Tuesday, March 27, 2012

(No.192) Royal fighters, H.L. Mencken & SS Norway

by

Alastair Rickard


Here is a footnote to the recent series of three columns on RickardsRead.com offering some tips on cruising.

Captain Paul Von Knorring , a 20 year Finnish veteran of the Norwegian Cruise Line ship Dawn, recently related this anecdote from his time as commander of Norwegian's Sun.

The Norwegian Line's record frequent cruiser was (when Captain Von Knorring knew her) an 82 year old woman who, after she retired, made 327 cruises with Norwegian. This is not as amazing as it first seems since she literally lived on the cruise ship.

She started out cruising on Norwegian's first liner, the Norway (formerly the French transatlantic liner SS France purchased by Norwegian in 1979). She switched to the Norwegian Sun when the Norway went out of service. She even had her name on her stateroom door.

Captain Von Knorring said the only time she lived off the Sun during his time as its first officer was when the ship went into drydock for several weeks and she was not allowed to remain on board during this period. She apparently chose to make a Norwegian Cruise ship her permanent retirement home regardless of where it cruised.

During cruises most lines hold cocktail parties and the like for their 'frequent cruisers'. It is common on such occasions for the captain or cruise director (knowing the answers full well before they start) to poll the assembled guests about how many had cruised with the line 30 times or 50 times, etc etc. It is not unusual to have couples present with 60+ cruises.

This octogenerian was in a class by herself.

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On March 26,2012, the television columnist and critic for the Globe and Mail of Toronto, John Doyle, wrote a column not only lauding the superiority of today's television programming but arguing further that today's television drama had become superior to the novel as a cultural form. This seemed to me to be an argument bordering on the risible. In response I wrote the following letter to the editor of the Globe.

Sir:

John Doyle is one of my favourite columnists. His views about television are mostly well-founded but occasionally they are overwhelmed by an excessive use of hyperbole.

His column today ("The novel made the modern world, but good television is superior to the printed word", March 26) presents a respectable argument for the case the column heading encapsulates. However to argue that a relatively few televison dramas produced for a handful of mainly American cable networks like HBO are somehow representative of what televison today brings into the home is simply silly.

Even a jog through a program guide for the channels most Canadians can access is to see the preponderance of televison hours taken up with the broadcast of stuff as vacuous as the programming that was available to us in the "pre-cable era" to which Mr. Doyle refers.

H.L. Mencken observed decades ago that television is like a steak: a medium rarely well done. The arrival since then of a small proportion of television drama that is excellent has not changed that picture nor, for that matter, has the novel thereby been eclipsed.

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In conversation recently I was asked a question the person posing it did not realize was a trick question: who was the last British monarch to fight in battle?

The answer, if the question means a monarch who was king at the time of his active service, is King George II (1683-1760). He led British troops against the French in 1743 at Dettingen, a battle in the War of the Austrian Succession (1740-1748).

However the correct answer, if the question actually refers to any active service undertaken by a British monarch during his lifetime, is King George VI (1895-1952), our present Queen's father. On May 31, 1916 Prince Albert, as he then was, took part as a junior officer serving in the Royal Navy's HMS Collingwood in the First World War's Battle of Jutland off the North Sea coast of Denmark against the German high seas fleet. The future king left the Collingwood's sick bay and manned a gun turret throughout the naval battle, the largest during W.W.I. In fact the Battle of Jutland was the largest sea battle in naval warfare history before or since in terms of the numbers of battleships and battle cruisers engaged.

If the questioner had asked who was the member of the British Royal Family to see active service most recently, many who follow the news would know that the answer is the Queen's grandson, Prince Harry. As a junior officer he has seen active service with his regiment, the Blues & Royals, in Afghanistan.

The last member of the Royal Family to see battle prior to Prince Harry was his uncle Prince Andrew, the Duke of York. He flew a helicopter in various engagements during the Falklands War in 1983.

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Tuesday, March 20, 2012

(No.191) CNN: 'the Communist News Network'?

"CNN: 'the Communist News Network'? "

by Alastair Rickard

In my previous column on RickardsRead.com, "Cruising with Fox News" (posted March 11, 2012), I wrote about the widening political gap in the U.S., one promoted by major elements of the media, most prominently by the cable news networks Fox News and MSNBC.

I received a number of interesting responses to the column from readers in the U.S. and Canada. I will quote from several of them and then conclude with a few additional comments of my own.

A Canadian businessman who is often in the U.S. wrote that "your observations are all too accurate. What a sad state of affairs. My 'insight' on this fractured view of American political reality was having a middle-aged American woman advise me that CNN [i.e., Cable News Network] was the communist news network. The American political divide is not just a chasm, it is a very deep and broad canyon."

Another Canadian, a journalist, said of the column: "This is bang-on! As it is I cringe slightly whenever I cross the border" while another Canadian currently vacationing in the U.S. wrote to say that he thought the column was a "great read. I am still in Florida and bombarded by media nonsense. The election is Obama's to lose in my opinion. The GOP seem to have simply gone crazy."

An American university professor emailed that "you've hit the nail on the head. We are seeing pure propaganda masquerading as news in the U.S. and it is rapidly undermining the society. Unfortunately there seems to be a large section of the population that laps it up, judging from the stupid and untrue accusations against President Obama contained in emails I receive daily from 'educated' friends. All they would have to do to learn that the accusations are false is visit one or more of the 'fact check' sites found on the web (e.g., Snopes). However, like school children who can't wait to pass on gossip, they blindly, gleefully, and automatically forward the message, thus undermining their claim to a modicum of intelligence or education."

This correspondent concluded that "my students parrot the swill they hear from their parents (thus contradicting the view that kids don't learn anything at home), and my only hope is that I can help them to think critically. If we can't expose this crap for what it is, we could see a very nasty turn. ... Keep on writing it as it is!"

A New Yorker wrote to say that "I enjoyed your last posting re Fox and MSNBC. As usual right on the mark. .... The problem with economic experiments is that unlike scientific experiments, they cannot be replicated. So, for example, bailing out GM and Chrysler was an experiment (that) seems to have produced a positive result. But it cannot be replicated. ... At dinner last night a good friend defined a debate between Mitt Romney and Newt Gingrich as the Mormons vs the Polygamists."

Another Canadian related in his email that "I've been in Orange County, California for over a month now and I can tell you our American friends do not like paying taxes. If, and it is a huge if, a national sales tax of only 1% was implemented, the U.S. would be deficit free in only 36 months. ...

"There is no state that proves your thesis more than California. There is an initiative in the state legislature currently that appears to be like the Gordian knot. The citizens, by way of their famous propositions, voted to have increased educational services, which they can ill afford. The problem: they will not support the tax increases to pay for what they voted for on the proposition. Governor Brown was quoted in the L.A. Times this a.m.: 'the citizens of California are at war with the citizens of California, a war which neither side can win' ."

In response to these correspondents as well as others who wrote in response to RickardsRead.com column No.190, I offer a few more thoughts of my own on the subject.

The tax cuts that originated with President Bush and the Republicans, the ones the congressional GOP dearly wish to preserve, were unwise and are unsustainable and are entirely incompatible with the services which the great majority of of American voters wish their government to provide. Somehow, some time a majority of American voters must, if economic disaster is to be avoided, face up to the prospect of actually paying the taxes required to sustain the government services a majority of voters wish to continue to receive.

Unlike the Tea Partiers and political simpletons and cynics who currently seem to dominate so much of political discussion in the U.S., such as it is, reality will sooner or later confront American voters: reduction in government spending as the solution to the critical government deficit problem is nonsense unless coupled with a substantial increase in tax revenue. That reality is not altered by the fact that this 'expense reduction only' solecism appears to have been embraced by an alarming number of Americans, egged on nightly by Fox News and other boils on the American body politic.

A significant proportion of the American electorate seem to reside in a political fantasy land, one nourished by the misrepresentations and distortions of too much of the media and too many of the politicians. Should one be somewhat optimistic about more members of this group starting to vote their own best interests, something many of them failed so conspicuously to do in the two elections won by George W. Bush as well as in the 2010 congressional elections?

Dare one hope that enough Americans can be persuaded not to be indifferent to their own best interests, something from which they have been routinely distracted at election time by a smokescreen of politically divisive 'social issues' ?

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Sunday, March 11, 2012

(No.190) Cruising with Fox News

"Cruising with Fox News"

by Alastair Rickard


I have written occasionally in RickardsRead.com columns (see, for example, the examples cited at the end of this column) about the great political divide which exists within the U.S., one that is widened, reinforced and promoted by certain partisan media, in particular cable news broadcasters: Fox News on the right and MSNBC left of centre. In their political news and commentary they follow familiar paths of sycophancy or disdain.

For a Canadian context understand that on the American political spectrum these days Prime Minister Stephen Harper would qualify as middle of the road, not quite an 'Obama socialist' but at least a 'red Tory' in our political lexicon.

The bizarre fracturing of the American body politic is increased this year by the rise of the Tea Party movement on the Republican right, the endless Republican presidential nominee debates in which candidates have repeatedly trashed each other in the competition for votes in state primaries and by the run-up to the Nov. 2012 presidential election.

As Jeffrey Simpson, the longtime (Toronto) Globe and Mail columnist and one of the very best in this country, recently wrote of this year's current and former Republican candidates for the 2012 nomination: "A more dismal group has not been assembled since Sarah Palin dined alone. ... [They are] a group characterized by insularity, intellectual shallowness and meanness of spirit, coupled with an unshakeable eagerness to pander to every holy roller, Tea Partier, gun worshipper, global warming denier, government hater, nativist and millionaire financier ...."

This is the Republican Party's group of candidates for the presidency among whom Fox News urges its viewers to discover a saviour of America. To which some readers may say: what can you expect from a pig except a grunt? But ....

The divisive and and destructive political gulf between right and left in the U.S. was underlined for me during a recent transatlantic cruise when one's hard copy news options are non-existent and broadcast news outlets severely limited. For a news junkie like me this produces a certain desperation leading to a lowering of the news bar, i.e., any port in a storm.

For some reason both the Fox News and the MSNBC cable news signals were provided by the ship's limited television service. To switch from one to the other searching for news from North America was to produce a feeling of wonder: did the hosts and commentators live in the same political universe? One could only conclude they do not.

Not only were they yelling at one another across what was clearly an unbridgeable political chasm but if it could be said that there was any sort of dialogue at all, it was a dialogue of the deaf. In any case one can't have a dialogue with nonsense.

President Obama, a middle of the road and fairly pro-business chief executive, is routinely referred to as a "socialist" by Fox News' talking heads and by others on the American right. Such references spring either from ignorance or deliberate misrepresentation; they cannot reflect any real understanding of what actually constitutes socialism.

Awkward facts highlighted by President Obama (among others) are routinely ignored. For example: that Americans with incomes of more than $1 million per year paid on average 47% tax in 1972 but 25% in 2010; that the best off 5% of American families had a 16.1% share of ALL income in 1985 and a 20% share in 2010. Clearly the Republican/Fox News view that Obama is a socialist springs from both a fervent and fervid resistance to any political suggestion that the steadily growing economic inequality among citizens of the United State should be addressed by government.

As between the two cable news outifts, the liberal MSNBC (in a Canadian political context think mid to somewhat left of centre segment of the federal Liberal Party) and the extreme right wing Fox News (de facto the Republican Party's official broadcaster), Canadians generally would find it easier to identify with MSNBC news coverage.

The Fox News talking heads occupy an ideological cloud cuckoo land where they apparently feel free to make up their own facts as "responses" to what they routinely refer to as the American "mainstream media", i.e., apparently anyone to the left of Fox, any media which don't see the U.S. and the world as Fox does.

Whenever I watched Fox News it reinforced my view that relatively few Canadians would buy into the Fox News right wing approach to news and politics; it is just too simple-minded, parochial and unsophisticated.

I think my view has been borne out since the spring 2011 launch in Canada of the Sun News Network, what has been dubbed by its critics as 'Fox North'. It is a cable news channel owned by Quebeccor Media and headed by a former press secretary of Prime Minister Harper, Kory Teneycke. By June 2011 its average audience was 12,900 [sic].

I have made it a point to watch the Sun News Network from time to time. It is pathetic to the point of being laughable in its efforts to imitate the right wing tone and approach of Fox News. Indeed Canada's own "Fox News North" seems to be following a format dedicated to presenting the journalistic equivalent of Monty Python's silly walk.

Footnotes: selected RickardsRead.com archive references:

1. "Inferior news & canned travel advice," column No. 157 posted to RickardsRead.com on June 30, 2011.

2. "Fox news, Obama & U.S. fantasists," column No. 126 posted Dec. 8, 2010,

3. " Wankers, wingnuts and Fox News," column No.66, posted Dec. 2, 2009

4. "Cable news toothache," column No.22, posted April 12, 2009


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Monday, March 5, 2012

(No.189) Sun Life Financial: some comments

"Sun Life Financial update:
smart moves, gormless prats & loblolly boys"

by Alastair Rickard

On Feb. 29, 2012 major financial media, like the (Toronto) Globe and Mail's Report On Business, ignored the previous day's announcement of a significant change initiated by the new Sun Life CEO Dean Connor. He replaced the head of Sun's Asian operation by reaching into the second level of the senior ranks of Sun's Canadian operation for a new president of Sun LIfe Asia: Kevin Strain.

As background to the Strain appointment one needs to understand that the role Kevin Strain has filled at Sun Life Canada for several years (Senior V-P, Insurance and Investments) had been filled prior to his appointment to it by a Sun Life executive from its U.S. operation. [Clarica Life, the demutualized Mutual Life of Canada, had been taken over by Sun soon after the federal rules allowed.]

He had been imported (unwisely in my view) by Sun Corporate to replace Mutual/Clarica's Barry Triller, an actuary but a very experienced and savvy senior executive into whose DNA had seeped a fundamental understanding of distribution and agents and the core reality that we were in the business of 'selling stuff'. Triller had the loyalty and trust of the Mutual/Clarica (now Sun Life) career sales force but was pushed out of Sun Life as part of the inevitable purge in the post-acquisition/integration period of most senior Mutual/Clarica executives.

[In the interests of clarity: I became for a few years an executive in Sun Life's Canadian operation by virtue of the Mutual/Clarica takeover by Sun. I was not shown the door by Sun but I did decide to leave after a few years, having said everything I wanted to say to senior management -- at least twice.]

Triller's American replacement, whose conduct I observed at close range, knew very little about Canada and in my opinion almost nothing worth knowing about career agency distribution, i.e., about the system the Mutual/Clarica version of which Sun had paid hugely for. His U.S. life insurance industry background and clear preference was 'brokerage' distribution. His unsupportive attitude to career agency distribution and his negative decisions affecting this major new Sun Life asset in Canada soon became evident to the career agents (then as now the principal engine of Sun individual sales activity and profitability in contrast to its continuing brokerage operation in Canada).

The Mutual/Clarica/Sun Life career agency system became demoralized and pinched of support and came perilously close to being run into the distribution ditch -- as indeed Sun had managed to do gradually in the 1990s with its own Canadian career agency distribution system. To paraphrase T.S. Eliot: Strain's predecessor had a mind so fine that no valid idea involving Canadian career agency distribution could violate it.

After far too long a period had elapsed of enduring this sort of senior 'leadership' Kevin Strain was appointed to the role to help rehabilitate a distribution system approaching dysfunction. He worked with (among others) Jack Garramone, the head of the former Clarica now Sun Life career system, a very smart and experienced agency executive who had come over to Mutual/Clarica after it had acquired Met Life's Canadian operation.

Another key player was longtime Sun executive Vicken Kazazian who had a reputation as a problem solver and who, while not involved previously with direct agency responsibilities, had an understanding of and empathy for the career agency system -- unlike some of his 'original Sun' peers [see footnote 1 at the end of this column].

Strain apparently impressed Dean Connor during the latter's brief stint as president of Sun's Canadian operation ( in his role Strain reported to the Canadian president), a period which occurred between Kevin Dougherty's two terms as Sun Canada President, the second of which is ongoing. Last year, not a good one for Sun Life worldwide, Sun's Canadian individual insurance sales still increased by 9% year over year -- impressive in both a company and an industry context.

While I would not describe our relationship as much more than aquaintanceship I have known and observed Strain since he joined Mutual Life from London Life in the 1990s; they were Canada's two leading career agency life insurance companies. Although Strain is an accountant and his area had largely been in finance he, like Dougherty, demonstrated an affinity for and understanding of agency distribution and of the nature of the core of the insurance business: selling stuff.

Now, as then, I regard Strain as an able insurance man. In my experience this sets him apart from the sort of bean counters from la-la land (by definition a state of mind characterized by unrealistic expectations) one tends to encounter in a company's finance function, gangs of corporate loblolly boys best suited to little more than assisting with budgetary amputations. Much the same was true of certain gormless prats to be found at that time among those in the ranks of 'original Sun Life' executives for whom the idea of actually being in the selling business seemed somehow infra dig if not downright grotty.

I think Dean Connor's somewhat surprising choice (a bit surprising to me at least) of Kevin Strain as head of the company's Asian operation is not only interesting and indeed imaginative but may well turn out to have been inspired.

Sun Life has poured much treasure into its Asian operation, especially in recent years and particularly into the operations of the companies in India and China in which it actually has only a distinctly minority ownership interest. Former CEO Don Stewart, for whom I had and have a high regard as a person, seemed to me to be focused inordinately on Sun's future in Asia almost to the exclusion of what should also have been directed to support and enhance the company's engine of profitability (post-Clarica acquisition): its Canadian operation which de facto has supported Sun's Asian adventures [q.v., footnote 2].

Strain will need to examine closely and ride herd on Sun's 'investments' in its Asian operations. They need more and better senior management attention, all the more so at a time when its individual life sales in Asia (2011) declined by 10%. I have commented previously in RickardsRead.com columns on Sun's Asian operations and will not rehearse those comments here [q.v., footnote 3].

However I do note, for example, that the increase in Sun's net income from Asia from $92 million in 2010 to $138 million last year was supported, company management tells us, by for example "the favourable impact of changes to actuarial estimates and assumptions" (question: pricing assumptions like those that kept the Sun UL product for Canadian brokers underpriced for so long?) and also supported by "reduced levels of new business strain from lower sales in India and Hong Kong".

I will not examine in this column Sun's 2011 results although there are ample interesting points to reward one's attention. For example: the financial impact of Sun's "run-off" of that portion of its reinsurance (retrocession) business which it could not sell or for that matter even give away [q.v., footnote 4]; or the huge financial penalties Sun ultimately incurred because of its ill-advised involvement with the variable product business in the U.S. and the related and financially unfortunate acquisition for $2.6 billion (Can) in 2001 of Keyport Life of Boston, an annuity company.

I do want to touch on a couple of the strategic decisions made (without delay) by incoming Sun Life CEO Dean Connor who replaced Don Stewart on Dec. 1, 2011.

1. Connor took a wise decision to have Sun stop issuing individual insurance and variable annuity business in the U.S. The variable annuity decision may seem logical, even inevitable; the one involving insurance is less obvious. The reader needs to understand that Sun made the error some years ago of moving its U.S. individual insurance business away from a career agency distribution base to a half-baked, tax-oriented, high end market approach relying on distribution through PPGAs.

This career agency distribution system mistake was also replicated (gradually) in Sun Life Canada and came to involve 'brokerage' of one sort or another. As I discovered when I was asked to take a look at Sun's then "managed channel" in this country, Sun in Canada was -- pre-Clarica purchase -- likely still getting 3/4 of its new individual insurance business from former exclusive Sun career agents who had been cut loose. This comedy of distribution errors eventually produced for Sun Life in Canada declining sales, decreased market share and minimal to non-existent individual insurance product profitability on new sales.

In Canada this unsatisfactory distribution reality was addressed effectively by Sun with its 2000 purchase of Mutual/Clarica and its large career agency distribution system. No such opportunity offered itself in the U.S. and given the demands on Sun's financial resources these days (foreclosing the re-creation of its own American career system) Connor did the right thing and deserves credit for biting the bullet in terms of Sun's individual insurance operation in the U.S.

2. Sun's recent "strategic review" initiated by Connor repositioned Sun's corporate focus on growth in four "pillars", the first of which is "continuing to build our leadership position in Canada in insurance, wealth management and employee benefits". To which I say amen. It is about time the company properly prioritized its Canadian engine of reliable profitability.

The corporate repositioning directed by Dean Connor addresses, within Sun Life, that tendency for financial institutions to get bigger without becoming more coherent. This was well illustrated leading up to the Wall Street meltdown ca 2007-8. Neither corporate size nor lordly executive status provide prophylaxis against the embracing of bad ideas by senior management.

Dean Connor's early initiatives and decisions as Sun Life Financial's new CEO deserve attention and support. As for Donald Stewart, Connor's predecessor, he deserves the sort of public credit he earned but has not yet received from most of the financial services paparazzi for keeping Sun Life Financial out of a financial sewer approaching the depth of the one into which Manulife's senior management mindlessly jumped, a seriously misguided leap the results of which will continue to be a stench in the nostrils of that company's shareholders and policyholders [q.v., footnote 5].

Footnotes: RickardsRead.com archive sources:

1. "Sun Life & Manulife: returns & departures", column No.132 posted Jan.15, 2011.

2. "Sun Life's Canadian Jewel", column No. 138 posted Feb.22, 2011.

3. "Sun Life numbers: kumquats & apples", column No. 153 posted May 24, 2011.

4. " Sun & Manulife: bye bye retrocession", column No. 149 posted April 28, 2011, and
" Manulife retrocession: like a dog turd in dung", column No. 161 posted July 24, 2011.

5. "Sun Life: nails & screws", column No.178 posted Nov.18, 2011, and various other columns on RickardsRead.com since Jan. 2009; for example column Nos. 177, 173 & 143.

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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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