Moody's Talks - Focus on Finance

We discuss the severe thunderstorms' rising insured costs. Plus: Earnings weakness in the Medicare Advantage business and US commercial real estate exposure of German banks.

Speakers:  Bernhard Held, VP-Sr Credit Officer, Moody’s Investors Service; Dean Ungar, VP-Sr Credit Officer, Moody’s Investors Service; Evelyn Ocas Salazar, AVP-Analyst, Moody’s Investors Service; Juergen Grieser, Sr Dir Mgr-Analytics & Modeling, Moody’s RMS

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Property & Casualty Insurance – US: Battered by convective storms, carriers seek higher prices, advanced models
• Health Insurance – US: Medicare Advantage continues to grow, but its profitability is weakening
• Banks – Europe: Most EU banks have limited direct exposure to US CRE, German banks are more exposed

Steve Tu, Farooq Khan and Petr Paklin of Moody's, with Joe Lyons of Bitsight, on how AI will change banks; On Fast Finance, we discuss Evergrande's liquidation and upcoming FHLBank reforms.

Speakers:  David Yin, VP – Senior Credit Officer, Moody’s Investors Service; Allen Tischler, Senior Vice President, Moody’s Investors Service; Stephen Tu, VP – Senior Credit Officer, Moody’s Investors Service; Farooq Khan, VP – Senior Analyst, Moody’s Investors Service; Petr Paklin, AVP – Analyst, Moody’s Investors Service; Joe Lyons, Senior Director Cyber Risk Quantification & Ratings Research, Bitsight 

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Carolyn Henson, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Property – China: Court order to liquidate China Evergrande will weaken fragile market sentiment
• Banks – US: FAQ: Initial impact of FHFA reforms of FHLBanks will be less emergency liquidity for troubled banks
• Banks – Global: Banks are well-placed for substantial efficiency gains with deep AI adoption

Cristiano Ventricelli explains how recent improvements to digital finance systems could help them gain scale. Plus, we discuss BlackRock’s recent acquisition and the SEC’s approval of spot Bitcoin ETFs.

Speakers:  Abhi Srivastava, AVP – Analyst, Moody’s Investors Service; Neal Epstein, VP-Senior Credit Officer, Moody’s Investors Service; Cristiano Ventricelli, VP-Senior Analyst

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Decentralized Finance and Digital Assets – Cross Region: SEC approves spot Bitcoin ETFs, advancing cryptocurrency institutionalization
• BlackRock, Inc.: Acquisition of Global Infrastructure Partners is credit positive
• Decentralized Finance and Digital Assets – Global - 2024 Outlook: Digital finance slowly, steadily moves toward interoperability, standardization

Our global outlook for the sector remains negative for 2024, but the picture for non-bank finance companies is more varied than a year ago, with easing conditions in some markets and businesses.

Speakers: Bruno Baretta, AVP – Analyst, Moody’s Investors Service

Host: Michael Porta, VP – Senior Research Writer, Moody’s Investors Service

Weak results in personal lines drive the negative outlook for property and casualty insurance, while life insurance benefits from higher interest rates.

Speakers: Bruce Ballentine, VP – Senior Credit Officer, Moody’s Investors Service; Christian Badorff, VP – Senior Credit Officer, Moody’s Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service

James Eck and Brandan Holmes explain how rising physical climate-related claims complicate insurers' risk management; Olivier Panis discusses benefits for banks of enhanced climate change reporting.

Speakers: Olivier Panis, Senior Vice President, Moody’s Investors Service; James Eck, VP-Senior Credit Officer, Moody’s Investors Service; Brandan Holmes, VP-Senior Credit Officer, Moody’s Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Insurance – Global: Rising physical climate risk generates uncertainty, complicates risk management
• P&C Insurance and State Government — US: Sharp pricing hikes draw reinsurers to Florida; insurance market strains continue
• Enhanced climate change reporting will help banks manage risks

The boost banks have enjoyed for the last two years will start to fade as high rates translate into higher funding costs and lower growth. But the outlook for banks is not so gloomy everywhere.

Speaker: Felipe Carvallo, VP-Senior Credit Officer, Moody’s Investors Service

Host: Erin McDermott, AVP – Research Writer, Moody’s Investors Service

Reduced economic growth could lower financial institutions’ profitability, but there are also opportunities to sell retirement products and new forms of insurance.

Speakers: Qian Zhu, VP-Senior Credit Officer, Moody’s Investors Service; Kelvin Kwok, AVP-Analyst, Moody’s Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Demographics – China: Aging population, smaller workforce will have broad implications across sectors
• Life Insurance – China: Aging population offers growth opportunities, with risks and competition
• Insurance – China: Latest policies for health insurance improve diversification but raise underwriting risks

Moody’s analysts discuss how lenders are managing the risks created by the end of the low-interest-rate era, and explore the favorable funding and liquidity characteristics of universal banks.

Speakers: Yasuko Nakamura, VP – Senior Credit Officer, Moody’s Investors Service; Edoardo Calandro, VP – Senior Credit Officer, Moody’s Investors Service

Hosts: Carolyn Henson, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Banking – Global: Interest rates and the banking book: risks and regulation
• Banks – Cross Region: Universal banks’ superior funding and reserves offset liquid asset encumbrance

Private credit lenders built stores of capital that we expect will be put to work competing with banks to fund a new wave of leveraged buyouts. In the first segment of this episode, we discuss LBO competition and the risks it poses. Later, our guest lays out the concentration of private credit among a handful of giant asset managers building their own, largely self-contained lending ecosystems.

Guests: Christina Padgett, Associate Managing Director and Sandra Veseli, Managing Director, both from Moody’s Investors Service’s Corporate Finance Group; and Rory Callagy, Associate Managing Director, with Moody’s Financial Institutions Group.

Host: Jeff Pruzan, Vice President – Senior Research Writer, Moody’s Investors Service.

To read more on this topic, visit Moodys.com. (Some content available only to registered users or subscribers.)

Links:

• Private Credit – Global: Syndicated and private lenders will spar as LBOs revive, upping systemic risk

Moody’s analysts C.J. Wong and Yulia Wan discuss ongoing real estate market weakness in China and Vietnam, and explain how the credit effects will differ in each country.

Speakers: C.J. Wong, Analyst, Moody’s Investors Service; Yulia Wan, VP-Senior Analyst, Moody’s Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service

Additional Research:

• Banks – Asia-Pacific: Ongoing real estate sector stress raises credit risks for banks in China and Vietnam

Moody’s analysts Marat Faritov and Cristiano Ventricelli discuss how digital bonds could reshape debt markets, and the hurdles to be overcome before the technology can be more widely adopted.

Speakers: Marat Faritov, AVP – Analyst, Moody’s Investors Service; Cristiano Ventricelli, AVP – Analyst, Moody’s Investors Service

Host: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Digital bonds' features could transform debt markets over time
• US Congress works toward digital assets rules, but bills lack bipartisan support
• Cyber risk looms as digital bonds gain traction
• Decentralized Finance and Digital Assets – Europe: Swiss digital bonds benefit from favorable existing and adapted federal laws
• DeFi & Digital Assets: What is digital finance? Explanation and glossary

Moody’s analysts Laline Carvalho-Neff and James Eck explain how reinsurers have boosted their profitability, even as natural catastrophes have grown more frequent and more severe.

Speakers: Laline Carvalho-Neff, VP-Senior Analyst, Moody’s Investors Service; James Eck, VP-Senior Credit Officer, Moody’s Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Reinsurance – Global: Stable outlook as higher pricing restores more favorable risk and reward dynamic
• P&C Insurance and State Government — US: Sharp pricing hikes draw reinsurers to Florida; insurance market strains continue
• Reinsurance – Global: Reinsurance prices to keep rising through 2024, buyer survey suggests

Moody’s analysts discuss how a rate rise would affect Japan’s banks, Swedish banks’ high exposure to indebted real estate firms, and the stability of Swiss domestic bank deposits.

Speakers: Tetsuya Yamamoto, VP – Senior Credit Officer, Moody’s Investors Service; Louise Welin, VP – Senior Credit Officer, Moody’s Investors Service; Goetz Thurm, VP Senior Analyst, Moody’s Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Banks – Japan: A rise in domestic interest rates would bring more benefits than risks
• FAQ: Sweden's real estate turmoil creates risks for local banks
• Banks – Switzerland: Stable domestic deposits, strong liquidity reduce the risk of deposit outflows

Moody’s analysts discuss the economic and credit outlook for China, including the role of local government financing vehicles (LGFVs) and their debt burdens, and the latest on the property sector.

Speakers: Lillian Li, VP-Senior Credit Officer, Moody’s Investors Service; Jessie Tung, VP-Senior Credit Officer, Moody’s Investors Service

Host: Vittoria Zoli, Analyst – Emerging Markets, Moody’s Investors Service

Steve Tu discusses FedNow, a new US digital payments system, and why it could exacerbate deposit flight risk for banks. Farooq Khan explains the risks of higher interest rates for UK mortgage lenders.

Speakers: Stephen Tu, VP – Senior Credit Officer, Moody’s Investors Service; Farooq Khan, VP – Senior Analyst, Moody’s Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Banks – North America: FedNow launch may lower transaction costs, but exacerbate funding risks for banks
• Asset and customer relations risks intensify for UK lenders as rates keep rising

Moody’s analysts David Burger, Mark Wasden and Neal Epstein explain how differences in structure and asset risk give rise to divergent credit profiles among the three investment vehicles.

Speakers: David Burger, VP – Senior Credit Officer, Moody’s Investors Service; Mark Wasden, Senior Vice President, Moody's Investors Service; Neal Epstein, VP – Senior Credit Officer, Moody's Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Aaron Johnson, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Private Credit – Cross Region: Middle-market CLOs, BDCs and closed-end funds: structures lead to divergent credit risks

Moody's Marc Pinto talks to Guggenheim Partners Investment Management’s Anne Walsh about big risks – and opportunities – for insurers, asset managers and institutional investors.

Speakers: Marc Pinto, Managing Director, Moody’s Investors Service; Anne Walsh, Chief Investment Officer, Guggenheim Partners Investment Management

Host: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Life Insurance – US: Commercial real estate downturn could weaken portfolio asset quality
• US life insurers have strong capital levels heading into uncertain economic environment
• Property & Casualty Insurance – Global: Cyber insurance market stabilizes as profitability improves

US life insurers have significant commercial real estate exposure, mitigated by a low share of holdings in office properties and high share of investments in senior investment-grade fixed income.

Speakers: Evelyn Ocas Salazar, AVP-Analyst, Moody’s Investors Service; Manoj Jethani, VP-Senior Credit Officer, Moody’s Investors Service

Host: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Life Insurance – US: Commercial real estate downturn could weaken portfolio asset quality

Vladlen Kuznetsov explains why banks in emerging markets are exposed to environmental risks, and Laline Carvalho-Neff discusses global reinsurers' strong first-quarter results.

Speakers: Vladlen Kuznetsov, AVP – Analyst, Moody’s Investors Service; Laline Carvalho-Neff, VP – Senior Analyst, Moody’s Investors Service

Hosts: Danielle Reed, VP – Senior Research Writer, Moody’s Investors Service; Myles Neligan, VP – Senior Research Writer, Moody’s Investors Service

Related Research:

• Governance and external support mitigate environmental and social risks for banks in emerging markets
• Reinsurance – US & Bermuda: Everest, RenaissanceRe, AXIS Capital, Arch: Strong Q1 results, pricing boost 2023 prospects