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US Regulators Add Artificial Intelligence to Potential Financial System Risks

Article 0 Comments Rapid adoption of artificial intelligence (AI) could create new risks for the U.S. financial system if the technology is not properly supervised, a panel of regulators warned on Thursday. The Financial Stability Oversight Council, which comprises top financial regulators and is chaired by Treasury Secretary Janet Yellen, flagged the risks posed by AI for the first time in its annual financial stability report. While the group said AI could spur innovation or efficiencies at financial firms like banks, the rapidly advancing technology requires vigilance from both the companies and their watchdogs. “AI can introduce certain risks, including safety and soundness risks like cyber and model risks,” the group said in its annual report published Thursday, adding it recommended firms and their regulators “deepen expertise and capacity to monitor AI innovation and usage and identify emerging risks.” The panel also flagged the growing role of nonbanks and private credit as meriting close attention, and said financial institutions and regulators should continue to try to better gauge risks stemming from climate change. Some AI tools can be hugely technical and opaque, making it hard for institutions to explain or properly monitor them for shortcomings. If companies and regulators do...

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US Regulators Add Artificial Intelligence to Potential Financial System Risks

Article 0 Comments Rapid adoption of artificial intelligence (AI) could create new risks for the U.S. financial system if the technology is not properly supervised, a panel of regulators warned on Thursday. The Financial Stability Oversight Council, which comprises top financial regulators and is chaired by Treasury Secretary Janet Yellen, flagged the risks posed by AI for the first time in its annual financial stability report. While the group said AI could spur innovation or efficiencies at financial firms like banks, the rapidly advancing technology requires vigilance from both the companies and their watchdogs. “AI can introduce certain risks, including safety and soundness risks like cyber and model risks,” the group said in its annual report published Thursday, adding it recommended firms and their regulators “deepen expertise and capacity to monitor AI innovation and usage and identify emerging risks.” The panel also flagged the growing role of nonbanks and private credit as meriting close attention, and said financial institutions and regulators should continue to try to better gauge risks stemming from climate change. Some AI tools can be hugely technical and opaque, making it hard for institutions to explain or properly monitor them for shortcomings. If companies and regulators do...

10 Value Stocks for Long-Term Investors: Morningstar 0

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10 Value Stocks for Long-Term Investors: Morningstar

Start Slideshow Are growth stocks overpriced? That was the question posed by Margaret Giles, a Morningstar content development editor, in a new blog post. Growth stocks have enjoyed a sizable performance advantage over value stocks in 2023. The Morningstar US Growth Index outperformed the Morningstar US Value Index by some 25 percentage points through Dec. 8. Meanwhile, value stocks look attractive, Morningstar’s chief U.S. market strategist, Dave Sekera, said in the post. “Based on our valuations, we continue to advocate for an overweight position in the value category, whereas growth stocks are trading at a slight premium to our fair values and core stocks are valued near the market average,” Sekera said. In her post, Giles listed the best value stocks to buy for the long term. Analysts chose these stocks from the value portion of the Morningstar style box. They are also from companies that Morningstar includes on its list of the best companies to own. These have wide Morningstar economic moat ratings and predictable cash flows, and they are run by management teams that make smart capital-allocation decisions. Not least important, the stocks are trading below Morningstar’s fair value estimates. See the accompanying gallery for 10 value stocks...

10 Value Stocks for Long-Term Investors: Morningstar 0

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10 Value Stocks for Long-Term Investors: Morningstar

Start Slideshow Are growth stocks overpriced? That was the question posed by Margaret Giles, a Morningstar content development editor, in a new blog post. Growth stocks have enjoyed a sizable performance advantage over value stocks in 2023. The Morningstar US Growth Index outperformed the Morningstar US Value Index by some 25 percentage points through Dec. 8. Meanwhile, value stocks look attractive, Morningstar’s chief U.S. market strategist, Dave Sekera, said in the post. “Based on our valuations, we continue to advocate for an overweight position in the value category, whereas growth stocks are trading at a slight premium to our fair values and core stocks are valued near the market average,” Sekera said. In her post, Giles listed the best value stocks to buy for the long term. Analysts chose these stocks from the value portion of the Morningstar style box. They are also from companies that Morningstar includes on its list of the best companies to own. These have wide Morningstar economic moat ratings and predictable cash flows, and they are run by management teams that make smart capital-allocation decisions. Not least important, the stocks are trading below Morningstar’s fair value estimates. See the accompanying gallery for 10 value stocks...

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Range Rovers Become Thief-Magnets, Causing Insurance Premiums to Skyrocket

Article 0 Comments Tim Coen, a property investor, loved his Range Rover Sport but decided it was time to go green. He wanted to trade in the gas-guzzling sport utility vehicle for an electric Porsche. There was a snag, however. A string of Range Rover thefts in the UK has caused insurance premiums to skyrocket. While the Porsche was being built, his coverage provider said it wouldn’t re-insure the Range Rover. He searched online and the cheapest quote he could find was £48,000 ($60,100). The eye-watering cost has sent the SUV’s resale value tumbling. The Leeds-based entrepreneur, who runs investment firm North Property Group, paid £103,000 for his Sport SVR two years ago. He checked its value online three months ago and it was supposedly worth £75,000. Now, it would only fetch about £45,000, according to the same site. Coen, 34, can’t even sell it — he would need to fork out an extra £25,000 to pay off the finance because of the drop in valuation. “I was trying to be a bit more eco-friendly, but now I’m probably not because I’ve got two cars rather than one,” said Coen, whose previous Range Rover was stolen in London in 2020....

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Gen Xers Fret About Retirement Savings Gap

Gen Xers are feeling downbeat about achieving their retirement goals, Schroders reported Wednesday. In a survey, non-retired Americans ages 43 to 58 said that on average they will need $1,112,183 in savings to retire comfortably but expect to put away just $661,013, leaving a shortfall of $451,170. Millennial and baby boomer respondents look forward to a smaller savings gap. Millennials believe they will need $1,280,892 to retire comfortably and expect to have saved $877,266, resulting in a gap of $403,626. Boomers still in the workforce say it will take $924,897 in savings to retire comfortably but anticipate having saved $291,496 less than that, or $633,401. Put another way, the survey findings showed that 61% of non-retired Gen Xers are not confident in their ability to achieve a dream retirement, compared with 53% of non-retired boomers and 49% of millennials.  Further, 45% of non-retired Gen Xers said they have done no retirement planning, compared with 43% of millennials and 30% of non-retired boomers.  “The size of the retirement savings gap facing Gen X is concerning, as they are the first generation to rely on 401(k) plans instead of pensions and the next in line to retire,” Deb Boyden, head of U.S....

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Infrastructure Faces $600B Hit in Worst-Case Climate Shift: Study

Article 0 Comments Infrastructure investors face losing nearly a third of their money, or around $600 billion, if countries do not plan for an orderly shift to a greener economy by mid-century, a first-of-its-kind study shared with Reuters showed. The researchers describe this worst-case scenario in terms of governments moving late, or unexpectedly, to impose taxes on carbon emissions. Those abrupt moves would drive an inflation-fueling price shock that would see interest rates rise, impacting the net-asset value of the investments. Infrastructure portfolios could lose as much as half of their value, according to the research by the EDHEC Infrastructure & Private Asset Research Institute. “There’s more risk than people think,” co-author Frederic Blanc-Brude told Reuters by phone, while the COP28 climate talks were taking place in Dubai. “They are going to become material sooner, and more than is expected, and people need to wake up.” In an orderly transition, by contrast, where the system changes gradually to rein in emissions, the costs would be absorbed as part of normal business operations. Both scenarios were assessed across 9,000 infrastructure assets – including airports, toll roads, power stations, seaports and pipelines – but did not include potential legal, market and technological...

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When a Client Faces Cognitive Decline, Speak Up

The first step in protecting clients that show signs of cognitive decline is straightforward, argues Barbara Archer, managing director and partner of Hightower Wealth Advisors in St. Louis. “If we see something, we need to say something,” she says in an interview with ThinkAdvisor. Specifically, this means speaking with the client and then to a trusted contact if the client has one. When advisors spot a red flag, they also need to protect themselves. This entails taking the above steps plus contacting their firm’s compliance department and the state in which they’re based to determine appropriate rules, says Archer. Should a client with diminishing cognitive capacity or other mental health issues start to handle assets differently from an established manner, “the client’s family or their counsel may question the advisor. If there’s an issue, there is liability,” Archer points out. Some behavioral changes do not necessarily signal cognitive decline, she notes. They may be temporary changes resulting from a new medication or an infection. Archer, who heads a practice with two partners and five other advisors, supported by six associates — with assets under management of more than $1 billion — founded Archer Wealth Management in 1983 and joined Hightower in 2016, merging...

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Harnessing AI in Annuities

What You Need to Know Clients and prospects already use AI systems to make their dinner. You could use it to educate your clients. Insurers could use it to develop new types of investment indexes. Artificial Intelligence is today’s hottest of hot topics across all industries, and the annuities market is no exception. AI technology and machine learning is transforming traditional processes for financial advisors, agents, and carriers leading to improved efficiency, accuracy, and customer experience. A question remains, however, as to what exactly can and cannot be automated, and how much human intervention will be required, as AI is increasingly integrated across the lifecycle of a product. Here’s how AI could affect three types of processes within the annuity sector. 1. The Buying Experience Consumers themselves are already turning to AI for a wide variety of reasons, from asking ChatGPT to tell a joke to generating a recipe to help use the items you have in your refrigerator. As consumers continue to use AI in their everyday lives, it begs the question of how the technology can be leveraged by financial professionals and advisors to educate folks about more complex subjects, like annuities. Annuities are commonly seen as some...

Intact Financial Corporation and RSA announce sale of UK direct Personal Lines operations to Admiral Group plc 0

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Intact Financial Corporation and RSA announce sale of UK direct Personal Lines operations to Admiral Group plc

RSA to sell its UK direct Personal Lines (Home and Pet) operations following the recent conclusion of a strategic review RSA will also exit its Home and Pet partner and broker contracts in the UK, which completes its exit from the UK Personal Lines market Accelerates path to sustainable outperformance for the continuing UK&I business, which is now expected to deliver a low-90s combined ratio[1] in 2024 No material impact expected to Net Operating Income Per Share (NOIPS)[2] Toronto, ON (Dec. 7, 2023) – Intact Financial Corporation and its subsidiary Royal & Sun Alliance Insurance Limited (RSA) are pleased to announce that they have reached an agreement to sell RSA’s UK direct Personal Lines operations, representing approximately £165 million of annual premiums,[3] to Admiral Group plc (Admiral). The transaction will result in the transfer of renewal rights, brands and employees. RSA will retain the claims reserves, which will be run off over time. The sale has been approved by the Boards of Directors of both Intact and Admiral, and is expected to close at the end of Q1 2024. RSA will also exit its UK Home and Pet partner and broker contracts representing annual premiums of approximately £515 million,[3] and is exploring...