Mr. Paisan: Prior to September 11, I would describe the health of the property-casualty insurance industry as quite good. By that I mean that when you describe the health of the property-casualty insurance industry you look at what the basic statutory surplus capital base is, and it was, I would say, over-capitalized by maybe 60 or 70 billion. The health of the insurers had been deteriorating over the past several years, however, due to some severe and irrational pricing competition. But even with that deterioration, I would say that overall, it was still a rather healthy industry.
TWST: Despite the drop-off in the stock and bond markets, even prior to
September 11?
Mr. Paisan: This is an industry that when you measure its health, you're
measuring it with a capital base that was over-capitalized. Despite what
had happened in the bond and equity markets over the past year and a
half, you have to remember that, prior to that, for probably a good six
years, there was such an incredible boom in the markets that it tended
to inflate the capital base of the industry. That capital base was
certainly not inflated because of inflated amounts of retained earnings.
Tickers included in this excerpt: ACE, AIG, CB, PRE, RE, RNR, SPC
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.