Risky Business by KCIC

KCIC.com
  • HOME
  • CLAIMS ADMIN
  • DISPUTE RESOLUTION
  • INSURANCE & RISK
  • TECH
  • CULTURE

OBIG Testimony Transcript Released

August 1, 2014 By Jonathan Terrell Leave a Comment

Testifying-on-the-Proposed-Sale-of-OBIG-Subsidiaries-in-post-image

In my previous post, I discussed my July 23 testimony at a public informational hearing of the Pennsylvania Insurance Department. The hearing was about the proposed sale by One Beacon Insurance Group of four of its subsidiaries, including One Beacon Insurance Company and Potomac Insurance Company.

The transcript of the entire hearing has since been posted to the Pennsylvania Insurance Department website, including my live testimony.

The transcript with my testimony (edited for typographical errors) can be found HERE .

In my oral presentation, I provided a short summary of my expert report that had been submitted in advance of the hearing, as well as some comments on the presentations by the actuaries, the Seller and the Applicant.

One of my main conclusions was:

“The proposed transaction is the most opportunistic and most cynical insurance company restructuring I have ever seen.” (Page 116)

Along the way, I sharply criticized the work of the retained actuaries:

“The history of reserving for long-tail liabilities by insurance companies teaches us, indeed, to disbelieve actuarial estimates.” (Page 117)

In criticizing the adequacy of the pro-forma opening balance sheet, and disputing the assumptions behind it, I stated:

“They go on to tell us, and this really, really amazes me … but they have forecasted that will start repaying surplus notes in 2018, just four years out into a multi-decade runoff.” (Page 134)

Regarding the management being unable to offer a single, plausible justification for the deal:

“They talk about complicated accounting and reporting. I mean, are we supposed to shed a tear for that?” (Page 136)

In conclusion, I invited them to put some more skin in the game through financial instruments that would align the ongoing success of the Seller with the runoff entities:

” … if they are so confident in the sophistication of their actuarial analysis and their financial projections, they should put their money where their mouth is.” (Page 138)

On July 26, 2014, the Department reopened the public comment period indefinitely to afford persons ample opportunity to provide written comments on the filing to the Department.  KCIC invites you to comment on this important proposed transaction.

Filed Under: Insurance & Risk Tagged With: One Beacon Insurance Group, Potomac Insurance Company, Testimony

Jonathan Terrell

About Jonathan Terrell

Jonathan Terrell is the Founder and President of KCIC. He has over 30 years of international financial services experience with a multi-disciplinary background in accounting, finance and insurance. In addition to leading KCIC's business operations, Mr. Terrell is in demand as an expert witness in disputes involving insurance company reorganizations, economic damage calculations, and insurance coverage valuation. Prior to founding KCIC, Mr. Terrell worked at Zurich Financial Services, JP Morgan, and PriceWaterhouseCoopers. He holds a bachelor’s degree from Newscastle University in England and is a UK-qualified Chartered Accountant.

Meet the Contributors

Jonathan TerrellJonathan Terrell
Dan SnyderDan Snyder
Nick SochurekNick Sochurek
Megan ShockleyMegan Shockley
Carrie ScottCarrie Scott
Michelle PotterMichelle Potter
Andrew PetryszakAndrew Petryszak
Chris MonahanChris Monahan
Elizabeth HankeElizabeth Hanke
Nancy GutzlerNancy Gutzler
Chris CrookChris Crook

ARCHIVES

QUICK LINKS

CLAIMS ADMIN
DISPUTE RESOLUTION
INSURANCE & RISK
TECHNOLOGY
CULTURE
KCIC.COM
LinkedIn Icon Twitter Icon

Tag Cloud

insurance Risk Asbestos asbestos litigation claims administration Risk Management Consulting Litigation Claims Technology Berkshire Hathaway claims management Culture product liability KCIC KCIC Cares mesothelioma Insurance Coverage Corporate Insurance company culture data KCIC Culture

CONTACT

KCIC
733 10th Street, NW
Suite 3001
Washington, DC 20001

P: 202-772-2300
F: 202-772-2333
E: contact@kcic.com

Copyright © 2018 | Terms of Use | Privacy Policy | Risky Business - KCIC.com