Company write-downs because of the drop in subprime mortgage values could result in more than $3 billion in losses for writers of director and officers insurance, a research and technology firm said today.

New York-based Advisen Ltd. announced that finding would be contained in a report it will on release Monday.

Advisen said the $230 billion in write-downs from the subprime mortgage crisis have sparked a barrage of securities class-action and related lawsuits that are likely to cost D&O insurers $3.6 billion.

The report bases its findings on historical securities class-action settlement patterns and D&O program limits and retention data from Advisen's Program Benchmarking database, the company said.

The losses will be borne by a small group of financial institution D&O insurers, Advisen noted.

It said the report, titled "The Crisis in the Subprime Mortgage Market and Its Impact on D&O and E&O Insurers," will provide details on write-downs reported by more than 120 financial institutions around the world and analysis of the 181 subprime-related lawsuits filed to-date.

"As the subprime story unfolds, the potential impact on the insurance industry becomes clearer," said a statement from Dave Bradford, Advisen's chief insurance industry analyst and author of the report. "Losses to D&O and E&O [errors and omission] insurers will be significant, but not cataclysmic."

The report will include:

o Details on the write-downs reported by more than 120 financial institutions across the globe.

o Market cap losses experienced by those companies.

o Subprime-related lawsuits filed against those companies.

o An analysis of the full 181 subprime-related lawsuits.

o Market share of the top-ten writers of financial institution D&O and E&O.

o The contribution of subprime losses to 2007 and 2008 loss ratios.

o The impact of the subprime meltdown on D&O and E&O pricing based on program data reported by risk managers and brokers and on the results of a survey of 110 financial institution insurance buyers.

Special Reports /

Study Finds Subprime Mess Could Spur A $3.6B D&O Loss

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