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Spring/Summer 2010



    A Word from Daniel Minihan

    Volatility continues to be the theme in world markets with the intervening period since our last newsletter seeing the market move back up to 12 month highs, only to then fall back in June and July to once again show signs of rising.

    The risks worth taking

    Almost all investors are familiar with the concept of active management and understand the concept of trying to pick the right stock at the right time in order to benefit from its price appreciation. Opposed to this approach is the concept of passive, or index management, which simply tries to replicate the return of ‘the market’ at minimal cost to an investor. In both cases a return will be generated that will be either lower than the overall market (the index fund due to fees or the active manager who makes the wrong bet) or above the market (the active manager that makes the right bet).

    The Business of Insurance

    In our previous Winter/Spring edition we highlighted the very real issue of underinsurance in Australia particularly in regards to personal insurances’ such as Death, Total and Permanent Disability, Income Protection and Trauma Insurance. Whilst this continues to be an ongoing issue, our focus in this article is on the importance of Business Insurance and in particular the need to insure key people and have business succession plans in place. There are essentially two forms of business insurance – ‘Key Person Insurance’ and insurance to fund ‘Buy/Sell Agreements’. Both these insurances have quite separate and distinct purposes, however they are both equally important in ensuring a business is well equipped to deal with an unforseen event. Below we provide a summary of some of the characteristics of these insurances.

    Traumatic Times

    Australia continues to experience an increase in cancer cases, heart disease and stroke, however with the ever growing advances in medical research the chances of surviving a serious medical event have also increased. This was not the case only a decade or two ago, where such a serious medical event would have usually resulted in death. In the end, survival is invaluable; however in the mean time such events can be extremely traumatic and have serious consequential effects on lifestyle, family and work.


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