To hear about Environmental Impairment Liability Insurance, Finance Monthly reached out to one of the US’ leading experts in the field - Susan K. Neuman, Partner at the Hickey Smith law firm who provides counselling and coverage advice to parties to contaminated property transactions and to environmental insurers.

As one of the US’ leading experts on environmental insurance for owners, buyers and developers of contaminated properties, what are the complexities of resolving disputes in relation to Environmental Impairment Liability (EIL) Insurance?

There are a number of complexities in EIL coverage. The term EIL refers to a policy which covers liabilities caused by pollution conditions, new or pre-existing/historical, at a specific site; a more current term is Site Pollution Liability (SPL). Underwriting EIL/SPL policies has a highly technical aspect. For example, underground storage tank (UST) policies are underwritten, based on the age, construction, contents, and leak detection method of the tanks as required by federal and state regulations. Another complexity is the modular structure of current SPL policies and their coverage for very specific risks rather than public tort liability covered by CGL policies. Also, unlike CGL policies, they are non-standardised and coverage turns on whether the language is unambiguous. Unlike earlier versions of the policy, the current SPL policy was designed to facilitate contaminated property transactions, and to do this successfully, legal coverage expertise is required. In 1997, there were a handful of brokers that had this sort of expertise. However, as the product became commoditised, brokers without it placed policies that were poorly drafted and resulted in claims and losses.

What have been any recent trends in the EIL insurance field in the US?

Recent trends in environmental insurance include several mergers since 2014. ACE bought Chubb and kept the Chubb name, XL bought Catlin to become XL Catlin, Ironshore merged with Liberty (the new name is still not clear).

Then there is AIG, which was the major SPL provider back in 2015. The company suddenly cancelled its site pollution program and non-renewed almost $1 billion in premium. It still writes blended casualty and pollution products, which is a growing market generally. Elsewhere, brownfields insurance for redevelopments and M&As continue to pose difficulties for underwriters who want protection from long-term potential moral hazards associated with known conditions and voluntary testing. A key driver for environmental insurance business is contractual obligations. Emerging issues include renewable energy, including coverage for solar redevelopment of brownfields, and coverage for post-remedial institutional and engineering controls liability that can address the moral hazards concern.

Can you tell our readers about the recent ‘unavailability of EIL insurance’ in the US?

The ‘Unavailability of EIL Insurance’ is another complexity in the field. The availability rule, set forth in the landmark Owens Illinois 1994 decision, requires that, under the pro rata allocation method, if a policyholder decides not to buy available insurance for a particular risk,  it must cover a portion of the costs associated with claims arising during that period. If, however, there is no insurance available for purchase in certain years, the unavailability rule applies and the policyholder doesn’t have to pay a share of costs attributed to those years. This rule makes sense in the context of thousands of separate asbestos products liability claims and the permanent unavailability of asbestos products liability coverage after 1985, when asbestos was excluded from all CGL policies. It makes no sense at all in the context of one regulatory claim for cleanup costs arising from one very long occurrence (pollution condition) at a manufactured gas plant (MGP) site. In this context, the unavailability of EIL insurance is a fallacy in every sense.

In the recent Keyspan v. Munich Re decision, the NY Court of Appeals affirmed the 1^st Dept. Appellate Division decision rejecting the unavailability rule and held that Keyspan, not Century, had to bear the risk for loss associated with periods, outside of Century’s policy periods, when insurance was unavailable. However, under the leading 2nd Circuit Court of Appeals Olin v. INA decision, coverage for these periods was available from policies Keyspan could have purchased between 1980 and 1985. The policies were claims made, and they covered pre-existing conditions without a retroactive date. In addition, they only had a single claim made trigger of coverage with a reporting tail of indefinite length, so a claim not made until 1995 would be covered. In addition, in 1995 and a few years thereafter, Keyspan could have purchased a broadly worded and loosely underwritten cleanup cost cap (CCC) policy that would have applied to investigation as well as remediation costs. This information was undoubtedly included in an expert’s report which Keyspan received, but failed to submit with the original motion. It subsequently did everything possible to suppress these facts. This case is the best example of how the unavailability rule acts as a disincentive to the purchase of insurance and management of environmental risk.

Website: http://www.hickeysmith.com/

Finance Monthly connected with Dan Flanigan - the Managing Partner at Polsinelli’s New York office, who’s also the Founder of the firm’s financial services practice. Established 20 years ago, the department offers a wide range of debt-related legal services in one tightly integrated practice group – from origination through servicing, through to enforcement, bankruptcy and more. Started with only seven lawyers working in the department, Polsinelli’s financial services practice has grown to 100 people today.

According to Chambers USA, Dan Flanigan’s clients refer to him as a ‘master strategist’ and consummate problem solver. Dan has been selected for inclusion in Best Lawyers In America

2018 in each of the following areas: Banking and Finance Law, Real Estate Law, Bankruptcy and Creditor-Debtor Rights/ Insolvency and Reorganization Law, Litigation--Banking and Finance, and Litigation--Bankruptcy.

Dan is a trusted adviser to lenders, helping them navigate the ups and downs of the business cycle. He also makes his financing expertise, and deep knowledge of the lending environment and culture, available to Polsinelli’s borrower clients, especially in difficult restructuring and workout situations. In recent years Dan has been intensely involved in the commercial mortgage backed securities industry (CMBS).

Here, Dan tells us about his career and the CMBS industry in the United States.

Your practice is so diverse - how do you overcome the technical challenges of working within so many different areas?

When I was a young lawyer, specialisation was not as embedded as it is today – especially in the finance world. In a market like Kansas City, where my career path began, it wasn’t unusual for a skilled professional to be helping bank clients with an extensive range of services. I was lucky that I grew up and trained in a time when you didn’t need to specialise in one thing only, as this allowed me to get an insight into a number of areas of focus and develop a wide range of skills.

My real estate practice was a logical step from finance because when you work within finance in the US, it’s hard not to get into real estate, too.

My piece of advice for overcoming technical challenges is to stay up-to-date and read as much as you can about new trends and developments and you have to “burn the midnight oil” but it is worth the effort.

What are any interesting cases that you are currently working on?

At Polsinelli, we are very involved in the so-called ‘retail apocalypse’ in the US. Our country is incredibly over-retailed and shops are closing every day, due to factors such as over-expansion of malls, rising rents, bankruptcies, low profits outside of holiday binge spending, etc.

Big  malls across America have been a significant part of Commercial Mortgage-Backed Securities (CMBS) pools. CMBS is a type of mortgage-backed security, secured by mortgages on commercial properties, instead of residential real estate that can provide liquidity to real estate investors and commercial lenders. We have been very involved in the general movement of debt from a public regulated banker type of product into the so-called ‘private debt market’.

More generally, we represent loan originators, issuers, loan sellers and servicers on a national basis in all aspects of the CMBS market and other real estate finance.

What drew you to the CMBS field?

The CMBS industry came about in the mid and late 1990s as a response to the debt crisis for commercial real estate in the US that was a consequence of the SNL crisis. In the early to mid-1990s, it was nearly impossible to get any financing. Thus, the securitisation market was invented with the objective of helping to alleviate this situation.

What we were able to see in Kansas City for example was that all funds were moving to central locations, especially New York. Securitisation was a Wall Street invention.

CMBS fits perfectly because I had experience in all of the components required for CMBS, such as lending and bankruptcy for example. Banks were failing at that time and some of my bankrupt clients ended up developing a CMBS origination platform and I followed them religiously, ultimately ending up in New York.

ABOUT POLSINELLI

Polsinelli is an Am Law 100 firm with more than 825 attorneys in 21 offices. Ranked #24 for Client Service Excellence and #10 for best client relationships among 650 US law firms, Polsinelli is also named among the top 30 best-known firms in the nation for the second consecutive year. The firm’s attorneys provide value through practical legal counsel infused with business insight and a focus on health care, financial services, real estate, intellectual property, mid-market corporate, labor and employment, and business litigation.

Amidst the recent shock resignations of Brexit Secretary David Davis and Foreign Secretary Boris Johnson, investment uncertainty, slower economic growth and a weaker pound, the United Kingdom is on its way to a slow but steady Brexit, with negotiations about the future relations between the UK and the EU still taking place.

And whilst the full consequences of Britain’s vote to leave the EU are still not perceptible, Finance Monthly examines the effects of the vote on economic activity in the country thus far.

Do you remember the Leave campaign’s red bus with the promise of £350 million per week more for the NHS? Two years after the referendum that confirmed the UK’s decision to leave the European Union, the cost of Brexit to the UK economy is already £40bn and counting. Giving evidence to the Treasury Committee two months ago, the Governor of the Bank of England Mark Carney said the 2016 leave vote had already knocked 2% off the economy. This means that households are currently £900 worse off than they would have been if the UK decided to remain in the EU. Mr. Carney also added that the economy has underperformed Bank of England’s pre-referendum forecasts “and that the Leave vote, which prompted a record one-day fall in sterling, was the primary culprit”.

Moreover, recent analysis by the Centre for European Reform (CER) estimates that the UK economy is 2.1% smaller as a result of the Brexit decision. With a knock-on hit to the public finances of £23 billion per year, or £440 million per week, the UK has been losing nearly £100 million more, per week, than the £350 million that could have been ‘going to the NHS’.
Whether you’re pro or anti-Brexit, the facts speak for themselves – the UK’s economic growth is worsening. Even though it outperformed expectations after the referendum, the economy only grew by 0.1% in Q1, making the UK the slowest growing economy in the G7. According to the CER’s analysis, British economy was 2.1 % smaller in Q1 2018 than it would have been if the referendum had resulted in favour of Remain.

To illustrate the impact of Brexit, Chart 1 explores UK real growth, as opposed to that of the euro area between Q1 2011 and Q1 2018.

As Francesco Papadia of Bruegel, the European think tank that specialises in economics, notes, the EU has grown at a slower rate than the UK for most of the ‘European phase of the Great Recession’. However, since the beginning of 2017, only six months after the UK’s decision to leave the EU, the euro area began growing more than the UK.

Reflecting on the effect of Brexit for the rest of 2018, Sam Hill at RBC Capital Markets says that although real income growth should return, it is still expected to result in sub-par consumption growth. Headwinds to business investment could persist, whilst the offset from net trade remains underwhelming.”

All of these individual calculations and predictions are controversial, but producing estimates is a challenging task. However, what they show at this stage is that the Brexit vote has thus far left the country poorer and worse off, with the government’s negotiations with the EU threatening to make the situation even worse. Will Brexit look foolish in a decade’s time and is all of this a massive waste of time and money? Or is the price going to be worth it – will we see the ‘Brexit dream’ that campaigners and supporters believe in? Too many questions and not enough answers – and the clock is ticking faster than ever.

Daniel D. Morris is the Founding Partner of the Silicon Valley, Los Angeles, and Portland (Oregon) based CPA firm, Morris + D’Angelo, which focuses on servicing entrepreneurial families and their businesses. The firm utilises an integrated and holistic approach designed to help customers navigate the most complex and sensitive of matters.

Below, Daniel discusses the impact of Donald Trump’s new tax legislation, as well as the things that make Morris + D’Angelo unique when compared to other tax and business advisory firms in Silicon Valley.

What have been any recent tax policies or reforms in the US and how have they impacted your clients?

In December last year, President Donald Trump signed new tax legislation that changed the landscape of business and individual taxation. Corporate tax rates have been reduced by 40% and initiated a quasi-territorial tax system for corporations. Individual tax brackets have likewise been reduced, albeit only slightly. Individual based tax deductions have been significantly curtailed while increasing allowable standard allowances. Self-employed and associated pass-through businesses in most categories will also see reduced rates.

The most notable challenges the new legislation created are in the international arena. The new provisions created a global tax on intangibles (called GILTI) and imposes an effective 10.5% corporate level tax with the remainder excluded from income under the aforementioned quasi-territorial regime. Global structures owned and operated by individuals, families, estates, trusts, joint ventures, and pass-throughs pay a GILTI at upwards of 37% and do not receive the corporate level territorial exclusion.

This corporate versus individual disparity is creating terrific drama and challenges as advisers and taxpayers regroup their thinking as to how best to navigate global business operations while avoiding excessive taxation.

Morris + D’Angelo reacted swiftly to protect our customers’ options while providing best-of-class advisory and choices. This is an ongoing process as the legislation is so radically different in approach than the previous underlying taxation philosophy that served our country so well for nearly seventy years, that the primary concept we champion is to “hold on and prepare for more changes”.

Tell us about Morris +D’Angelo’s key priorities towards your clients? What differentiates the company as opposed to other tax and business advisory firms in Silicon Valley?

Our priorities are clearly developed around providing world-class services and options to a selected group of customers. Unlike traditional firms that charge by the hour and have a shotgun approach to customer attraction, selection, and retention, we utilise a more sniper-driven process.

Our customers share the following characteristics:

• They are closely held and family driven enterprises, meaning we do not seek publicly held companies, non-profit associations, or most regulated type enterprises.
• They are multi-jurisdictional, meaning they are or will be operating across both state and national borders and they require what we term ‘deep generalists’ that understand the complexities associated with global enterprises and who personally have developed networks of qualified advisers to assist in local matters while having a coordinated professional at the helm of global design, compliance, and outcomes.
• They frequently have family offices where we are the advisers to the family to help them achieve success in their coordinated endeavors.
• They will likely be invested in real estate as developers, landlords, commercial operators, property managers, and similar real property business activities.
• They will be engaged in technology-driven enterprises as investors, inventors, executives, and advisers.
• They will be profitable at levels that can afford our services and where there is ample cash flow to execute enhanced business operations.
• They are awesome people. They contribute to the well-being of their communities, they respect others, they promote good citizenship, and they are pleasant to spend time with. We invest in their success. Accordingly, we avoid toxic personalities.
• We live our famous trademark as we are “Not Just Another CPA Firm”.

What would you say are the challenges of providing effective tax and business advice to entrepreneurial and family-based enterprises?

Challenges, of course, are certainly situational as no two families are alike. The most common challenge is likely gathering their full attention. Entrepreneurs are doers and they are hyper-focused on achieving measurable results and rarely invest in activities that require them to reflect and ponder their futures.

Additionally, there are inherent conflicts among generations in regards to desired outcomes, where to invest the family attention, and the legacies to be fulfilled. We’re also often faced with the, unfortunately, common challenges of blended families due to divorce, or changing demographics relative to marriage and family, and the likelihood of a geographically and/or societally mixed marriage (e.g. mixed religions can create estate and inheritance issues should people of mixed faiths marry, have children, and reside in countries that base inheritance laws on religious attributes compared to for example common law or civil law countries).

On top of this, the availability of information to both the lay and professional person exponentially increases the challenge. While the internet is great for research and ideas, it fails to provide context, wisdom, or judgement. True professionalism integrates knowledge, context, and experience to blend a better result. Accordingly, there are conflicts upon perceptions of what options might be available, in the minds of customers, compared to the conclusions provided by professionals. These conflicts are best resolved by active engagement, communication, compassion, and listening. These are hallmarks of our firm. We leverage both ears before we exercise our one mouth.

What are the most tax efficient structures for US entrepreneurial and family-based enterprises?

This depends on the context of the specific case. For global enterprises, operating in a traditional cross-border CFC (controlled foreign corporation) environment, the most tax efficient structure today is likely a corporation, as it limits the global GILTI tax impact, provides for territorial tax benefits and domestic tax (on domestic earnings) of 21% or less.

For real estate type businesses, pass throughs like LLCs and Limited Partnerships are likely to provide better after tax cash flows due to reduced tax rates on real estate activities and a single layer of taxation.

As for more common business, my advice is to model out their cash flows and determine which of the available models provides the best tax-based results, ease of management and control, long-term family considerations, privacy matters, and asset protection.

I should note that trusts are generally overlooked as an operating vehicle, but they can provide many benefits of ownership along with control, asset protections, and longevity. This is something that our customers frequently consider.

How can entrepreneurs structure their business portfolio in such a way that their personal tax liability is mitigated?

Our recommendation for the families that we advise is to utilise dynastic trust concepts where the trusts are formed in excellent asset protection jurisdictions. These protector-driven trusts mitigate the risk associated with claims, allow for multi-generational transfers, and provide protection for the family’s daily operations.

What are Morris + D’Angelo’s goals moving forward?

Our goals are to continue to expand our offices to more geographies with our targets to include Dallas, Miami, Washington, DC, New York, London, and Geneva. We will continue to grow our cross-border and multinational services dedicated to helping families achieve their goals, objectives, and success. We will remain nimble, flexible, and current as it relates to technology, economics, and governance. Finally, we will continue to have fun each and every day as it makes life easier and certainly more enjoyable.

Website: https://www.cpadudes.com/

About Daniel D. Morris

In addition to his work for Morris + D’Angelo where he serves customers in over 20 countries and 25 states, Dan is also the Co-founder of The VeraSage Institute, a think tank dedicated to helping professionals improve their pricing and customer centric economics. He’s been an author/instructor with professional CPA and related associations since 1998 and has been an adjunct professor for Foothill College located in Los Altos Hills, California. Dan is the only American to hold the prestigious Post Professional Graduate Diploma in Private Wealth Advisory - a programme sponsored by the Society of Trust and Estate Professionals in the UK.

Daniel has served numerous regional and national professional associations (California CPA Society and the American Institute of Certified Public Accountants) where he’s held several leadership positions including President of the Silicon Valley/San Jose Chapter along with the state-level governance council. He is also active in FinTech, including the blockchain and associated crypto currencies and is frequently interviewed by regional and national publications.

About Morris + D’Angelo

Morris + D’Angelo’s registered trademark is Not Just Another CPA Firm – and this really is the case! The company never charges clients by time incurred, but instead, they price for purpose which ultimately means that the customers pay for the results they’ve managed to achieve.

The firm was founded in the Silicon Valley in 1994 and over the years, has helped startups and entrepreneurs that have changed the world. The team at Morris + D’Angelo listens and understands what their customers want and need and strives to deliver results in abundance. Along with the company’s physical offices, Morris + D’Angelo has a personally crafted network of affiliations throughout Europe, Asia, Australia, the Caribbean and Latin America. The firm coordinates services in a timely basis in nearly every location that deliver results that are instrumental for success.

In light of Donald Trump’s dramatic withdrawal from the Iran Nuclear Deal, Katina Hristova examines how the pullout can affect the global economy.

As with anything that he isn’t fond of, US President Donald Trump hasn’t been hiding his feelings towards the Joint Comprehensive Plan of Action between Iran and the five permanent members of The United Nations Security Council plus Germany. Pulling the US out of the agreement on the nuclear programme of Iran, which was signed during Obama's time in office, is something that Trump has been threatening to do since his 2016 election campaign. And he’s only gone and done it. Earlier this month, he announced America’s immediate withdrawal, saying that the US will reimpose sweeping sanctions on Iran’s oil sector and that “Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States”. And as if this isn’t alarming enough, President Trump has also said that the US will require companies to ‘wind down’ existing contracts with Iran, which currently ranks second in the world in natural gas reserves and fourth in proven crude oil reserve, in either 90 days or 180 days. This would hinder new contracts with Iran, as well as any business operations in the country.

Since Washington’s announcement, signatories of the Iran Nuclear Deal, still committed to the agreement, have embarked on a diplomatic marathon to keep the deal alive. On 25 May, Iran, France, Britain, Germany, China and Russia met in Vienna in a bid to save the agreement.

So how will this hurt the global economy?

Deals worth billions of dollars signed by international companies with Iran are currently hanging by a thread. The main concern on a global scale is that the US’ decision threatens to cut off a proportion of the world’s crude oil supply, which has already resulted in an increase in oil prices, with crude topping $70 a barrel for the first time in four years.

Additionally, European companies like Airbus, Total, Renault and Siemens could face fines if they continue doing business with Iran. Royal Dutch Shell, who is investing in the Iranian energy sector, is potentially one of the biggest companies to be affected by Trump’s withdrawal which could put billions of dollars’ worth of trade in jeopardy. As The Guardian points out: “In December 2016, Royal Dutch Shell signed a provisional agreement to develop the Iranian oil and gas fields in South Azadegan, Yadavaran and Kish. While drilling is still a long way off, sanctions are likely to put any preparations already being made on ice.”

French company Total, who’s involved in developing the South Pars field, the world’s largest gas field in Iran, is in a similar situation.

Airbus and Boeing, two of the key players in the international aviation industry, have signed contracts worth $39 billion to sell aircraft to Iran. As The Guardian reports, the most significant deal is an agreement by IranAir to buy 100 aircraft from Airbus.

A spokesman from Airbus said that jobs would not be affected. “Our [order] backlog stands at more than 7,100 aircraft, this translates into some nine years of production at current rates. We’re carefully analysing the announcement and will be evaluating next steps consistent with our internal policies and in full compliance with sanctions and export control regulations. This will take some time”. Rolls Royce is also expected to be indirectly affected if Airbus loses its IranAir order, as the company is the key engines provider to many of those aircraft models.

Another European company that will be hurt by the sanctions announcement is French Renault and PSA, who owns Peugeot, Citroën and Vauxhall. When sanctions were lifted back in 2016, Renault signed a joint venture agreement with the Industrial Development & Renovation Organization of Iran (IDRO) and local vehicle importer Parto Negin Naseh, worth $778 million, to make up to 150,000 cars in Iran every year. This is one of the largest non-oil deals in Iran since sanctions on the country were lifted. Last year, local firm Iran Khodro also signed a deal with the trucks division of Mercedes-Benz, with car production scheduled for this year.

Iranian firm HiWEB has been working alongside Vodafone to modernise the country’s internet infrastructure, but it looks like the partnership will have to be reconsidered.

The consequences

The White House and President Trump appear aware of the danger that a rise in oil prices on an international level pose to the economic growth of the Trump era, however, they also seem ready to embrace the economic and geopolitical challenges that are to follow. Although the consequences of US’ Iran Deal pullout are not perfectly clear in the short term, they will undoubtedly become more visible as sanctions take effect. The deal has its flaws, however, completely withdrawing from it and threatening the US’ closest allies can only compound those issues and create new ones. It is hard to predict what will unfold from here and where Trump’s strategy will take us. The one thing that is certain though is that the world doesn’t need more hostility.

Finance Monthly hears from José R. Sánchez, the President and CEO of Chicago-based Norwegian American Hospital, who discusses what it takes to be a CEO of a hospital and the initiatives that the hospital has been up to since we last spoke a year ago.

I have been President and CEO of Norwegian American Hospital since 2010 and have had a long career in healthcare, going back 30 years, mostly in New York. I spent almost 16 years with the New York City Health and Hospitals Corporation where I held a number of positions during my tenure in various leadership roles. I was the most senior leader within the system, responsible for the largest healthcare network that included 3 hospitals, 23 clinics and over 9 000 employees. Healthcare is a very competitive field in just about every part of the country. The rules I follow are excelling in any responsibility given to me and managing an efficient operation. I focus on quality improvement, best practices, growing business, expanding services, addressing community needs and having a viable bottom line.

A successful hospital CEO knows how to cultivate leadership within the organisation. I believe that inherent leadership skills that engender the support and confidence of the providers, patients, and the surrounding community are most important. Good leaders will not only engage with their executive team but the best leaders are those who engage at all levels of the organisation. Additional skills that have been helpful to me are those I have been able to gain through roles in management and understanding operations, while staying updated on current changes in the market. I focus on identifying and bringing in the best talent for the success of the organisation. It is also important to understand the politics of healthcare. I believe there is a very close relationship between understanding the fundamental principle of operations in the healthcare setting and understanding how policies are shaped. You need to be able to balance both equally and be able to identify critical priorities and act on those priorities, on behalf of, or for, the benefit of the organisation.

As we understand today, healthcare is an evolving system. The direction of healthcare is very unclear and this is probably the most disruptive time ever in healthcare. Therefore, there is greater demand for training the workforce to respond to those changes. In order to make every attempt to have high moral in the organization, it is important to value the roles and responsibilities that the workforce has. Communication is also key for high morale, taking time to explain trends in healthcare, and working in collaboration as a team. Celebrate the successes openly and openly address the challenges we have every single day. Staff development is key to improving and maintaining high moral. Standardisation of policies across the board is critical and transparency is key as well. Trust is a major driver to maintain and improve morale.

The successes of Norwegian are many but we have been able to keep the doors open by being a proactive organisation, representing the needs of the community by creating specific programs that address the health disparities in the community. We also have been able to have a very lean, efficient organisation and have been a financially viable institution, posting a profit for the last 6 years. We made significant improvement in quality across the organisation and have received numerous recognitions and awards, both nationally and locally. In 2015, NAH received the Healthgrades® Patient Safety Excellence Award^™. This distinction put Norwegian American Hospital within the top 10% of all hospitals evaluated for their excellent performance in safeguarding patients from serious, potentially preventable complications during their hospital stays. We were recognized for having the lowest hospital inquired infection rate among 67 hospitals in Greater Chicago area. In 2017, our Pediatric Care-A-Van received the prestigious American Hospital Association NOVA Award. Only five NOVA Awards are given nationwide each year. We have engaged the community to be active participants in the hospital and to provide input to improve quality and community engagement. We also are very proud of our relationship with all the stakeholders in the community: community based agencies, schools and the business community. Some of our successes of pride include the financial investment for the renovation of the first floor of the hospital and the creation of our own family residency training program.

NAH has really addressed the healthcare needs of the community and taken responsibility to develop and grow the next generation of healthcare providers through our active participation with medical students and our resident program. We also are the largest employer in the Humboldt Park community, so approximately 65% of our workforce comes from residents of the community. We serve as the economic anchor to the surrounding communities. Norwegian American Hospital reinvests back into the community through programs to care for the underserved and uninsured, manage chronic conditions like diabetes, health education and promotion initiatives and outreach for the elderly. Our Comprehensive Diabetes Centre addresses the diabetes rates in our community that have risen exponentially. We also started a new Family Medicine Residency program to help attract new doctors to the area because physicians tend to remain in the communities where they complete their residency. Our partnerships with local faith-based organisations have opened doors to raise awareness of specific health needs in our community. Recently, Norwegian American Hospital donated land where a veterans’ home was constructed, a move that symbolizes a long-term commitment to Chicago’s homeless veterans and their quality of life. Our hope is that dependency on hospital services will be reduced. People living on the streets tend to cycle in and out of emergency rooms and in-patient stays. NAH is proud to be among the first hospitals in the City of Chicago to address homelessness and housing for veterans.

We have fully embraced the Affordable Care Act with participation during open enrollment periods to expand Medicaid for those individuals who are eligible for the program. We also support programs in the community and are active participants in health fairs. Community health fairs are go-to events for our local residents who want to learn more about a variety of health topics and wish to receive free or low-cost screenings. In addition, throughout the year, NAH offers numerous opportunities for the public to learn more about key health topics and how to incorporate healthy lifestyle changes. This year, we have a Care-A-Van that brings services to schools and children and families throughout the year. The state-of-the-art mobile clinic brings healthcare to 3 000 underserved children who otherwise would not receive care for asthma, obesity, diabetes, high blood pressure, lead poisoning and other preventable health disparities.

At the forefront of our agenda is our quality journey that has direct impact in patient outcomes. Each quality service line has a dashboard that reports clinical metrics. We have an external affairs committee that was developed several years ago with members who are residents of the community. They have become the ears of the community to provide input to hospital leadership as it relates to improving care and communicating community concerns and needs. We do a community assessment regularly to evaluate and understand the need for services required in the community. Our commitment to improve healthcare outcomes and patient safety is manifested in the performance results of several national clinical measures within the Centers for Medicare and Medicaid Impatient Quality Reporting Program. NAH exceeds the national scores or benchmarks in many categories which include mortality, patient safety indicators and Hospital Acquired Infections. We exceed the national benchmarks in five out five mortality categories and six out of seven patient safety indicators, with a slightly better overall patient safety score than the national benchmark. NAH is accredited by The Joint Commission for hospital and behavioral health programs; College of American Pathology for laboratory services; Healthcare Facilities Accreditation Program (HFAP) as a Certified Primary Stroke Center; and Illinois Department of Public Health’s (IDPH) Level II Perinatal Care Certification.

The goal of the hospital is to change and evolve every day. We need to be adaptable to a very disruptive healthcare environment. We have to focus on trends in healthcare which includes the triple aim of quality, population health and financial viability. The policies of the state continue to change and we need to adapt and respond quickly to those changes. It is clear that our goal needs to be on quality improvement, best practices, expansion of services, efficiency and using technology as a tool to help us accomplish our objectives. NAH recognizes that health is more than simply treating patients who come through our doors. We want to build not only a healthier, but a more prosperous community.

2018 has been a trying year for healthcare. We are beginning to see acceleration of mergers and acquisitions throughout the country and beginning to see merging models of care. In 2018 we are beginning to see other providers emerging in the market, such as CVS, Walgreens and others.

We are beginning to look at challenges and changes in healthcare and at opportunities to improve the current system. Certainly, in this very difficult time there are great opportunities to improve care, address the need of consumerism, growth and efficiency and develop new models to address the population needs. Healthcare today is about collaboration, we can no longer exist in silos. The solution to many problems will require a collective effort of sharing information, sharing responsibilities and focusing on innovation. I suggest that new leaders need to pay attention to demographic changes in the country as well as the elderly population that continues to grow. We need to not only focus on health, but the social determinate of health: food, housing and transportation. Prevention and education will continue to play a significant role to the outcome of interventions we will make.

2018 will be a year to focus on positioning ourselves strategically on many different fronts. Growth, efficiency, financial viability and adapting to the new healthcare order. We will focus on sustainability and leverage the gains we’ve made. We will create more growth opportunities for the hospital outside of our four walls. Our focus will be on shaping policies that address the needs of the people who comprise this community. We will continue to find funding solutions for the programs that have been subsidizing NAH. We will do all of this so that we can continue to provide the highest quality of care for the most vulnerable members in our community.

Positioning the hospital for 2018 is in the hands of the leadership of the hospital to create the vision and future to keep the tradition of Norwegian American Hospital alive, which has served the Humboldt Park Community for over 120 years.

Website: https://www.nahospital.org/

March started off with a bang when US President Donald Trump announced that his administration will impose steep tariffs on imported steel and aluminium in order to boost domestic manufacturing, saying that the action would be ‘the first of many’. This has brought about threats of retaliation by a number of the main US allies and the fear that Trump’s extreme protectionism may destroy the post-World War II trading system and result in a global trade war. Claiming that other countries are taking advantage of the US, the 45^th President seems confident about the prospects of a global trade war, tweeting: ‘Trade wars are good, and easy to win’ a day after his initial announcement. Although the tariffs are stiff, they are considerably small when seen in the context of US economy at large. However, the outrage that his decision has fuelled and the fact that China has already taken steps to hit back signal global hostility and economic instability.

The Response

Donald Trump’s decision from the beginning of March was followed by a chain of events, including the EU publishing a long list of hundreds of American products it could target if the US moves forward with the tariffs, the US ordering new tariffs on about $50 billion of Chinese goods and China outlining plans to hit the United States with tariffs on more than 120 US goods. In an attempt to soften the blow, the White House announced that it will grant exemption to some allies, including Canada, Mexico, the European Union, Australia, Argentina, Brazil and South Korea. Trump gave them a 1 May deadline to work on negotiating ‘satisfactory alternative means’ to address the ‘threat to the national security of the United States’ that the current steel and aluminium imports imposes. Trump said that each of these exempted countries has an important security relationship with the US. He also added:  “Any country not listed in this proclamation with which we have a security relationship remains welcome to discuss with the United States alternative ways to address the threatened impairment of the national security caused by imports of steel articles from that country”.

China vs. the United States

China is one country that is not listed. However, by the looks of it, China is not a country that will be discussing “alternative ways to address the threatened impairment of the (US) national security”. Instead, they fire back. China is the main cause of a glut in global steel-making capacity and it will be hardly touched by the US’ import sanctions. However and even though they do not want a trade war, they are ‘absolutely not afraid’ of one. Following Trump’s intentions for tariffs on up to $50 billion of Chinese products and the proposed complaint against China at the World Trade Organization (WTO) connected to allegations of intellectual property theft, China's Ministry of Commerce said it was "confident and capable of meeting any challenge”.

In response to Trump’s attacks, the Asian giant published its own list of proposed tariffs worth $3 billion, which includes a 15% tariff on 120 goods worth nearly $1billion (including fruit, nuts and wine) and a 25% tariff on eight goods worth almost $2 billion (including pork and aluminium scrap). Despite their actions, China’s Commerce Ministry urges the US to ‘cease and desist’, with Premier Li Keqiang saying: "A trade war does no good to anyone. There is no winner."

Is Trump going to win?

During his presidential campaign, one of Trump’s promises was to correct the US’ global imbalance, especially with China, however, it seems like his recent actions are doing more harm than good. Even if his tariff impositions result in a few aluminium smelters and steel mills in the short term, they risk millions of job losses in industries that rely on steel and aluminium; potentially endangering more jobs than they may save.

A country’s trade patterns are dictated by what the country is good at producing. China is known to be the world’s largest producer of steel, whilst steel is simply not one of the US’ strengths. Steel produced in America is 20% more expensive than that supplied by other countries. Naturally, it makes sense for US-based manufacturers to prefer buying their steel from overseas. Once Trump’s suggested tariffs are added onto steel and aluminium shipments from abroad, they will worsen US’ trade deficit and will impact the stock market. In an article for Asia Times, PhD candidate at the University of California at Berkeley Zhimin Li explains: “Domestic companies will inevitably suffer from higher input costs and lose their competitiveness. As a result, they will become less able to sell to foreign markets, leading to a deterioration of trade balances for the US.”

He continues: “Moreover, more expensive manufacturing materials will translate to higher prices at the cash register, putting upward pressure on inflation and prompting the US Federal reserve to raise interest rates even more aggressively than anticipated. This will add to investors’ anxiety and foster an unfavourable environment for equities.”

Looking at it all from China’s perspective doesn’t seem as scary or impactful. The tariffs on metals wouldn't hurt Chinese businesses considerably, as China exports just 1.1% of its steel to the US. But steel tariffs are not as significant as the coming fight over intellectual property.

On the other hand though, China has the power to do a lot to infuriate Trump. One of the products that the country depends on buying from the US are jets made by the American manufacturing company Boeing. However, Boeing is not China’s only option - they could potentially turn to any other non-US company such as Airbus for example. The impact of that could be tremendous, as in 2016 Boeing’s Chinese orders supported about 150 000 American jobs, according to the company’s then-Vice Chairman, Ray Conner.

China could also target American imports of sorghum and soybeans, whilst relying more on South America for soy. NPR notes: “Should China take measures against US soybean imports, it would likely hurt American farmers, a base of support for Trump.” An editorial in the state-run Global Times argues: “If China halves the proportion of the U.S. soybean imports, it will not have any major impact on China, but the US bean farmers will complain. They were mostly Trump supporters. Let them confront Trump.”

The list of potential actions that can threaten the American economy goes on, but the thing that we take from it is that the US could well be the one to lose, regardless of where China may apply pressure. So, is businessman Donald Trump, in an attempt to cure America’s international trade relations, on his way to be faced with possible unintended consequences and do more damage than good? Are his seemingly illogical policies threatening to make Americans poorer, on top of firing the first shots of a battle that no one, but him, wants to fight? Will this lead to hostility in the international trading system that will affect us all?

We’ll be waiting with bated breath.

World stock markets have had a positive start to 2018, signalling a strong year for economic growth ahead.

Forefront in the optimism is Japan, whose stocks increased by over 3%—bringing it to nearly its highest in 26 years. Leading the rally were energy and financials stocks.

This comes after US stock markets closed last night with another record high.

What this means for Japan

Topix index of all First Section issues on the Tokyo Stock Exchange jumped to its highest since 1991, rising by 2.1%. The Nikkei, short for Japan's Nikkei 225 Stock Average and the leading and most-respected index of Japanese stocks, rose by 2.6%.

The Nikkei stock average surged above 20,000—something it has done before, but has not been able to sustain in the past.

The anticipated market rally in 2018 will commemorate the longest winning streak since 1989, when during the Japanese asset price bubble, the Nikkei gained for the 12th straight year.

"With a global economic expansion, Japanese companies will likely keep double-digit growth," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co.

Analysts have said that the expected yen’s weakness, combined with the upbeat economic outlook, means Japanese companies will be aided in posting another record profit in the new year.

Despite the good news, analysts have also warned of a risk of volatility, with Senior technical analyst at Mizuho Securities Co., Yutaka Miura saying:  "Although the weather is fine, the waves are high... there will be scattered rain."

Describing the surge, Miura also said: "More overseas market players flocked to the market in the afternoon amid hopes for higher (Tokyo) stock prices this year."

How the US plays a part

Analysts have also forecasted the dollar to trade between ¥95 and ¥120 in 2018, compared with around ¥113 in late December.

Japanese companies such as Toyota and Sony depend heavily on the US market. Construction machinery manufacturer Komatsu, for example, will receive a boost thanks to the US tax overhaul legislation enacted in late 2017.

A potential defeat of Trump's Republicans in the US midterm election in November will likely start to gradually be factored in by investors, with the Nikkei possibly dropping below the 20,000 line.

Mizuho’s Miura concludes: "Following the passage of the tax reform bill, political conflicts between Republicans and Democrats will become clearer toward the midterm elections,” adding: “The conflicts may hamper Trump's efforts to push through other policies such as his long-promised plan to boost investment in infrastructure which is scheduled to be announced in January.”

Brenda-Lee Russell is the Managing Director of Omni Corporate Services Ltd. and is responsible for the overall day-to-day operations and management of the business, with complete oversight of the business platform and business models. Here she speaks to Finance Monthly about trends within the financial sector in The Bahamas and tells us about her company.

What is the current state of the financial sector in The Bahamas?  

I think that the current state of the financial sector in the Bahamas is steady, but optimistic. Within the last few years, we have been faced with many challenges that would have brought us to a place where we had to do things differently. We found ourselves at a crossroad for a mandatory need to change some areas. One significant factor that compelled us to change the way we do business with our clients was the legislation and enactment of The Foreign Account Tax Compliance Act (FATCA). It was enacted in 2010 by the US Congress to target non-compliance by US taxpayers using foreign accounts. FATCA requires offshore Foreign Financial Institutions (FFIs) to report to the IRS information about financial accounts held by US clients (taxpayers), or by Foreign Entities in which US taxpayers hold a substantial ownership interest. The Bahamas did not hesitate to comply with such requirement and in November 2014, we entered into a Model 1 Intergovernmental Agreement (IGA) (Bahamas-US FATCA Agreement) for implementing FATCA. Subsequently, in 2015, The Bahamas and The United States of America Foreign Account Tax Compliance Agreement was enacted. Of course, the ultimate goal of FATCA is to deter tax evasion by imposing information reporting requirements on financial institutions throughout the world (with respect to US persons with accounts in those institutions). Many of the banks and other financial intuitions that work with people with some kind of US Indicia, would immediately have reporting obligations - firstly to the local Competent Authority, for the purpose and intent of being compliant with FATCA. As a result of FATCA, some FIs have opted not to continue to market within the US Jurisdiction and would prefer to stay far away from US clients. This is easily understandable.

Another challenge or change we face, as we speak, is the Common Reporting Standards, commonly called CRS. Once again, the Government of The Bahamas stands ready to comply. It has taken a policy decision to implement CRS by way of the Multilateral Convention. Financial Institutions must be ready to report to the Local Competent Authority, as early as mid-next year 2018.

Although we are faced with many challenges, we are very optimistic that the days, weeks, months and years ahead, shall produce growth and positive outcomes. However, we must be mindful to be on the cutting edge of change in every possible way and we have come to the stage where we must start thinking outside the box. It is safe to conclude that we would have seen a slight degree of shrinkage in our industry, with many of our Super High-Net-Worth clients exiting The Bahamas and a number of our banks restructuring internally. We’ve also witnessed a couple of our major banks decommission private banking, while focusing solely on the trust side of the business, or vice versa. It is understandable that these radical changes have resulted in a few job losses, but it’s safe to say that The Bahamas’ financial sector continues to thrive.

What do you anticipate for the sector in the future?

I anticipate to see overall growth in the financial sector, as well as the evolvement of many small financial institutions.

What is Omni’s mission? What differentiates the company from its competitors?

Omni has learnt how to manage risk to optimize solutions for our clients. We have trained our minds to think differently. We take the time to evaluate, calculate and assess our clients’ overall objectives and come up with a sound solution. While we will always comply with our local regulators and act within the ambit of the law, we will not be afraid to think outside the box to create a solution for our ever-changing clients. Omni’s mission statement is: “Infinite Possibilities, Answers and Solutions in a Changing World”. One of our distinct differences, when compared to our competitors, is that we will not send away our US clients. Instead, we help them fully understand our obligations under FATCA and that we must report to the IRS who they are, as well as their interest in the assets that we manage.
Things have changed in the past 15-20 years, but at Omni, we are open-minded enough to have adapted to these changes.

Website: http://thinkomni.com/

Business travel has its own set of wonderful perks. An opportunity to get out of the office and see the world, corporate exploration allows you to do business in a brand-new city, as well as having some fun while you’re out there. But where are the best destinations in which to do business? Here, Irma Hunkeler at BlueGlass, brings you ten places for your consideration.

10. Instanbul

Instanbul, Turkey. Photo: Moyan Brenn/Flickr

It’s a cliche but it’s true: east meets west in Istanbul, and this is particularly true when it comes to business. The city has acted as a central connection point for companies from different ends of the globe, making it one of the world’s most diverse and thriving corporate destinations. It’s also a place full of beautiful ruins, amazing street food and fantastic people. Put your negotiation skills to the test with a haggle at a street market.

Main industries: Textile production, food, oil, electronics

Where to go: Hagia Sophia, Basilica Cistern, Aya Sofya

9. Frankfurt

Frankfurt, Germany Photo: Pixabay.com

Long known as a major city for aviation - it has one the largest airports in Europe - Frankfurt is also establishing itself as a place for a number of other industries. With Frankfurt the seat of the European Central Bank, the German city is of international importance when it comes to the European financial services industry. It’s also a fantastic place to come and do business in.

Main industries: Financial services, telecommunications, IT, biotech, creative services

Where to go: Stadel Museum, Kaiserdom, Frankfurt Stock Exchange

8. Hong Kong

Hong Kong Photo: Pixabay.com

Alongside London and New York, city-state Hong Kong is one the globe’s leading business destinations. A combination of the free flow of information and free market policies make it a place conducive to running successful businesses, so it’s not hard to see why so many companies have activities here. What’s more, Asia’s most popular city for international business is one of the least corrupt economies in the world.

Main industries: Financial services, trading, tourism, professional services

Where to go: Victoria PEak, Hong Kong Museum of History, street markets

7. Mexico City

Mexico City, Mexico Photo: Pixabay.com

The heart of the Americas is one of the most thriving corporate destinations in south America. Named as one of the world’s best start-up hubs, Mexico is known as a great place to do business, chiefly because of the city’s sociability. It’s an easy city in which to set up shop and get to know people, so it’s no surprise that companies from the US are starting to call Mexico home.

Main industries: Pharmaceuticals, technology, financial services, manufacturing

Where to go: National Museum of Anthropology, Chichen Itza, Palacio de Bellas Artes.

6. New York

New York City, US Photo: Pixabay.com

Where to start when it comes to the Big Apple? This metropolis is home to companies from every part of the globe. Almost every big name has a presence here, in some form or another. As well as established players, the city also has an emerging start-up scene. After a day spent hustling in Manhattan, head to one of New York’s world-class museums before seeing a Broadway show.

Main industries: Financial services, media, technology

Where to go: Central Park, Empire State Building, Museum of Modern Art

Click next to see our top 5 business destinations

[pag]

Deloitte appears to be the latest in a series of large multi-national companies becoming the victim of serious cyber breaches.

A report by the Guardian newspaper has revealed that the accountancy giant computers were discovered to have been hacked in March this year, although there are suggestions that the hack could have occurred as long ago as October 2016.

The news comes as several US companies are reporting large scales cyber security issues. Equifax and the SEC have both recently suffered embarrassing and potentially devastating hacks which have resulted in huge amounts of company data being compromised.

While the scale of the Deloitte hack is not yet known, the accountancy firm works for a vast amount of companies and governments around the world, providing tax consultancy and audits, all who have vital and confidential data held by the company. It appears that the main attack has been focused on the US arm of Deloitte, although there have been indications that it may affect companies in other countries.

The leak is said to have stemmed from the use of the company’s cloud storage system, where they store nearly 250,000 client emails. The hackers entered through an administrator password and reports suggest that this could have allowed them full access to all the information stored in the cloud.

Deloitte have sought to play down the hack in a statement which cited that there have been “very few impacted clients”. A spokesman is quoted as saying: “In response to a cyber incident, Deloitte implemented its comprehensive security protocol and began an intensive and thorough review including mobilising a team of cybersecurity and confidentiality experts inside and outside of Deloitte.”

Deloitte have taken steps to not only plug the leak, but to locate the source of the hack and earlier this year employed top US law firm Hogan Lovells to launch a special investigation on their behalf.

The hack will also serve as an embarrassment to a company who were voted Best Cybersecurity Consultants in the World in 2012.

While the full scale of the attack is not yet known, Deloitte will hope that they will not suffer the same fate as Equifax, whose share price fell 32% during the fallout of their cyber breach.

Following an internal review, SEC Chairman Jay Clayton revealed that the organisation had been the victim of “Malicious attacks”. The revelation came in a 4,000-word statement released on Wednesday and caused concerns among those on the trading floor.

The Securities and Exchange Commission is responsible for handling almost 1.7 million financial market disclosure documents a year through its EDGAR system, which was revealed as the source of the leak. The admission will be a source of embarrassment for the SEC, whose mission statement is to ‘protect investors’. Clayton’s statement confirmed that the leak was discovered and subsequently fixed in 2016. However, last month they discovered that the breach may have resulted in people being able to use the data acquired in the hack to illegally make profits on the stock market.

In addition to the cyber hack, Clayton’s statement also confirmed the use of private e-mails being used to transmit confidential data and that a number of SEC laptops that may contain confidential data are missing.

Wall Street has been suitably dismayed by the leak, given the potential risks that have been thrust upon it by the very organisation that is tasked with policing trades. However, the cyber breach will not come as a surprise to many within the government who have previously raised concerns about the SEC’s security systems in the past, including the Department of Homeland security who reportedly discovered five “critical” weaknesses in their system as recently as the start of 2017.

The US markets are already on edge, following the recent Equifax data breach which resulted in the leak of 143 million consumer records and is the subject of increased scrutiny and at least one Federal investigation.

In a bid to restore faith in the institution, Clayton has given his assurances that the SEC is taking cyber security seriously; he stated that: "The Commission will continue to prioritize its efforts to promote effective cybersecurity practices within the Commission itself and with respect to the markets and market participants it oversees," and that all steps are being taken to ensure there is not a repeat of a leak.

The move is a further indication that large financial companies and institutions are under increasing threat from cyber hacks. The SEC statement did not specify who was behind the breach, but recently countries such as Russia and North Korea have been linked to several high-profile hacks on large organisations.

Clayton and the SEC will need to ensure that it does not fall victim again if it is to rebuild its significantly damaged reputation on Wall Street.