Analysts warns insurer lacks reserves to pay £2bn in D&O
Barclays Capital analyst Jay Gelb says Chubb could pay out $2bn from directors and officers (D&O) insurance policies as litigation surges in the wake of the financial crisis and recession, Fox News reports.
"Chubb does not appear appropriately reserved in this line," the analyst said. "If Chubb's 2008 US D&O accident year loss ratio of 78% rose to the peak developed loss ratio over the past 10 years of 120% (which occurred in 2002 due to the tech bubble/IPO laddering), we estimate Chubb could report additional D&O losses of $2bn, pre-tax over several years."
