Comments on: Microblog 2008-11-03 http://overlawyered.com/2008/11/microblog-2008-11-03/?utm_source=rss&utm_medium=rss&utm_campaign=microblog-2008-11-03 Chronicling the high cost of our legal system Sun, 27 May 2012 13:04:59 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: William Nuesslein http://overlawyered.com/2008/11/microblog-2008-11-03/comment-page-1/#comment-33872 William Nuesslein Wed, 05 Nov 2008 14:12:30 +0000 http://overlawyered.com/2008/11/microblog-2008-11-03/#comment-33872 The risk in AIG's business was a mathematical concept beyond the kin of almost everybody, especially sales people. The brokers in a company I worked for found that insurance companies actuaries were just too conservative. The company underwrote some insurance for it's clients. A few years later, that insurance went sour. There is excess loss reinsurance for life insurance portfolios that has worked well for a long time. I never fully understood its mathematical foundations. But Insurance depends on risks being independent and bounded. I suspect that the major source of the current debacle comes from "rule orientation". Managers were satisfied with meeting accounting standards, without understanding the business, and they did not test bounds or independence.. The risk in AIG’s business was a mathematical concept beyond the kin of almost everybody, especially sales people. The brokers in a company I worked for found that insurance companies actuaries were just too conservative. The company underwrote some insurance for it’s clients. A few years later, that insurance went sour.

There is excess loss reinsurance for life insurance portfolios that has worked well for a long time. I never fully understood its mathematical foundations. But Insurance depends on risks being independent and bounded.

I suspect that the major source of the current debacle comes from “rule orientation”. Managers were satisfied with meeting accounting standards, without understanding the business, and they did not test bounds or independence..

]]> By: Walter Olson http://overlawyered.com/2008/11/microblog-2008-11-03/comment-page-1/#comment-33772 Walter Olson Tue, 04 Nov 2008 04:48:44 +0000 http://overlawyered.com/2008/11/microblog-2008-11-03/#comment-33772 Good point, I've removed the link to reflect its not being public. Good point, I’ve removed the link to reflect its not being public.

]]> By: John Rohan http://overlawyered.com/2008/11/microblog-2008-11-03/comment-page-1/#comment-33769 John Rohan Tue, 04 Nov 2008 04:26:35 +0000 http://overlawyered.com/2008/11/microblog-2008-11-03/#comment-33769 Ted Frank's twitter post says it is "protected" and won't open up. Ted Frank’s twitter post says it is “protected” and won’t open up.

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