Lloyd's of London

Today, we went to one of the oldest and most prestigious insurance agencies in the world, the Lloyd's of London. We left campus in our business attire around 10:00AM for our 11:30 appointment. The building was absolutely magnificent looking. Its architecture was different from anything that I have seen before (see picture below).



Once we were inside, we went through a security check and were issued i.d. badges. They charged the group £100, but Dr. Michello took care of it so that each student only had to pay £1 each! Once we were in, we were guided through the business floor to a conference room. In the conference room, our guide informed us of the history of Lloyd's and what they do.



Lloyd's began in a coffee shop where underwriters worked with merchant vessels to insure their ships during voyages. The owner of the coffee shop, Edward Lloyd, did not actually participate in any of the business deals, however, he did provide the environment for a market to take place. Similar to the way it took place in 1688, Lloyd's currently serves as a market place where underwriters and agents can do business.


Currently, the most riskiest part of their business entails "terrorism insurance." Some of their most eccentric things that are insured are body parts (i.e. nose for wine taster, hands for a surgeon, etc). One falsity that was corrected while we were there was that Jennifer Lopez's rear-end was NOT insured by Lloyd's.



Lloyd's of London Building



The floor where underwriting teams and agents meet


The broker sits on a stool at the end of the table and speaks to the underwriter (corner of the table) and his team (two individuals to his right).


1st floor looking up

Monday, July 28: 5th day of class

Today we reviewed Chapter 6 in our text books. The greater portion of our time discussing Baisle I's Tier I & II ratings and Baisle II's three pillars. We discussed how Baisle I inadequitely measured for the risk specifically pertaining to residential home loans. Baisle I had prime and sub-prime loans equally weighted when pertaining to risk, while Baisle II accounts for the risk better by showing that sub-prime loans are more risky. We briefly discussed what is being proposed for Baisle III, since Baisle II is already outdated.

Tomorrow, we are going to the Lloyd's of London. We are gettin dressed in our suits and doing it big in London!

Sunday, July 27: Brighton Beach

Today, Jessica, Britne, Cody and I decided to go to the beach! We took the Brit-rail to Brighton. Everybody was saying that it was the most beautiful day that they have had here this year. Their beach was covered in rocks instead of sand like the ones we were used to in Florida, the water was freezing, and people were everywhere!! However, we had a great time. We stayed there from 12:00 - 8:00, without sunscreen, so I look like a lobster!

On the way back, we saw these girls stomping and clapping to the "We will, we will ROCK YOU" song on the tube (subway). Everybody was looking at them like they were crazy, so our group decided to join them and sing with them. Ha. We had the whole car doing it. It was really funny! Needless to say, when people asked where we were from, they were not surprised when we said America.

Good Times!

Pier next to us with a carnival at the end

OCEAN!!

Stonehenge and Salisbury

Today, I got to see one of the oldest and mysterious places in the entire world, Stonehenge. It was more amazing than I had imagined. Some of the rocks came from great distances, and can weigh up to 16 or 17 tons! There are various assumptions about what it was there for. Some people say a calendar, some say royal burial ground, some say it is ritualistic, and others say ALIENS. Speaking of aliens, the crops where some "crop circles" were found in were right next to stonehenge. Weird, ay?

After Stonehenge, we visited a little town called Salisbury and saw Salisbury Cathedral. It was a beautiful place and a great little town. Today was a great experience that I will always remember.

Rockin it out...

Stonehenge

Salisbury Cathedral

Thursday, July 24: Bank of England

Today we visited the Bank of England. We left the campus around 8:30 and arrived at the bank at about 9:45. We had to go through security before we could get inside the bank. There were no pictures allowed after the security check point, so I don't have anything from the inside. We were given a brief description of what the bank's responsibilities are and how they changed in 1997. After the presentation, we watched a "drama documentary" about what would happen if their was not an entity that controlled interest rates to maintain inflation.

Afterwards, we were allowed to ask questions. A good question was asked with regards to why Great Britain has not gotten on board with the euro. He informed us that the euro would not benefit GB because their needs are not the same as other countries. It makes since that their economy is vastly different from the others using that currency, but I think it's mainly because GB does not want to be told what to do by someone else.

Following the question/answer session, I GOT TO PICK UP A BLOCK OF GOLD!! There were four cameras and a lady watching me, so I didn't try to take it with me. Visiting the bank was a very educating experience.

Bank of England

Big timing...

Wednesday, July 23: 4th Day of Class

Today, we began discussions of various ways to determine whether or not a market is efficient by reviewing Interest Rate Parity, Purchasing Power Parity, and the Fisher Effect. We learned how to take advantage of an inefficient market by using covered interest arbitrage and uncovered interest arbitrage. While reviewing interest rates, we studied how interest rates not only effect inflation but also directly relate to the depreciation of currencies.

For instance: When the Federal Reserve lowered interest rates earlier in the year, they inevitably setup the dollar to depreciate. They made the market borrower friendly since they would be able to borrow money at a lower interest rate. However, they harmed the investment portion of the loans. Investors are not getting good enough returns from the interest rates offered, so they are taking their money to other countries. Currently, an investor would profit greatly to convert their currency to dollars, borrow money in the U.S. at a lower interest rate, and invest in a country that is offering more friendly rates. Therefore, we are losing foreign investors (and their capital) to other countries.

The London Eye

Today was our first full sunny day here, so decided to take the trolley and underground over to the London Eye this afternoon. The London Eye is like an over-sized ferris wheel. It was an enjoyable experience, except for the fact that I don't like heights. It cost about £15, but it gave me a lot of good pictures of the town.


The London Eye


Dan, Cody, and I.


Palace of Westminster




Important, but can't remember?


Kind-a don't like heights.


The Gherkin (Egg shaped building)