Fireman's Fund Boosts A&E Reserves
NU Online News Service, Sept. 13, 9:50 a.m. EST?Fireman's Fund Insurance Company in Novato, Calif. said today that it will receive capital from its parent, Allianz AG of Munich, Germany, to increase its reserves for asbestos and environmental exposure by $750 million.
During the third quarter, the $750 million will be added to current A&E reserves of $760 million, bringing the total A&E reserving to $1.51 billion, Fireman's Fund said.
Jeffrey Post, chief executive officer of Fireman's Fund, said that with the increase, the company's net survival ratio–an average ratio of reserves to payments for A&E liabilities–increases to over 13 years. He noted that the average survival ratio for the industry is roughly eight years and said that the A&E problem "has been exacerbated by a dramatic up-tick in litigation surrounding the asbestos issue."
In a separate statement, Allianz AG noted that the reserve increase was based on detailed reviews by the firms Tillinghast Towers-Perrin and Milliman USA.
Allianz is providing capital to Fireman's Fund to finance the increase, the German insurance group noted, stressing that "the transaction confirms Allianz' commitment towards Fireman's Fund."
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