A Brief Note On The Group Inc.

The company’s finance department had the chance to reduce the company’s weight in mortgage-backed securities. However, it chooses not to. The company’s financial adviser did not evaluate any risk that would emerge in the economic sector of the U.S during that year. Furthermore, the company had an opportunity to identify the consequence that would result due to the falling mortgages; somewhat the company neglected this risk and increased in value of portfolio.

Since mid 1990s, the subprime mortgage market has grown rapidly experiencing a phenomenal 23% compound annual growth rate to 2006. The total subprime loan originations increased from $65 billion in 1995 to $613 billion in 2006. The subprime sector has become a significant sub-sector of the total residential market accounting for 21% of all residential mortgage originations in 2006. Similarly, by year-end 2006, total outstanding balance of subprime loans grew to $1.2 trillion, approximately 12.6% of all outstanding mortgage debt.

Effective February 7, 2013, SeaBright Insurance Company (“Seabright”), a Seattle-based insurance company specializing in workers compensation, entered into run-off. In 2012, Enstar Group Limited (“Enstar”), a run-off specialist, purchased SeaBright. SeaBright continues to manage existing claims but no longer writes new or renewal business, which means that premium activity has slowed down. In 2015, a major change occurred when all of SeaBright’s net liabilities (i.e. loss reserves associated with its prior workers comp business) were shifted to an Enstar affiliate, Clarendon National Insurance Company, through a reinsurance agreement. Circumstances that led the company to run-off: SeaBright was placed into run-off driven by weakened underwriting performance associated with reserve strengthening actions for accident years 2007 through 2009, primarily related to increasing medical cost trends. Additionally, SeaBright was facing marketplace challenges associated with its geographic and coverage lines expansion. Seabright has had to deal with significant pressure from its workers comp book developing adversely year-over-year and having to liquidate investments to satisfy claims and expenses. The reinsurance contract with Clarendon did provide major relief but SeaBright still remains a going concern and without premiums coming in and asset base rapidly shrinking, its solvency status as an insurance company remains questionable. The key now is to track the level of credit risk

Shorewest’s private and family owned status was an important factor, based on the assumption it would provide a better culture and more opportunities, unfortunately, when conducting a financial analysis of the company based on common measurement criteria, privately owned has drawbacks. Shorewest is not required to generate or share publicly, annual reports, normally where financial and market data is typically available. Without easily assessible financial data, it is hard to measure profitability, however, the data available does demonstrate a track record of home sales and agent recruiting. Growth and resiliency appear to be a strong competency, the company survived the housing crash with diversified service offerings in their mortgage, title and insurance divisions. Creation of their home services division in 2011, designed to coordinate moving and utility transfer activities, shows courage and innovation. This service was discontinued in August, which also demonstrates sound measurement and financial decision making, many companies are slow to cut the cord when a product or service is not performing to plan. Even without specific financial data, there is solid evidence to support adequate financial efficacy and long-range planning.

The recent mortgage crisis in the US was unprecedented. It led to a massive clampdown of financial institutions, occasioning one of the worst financial melt-downs the US has ever faced (Jaffe, 2008). Quite naturally, it would be necessary to examine the cause of the crisis in order to draft prophylactic measures that would prevent the same financial disaster in the future. This paper will discuss the events that led to the mortgage crisis.

The insolvency seen in the Housing Market manifested in the large number of stagnant foreclosures caused a dramatic decline in housing prices, which resulted in many homeowners owing more money on their houses than they are worth. Market-level insolvency is caused by capital flight in a specific market in response to a scare during a decrease in solvency. During the scope of this recession, the initial, progressive decrease in solvency was caused by a negative Net Capital Outflow in conjunction with the cash-vacuum produced by the US Budget Deficit, and the scare was caused primarily by the failure of several significantly-sized corporations and a rapid increase in foreclosures caused by the loss of a large number of jobs.

The return on equity ratio for Disney between 2009 and 2010 dropped slightly from .22 to .189. This is a result of a slight reduction in share holder equity and a significant reduction in net income. The drop in ROE could cause share holders to worry, but in this case the reduction is not sever enough to cause panic.

The mortgage crisis we are experiencing in the United States today is already ranking as among the most serious economic events since the Great Depression of the 1930’s. Hardly a day goes by without a story in the newspaper or on the cable news stations reporting about the increase in the number of foreclosures across the United States. The effects of this crisis have spread across all financial markets, where in the end all of us are paying a price for this home mortgage crisis. When the housing market collapsed, so did the availability of credit which our economy depends upon. The home mortgage crisis, the financial crisis and overall economic crisis all need to address by the

services that cater to the customer’s unique needs. They offer both their commercial and residential

Based out of Boise, Idaho, McBride Financial Services is a small mortgage lender that is in its beginning stages. The firm’s focus will be in standard, FHA, and VHA loans for home refinancing and purchasing. The company hopes to increase its offices into Wyoming, Montana, North Dakota, and South Dakota. “McBride Financial Services will be the preeminent provider of low cost mortgage services using state of the art technology in the five state area of Idaho, Montana, Wyoming, North Dakota, and South Dakota.” (University of Phoenix, 2005, 2011, para. 2). McBride Financial Services has decided to redesign it’s marketing plan so they can reach individuals that fit the profile of the type of consumer that

The asset turnover ratio of CVS has been fairly stable over the last 5 years from 1.66 in 2011 to 1.64 in 2015. However, the direct competitors average 2.72. In general, the higher the asset turnover ratio, the better the company is performing. It is a concerning factor, that the competitors are generating more revenues per one dollar of assets.

Clayton Properties LLC. is a small business based in Portland, Oregon, which was established in 1968. The company began as a small family-owned business which was operated solely by family members. At first, the owners purchased properties and rented them in as is condition. The business became very lucrative during the 1970s, when the Claytons were able to purchase over 40 houses in foreclosure. Some of the houses were in desperate need of repair, so the Claytons hired their son, who was a contractor,

Jeffery M. Berry obtained his doctorate from John Hopkins University. Berry now resides as a professor at Tuffs University teaching political behavior theory and American politics. In Doctor Berry’s novel titled, The Interest Group Society, Berry focuses on the interworking’s of indirect and direct lobbying in the United States. He analyzes the role of interest groups, pluralism, and PAC’s in order to dissect the complexities of interest group associations in the decision making process. Doctor Berry gathers information from the founding fathers, case studies, and legislative proceedings to analyze democratic theory. The Interest Group Society is directed towards an audience who seeks to obtain information on interest groups influence within

Countrywide was fueled by several incentives to write subprime loans. Over 28 percent of Countrywide’s earnings are related to subprime loans offered by the business to assist low income families obtain a home (Ferrell, et al, p. 387). With this said, Countrywide evolved their financial earnings through utilizing subprime loans. The most powerful incentive Countrywide obtained was being acknowledged as America’s leading home lender. Countrywide became so large and strong that they felt impregnable (Olster, 2010). With impeccable profits comes the desire to expand. Expansion incentives radiated throughout the housing market. Countrywide sought to expand their subprime loan offerings to contractors and those outside of the low income market

In the second half of 2007, the banking industry and financial market showed signs of considerable stress by raising the default rate of mortgage and the decline in the value of residential mortgage-backed securities. This had led to a re-pricing of many debt instruments. By the end of 2007, Citigroup declared that the fair value of its U.S. sub-prime related direct exposure could decline by 20%. This affected Citigroup’s financial results and would incur further losses in the future.