You're missing my point. They should have had the same gross (although the independent actuaries sure did not buy their analysis) and booked a smaller recoverable and therefore a higher net instead of reporting earnings they never had. Had management properly estimated the likely recoverables (same gross) it would have booked the proper/higher net reserves back when it saw the adverse development, would not have confidently assumed a total victory in arbitration and would have taken no hit/smaller hit today to the balance sheet. It's management that's trying to get it both ways. Win the arbitatration, we win; lose the arbitration, we explain that we were right anyway. Has management explained how it failed to convince the independent actuaries that it's "better" estimate should be used. Missing by that much in baseball-type arbitration is in itself a major f-up. The whole point of baseball arbitration is to be right, otherwise the other guy wins. That's hardly a demonstration of XL's reserving skills, or maybe I'm afraid it is.