WEBVTT - Robinhood Unveils Credit Card, Carnival Earnings 0:00:02.960 --> 0:00:10.840 Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:18.759 Eastern on applecarplaying Android Auto with the Bloomberg Business App. 0:00:18.800 --> 0:00:22.000 Listen on demand wherever you get your podcasts, or watch 0:00:22.079 --> 0:00:24.520 us live on YouTube. 0:00:25.120 --> 0:00:27.920 All right, Good Wednesday morning from Bloomberg INTERACTI Broker Studio 0:00:27.920 --> 0:00:30.680 in New York City to our worldwide audience. We've got 0:00:30.680 --> 0:00:33.919 Bailly the Lipsholtz sitting in for Alex Steele. We're broadcasting 0:00:33.920 --> 0:00:36.560 live from the Bloomberg Interactive Broker Studio. We're doing the 0:00:36.600 --> 0:00:38.919 streaming thing on the intro web, so I think it's 0:00:38.920 --> 0:00:40.480 YouTube dot com. You go over there and you search 0:00:40.520 --> 0:00:42.880 Bloomberg Podcast and that's where you find. It's big news 0:00:42.880 --> 0:00:45.480 today for a good head of friends of Robin Hood. 0:00:45.520 --> 0:00:50.120 Markets stocks up three point six percent today. The company 0:00:50.159 --> 0:00:52.400 unveiling a credit card. I need more credit cards. 0:00:52.400 --> 0:00:54.120 Look at the stock here. Obviously I'm a Wall Street guy. 0:00:54.160 --> 0:00:55.200 All I care about is the stock. 0:00:55.440 --> 0:00:58.640 Stock's a fifty six percent year to date wow, trailing 0:00:58.640 --> 0:01:00.320 twelve months up one hundred and thirty two since it's 0:01:00.320 --> 0:01:02.480 got a seventeen and a half billion dollar market cap 0:01:03.320 --> 0:01:05.520 so big news coming out of our friends of Robinhood. 0:01:05.640 --> 0:01:07.760 Lat Ten of joins us. He's a chief executive officer. 0:01:07.959 --> 0:01:10.400 He's a co founder Robinhood. He joined us here in 0:01:10.400 --> 0:01:14.000 a Bloomberg interactive broker studio. I'm not on the robin 0:01:14.000 --> 0:01:15.440 Hood platform because I'm a gentleman. 0:01:15.480 --> 0:01:15.920 I need the. 0:01:15.880 --> 0:01:19.920 Swiss bank secrecy laws protecting me. But my twenty eight 0:01:20.000 --> 0:01:22.040 year old twins, who are the future of this thing, 0:01:22.120 --> 0:01:24.199 they are on Robinhoo. They're very happy. They were psyched 0:01:24.200 --> 0:01:26.679 that I was talking to Vlad. Talk to us about 0:01:26.680 --> 0:01:30.039 your news today. You're not just a commission free platform, 0:01:30.040 --> 0:01:32.600 which is in and of itself amazing, but you're now 0:01:32.600 --> 0:01:34.240 getting to the credit card business. 0:01:34.720 --> 0:01:35.000 Yeah. 0:01:35.040 --> 0:01:37.480 We were really excited to announce this. We've been working 0:01:37.480 --> 0:01:40.399 on it for quite a while and we didn't just 0:01:40.480 --> 0:01:43.720 want to launch another me too credit card. We really 0:01:43.760 --> 0:01:47.559 wanted to come in and do something special and really 0:01:48.000 --> 0:01:51.800 lead the industry. So it's really the best cash back 0:01:51.880 --> 0:01:54.920 rewards that we found in any credit card on the market, 0:01:55.160 --> 0:01:58.080 the best digital experience, and really the best design. We 0:01:58.160 --> 0:02:02.559 have a solid gold card that's basically a hunk of metal. 0:02:02.720 --> 0:02:08.480 It's extremely iconic, very simple, like very well designed. We're 0:02:08.520 --> 0:02:11.280 really proud of the product. Now the hard work comes 0:02:11.320 --> 0:02:14.720 of rolling it out. But even since the announcement, in 0:02:14.760 --> 0:02:18.200 the first few hours after the announcement, which was last night, 0:02:18.280 --> 0:02:20.400 we had hundreds of thousands of people signing up for 0:02:20.440 --> 0:02:24.639 the credit card, so it's it's looking very good so far. 0:02:24.800 --> 0:02:27.080 How does the credit card fit into the business, because 0:02:27.120 --> 0:02:29.680 I know early last year you guys announced a retirement products, 0:02:29.720 --> 0:02:32.880 so it feels like you're trying to expand away from 0:02:33.120 --> 0:02:34.840 the core trading platform. 0:02:35.200 --> 0:02:35.480 Yeah. 0:02:35.520 --> 0:02:39.200 So as a business, holistically, we're focused on three things. 0:02:39.360 --> 0:02:42.760 The first is being the number one platform for active traders. 0:02:43.040 --> 0:02:44.960 Right now, we're number two, but we have a path 0:02:45.040 --> 0:02:49.200 to being number one in some number of years, and 0:02:49.240 --> 0:02:53.120 that's really through user experience improvements, product innovations like twenty 0:02:53.120 --> 0:02:57.680 four hour market, adding new asset classes like Futures, new 0:02:57.720 --> 0:03:01.200 platform launches like our web Pro platform which we've announced. 0:03:01.520 --> 0:03:03.760 But we don't want to just be an active trader platform. 0:03:03.800 --> 0:03:06.280 We also want to grow wallet share with our customers 0:03:06.360 --> 0:03:09.480 and help them build wealth. That's where Robinhood Gold comes in. 0:03:09.840 --> 0:03:13.399 That's where our innovations and the retirement program with three 0:03:13.440 --> 0:03:16.080 percent match come in. And of course, now the credit 0:03:16.120 --> 0:03:20.120 card is sort of another pillar of us growing wallet 0:03:20.160 --> 0:03:23.240 share with customers and helping them do all of their 0:03:23.240 --> 0:03:26.160 financial activities in one place via Robinhood. 0:03:26.320 --> 0:03:29.960 So are you competing with this card with the bank 0:03:30.040 --> 0:03:31.400 issued visa master cards? 0:03:31.520 --> 0:03:33.400 Is that the market you're now going into. 0:03:33.919 --> 0:03:36.560 I think that we're trying to do something really interesting 0:03:36.600 --> 0:03:39.680 with this card. So if you think about premium credit cards, 0:03:40.000 --> 0:03:43.160 the best ones out there, accept less than half of 0:03:43.200 --> 0:03:44.040 the people that apply. 0:03:44.680 --> 0:03:47.440 Is that right? Half of that? Is that Chase Sephi 0:03:47.520 --> 0:03:49.720 or is that an Platinum or whatever. 0:03:49.880 --> 0:03:53.280 Those classes of credit card. It's really like the typical 0:03:53.440 --> 0:03:57.320 sort of like super prime premium rewards cards, and they 0:03:57.360 --> 0:04:00.200 have high annual fees. So what we want to to 0:04:00.240 --> 0:04:04.400 do is, in the same way that Robinhood democratized stock 0:04:04.440 --> 0:04:07.320 trading and made it accessible to a wider group of people, 0:04:08.240 --> 0:04:11.760 we want to open up the private client experience. I 0:04:11.800 --> 0:04:14.920 don't know if you've been to a Chase branch, but 0:04:15.520 --> 0:04:18.440 you can see there's two doors, one for the private 0:04:18.520 --> 0:04:21.800 clients and one for everyone else. And the whole idea 0:04:21.839 --> 0:04:26.200 behind Robinhood Gold is giving that private client experience for 0:04:26.240 --> 0:04:28.839 as little as five dollars a month, opening it to everyone, 0:04:28.920 --> 0:04:31.440 and it starts with the premium credit card. Of course, 0:04:31.480 --> 0:04:34.320 the retirement benefits where you get a three percent match, 0:04:34.680 --> 0:04:37.640 the first and biggest in the industry the five percent 0:04:37.720 --> 0:04:41.880 apy on our cash which is just an institutional grade, 0:04:42.000 --> 0:04:44.719 high yield offering that you have to have, you know, 0:04:44.839 --> 0:04:49.520 millions of dollars to match at other brokers. So yeah, 0:04:49.520 --> 0:04:52.000 we're putting all this together and we're seeing Robinhood Gold 0:04:52.040 --> 0:04:55.520 customers actually depositing the lion's share of their money into 0:04:55.600 --> 0:04:58.520 Robinhood and really growing with us. And I think we 0:04:58.600 --> 0:05:03.040 have an opportunity to offer them services for all their 0:05:03.040 --> 0:05:04.679 financial needs in BIB the perks. 0:05:04.480 --> 0:05:06.440 Are pretty sweet, as you mentioned, three percent cash back 0:05:06.440 --> 0:05:08.960 on all purchases. Do you make money off of this? 0:05:09.240 --> 0:05:09.400 Are? 0:05:09.600 --> 0:05:11.719 How is this going to be kind of another peg 0:05:11.800 --> 0:05:14.400 for the profitability and the growth of the company. 0:05:14.760 --> 0:05:19.400 Yeah, two things there. One is we do obviously any 0:05:19.600 --> 0:05:23.520 business line we enter, we intend to be profitable over 0:05:23.560 --> 0:05:26.479 the long run on a standalone basis, so not just 0:05:26.600 --> 0:05:30.039 a creative but we anticipate this being a profitable business 0:05:30.080 --> 0:05:35.120 line just within the card portfolio. And that's through not 0:05:35.240 --> 0:05:40.279 just the interchange transaction revenue, but also the lending business 0:05:40.400 --> 0:05:43.000 through the card. We anticipate this would actually be a 0:05:43.120 --> 0:05:47.280 very attractive card for people building credit over time, and 0:05:47.320 --> 0:05:49.640 not just folks that pay off their balance in full. 0:05:50.279 --> 0:05:52.880 And then the other side of it is we see 0:05:52.880 --> 0:05:57.159 that when customers adopt Robinhood Gold, their rate of deposit 0:05:57.240 --> 0:06:00.719 growth and account balance growth is much higher than non 0:06:00.760 --> 0:06:04.000 Gold customers. They also adopt our products at a much 0:06:04.040 --> 0:06:07.719 higher rate, and so even though they're getting so much 0:06:07.760 --> 0:06:11.760 more value with all these industry leading rates and value props, 0:06:12.360 --> 0:06:15.640 the revenue that accrues to the business from the gold 0:06:15.680 --> 0:06:19.440 relationship is also multiples higher than non gold customers. And 0:06:19.480 --> 0:06:22.599 we think the credit card, since it's so core to 0:06:23.120 --> 0:06:26.599 people's financial needs. Typically all of their the line's share 0:06:26.600 --> 0:06:29.360 of their spending goes through credit, and if you're using 0:06:29.360 --> 0:06:32.360 a credit card, much easier to grab the paycheck deposit. 0:06:34.120 --> 0:06:35.240 You need to carry his cash around. 0:06:35.279 --> 0:06:37.200 Now, this is the guy who walks around with hundreds 0:06:37.200 --> 0:06:38.119 of dollars in his pocket. 0:06:38.120 --> 0:06:41.040 I don't know why I asked myself to say, when 0:06:41.080 --> 0:06:43.520 you walk into a bar, the jersey short good cash 0:06:43.560 --> 0:06:44.200 on the bar there. 0:06:44.839 --> 0:06:46.280 Well, I mean, I'll show you what I've got in 0:06:46.279 --> 0:06:46.719 my pocket. 0:06:46.920 --> 0:06:50.640 Oh, he brought the card, very cool fourteen car So 0:06:50.760 --> 0:06:53.080 this all right, folks, on we're shoving you this card. 0:06:53.200 --> 0:06:56.560 It is it weighs something you got some hef to. Well, 0:06:57.080 --> 0:06:58.560 this is the card here, folks, it is. 0:06:58.640 --> 0:07:02.040 It's basically a gold bull. It's like it's not gold plated, 0:07:02.120 --> 0:07:04.320 it's a this is solid. 0:07:04.400 --> 0:07:07.359 Your numbers though I can't make it right now. 0:07:07.480 --> 0:07:10.400 That's the great thing about it because this is a 0:07:10.400 --> 0:07:13.720 digital first card, and we outlined all of the awesome 0:07:13.760 --> 0:07:21.000 digital features like virtual cards, like family focused suite of features. Yeah, 0:07:21.200 --> 0:07:22.840 you don't actually need the number on it. You can 0:07:22.880 --> 0:07:25.000 open up the app, look at the number, the expiration 0:07:25.080 --> 0:07:27.760 dates on there. The design of the card is minimal, 0:07:28.040 --> 0:07:32.000 only the robin Hood brand, the chip and on the 0:07:32.000 --> 0:07:34.320 back you have your name and that's pretty much interesting. 0:07:34.400 --> 0:07:36.840 So if it gets stolen or lost, you don't really 0:07:36.880 --> 0:07:39.800 have to worry about their actual number being used. 0:07:40.560 --> 0:07:41.880 Yeah, yeah, all right. 0:07:41.960 --> 0:07:46.280 So who is the typical robin Hood customer these days? 0:07:46.280 --> 0:07:47.080 Client? These days? 0:07:47.720 --> 0:07:51.800 A typical Robinhood customer, I would say, is someone in 0:07:51.840 --> 0:07:55.560 their thirties. They tend to be an early adopter of technology. 0:07:56.280 --> 0:07:59.000 They have you know, more half of our customers make 0:07:59.080 --> 0:08:04.920 over one hundred thousand dollars in annual income, so it's 0:08:05.000 --> 0:08:08.720 not sort of like the paycheck to paycheck customer as 0:08:08.920 --> 0:08:15.200 maybe some people think, and we also have much larger 0:08:15.240 --> 0:08:20.080 customers with big accounts. We recently have been introducing matches. 0:08:20.440 --> 0:08:24.400 In fact, last night we rolled out another initiative, one 0:08:24.480 --> 0:08:29.920 percent unlimited deposit match into Robinhood for all dollars deposited 0:08:29.960 --> 0:08:34.240 for our Gold members. So basically, most financial firms charge 0:08:34.240 --> 0:08:36.880 you a percentage to keep your money there as a 0:08:36.960 --> 0:08:39.920 management fee. We're paying you a percentage to move your 0:08:39.960 --> 0:08:43.400 money with us. And these types of offers have really 0:08:43.440 --> 0:08:46.360 attracted people with much bigger accounts. We've had customers with 0:08:46.400 --> 0:08:49.199 tens of millions of dollars moving those accounts to Robinhood 0:08:49.600 --> 0:08:52.680 and they've been very happy with the experience. So we 0:08:52.800 --> 0:08:58.040 have been adding capabilities to serve customers across the entire market, 0:08:58.200 --> 0:09:01.040 not just sort of in that middle tier, but also 0:09:01.320 --> 0:09:05.200 people with more money and people with less who are 0:09:05.200 --> 0:09:08.280 just getting started. We also would like to serve them 0:09:08.480 --> 0:09:11.480 and have been focusing on that demographic since day one. 0:09:11.520 --> 0:09:13.920 And VLAT When I talk to skeptics, they point out 0:09:13.920 --> 0:09:17.920 that you guys are heavily reliant on options trading, crypto volumes, 0:09:17.960 --> 0:09:20.960 and that driving the business. Paul mentioned their huge run 0:09:21.040 --> 0:09:22.880 up over the last twelve months, it's still down forty 0:09:22.920 --> 0:09:26.160 eight percent from the IPO price. What is the kind 0:09:26.200 --> 0:09:28.680 of mission in the next coming months and years for 0:09:28.760 --> 0:09:29.320 the company to. 0:09:29.320 --> 0:09:31.120 Get back to that IPO price and trade higher. 0:09:31.840 --> 0:09:34.480 Well, I think we've been doing really well focusing on 0:09:34.520 --> 0:09:38.720 the inputs of the business. I can't really control the 0:09:38.800 --> 0:09:42.360 stock price directly, but if we're growing revenues, if we're 0:09:42.360 --> 0:09:47.080 diversifying revenues, if we're launching innovative new products for our customers, 0:09:48.320 --> 0:09:51.439 I think we can kind of grow through market headwinds 0:09:51.480 --> 0:09:54.560 and high interest rate environment and be sort of like 0:09:55.160 --> 0:09:59.080 a company that thrives in all conditions. And you mentioned 0:09:59.120 --> 0:10:02.600 the revenues and you know, options trading and all these things. 0:10:02.640 --> 0:10:05.840 But what's happened in the past couple of years is 0:10:05.880 --> 0:10:08.959 the revenue profile of the business has diversified as we've 0:10:09.000 --> 0:10:11.600 rolled out all these products. As of the last earnings 0:10:11.600 --> 0:10:14.880 report several earnings calls, more than half of the revenue 0:10:14.920 --> 0:10:18.480 is actually net interest margin, not even transaction base. So 0:10:18.559 --> 0:10:20.760 as we add more of these products, like the five 0:10:20.840 --> 0:10:24.920 percent yield on your cash, the profile of the business 0:10:25.200 --> 0:10:26.160 has also changed. 0:10:26.400 --> 0:10:27.960 All right, flat, thank you so much for joining us. 0:10:27.960 --> 0:10:30.080 Really appreciate you coming into our Bloomberg and director broker 0:10:30.120 --> 0:10:32.920 studio of lad Tenev. He's the chief executive officer, co 0:10:32.960 --> 0:10:36.280 founder of Robin Hood. The news Today, Robinhood unveils a 0:10:36.320 --> 0:10:38.520 credit card and folks, it hasn't hef This is a 0:10:38.640 --> 0:10:41.400 unique credit card. It's been a further push beyond the 0:10:41.440 --> 0:10:44.559 trading business there in the stock performing very well there. 0:10:44.559 --> 0:10:45.360 We appreciate that. 0:10:46.920 --> 0:10:50.800 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:10:50.840 --> 0:10:53.959 weekdays at ten am Eastern on applecar Play and and 0:10:54.160 --> 0:10:56.840 Roight Auto with the Bloomberg Business app. You can also 0:10:56.920 --> 0:11:00.120 listen live on Amazon Alexa from our flagship New York 0:11:00.120 --> 0:11:03.120 station just Say Alexa playing Bloomberg eleven. 0:11:05.200 --> 0:11:06.839 One of the issues here is we think about the 0:11:06.920 --> 0:11:10.880 ripple effects of what happened in Baltimore yesterday, is who's 0:11:10.880 --> 0:11:12.679 going to pay for this stuff? And that kind of 0:11:12.720 --> 0:11:15.080 goes to the insurance discussion, and so we have a 0:11:15.120 --> 0:11:18.719 just insurance discussion. We turned to our expert, Matthew Palozola. 0:11:18.760 --> 0:11:21.800 He's a senior analys insurance annalys for Bloomberg Intelligence he 0:11:21.880 --> 0:11:25.360 joins his life in our Bloomberg Interactive Brooker Studio. So, Matthew, 0:11:25.360 --> 0:11:27.920 it's not every day that we have an event like 0:11:27.960 --> 0:11:31.240 we saw yesterday in Baltimore. From your perspective, from the 0:11:31.280 --> 0:11:33.760 insurance perspective, how do you think it's going to play out? 0:11:34.320 --> 0:11:37.079 So we know a couple of things. Is obviously still 0:11:37.200 --> 0:11:40.640 very early, but we've seen some stuff in the trade press, 0:11:40.760 --> 0:11:43.680 and there's a little more information than there actually normally 0:11:43.760 --> 0:11:46.959 is on some of these disasters. The bridge itself, I've 0:11:47.000 --> 0:11:49.199 seen reports that it's valued at about one point two 0:11:49.280 --> 0:11:52.160 billion dollars. I have no idea how much it's going 0:11:52.200 --> 0:11:55.640 to actually cost to rebuild it. The ship the Dolly 0:11:55.720 --> 0:12:00.880 that crashed, actually is carrying, in my view, unusually large 0:12:00.880 --> 0:12:03.600 amount of insurance and reinsurance, which is a good thing 0:12:03.640 --> 0:12:06.880 in this case. There's about three point one billion dollars 0:12:07.000 --> 0:12:11.640 worth of insurance and reinsurance tied to that vessel. Now 0:12:11.679 --> 0:12:15.080 that's also separate from insurance that's on the bridge and 0:12:15.200 --> 0:12:17.800 kind of other things. The problem is it's going to 0:12:17.840 --> 0:12:22.559 take a long time to play out, so the reinsurance 0:12:23.000 --> 0:12:25.200 that's on there will probably end up paying the bulk 0:12:25.200 --> 0:12:25.439 of the. 0:12:25.360 --> 0:12:28.480 Claims and how does this compare to say a hurricane 0:12:28.600 --> 0:12:31.520 or another form of kind of natural disaster thing that 0:12:31.600 --> 0:12:35.240 happens where you have insurance and reinsures kind of all. 0:12:35.400 --> 0:12:38.960 Yeah, anything, it's it's a more complex event, right, So 0:12:39.160 --> 0:12:41.400 on the back end, stuff we probably will never see. 0:12:41.400 --> 0:12:44.680 They'll probably be a lot more back and forth. In 0:12:44.800 --> 0:12:48.720 terms of the cost of the event, I'm assuming very 0:12:48.840 --> 0:12:52.840 early back of the envelope, it's probably a mid single 0:12:52.920 --> 0:12:57.160 digit billions, probably like a four billion or probably even less, honestly, 0:12:58.240 --> 0:13:00.880 which is like a small hurricane, and we have hurricanes 0:13:00.880 --> 0:13:03.600 that are twenty thirty fifty billion dollars. So in terms 0:13:03.600 --> 0:13:06.959 of the impact of the entire industry is probably very manageable. 0:13:07.520 --> 0:13:10.440 Who ensures this stuff? I mean, these ships go all 0:13:10.480 --> 0:13:12.559 over the world. They're monsterships. 0:13:12.600 --> 0:13:14.360 I have no idea how they get in and out 0:13:14.360 --> 0:13:16.280 of ports now that you think about it, they're so 0:13:16.440 --> 0:13:18.920 huge these days, and I got to traverse you know, 0:13:20.320 --> 0:13:23.720 dangerous waters, congested waters. Who ensures this stuff? 0:13:23.760 --> 0:13:24.720 So it's pretty interesting. 0:13:25.040 --> 0:13:27.560 The way it works is it's it's kind of a 0:13:27.760 --> 0:13:33.400 mutual claims paying group that specifically this ship, right, So 0:13:33.480 --> 0:13:35.840 a bunch of this is kind of the way insurance started. Honestly, 0:13:36.000 --> 0:13:39.040 is a bunch of people running the ships get together 0:13:39.320 --> 0:13:42.760 and they pull their resources, and that's where they get 0:13:42.760 --> 0:13:45.720 the insurance from. That's really only the very low layer 0:13:45.800 --> 0:13:48.280 of the insurance. So that's one hundred million of the 0:13:48.440 --> 0:13:50.880 three point one billion of insurance, right. 0:13:50.880 --> 0:13:52.120 So then the rest of it goes to this. 0:13:52.080 --> 0:13:56.160 Global reinsurance market. Above the one hundred there's kind of 0:13:56.200 --> 0:14:01.120 another bit of ship reinsurance, and then above that it's 0:14:01.440 --> 0:14:04.680 the global reinsurance market. So I think companies like Swiss 0:14:04.720 --> 0:14:07.160 re Munich ree, some of the Bermuda reinsurance companies, I 0:14:07.160 --> 0:14:08.840 don't know if they have specific exposure. 0:14:09.160 --> 0:14:11.360 So do we know who's the name's backing this? 0:14:11.440 --> 0:14:14.400 Who's we don't. We know that acce Xcel. 0:14:15.720 --> 0:14:17.920 Was the lead on some of the reinsurance, we don't 0:14:17.920 --> 0:14:19.640 know by how much, and that was just reported by 0:14:19.640 --> 0:14:22.120 the group at the time when they renewed the policy. 0:14:22.320 --> 0:14:25.440 If I'm a shipper and now my path is delayed 0:14:25.440 --> 0:14:27.680 and I have to rethink how I'm operating, is there 0:14:27.760 --> 0:14:30.880 anyone that I'm covered by insurance or reinsurance? Like, how 0:14:30.920 --> 0:14:33.520 does insurance play into some of the delays that are 0:14:33.640 --> 0:14:37.120 likely going to happen as they eventually clear, there'll. 0:14:36.600 --> 0:14:39.400 Certainly be some knock on effects, right, so it would 0:14:39.440 --> 0:14:43.120 be a business interruption claim. So it's kind of I think, 0:14:43.320 --> 0:14:47.520 pretty classic, meaning there's something in your way, you can't 0:14:47.520 --> 0:14:51.320 do your business, you'll have some sort of business insrupting 0:14:51.360 --> 0:14:54.200 clim it's probably on the primary insurance market. If you 0:14:54.240 --> 0:14:57.480 recall in twenty twenty one the Suez Canal got blocked 0:14:58.000 --> 0:15:01.520 by that ship. There was talk about like ten billion 0:15:01.560 --> 0:15:03.720 dollars worth of commerce a day going through there or 0:15:03.760 --> 0:15:07.120 something like that, and that was that was six days. 0:15:08.040 --> 0:15:10.520 Even when that happened, it wasn't a huge amount of 0:15:10.520 --> 0:15:13.160 business eruption claims for the industry, but that that would 0:15:13.240 --> 0:15:14.360 be where it falls. 0:15:14.640 --> 0:15:17.680 All right, So are rates going to go up here 0:15:17.800 --> 0:15:20.080 or is this just a one off black Swan kind 0:15:20.080 --> 0:15:21.880 of event it which kind of seems like it. 0:15:21.960 --> 0:15:25.040 So reinsurance press have been going up anyway, right, So, 0:15:25.880 --> 0:15:30.840 and the reinsurance market doesn't exactly move in lockstep anymore. 0:15:31.040 --> 0:15:33.400 It's kind of individual market. So I think you will 0:15:33.440 --> 0:15:37.360 certainly see maritime reinsurance rates going up. So in case 0:15:37.400 --> 0:15:39.520 you're shipping anything overseas, qual you might have to pay 0:15:39.520 --> 0:15:42.400 a little more. But I think that's almost a given. 0:15:42.440 --> 0:15:47.240 After an event like this that specifically to maritime reinsurance. 0:15:46.800 --> 0:15:49.640 And looking at reinsurres, we've been sitting on the equities desk. 0:15:49.640 --> 0:15:51.280 We're trying to game out which stocks are going to 0:15:51.320 --> 0:15:53.760 move in which direction and who benefits and who loses? 0:15:53.960 --> 0:15:55.080 How does that play out? Like? 0:15:55.160 --> 0:15:57.520 Is this in real time we find out that X 0:15:57.560 --> 0:16:00.640 firm has to disclose that they're the main reinsurer on 0:16:00.720 --> 0:16:02.680 this or how how did those kind of dynamics? 0:16:03.000 --> 0:16:03.640 Usually the way works. 0:16:03.680 --> 0:16:06.480 So what will happen is and I don't expect we'll 0:16:06.480 --> 0:16:08.280 see much of this for the names I cover. 0:16:08.440 --> 0:16:11.040 But what will happen is as we go into earnings. 0:16:11.240 --> 0:16:12.960 If you are one of the companies with a big 0:16:12.960 --> 0:16:15.720 exposure to this and it's gonna be material on your results, 0:16:16.000 --> 0:16:19.640 they will usually pre announce that ahead of earnings, just 0:16:19.680 --> 0:16:21.920 so that they don't, you know, dramatically miss the number 0:16:21.920 --> 0:16:24.320 on that day. So that will be the way it 0:16:24.320 --> 0:16:26.080 would play out in the market. But I don't think 0:16:26.080 --> 0:16:28.560 you're gonna hear a ton from at least in Bermuda 0:16:28.600 --> 0:16:29.600 companies that I cover. 0:16:29.920 --> 0:16:31.840 Gotcha, where are we? I don't know? 0:16:31.880 --> 0:16:35.040 Trailing twelve months on your you're the disaster guy. So 0:16:35.240 --> 0:16:39.080 there's a hurricane or some terrible fire with our friends 0:16:39.080 --> 0:16:41.120 in California or something like that, we turned to you. 0:16:41.920 --> 0:16:43.440 We haven't talked to you a lot recently. 0:16:43.720 --> 0:16:45.400 Yeah, we've We've been alright. 0:16:45.640 --> 0:16:49.200 So even last year, what happened was the Swiss regis 0:16:49.200 --> 0:16:53.120 put out there annual catastrophe loss for the industry, right, 0:16:53.280 --> 0:16:55.120 and it was one hundred billion dollars for the third 0:16:55.240 --> 0:16:57.880 year in a row. And when I started in this 0:16:58.000 --> 0:17:00.720 industry many years ago, if you told me it would 0:17:00.720 --> 0:17:02.800 be one hundred billion dollars last year, we'd be shocked, right, 0:17:02.800 --> 0:17:04.200 it would have blown off the off the chair. And 0:17:04.200 --> 0:17:06.080 now it's been three years in a row that's happened. 0:17:07.040 --> 0:17:09.520 The interesting thing about last year was a lot of 0:17:09.560 --> 0:17:14.760 it was caused by severe convective storms, not huge catastrophes, 0:17:14.800 --> 0:17:17.440 not huge hurricanes, So it was kind of these smaller 0:17:17.480 --> 0:17:20.840 events that built up. So that's probably why you're not 0:17:20.880 --> 0:17:23.919 hearing these kind of headline things. But the losses, you know, 0:17:23.920 --> 0:17:27.480 are still there. That said, the market's still very well capitalized, 0:17:27.520 --> 0:17:29.480 and it really wasn't. It was still a pretty good 0:17:29.560 --> 0:17:34.000 year for the insurers. But that's kind of what's happening. 0:17:34.000 --> 0:17:36.040 And now if you get a big event on top 0:17:36.080 --> 0:17:38.720 of those accumulation of smaller events, than it could be 0:17:38.720 --> 0:17:39.240 pretty all. 0:17:39.160 --> 0:17:41.480 Right, Bailey's in the market for beachfront mansion done in 0:17:41.520 --> 0:17:42.200 the palm beachery. 0:17:42.320 --> 0:17:44.240 Can you get insurance on that stuff sitting on the water? 0:17:44.520 --> 0:17:47.600 It depends on the state, but probably not. You might 0:17:47.640 --> 0:17:50.679 have to move into yours. But yeah, no, I mean, 0:17:50.720 --> 0:17:53.240 it's it's all the insurers are pulling back from all 0:17:53.359 --> 0:17:56.679 of the coastal states. 0:17:56.359 --> 0:17:58.600 It's partly climate change. 0:17:58.640 --> 0:18:00.520 I know, we know, kind of like a point to 0:18:00.560 --> 0:18:02.720 that immediately, but that's not it's not the biggest thing. 0:18:03.119 --> 0:18:05.000 The other thing is that property valves have gone up, 0:18:05.119 --> 0:18:08.560 inflation has pushed the repair costs up, and yes, the 0:18:09.480 --> 0:18:12.280 frequency and severity of storms is worse. So it's kind 0:18:12.280 --> 0:18:14.240 of all those things mixed together. It's just at a 0:18:14.240 --> 0:18:16.879 conference where someone said a home insurance ceo who I 0:18:16.880 --> 0:18:19.360 won't name, and said they just wouldn't even touch New 0:18:19.440 --> 0:18:20.680 Jersey specifically. 0:18:20.880 --> 0:18:23.040 Right, all right, Well, I'm five blocks for us, fine 0:18:23.080 --> 0:18:25.280 blocks in from the ocean, so I feel and they're 0:18:25.280 --> 0:18:27.080 long blocks of the big block, so I feel very 0:18:27.800 --> 0:18:30.560 safe there. But again, you know, Superstorm Sandy came through 0:18:30.640 --> 0:18:33.960 and still to this day you get onto men and 0:18:34.000 --> 0:18:36.639 menal loaking in New Jersey. There are still lots like 0:18:36.680 --> 0:18:39.199 a ten million dollar home got washed away. They haven't rebuilt. 0:18:39.440 --> 0:18:43.000 It's still sitting there empty. So those folks got crushed. 0:18:43.400 --> 0:18:43.920 So it's a thing. 0:18:43.920 --> 0:18:46.800 Matthew Palozola, thanks so much for joining us senior analys 0:18:46.800 --> 0:18:49.879 covering the insurance business for Bloomberg Intelligence. Joining us here 0:18:49.920 --> 0:18:52.160 in our Bloomberg Interactive Brokers studio're trying to game out 0:18:52.560 --> 0:18:54.800 kind of what some of the insurance implications will be 0:18:54.800 --> 0:18:59.760 from this bridge collapse in Baltimore. 0:19:00.320 --> 0:19:04.160 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:19:04.240 --> 0:19:07.320 weekdays at ten am Eastern on Apple Car, playing Android 0:19:07.359 --> 0:19:10.440 Otto with the Bloomberg Business app. Listen on demand wherever 0:19:10.520 --> 0:19:14.800 you get your podcasts, or watch us live on YouTube. 0:19:15.359 --> 0:19:18.280 Cardinal Cruise Lines reported some numbers. 0:19:18.600 --> 0:19:23.080 They raised their four year outlook amid record setting booking pace, 0:19:23.119 --> 0:19:25.520 but they also said that the collaps Baltimore Bridge might 0:19:25.560 --> 0:19:29.000 have a ten million dollars negative impact on their cash flow. 0:19:28.800 --> 0:19:31.520 And earnings for the year. 0:19:32.000 --> 0:19:34.240 Let's break it down with Jody Lourie. She covers all 0:19:34.280 --> 0:19:36.680 the consumer stuff for Bloomberg Intelligence. 0:19:36.720 --> 0:19:38.160 She's a credit analyst over there. 0:19:38.960 --> 0:19:42.560 So, Jody, what'd you make of the Carnival numbers. It 0:19:42.600 --> 0:19:46.359 seems like people are cruising like crazy here, So I. 0:19:46.359 --> 0:19:48.080 Would say a few things about that, Paul. 0:19:48.280 --> 0:19:50.600 First of all, I would say that when you look 0:19:50.600 --> 0:19:52.960 at Carnival, it's really a cash flow story. It really 0:19:53.000 --> 0:19:56.919 is a credit story more than anything else, and the 0:19:56.920 --> 0:19:58.640 bookings are sort of confirming that. 0:19:59.040 --> 0:19:59.200 Now. 0:19:59.240 --> 0:20:01.640 The booking level, if you include short and long term, 0:20:01.680 --> 0:20:04.400 it's actually not at the peak, which was second quarter 0:20:04.440 --> 0:20:07.320 of last year, but it's right near the peak, and 0:20:07.520 --> 0:20:10.480