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Welcome to Mind Matters weeks of 18 and 25 July 2022
The Winter Programme Day 1 Highlights
Where to build your career using your actuarial skills
This is a panel of six actuaries all working in different areas from short term insurance, to insurtech, to banking and to data analytics. Recruitment Agency SA3 is also in attendance adding to the consensus that your skills are what get you to the interview, your presentation at the interview gets you the job and how you apply yourself gives you opportunities in the job itself! It is amazing how things have changed in the financial services sector that is bringing about a different emphasis on what is valued in actuarial practice. Don't miss this discussion!
You can watch the recording here or by clicking on the title. OR you can listen to the recording here. Below is a list of the speakers as they appear in the video which starts from 0:12:27 and goes to 01:43:20.
Santam: Liaan Cilleirs
Old Mutual Insure: Edwin Mpofu
Naked Insurance: Ernest North
FNB: Jonathan Havemann
Dynamo Analytics: Esther Glover and Daniel du Plessis
Building a Roadmap to Qualification by working out Work-Based Learning (WBL)
For those of you who are entering the workplace in 2023 this is a must see or listen to presentation. Given by the Member Engagement Executive Michelle Abrahams, you will find all your answers to what work-based learning is and how you can incorporate it into your day to day working without stressing about it. There is also other information about your exams and what the requirements are - which is vital for anyone who is just starting out.
Watch the presentation here or click on the above link. Listen to the recording here. Both start at 01:50 on the recording and end at 02:50! An hour's worth.
Building a career and a reputation that counts!
Rebecca Muriuki tells it how it is! Building a career and making the most of your hard work. Hard work alone won't speak for you or advance you on its own - you have to inhabit the actuarial space and find ways to be noticed over and above the skills that you have worked so hard to develop.
This is a in inspiring presentation and I encourage all women to watch or listen to it as well as all the men out there too - you will also be inspired and gain from Rebecca's experience as an actuary and a mindset coach.
Find the presentation by clicking on the title and find the recording for listening only here. The recording begins at 02:58 and ends at 03:59
This panel of three actuaries brings you three unique perspectives on how qualification was achieved. They were not fast qualifiers and that is what makes each of their stories so interesting. Watch the recording by clicking on the title or listen to their stories here. Below are the three actuaries.
Kamlen Govender, FASSA, Senior Actuarial Supervisor, Old Mutual
Itumeleng Kgafela Mandisi, FASSA, Head of Actuarial, MILVIK BIMA, London
Elash Mistry FASSA, Hanover Re
You can also watch Elash's story on YouTube here.
Global and local economic news
Stocks push higher amid bets on slower Fed hikes: markets wrap
Stocks rose in Asia on Thursday, bonds climbed and the dollar fell as the prospect of a slower pace of Federal Reserve monetary tightening filtered across global markets.
This article sums up the impact and the sentiment on the raising of Fed rates by 75% basis points as it did last month. 3 min read by Bloomberg.
Inflation and interest rates: Will things get worse before they get better?
There is worse to come for embattled consumers facing inflation that spiked at 7.4% year on year this week causing the South African Reserve Bank to respond by hiking interest rates by an unusually large 0.75%.
Zisanda Gila, senior portfolio manager in fixed income at Momentum speaking at an Actuarial Society of South Africa investment conference this week, revealed that Momentum was expecting further large rate hikes this year and following the SARB interest rate hike, Momentum updated its forecast to a further 0.75% percent increase in September and another 0.5% in November.
Melanie Stockigt, portfolio manager at Laurium, speaking at the same conference, said inflation would probably reach 8% this quarter before it peaked.
Stockigt says the spike in the inflation rate was a result of the increases in food and fuel prices on the back of the Russian invasion of Ukraine.
Zisanda Gila and Melanie Stockigt shared a platform with Sanisha Packirisamy, economist at Momentum at the Actuarial Society of South Africa investment conference on 22 July 2022. 6 min read.
Biggest hike since Tito: Managers react to the 75bps repo rate increase
Michael Grobler, fixed income strategist at Ashburton Investments said that the impression from yesterday’s Monetary Policy Committee (MPC) meeting at the South African Reserve Bank (Sarb) ‘was as hawkish as could possibly have anticipated’.
The committee increased South Africa’s repo rate by 75bps to 5.5%.
‘This marks the largest hike by the SARB since the Tito Mboweni Sarb increased the policy rate by 100bp increments in the 2002/2003 cycle when the repo rate was still in double-digit territory,’ Grobler said in a note. ‘Given the current base level of rates, the 75bp increment hike can be classified as an outsized hike.
Read the article to the end as it does shed some positive light on bonds. 3 min read
London’s Financial Center Struggles to Find Its Way in Post-Brexit Britain
London is in danger of becoming a mere “regional stock market” down the line unless it significantly raises its game — that is the warning from Mark Austin, the latest person charged with sprucing up the UK’s listing rules and helping the city maintain its position as one of the world’s leading financial centers.
“We need to be fleet of foot, ambitious and bold,” said Austin, a partner at law firm Freshfields Bruckhaus Deringer, who was commissioned to lead a government review into London’s capital markets. For companies wanting to list in Europe rather than the US, “London was often the go-to option; that is not necessarily the case anymore. They are increasingly also eyeing Amsterdam or other venues, be it for valuation, or easier regulation,” he said in an interview.
It is hard to believe that the Brexit vote took place six years ago, Britain seems to have been at sea politically and economically ever since. A very interesting read. 6 mins
Insurance and financial news
SARB sends warning to South Africa’s biggest banks
The South African Reserve Bank’s (SARB) Prudential Authority has warned the country’s biggest banks that they are at high risk of being used for money laundering and terrorism funding.
The warning comes as South Africa was put on notice that it is at risk of being placed on a global ‘grey list’ of nations that require greater oversight due to shortcomings in tackling illicit crime.
According to the Prudential Authority (PA), South Africa’s banking sector as a whole is at high risk for money laundering, terrorism financing and proliferation financing (funding nuclear or chemical weapons and their components) – however, the largest risk is concentrated at the top, among the five biggest banks.
Read this carefully - it is a very clear warning with dreadful consequences. 4 min read
The R1.7bn lawsuit that could have a drastic impact on the investment industry
Three Living Hands Umbrella Trust trustees are suing Old Mutual Unit Trust Managers for losses related to the Fidentia scandal.
This case goes back a long way. Read this article from 28 April 2022 before the one below. It is a 4 min read. It is an important case for the industry.
Old Mutual applies for leave to appeal ruling finding it liable for over R1.7bn in Fidentia damages
Old Mutual wants to file its appeal application with either the Supreme Court of Appeal in Bloemfontein or a full bench of the South Gauteng High Court.
Old Mutual Unit Trust Managers (Omut) today filed an application with the South Gauteng High Court in Johannesburg for leave to appeal a vital court ruling. That judgment found the unit trust administer liable for more than R1.7bn in losses the Living Hands Umbrella Trust suffered because of the Fidentia scandal.
‘The defendant intends to make application to this court for leave to appeal against the whole of the judgment and order of this court dated 12 July 2022, including the order as to costs,’ Omut’s lawyers Webber Wentzel wrote in court papers dated 29 July.
Japanese Insurers Sell Heatstroke Coverage as Temperatures Soar to Record Levels
As temperatures soar to unprecedented levels from Europe to Asia this summer, some Japanese insurance companies have begun selling policies to protect people struck down by the heatwave.
Sompo Holdings Inc. and Sumitomo Life Insurance Co., two of the country’s biggest insurers, are offering policies specifically designed to cover medical expenses arising from heatstroke.
A great product don't you think? No-one wants heatstroke and yet it's coming and everyone reacts differently so there may be a way that insurers and the insured will benefit - what do you think? Read the article. 3 min
UK Insurers, Banks Risk Fines Under New Reforms Unless They Put Customers First
Financial firms may be fined and stripped of their regulatory authorization unless they put their customers’ needs first under far-reaching reforms from the UK City regulator.
Banks, insurers and other companies will have to ensure their services are actually good for their clients and that this approach is taken at all levels of the business, Ian Searle, head of department for consumer and retail policy at the Financial Conduct Authority, said at a press conference.
TCF - treating customers fairly - we seem to be ahead of the game here in SA? Or are we? 3 min read.
Lloyd’s Insurers Preparing to Cover Ukraine Grain
Lloyd’s of London insurers and brokers are preparing to provide cover for grain shipments from Ukraine and are likely to announce their plans shortly, the commercial insurance market’s chairman said on Wednesday.
This is an interesting and risk ridden sector. Not for the feint hearted. 3 min read
Update: Russia Confirms Missile Strike on Port of Odesa but Says Grain Deal Stands
A global wheat shortage and soaring European energy prices are some of the most far-reaching effects of Russia’s invasion of Ukraine, threatening millions in poorer countries with hunger and prompting fears in Europe over heating supplies this winter.
Please read this article to understand the ramifications of the grain not getting out of the Baltic Sea. 3min 30 sec read
Crytocurrencies: are they worth the risk?
Opportunities galore in low-risk crypto asset arbitrage – Future Forex’s Harry Scherzer
For those who prefer to steer away from the risks associated with crypto but want to take advantage of the enthusiasm for crypto that still exists, Future Forex offers an investment product called cryptocurrency arbitrage that produces investment returns no matter what the movement or volatility of crypto. , actuary Harry Scherzer, explained to BizNews that their product isn’t an investment in cryptocurrency: it is an investment in a glaring market inefficiency, and for peace of mind, you could substitute cryptocurrency with avocados. It is about buying cheaper in another market and selling for more in South Africa, and annualised returns could be as much as 80% per annum. – Linda van Tilburg
Wow that's selling cryptocurrencies for sure! 5 min read
Crypto arbitrage shrugs off the crypto plunge
While crypto prices are in the sink, crypto arbitrage has been living up to its reputation as a relative safe haven in times of trouble.
The last few months have been terrible for cryptos, with Bitcoin (BTC) down 60% from its November 2021 peak above $67 000.
It’s been even more horrendous for altcoins such as Ethereum (ETH), down almost 70% over the same period.
This article explains rather well how the arbitrage works in this space. The explanation makes arbitrage seem very simple and without much risk - provided the market behaves in the way it has done in the past 18 months! 4 min read. Two great graphs included.
Cryptocurrencies are gaining ground across Africa. That’s both good news and bad
Cryptocurrencies have become popular in African and other developing countries. That’s according to a policy brief released recently by UNCTAD, a United Nations agency. Significant proportions of Kenya (8.5%), South Africa (7.1%) and Nigeria’s (6.3%) populations are using these digital currencies. In June, the Central African Republic adopted bitcoin as a legal tender.
The report warns that widespread use of unregulated digital currencies poses danger to the continent’s financial system. In an interview with The Conversation Africa, Iwa Salami, an expert in financial technology law and regulation, examines the future of digital currencies in Africa.
This is a well researched article from The Conversation, also available in .pdf below. A 4 min 30 sec read.
Five misconceptions about crypto taxation
Since their inception in 2009, there have been many misconceptions about crypto assets, often referred to as cryptocurrencies. These misconceptions have cost investors millions of rands and have subsequently been addressed or explained on numerous media platforms.
By now, even novice investors should know that crypto assets are not the preferred mode of buying illicit items on the dark web.
I think you should read this if you're interested in cryptocurrencies as an investment. 4 min read
Energy challenges and ESG investments
New report calls for urgent energy transformation in SA
South Africa needs to urgently transform its energy system, and renewables need to be elevated as a national priority going forward, a new study says.
The integrated energy report, launched yesterday by the National Business Initiative, Business Unity SA and the Boston Consulting Group (BCG) details SA’s energy transition.
This study also assesses what it would take for SA to reach net-zero by 2050 and ensure a Just Transition.
3 min read ahead of the articles below.
Ramaphosa energy plan reaction — ‘devil is in the details and how it is implemented’
On Monday 25 July, President Cyril Ramaphosa announced an “energy action plan” that promised the potential to end rolling blackouts and fundamentally transform the electricity sector in South Africa. Broadly well received, stakeholders representing academia, the energy sector and the environmental lobby have, however, expressed cautious optimism.
Gaylor Montmasson-Clair, senior economist at Trade & Industrial Policy Strategies — a non-profit, economic research institution — told Our Burning Planet that “overall, I think it is a strong plan given the difficult circumstances that SA is in at the moment. The devil will be in the details and in how it gets implemented.
Roger Baxter, CEO of the Minerals Council South Africa, said in a statement: “President Ramaphosa outlined a detailed plan by the government to abolish the 100MW licensing cap on private sector renewable energy projects, ensure greater private sector participation to urgently install electricity generation capacity, address Eskom’s R400-billion debt and its internal crime and corruption problems, and streamline regulatory processes by eliminating red tape. This represents the most fundamental reforms of South Africa’s energy sector in 20 years.
This article provides commentary across a range of stakeholders. 5 min read
Ramaphosa's power reform plan - SA should be 'cautiously optimistic'
President Cyril Ramaphosa's announcement of sweeping reforms to stabilise the power grid and get the country quite literally out of the dark has been welcomed as a necessary and urgent step in the right direction. Connie Mulder, head of the Solidarity Research Institute (SRI) told BizNews the crux of the president's plan is to decentralise power generation - a policy shift that couldn't come soon enough.
Mulder believes this change in tack follows immense pressure from political parties, civil society organisations and think tanks after almost 15 years of government inaction. Mulder says he's cautiously optimistic, but make no mistake, he said: "this has riled up a lot of vested interests. If South Africa does move outside of Eskom for generation there are a lot of cadres who are set to lose a lot of money and we should expect resistance to this from all sectors, especially your more left-leaning trade unions which will be up in arms completely."
A 16:49 minute interview or recording.
Return of Coal as Alternative to Russian Gas Threatens European Firms’ ESG Ratings
Despite an energy crisis following sanctions on Russia, major European investors say they will not relax their investment principles of reaching net zero targets on greenhouse gas emissions by 2050 or earlier.
Investors increasingly use ESG ratings, developed by companies such as MSCI or Sustainalytics, to judge firms’ merits. Burning coal, which puts out more carbon dioxide than alternatives like oil and gas, gives companies a black mark.
European countries including Germany and Italy are nonetheless considering bringing back coal due to the Ukraine crisis, which has cut Russian gas flows. Some companies, such as German speciality chemicals maker Lanxess, have also said they may consume more coal.
A conundrum very difficult to get out of. 3 min 30 sec read
About YOU
Krista Tippett: On Generous Listening and Asking Better Questions
Krista Tippett, whose wonderful book Becoming Wise: An Inquiry Into the Art of Living distills many of her conversations, offers us a window into exploring ourselves and others, through generous listening and asking better questions by moving away from the false refuge of certitude.
On the art of starting new kinds of conversations Tippett offers shining wisdom, countering the notion that we need to win or lose.
This is a beautiful read, it does make you realise that certitude is a comfort and not a growth point. 4 min read or maybe more - don't rush it!