Banks face insurer scrutiny; analyzing Russia's shadow fleet; cloud skills gap
Today is Tuesday, March 28, 2023, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition of Insight Weekly, we continue to examine the fallout from recent bank failures. Silicon Valley Bank's collapse and UBS's rescue of Credit Suisse have alerted executive liability insurance underwriters to the risks they face across the banking spectrum and beyond. In the startup space, insurtechs without a visible path to profitability are set to suffer the most from SVB's fall, while early-stage mining ventures appear to be largely unscathed, according to industry experts. The global banking debacles have prompted investors to exit riskier energy assets, causing a basket of 11 large North American midstream operators to lose almost 5% in value since the end of February, according to S&P Global Market Intelligence data.
Market Intelligence has published a new whitepaper that seeks to identify and analyze the key tactics and methods employed by Russian and non-Russian vessels when attempting to evade sanctions and price caps imposed on Russian oil and refined products. The paper estimates that 443 tanker vessels of more than 10,000 deadweight tons are operating within the so-called shadow or ghost fleet.
The cloud skills gap remains a problem for organizations. One answer is to upskill or retrain existing staff, but there are obstacles to making this happen at scale. 451 Research's survey data points to budgetary challenges, a lack of proper automation tools, and even some employee apathy or disinterest in retraining opportunities.
Bank Failures’ Impact in Focus
Banks face greater scrutiny from D&O insurers after SVB, Credit Suisse shocks
The failure of Silicon Valley Bank and rescue of Credit Suisse have alerted executive liability underwriters to the risks they face across the banking spectrum and beyond.
—Read the full article from S&P Global Market Intelligence
Insurtech funding flight to quality to accelerate after SVB collapse
The insurance startups set to suffer the most from the SVB collapse are newer companies that do not have a visible path to profitability.
—Read the full article from S&P Global Market Intelligence
Mining startups appear to escape fallout from Silicon Valley Bank collapse
Banking sector woes will not have a major impact on earlier-stage miners and mineral explorers that depend on startup cash, experts say.
—Read the full article from S&P Global Market Intelligence
Bank troubles wash up on oil and gas midstream stocks
An index of large North American midstream operators has lost 5% of its value since the end of February as banking troubles had investors leaving riskier energy assets.
—Read the full article from S&P Global Market Intelligence
Deep Dives
Financials
Community banks increasingly grapple with activist shareholders
The increase in shareholder activism comes after M&A slowed to a trickle, stock underperformance at some banks frustrated investors, and new regulatory proxy rules emboldened activists to push for board changes.
—Read the full article from S&P Global Market Intelligence
Extending bid period on SVB bridge bank would boost FDIC's return, observers say
Market observers say the regulator is allocating a relatively short period of time for due diligence, highlighting tensions between the goals of different parties at the negotiating table.
—Read the full article from S&P Global Market Intelligence
Insurance
US P&C Q4'22 earnings recap – Auto losses deal heavy blow to Allstate
Allstate and Root were the only two companies in an S&P Global Market Intelligence analysis that booked pretax net losses for the fourth quarter of 2022.
—Read the full article from S&P Global Market Intelligence
US life Q4 2022 earnings recap: Genworth bucks trend as overall revenues fall
Genworth booked $1.90 billion in total revenue in the fourth quarter of 2022, an increase from $1.74 billion in the prior-year period.
—Read the full article from S&P Global Market Intelligence
Credit and Markets
Banking stresses amplify economic risks
While the failure of Silicon Valley Bank and the forced sale of Credit Suisse were unique situations in many ways, the problems of bank portfolio losses on long-term bond holdings, deposit flight and contagion risk are concerning.
—Read the full article from S&P Global Market Intelligence
Banking failures took short sellers by surprise
While Silvergate was the second-most-shorted stock at the end of February, short sellers pared back their bets against other since-failed banks.
—Read the full article from S&P Global Market Intelligence
UK wage growth cools amid uncertain economic outlook
The latest official labor market data showed signs of cooling pay growth, confirming earlier signals from survey data of a softening jobs market.
—Read the full article from S&P Global Market Intelligence
Russia's Shadow Fleet - Understanding its Size, Activity and Relationships
The Russian shadow fleet or ghost fleet has been widely discussed and debated since the G7 Oil Price Cap for crude oil took effect on Dec. 5, 2022 and continued when the subsequent price cap on refined products became effective on Feb. 5, 2023.
—Read the full article from S&P Global Market Intelligence
Real Estate
UK house prices in February posted largest annual fall since end-2012
The cost-of-living crisis arising from very elevated inflation and higher borrowing costs, alongside record-high house price-to-income ratios, indicates a period of weaker UK house prices from late 2022 to mid-2024.
—Read the full article from S&P Global Market Intelligence
Energy and Utilities
Energy Research: Visualizing corporate renewables contracted in the US and around the world
Nearly 78% of tracked renewable energy contracted by U.S. corporations is situated in the U.S., but procurement in the rest of the world — particularly in India and Europe — is rising fast.
—Read the full article from S&P Global Market Intelligence
AI shows promise for energy systems, but machines still have much to learn
More and more local grid ecosystems are using artificial intelligence successfully, but the road to widespread deployment in key grid functions is still long.
—Read the full article from S&P Global Market Intelligence
Metals and Mining
'Neat political theater': US treads lightly with tariffs over inflation concerns
Recent US tariffs on Russian metals products avoid the largest US imports, according to an S&P Global Commodity Insights analysis, but some observers see room for tighter trade rules as supply chains continue to adjust.
—Read the full article from S&P Global Market Intelligence
Copper in prime spot as A$5B Queensland grid set to unlock critical minerals
Miners investing big in copper will benefit from a move by Australia's Queensland government to spend A$5 billion to build and own a 1,100-km power transmission line to connect a critical minerals hub to the national grid and renewable energy.
—Read the full article from S&P Global Market Intelligence
Technology, Media and Telecommunications
Kagan Research: US video ad revenue projections through 2027
Total U.S. video ad revenues could top $73 billion by 2027, benefiting from the broader shift of advertising spend migrating to digital formats and from consumers embracing streaming video services.
—Read the full article from S&P Global Market Intelligence
451 Research: Closing the cloud skills gap: A perennial problem for businesses
Consistent recruitment and hiring challenges in the cloud computing space have increased the value of retraining technology professionals. However, there are significant roadblocks to providing and leveraging cloud skills.
—Read the full article from S&P Global Market Intelligence
The Week in M&A
Deal Tracker: Infotech M&A activity drops in February
Bank M&A 2022 Deal Tracker: 8 deals announced in February
European M&A lull extends into February
Deal Tracker: Europe's media, telecom M&A value rises in February, volume falls
Deal Tracker: Aggregate value of Europe's IT deals exceeds $2B in February
The Big Number:
Trending
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Written and compiled by Alex Virtucio