With a portion of the industry's underwriting profit for 2006 attributable to $7 billion in reserve takedowns, it's fair to ask whether reserves carried overall are now adequate to cover losses that have occurred.
Are they redundant–more than adequate to cover such losses–leaving some fat for future profit taking? Or are they deficient, falling short of levels needed for ultimate claims payouts?
Recent reports by industry experts suggest that in spite of takedowns in 2006, reserve redundancies remain for the industry overall.
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