More than $170 billion has evaporated from the balance sheets of companies around the world as the result of the meltdown of the U.S. subprime mortgage market, reports Advisen Ltd., a provider of technology and data to the global commercial insurance industry. However, the $170 billion of writedowns may be only the tip of the iceberg, the research firm suggests in a special report, “Subprime-related Writedowns: Potential Exposure to D&O and E&O Insurers,” that tracks writedowns reported to date and the related lawsuits filed against those companies.
Advisen estimates the 112 companies reporting writedowns may have as much as $1.2 trillion in collateralized debt obligations and other securities backed by subprime mortgages on their balance sheets.
The crisis in the subprime mortgage market also has triggered an avalanche of lawsuits. According to Advisen’s MSCAd large loss database, 113 lawsuits — encompassing securities class action suits, derivative actions, fiduciary liability suits, underwriting malpractice suits and other related suits — have been filed to date. Of the 112 companies reporting writedowns, 24 have been sued. A number of those companies have experienced multiple suits.
Source: Advisen, www.advisen.com