Australia’s IAG takes a big reserve hit on UK motor insurance, reducing this year’s profit by about 40 percent. Judging from the company’s press release, it took $300 million development on 2007 and prior, plus the company bought a $200 million retro for $65 million, plus will be writing down $86 million in goodwill and other intangibles on UK business. Not bad for a company that writes $8 billion a year.
Apparently the British Isles are over-run with “claim farming,” which to these American ears sounds like lawyers who work on a contingency basis. But maybe not, as IAG top honcho Mike Wilkins swears up and down that
we have acted quickly and prudently to address this issue, which is peculiar to the UK business.
The Wall Street Journal write-through continues: “But that won’t stop uncomfortable questions about whether IAG should remain in any form in the UK, which Wilkins describes as the ‘most competitive insurance market in the world.'”
Good luck, guys.