 things IT can do to meet Legal's needs". Here is the summary, in relevance to the Insurance industry and enterprise content management.

Nearly all companies in the course of regular business activities become the target of lawsuits, which vary from simple employee wrongful termination to major litigations such as class-action lawsuits. Litigations, in fact, are a reality of doing business. In the Auto Insurance industry, a huge portion of the lawsuits that the companies face comes from their Claims division, as one may expect. The explosion of electronic documents, along with new regulations, new trends in litigation discovery and how end users handle documents are forcing organizations to re-think their document retention and discovery strategies. According to a recent study from UC Berkeley, more than 96% of all information of an enterprise is in digital format and even 70% of all paper documents are copies of electronic documents.

The different kinds of Electronically Stored Information (ESI) -

I can tell in the Auto Insurance industry, we manage (scan, index, archive and retrieve) all these classes of documents which prevail as a result of the complexity of this data-driven industry.

What is Discovery?

Discovery is the process in which both parties in a lawsuit discover relevant information concerning a case. Ordered by the court during the initial phases of a lawsuit, discovery can be required both of the plaintiff and the defendant. A business that receives a discovery request that calls for the production of electronic and other documents is obligated to make a reasonable effort to search its records for responsive communications.

"Spoliation" - is the term used by courts to describe the improper destruction of evidence, including email and messages. Companies are guilty of spoliation if they destroy evidence like company records relevant to a litigation with the purpose or intent of preventing the other party from using the evidence against them. Spoliation can occur through a "conscious" decision and also unconsciously through inactivity to prevent destruction of email.

Relevant changes to Federal Rules of Civil Procedure (FRCP)
The FRCP are a body of rules focussed on governing court procedures for managing civil lawsuits in United States. Here are some of the changes related to discovery that went into effect on December 1, 2006.

As it is obvious from the above summary the importance that IT plays in working with Legal to ensure smooth and reliable discovery like archiving, maintaining proper records retention strategies, and the actual electronic discovery process in the event of a lawsuit. In addition, according to Contoural, here are 7 things that IT can do to meet Legal's needs
(1) Create fast, effective litigation hold processes
(2) Educate Legal on archival capabilities of the IT organization
(3) Find and retrieve documents in native format
(4) Create and update an ESI survey data map
(5) Partner with Legal in creating the document retention policy
(6) Disable PST files and other forms of underground archival
(7) Create process for deleting older email and files that are not under hold or needed for compliance or business processes

By helping Legal with these activities, IT will move from a reactive state to a state of litigation readiness.

Gartner lists Attenex, Aungate, Dataflight, MetaLincs, Summation as some of the key vendors of E-Discovery software. EMC, IBM FileNet, HummingBird, Open Text are some of the top players in the much more complicated Records Management product which enables organizations to create the retention schedules and automate the management of their records retention policies. Since these products are very expensive and mostly have license-based costing, it depends on the companies health and IT investment strategy to go for these!


The ECM Market & major vendors

According to Gartner, ECM is a $2.9 billion market (wow! that's how big it is) in 2007, merely based on worldwide software revenues. They predict that the market size would grow at a CAGR of 12.9% through 2011. So, there's lots coming in this industry. Some vendors choose to specialize in some specific segments like Records Management or BPM and are successful niche players in those markets. Other big names like IBM (and now Microsoft - through its Sharepoint MOSS 2007 product) are trying to establish themselves as leaders in the ECM market. Below you may find Gartner's Magic Quadrant for ECM

Copyright Gartner


Gartner's hype cycle on ECM

Copyright Gartner

These are the various technologies that fall under the umbrella of ECM. Different organizations, depending on the industry, their size, their ability to invest in IT, their annual budgets, etc. implement a subset of these components.