Advisen Report Looks At Impact Of Credit Crisis On Liability Insurance Loss Ratios
A new report from Advisen Ltd., which provides information and analytics to the global commercial insurance industry, offers insight regarding the effects of the subprime meltdown and the resulting credit crisis on liability insurance loss ratios.
The report, The Subprime Mortgage Meltdown, the Global Credit Crisis and the D&O Market, says U.S. insurers will see nearly $6 billion in losses from lawsuits stemming to subprime mortgage-related issues. The losses are more than 60% higher than the figure Advisen previously forecast in February and yet another indicator that what began as a subprime issue has spread into a crisis of global proportions.
According to Dave Bradford, co-founder of Advisen, the revised forecast reflects an increase in securities class-action suits, securities fraud suits brought by regulators and law enforcement agencies, shareholder derivative suits and defense costs associated with dismissed suits.
Other key findings in the report include:
• Financial institutions and other companies report more than $750 billion in write-downs on losses relating to securities backed by subprime mortgages as of Nov. 1, 2008
• 124 subprime-related securities class-action lawsuits have been filed to date.
• Credit-default swaps tied to mortgage-backed securities have been and continue to be a key source of losses for financial institutions and others.
• More than 48 investigations have been launched by the Securities and Exchange Commission (SEC) on subprime-related issues.
The release of the latest Advisen report coincides with the 2008 Professional Liability Underwriting Society Conference, which is being held this week in San Francisco. The theme of the conference is “Prospects for the Future: Golden Opportunities or Fool’s Gold?”
The Subprime Mortgage Meltdown, the Global Credit Crisis and the D&O Market is available for free at: http://corner.advisen.com/The_Global_Credit_Crisis_and_D_O_final_2.pdf
Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.
