PB Week: Adrian Colosso's guest blog
To misquote Charles Dickens, these have been the worst of times and, if we believe everything we read and hear via the global media circus, the best of times are a long way off, writes Adrian Colosso, chief executive of Heath Lambert.
I started the week catching up with an old friend and client in the construction sector. The conversation turned (after I had exhausted all my usual plaudits on the resurgence of the mighty Hammers!) to the lack of credit insurance but more importantly how the slowdown in his sector was not isolated to the UK, but was affecting the supposed 'boom' countries of Dubai and China. The Middle East will see a halt in many of the huge, privately funded construction projects, with only civil projects getting the go-ahead. The likelihood is Dubai will continue to resemble Stratford over the coming year but at least the East London regeneration has purpose, coupled with a strict 2012 deadline.
Litmus test
The litmus test for the market in the first quarter will be reflected in insurers' results in the next few weeks. Certain insurers have relied heavily on interest earnings and prior year releases, and these will be at an all time low in 2009. It was interesting to read the joint Confederation of British Industry and PricewaterhouseCoopers survey this week which claimed the insurance industry was out-performing its peers in the financial services sector. It even said that although insurers' business volumes fell consistently throughout 2008, predictions are being made that volumes may 'rebound in the next quarter'.
Different animal
What is obvious in the broking community is that international wholesale business is a different animal. However, this will be the year the regulator starts to sharpen its teeth, and rightly so as we have seen brokers, and clients, really begin to feel the heat, especially on whether they can tighten up operational controls, and awkward questions will be asked on how the corporate governance works within the company. Those who have borrowed heavily over the past few years are going to have to pay it back, and as easy capital has dried up, then the day-to-day ebb and flow of cashflow versus cost becomes front of mind. I don't envy anyone seeking to refinance in the next six months.
We seem to have started the year in the eye of the perfect storm, but myself and my team at Heath Lambert are ready for the challenge.
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