He left when his replacement, Philip Moore, joined NPI on 1 October.Alastair Lyons, chief executive of NPI, said yesterday: "The argument that we have been forced into this [de-mutualising] by our level of solvency is categorically not true. Its free asset ratio - the main measure of financial strength - would shrink from 7.9 per cent to around 3 per cent, even before markets slumped.Mr Cazalet said NPI, in common with other life insurers, was likely to be forced by the end of this year to ditch its optimistic assumptions because of dwindling interest rates. With NPI, as far as its life fund is concerned, there is nothing in the pot to give away," he said.The report estimates NPI's investments will have returned almost nothing since the start of the year. Taken with outgoings (excluding policy premiums and claims) the society is estimated to have a negative cash position of pounds 500m.In calculating its liabilities, NPI has used optimistic assumptions about investment returns which sharply boost the level of free assets it appears to hold in public documents. If the life insurer used more conservative assumptions, it would appear much weaker, the report said. The carnivores have been replaced by a gentle, grass- eating herbivore As they say, what goes round comes round.. NPI, THE the life insurer which has put itself up for sale, has been so battered by market turmoil that policy-holders will be lucky to get a windfall payment of more than a few hundred pounds each, according to a study of its finances.
The report estimates that NPI might not be able to show any free assets, over and above the minimum required to show solvency, if its financial position were assessed this month. Ned Cazalet, who wrote the report, said a sum approaching pounds 1bn must be injected into NPI's funds to restore it to financial health.Even if a buyer paid an optimistic price of pounds 1.5bn, little more than pounds 0.5bn would be left for policy-holders, generating windfalls well below pounds 1,000, he added."With the Prudential's takeover of Scottish Amicable, the Pru was able to distribute ScotAm's reserves to the policy-holders. Without repair, the report adds, "its solvency at the end of 1998 would be in question". The report, by Cazalet Financial Consulting - one of the leading authorities on the life insurance sector - says NPI's finances have slipped so that "repair is needed as a matter of very considerable urgency". The two laureates then went on to become partners in John Meriwether's Long-Term Capital Management, and in the process came within a whisker of bringing about a total collapse in the global financial system. So, as if by way of punishment, the venerable Swedes have this year gone full circle and awarded the prize to a man whose reputation has been earned studying poverty and wealth redistribution, Amartya Sen. But for those left behind it will be a rough passage over the next few months.. THE ROYAL Swedish Academy of Sciences, which awards the Nobel prize for economics, seems to be the most dreadful follower of fashion, doesn't it? Last year it awarded the accolade to Myron Scholes and Robert Merton for developing the formula that led to the explosive growth in financial derivatives over the past ten years. Mr Tonseth is still only 52 and has corporate life left in him yet if he can be bothered to leave the ski slopes.
They are now going to have to adjust to a much more rugged approach as the group is shrunk to fit more modest circumstances and a tighter balance sheet. It was a deal which loaded the group with a debt mountain that Mr Tonseth found impossible to whittle away with asset sales.Strangely, many of the Trafalgar businesses are performing rather well whilst the one bit that has so far been disposed of, the Cunard cruise line, was sold to the Americans at the top of the market.Around at Kvaerner's St James HQ, they still talk of Mr Tonseth as a visionary. Mr Tonseth was on a three-year roller which would be virtually unheard of on these Anglo-Saxon shores now that boardroom excess is regarded in the same category as crimes against humanity. Even in the clubby environment of the Olso bourse, where cross shareholdings are the order of the day and the Anglo-Saxons are deterred from poking their noses in by dual share structures, destruction of shareholder value on such an epic scale practiced by Mr Tonseth must have been hard to stomach.Kvaerner's troubles date from the pounds 904m acquisition of Trafalgar House in 1996 from a grateful Hongkong Land. IT WAS a nice little Kvaerner while it lasted, which was for the best part of a decade. Even now that he has gone, Erik Tonseth is not exactly on his uppers.
His consolation prize for joining that small band of Norwegian chief executives who have been sacked by the board is a cool pounds 1.7m Say it in Norwegian crowns and it sounds even better. By the same token, however, the ECB, by failing to explain itself, will be assured of more or less continuous national criticism.. The Bank of England gets a pretty rough press as things are, but without these minutes, it would be a good deal rougher and unforgiving. Intriguingly, the minutes for September's meeting, published yesterday, reveals that one of the committee's previously most hawkish members, Willem Buiter, suddenly turned dovish and voted against the pack for a rate cut. From the Bank of England's perspective, their greatest purpose is to lend credulity and accountability to its decision making, for almost invariably they show the committee to have acted in a thoroughly sensible and pragmatic manner.
