Cox has hit back at claims that the company does not have sufficient reserves to meet its current and future claims.
It said its level of reserves was “adequate to cover its claims exposures”.
A report in the Sunday Times speculated that the lack of reserves was the reason behind the collapse of merger talks between Cox and Highway in April 2004.
In the light of “misinformed speculation” Cox said it felt itself obliged to issue clarifying comments on the merger and its own reserving.
The company said it had ended merger talks after deciding the deal would not be suitably beneficial to the company in terms of assets and earnings.
The decision was based on the expected amount of retained business, reserving and the need to unify accounting standards across the combined group, said Cox.
Cox said: “After becoming aware of Cox's concerns, Highway presented its draft views of Cox's reserving position including comments attributed to EMB, Highway's actuarial advisers, which purported to show that Cox's reserve position was inadequate.
“At no stage prior to this presentation had Highway or EMB discussed their views of Cox's reserving position with Cox's management or actuarial advisers.
“On receiving this presentation, Cox promptly examined in detail each of the statements relating to its reserve position and shared the presentation with its own actuarial advisers.
“The Cox Board was fully advised of this presentation and management's analysis and concluded that there was no substance to the suggestion that Cox was under-reserved.”
Cox rejected these claims, stating that its reserve position is robust.
In a statement it said: “The audited consolidated Group accounts of Cox include its share of the claims reserves held by Syndicate 218 at Lloyd's in respect of claims notified and claims incurred but not yet notified to the syndicate.
“The syndicate's actuarial advisers, Deloitte Actuarial & Insurance Solutions, reviewed the level of reserves required and confirmed on 27 April 2004 that the amounts provided were adequate as at 31 December 2003.
“Cox confirms that the reserves included in its audited consolidated group accounts at that same date, which were audited by PricewaterhouseCoopers, are adequate to cover its claims exposures.”
