Outside actuaries have concluded that Liberty Mutual’s asbestos exposure may be shorter tailed than that of many other commercial insurers because the company mainly wrote primary coverage and also benefited from several manuscript policy provisions that reduced loss limits available to pay asbestos claims.
The external review resulted in an indicated reserve that was approximately $60 million above the company’s carried reserves as of September 30, 2005 but the company said it has decided not to further adjust its reserves at this time.
Liberty Mutual Group announced the results of the external asbestos review by an outside actuarial firm, which was completed during the fourth quarter of 2005.
In explaining the $60 million in additional reserve, the company said the primary area of difference is in the IBNR (incurred but not reported) estimate, which is for policyholders that have no reported claims as of the date of the analysis.
The company said it is comfortable with its third quarter best estimate of required asbestos reserves and therefore will not adjust its asbestos reserves for any difference between the independent actuarial firm’s estimate and the company’s carried reserves, as it believes both estimates are well within the range of reasonableness.
In the third quarter of 2005, the company strengthened reserves by $203 million, which was approximately $50 million above the point estimate of the company’s internal actuaries and reflects management’s best estimate of the reserve requirement.
Total held reserves for asbestos liabilities (including allowance for reinsurance on unpaid losses) were $1.194 billion as of September 30, 2005.
Additional information on the company’s asbestos reserves is available at www.libertymutual.com/investors.
Was this article valuable?
Here are more articles you may enjoy.