More Students Line Up at Financial Aid Office. Universities are awash in financial aid requests, often from students who never thought of asking for help before. By Greg Winter and Jennifer Medina. [New York Times: Business]

More dismal news from the economy.

8:40:17 AM  #  

Texans See as Much to Lose as to Gain From War. In the heart of Bush country, views of war with Iraq run the gamut of national opinion. For every unswerving proponent, there is a foe or equivocator. By Peter T. Kilborn. [New York Times: Business]
8:39:52 AM  #  

Unrest Clouds Bolivia Leader's Future. Bolivia remains on edge, with the government seriously debilitated and Western diplomats worried about its future. By Juan Forero. [New York Times: Business]

I know from talking to my family that times are tough down there...but this has been going on for weeks...I don't know why it's taken the major press so long to pick it up State-side.

8:37:51 AM  #  

What it takes to exit lines of business in the insurance industry.  A great article talking about the history of run-off management companies and services, which are (in a very simplistic sense) firms that specialize in helping insurance carriers exit highly unprofitable lines of business.  The problem with the insurance industry is by the time you recognize a problem in pricing has occurred it's typically 2 or more years before you can exit that line of business.  In the case of asbestos litigation, some firms are paying millions of dollars on 20 year old policies that they didn't even write.

In a business plan published in April 1993, Lloyd's chairman, David Rowland announced the formation of a reconstruction project which was advertised as a "ringfence" of 1985 and prior liabilities. Under this plan, the liabilities of the old years were to be estimated to ultimate, discounted for the creditability of outwards reinsurance and the time value of money, and charged to the Names as a one-time premium in exchange for certainty, if not finality. After huge and prolonged actuarial studies, and considerable litigation, the membership of Lloyds approved the plan, which was secured with a $20 billion premium, the largest reinsurance transaction in history, and which created a facility that became known as Equitas, the largest run-off entity in the world.

Runoff presents an interesting set of problems for insurance carriers...and many are beginning to see it as an entirely different skillset than what is required for "active" business underwriting.

The special skills inherent in professional run-off management are different in kind and quality from those used in "live" claims management. In addition to claims expertise in multiple lines and jurisdictions, the most successful run-off managers are experts at operational cost controls, unearthing and preservation of historical information, actuarial science, commutations, specialised collections, dispute resolution, maximisation of cash assets, and even regulatory and tax issues. The final essential skill is the ability to motivate and keep staff, in an environment where people are not sure where "their next claim is coming from".

1:21:17 AM  #