We have been discussing the World Cup in South Africa for the past few months here at SBPDL. In fact, we have already declared that event to be a monumental failure based upon the amount of money spent to ensure the safety of the visiting fans to that rainbow nation.
The mainstream media has done a woeful job of covering South Africa since 1994, when the last vestiges of white rule were removed with the democratic election of Nelson Mandela. Indeed, only angelic and glowing praise of Mandela is allowed – see Richard Stengel’s work for Time magazine and the books he has written on his beloved mentor for proof of this – to be published.
Now, the truth of South Africa’s precipitous decline under Black rule is becoming increasingly obvious and any mention of this in the mainstream media is not tolerated (see this article in The Guardian).
Our coverage of the real South African World Cup (available here, here and here) should be enough to wipe away any false notions of a post-racial utopia from your sleepy eyes. The decline of South Africa in a mere generation since the handover of power from the white founders of that nation to the immensely unprepared Black majority is profound.
The gleaming towers and cities that will be viewed on television were built by white South Africans long before Black people took power (much like in America’s major cities). The shanty towns that house the teeming masses of the ever-expanding Malthusian Black underclass in South Africa are the true legacy of Black architectural feats.
We have been trying to figure out why the World Cup was forced on South Africa, a nation that could have easily hosted such a mammoth undertaking during the bad-old days of Apartheid (were an International Sports Boycott not applied to that nation).
Now, the answer has become crystal-clear: they were set up to fail for a significant monetary gain:
With just four days to go before the opening match of the 2010 Fifa World Cup in South Africa, Llyod’s of London, a British insurance and reinsurance market, has valued the insurance of most widely viewed sporting event in the world at a staggering US$9 billion.
The eyes of the world are watching, and with so much at stake, Fifa, tournament broadcasters, World Cup sponsors, national teams, associated business, as well as the players and fans have looked to insurers to protect against all eventualities.
Chris Nash, Sportscover underwriter, said “Competitions, offers, prizes, sponsorship, broadcast rights - it’s impossible to know how many there are, but all companies with these financial implications need coverage.”
The latest estimate divides the insurance policies into three categories: property insurance, contingency insurance and liability insurance.
According to underwriters at Llyod’s, roughly half of the US$9 billion figure can be attributed to property insurance. Five new purpose-built world class stadia as well as major renovations to five others, combined with the cost of providing training venues have taken South Africa’s overall stadium budget to more than US$1 billion.
Contingency insurance set up to cover unforeseen circumstances, such as broadcast delays causing incorrect advertising scheduling, has been valued equally at US$3.2 billion.
“If the opening ceremony is delayed, that will affect the broadcasters, because they’ve got their advertising slots in place,” said a spokeswoman for Lloyd’s. “Similarly, if the final has to be delayed for whatever reason, people might want money back for their tickets.”
Lloyd’s estimate that a further US$290 million worth of liability insurance has also been purchased.
While the £6.2 billion worth of insurance, which fails to take into account insurance on individual players, may seem initially high. In terms of overall economic impact official forecasts suggest that, once the dust has settled, the South African economy will be boosted by US$7.2 billion.
We have discussed the crime scenario in South Africa before (comparing South Africa correctly to the dystopia portrayed in District 9) and in a post detailing the horror that could unfold were Nelson Mandela to die before the games commence, or during.
The World Cup is not providing the economic boost that so many were promised in South Africa. The Black middle class might be growing in South Africa, but so is the ever-expanding Black underclass, who view the wealth and prestige they are not receiving with derision, disdain and extreme jealousy.
Already, 19,000 murders take place a year (largely Black on Black violence that was held in check during Apartheid) and those ”have not’s” who have yet to taste the joy of democracy in the Black-run new South Africa see the continued disintegration of their standard of living while the proverbial “haves” line their pockets with international contracts from investors abroad.
Yet, the entire nation is being played. No amount of positive press from The USA Today, Bloomberg Business Week, Financial Times, The Council on Foreign Relations or any outlet can hide this fact any longer. The Daily Star in London is providing the most important coverage on the World Cup (along with this Yahoo! Sports story of the New Zeland team stopping practice due to putrid and acrid scents emanating from a Black township).
$9 Billion dollars in insurance for the World Cup!:
It's a staggering number for any occasion, even the most watched sporting event in the world.
The 2010 World Cup starts in less than a week and it will be insured for $8.98 billion, according to specialist insurance company Lloyd's of London.
The breakdown is: $4.35 billion -- contingency coverage.
$4.35 billion -- property coverage
$290 million -- liability coverage.
FIFA utilized the capital markets to take out insurance against the cancellation of the 2006 World Cup to the tune of $260 million, yet transferred the risk to insurers for the 2010 and 2014 World Cups:
The Fédération Internationale de Football Assn. is protecting its investment with $650 million in coverage to protect against postponement or relocation of the event, which runs June 11 through July 11. The bulk of the coverage, which will remain in place for the 2014 World Cup in Brazil, is reinsured by Swiss Reinsurance Co. and Munich Reinsurance Co.
FIFA did not purchase insurance to cover cancellation of the World Cup. The organization chose not to cover that risk because “even if the event is delayed for any reason, it is extremely unlikely that it would be called off,” a spokesman said in an e-mail.
Insurance and security in South Africa will be in place for 64 matches played in nine cities during the month long World Cup centered in Johannesburg. Estimates of the number of visitors have ranged as high as 450,000 to watch the games.
The South African government has assured fans that enhanced security will keep them safe at World Cup venues. Concerns grew recently based on a report that an al-Qaida operative in Iraq had been detained on suspicion of planning an attack at the event.
Such threats are not uncommon, said Hans J.R. Steffen, Swiss Re's Zurich-based expert for large events.
“These are threats that are faced by all major events,” Mr. Steffen said. “This threat is not any bigger than those at other, previous events.”He said South African police and security agencies have taken all necessary precautions to keep the event safe.
“The location does not necessarily represent any unusual exposures,” said Jonathan Cole, a London-based partner with Jardine Lloyd Thompson Ltd. “Underwriters' main concerns focus around the infrastructure, terrorism and civil commotion,” he said in an e-mail.
The insurance market's confidence, though, has not been shared by everyone participating in the World Cup.
Claus Wunderlich, owner of Die Sport Assekuranz, a Reutlingen, Germany-based broker, said he has been approached by soccer players interested in kidnap and ransom insurance to cover them during the World Cup (see story). He would not divulge whether any such coverage was placed.
South Africa has stepped up its border security and is working with international agencies to gather intelligence regarding potential threats, the 2010 FIFA World Cup Organizing Committee said. Police will deploy 41,000 officers to maintain order and about $85 million will be spent on 10 water cannons, 100 BMW automobiles to patrol highways, 300 mobile cameras, unmanned surveillance aircraft, helicopters and other security equipment.
“The police force is ready,” South Africa Minister of Police Nathi Mthethwa said in a mid-May statement regarding World Cup security. “Police will be everywhere, ready for any eventuality. This is the epitome of our security plan; we will cover every corner because we do not have any no-go areas,” he said.
While no country can “stand boldly and pronounce that it is immune from terrorism, what becomes critical is, should such an act occur, how do we respond? What makes us even more alert in our security planning is that South Africa will be hosting the whole world and therefore we will take no chances,” Mr. Mthethwa said.
Mr. Steffen said South African police and security forces are especially vigilant partly because the African continent is hosting the World Cup for the first time. “Imagine how much people want these games to happen without any interruption or disruption,” he said.
Very "important' event
South Africa has hosted other large events, such as the All-Africa Games in 1999 and the Cricket World Cup in 2003. But the FIFA World Cup stands apart in its prominence, said Mr. Steffen.
“The World Cup is definitely a very big and important event for South Africa,” he said.
FIFA's coverage protects the Zurich-based organization from losses should the World Cup be postponed or forced to relocate because of terrorism, war, natural disasters or civil unrest, Mr. Steffen said.
Cancellation is the biggest exposure that FIFA and other stakeholders face with regard to the World Cup, Mr. Steffen said. While property/casualty, personal accident and other exposures are among those that generally are thought of first, “the biggest one is cancellation,” he said.
Though FIFA did not buy coverage for that exposure, many others facing losses if the event is canceled did buy cover that would respond, sources said.
Munich Re estimated in its 2009 annual report that the total demand for cancellation insurance could be around $5 billion.
Cancellation of the event would mean heavy losses for many organizations with ties to FIFA and the World Cup, Mr. Steffen said. Broadcasters, hotels, restaurants, travel agents, souvenir sellers and others would be hit with losses.
Television broadcast rights represent the largest share of exposed revenue for FIFA, a Munich Re spokesman said. The contra
“Swiss Re and Munich Re are the main providers” of coverage written for FIFA, Mr. Steffen said, with various international and local insurers providing following capacity.
Munich Re said in the annual report that its share of the coverage is the largest at around $350 million.
Mr. Steffen did not say exactly how much of the coverage Swiss Re will provide, but said it is a “three-digit million” amount.
German reinsurer Hannover Reinsurance Co. confirmed it will provide a portion of the coverage, but a spokeswoman said its participation is “quite marginal.”
FIFA's coverage was placed by Erwin Himmelseher Assekuranz-Vermittlung GmbH & Co., a Cologne, Germany-based broker.
FIFA returned to traditional markets for insurance after a pioneering 2003 move in which it purchased a $260 million catastrophe bond to cover the cancellation exposure of the 2006 World Cup in Germany. It was the first such bond to transfer the risk of staging a sporting event to the capital markets and was the first to cover the risk of terrorism.
FIFA said it turned to the capital markets in 2003 because prices were high in a tight marketplace after the 2001 terrorist attacks in the United States. With insurance prices declining since then, the organization decided to transfer the risk to insurers for the 2010 and 2014 events.
The USA Today ran a story in 2006 detailing the insurance aspect behind terrorist threats and published this interesting tidbit:
The Insurance Information Institute reported last year that insured losses from the 9/11 attacks approached $32.5 billion. That was 30 times more costly to the insurance industry than any prior terrorist attack and nearly 11/2 times more expensive than the $21 billion cost of Hurricane Andrew in 1992, the USA's most expensive natural disaster. The insurance industry's 9/11 losses did not stop there. OECD researchers found that claims payouts combined with downturns in the stock and bond markets, in which insurers are heavily invested, cost them about $200 billion in capital.
Going forward, the 2006 World Cup soccer championship in Germany serves as one model of how the capital markets might eventually complement private insurers in covering terrorism risks. To provide a financial guarantee for the World Cup host, Wall Street investment bank Credit Suisse sold $260 million in securities that provide a backstop against the tournament's cancellation.
Underwritten in 2003, the World Cup bonds were hailed as a breakthrough in spreading the financial risk against terrorism. The soccer bonds pay investors a handsome yield while subjecting them to the risk of losing up to 75% of their capital. But the financial markets have been slow to find investor appetite for terrorism-related securities in other venues.
We at Stuff Black People Don’t Like have been trying to persuade people around the world to understand what is about to happen at the South African World Cup. It appears the only people listening were FIFA and their corporate sponsors (based on the amount of insurance they have taken out).
Ladies and gentlemen, one game is about to change everything.
To paraphrase an adroit reader, the situation in South Africa and the undeniably high level of insurance taken out reminds us of the movie The Producers:
The plot of The Producers is that two debt-ridden and washed up Broadway producers decide to create the worst play in history. They insure this play by guaranteeing a share of profits to investors, but the fine print of the investment contracts stipulates that if the play loses money, then the investors must cover the loss on behalf of the producers. They search through scripts looking for the absolute worst play they can find, and settle on a script entitled "Springtime for Hitler”. To summarize, the two producers bank on the failure of their play, so that they can clean up on insurance money.
The South African World Cup was set up to fail from the beginning. With this information in hand, you are warned not to attend.