- Could AIG really have been THAT stupid in risk analysis? [Carney, more, Salmon] #
- Unexpected: NY Gov. Paterson appears before Congress and quotes Ayn Rand [Damon Root, Reason “Hit and Run”] #
- “I don’t know what Prop 3 is, but I’m voting against it because there were kids in that ad.” [@daveweigel quoting another] #
- Operatic: Terry Teachout and Leontyne Price among the Supreme Court justices [About Last Night] #
- Already a good blog out there on your topic? Don’t let that stop you [O’Keefe] #
- Obama Warns He May Cease To Exist Unless America Believes In Him [The Onion] #
- “The majesty of our jury system: remember, she made it past 2 sides’ voir dire” [@tedfrank on Anchorage Daily News coverage of Stevens trial juror] #
3 Comments
Ted Frank’s twitter post says it is “protected” and won’t open up.
Good point, I’ve removed the link to reflect its not being public.
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..