Seen at Insurance Journal:
No less a figure than AIG’s former head Maurice “Hank” Greenberg, who now heads CV Starr, sounded a similar warning. In his keynote speech to the delegates at the International Union of Marine Insurance (IUMI) Conference in Copenhagen he essentially described the subprime market as a house of cards, built on models for a market that didn’t exist. He also faulted the rating agencies for doing a very “poor job” of analyzing these financial products.
Nor does Greenberg share the I.I.I.’s optimism as to the extent of the insurance industry’s exposure. He thinks it will take the biggest hit, not only from direct losses – when the hedge funds can’t pay their debts – but also from the D&O and E&O claims that inevitably follow any financial melt down.
Considering how soft pricing has been in certain segments of the professional liability market, I imagine a few wise underwriters wouldn’t mind seeing a little blood in the streets in that regard.