Oh Sorry, When an insurance company has to go to the outside for a reserve review, which will be completed within the next 30-60 days; the Actuaries will conservatively place their numbers on it, so as they WILL NOT BE Wrong.
If they are too low, they will be held accountable and probably be sued.
The OTHER REASON is the US companies have been underpricing their policies since (at least) 1995.
THis is called the "soft Market". Underwriters were chasing premium dollars to invest, so they underpriced their products for past five years.
We call it Cash Flow underwriting. They are not the only insurance company to do this. The largest one was Reliance National, seized by the Dept of Ins about a year ago.
I would be happy to enter into a discussion of soft vs. hard markets with you but I don�t know if anyone else is interested. We are really talking about a buyers vs. a sellers market. It is not as simple as underpricing, like you claim. These things move in cycles, and there have been whole dissertations written about the issue. But it is certain that Sept. 11 precipitated the new hard cycle.
Are you suggesting that Reliance National & Trenwick are parallel cases?
Just curious about what outcome did the Sr and Jr bond holders/Preferred Stockholders see from the seizure and ultimate runoff so far? (LSH.A) I'm guessing that it's too early for this to be known, as runoff's take years to conclude, unless it's simple like crop insurance. Anyone close to this pls reply, Thx, BR