All material subject to strictly enforced copyright laws. © 2021 Insurance Insider is part of Euromoney Institutional Investor PLC.
Accessibility | Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies | Subscription Terms & Conditions

CNA takes $18mn hit on IGI workers’ comp

Carve-out losses continue to haunt

CNA Reinsurance Company took a further $18mn reserve charge in its 2nd quarter results for ongoing workers compensation exposures written on the IGI programme between 1997-1999.

CNA, which entered into a facility with the London PA managing agency IGI, became exposed to spiralling carve-out losses via the programme, which included participation in a reinsurance pool, Associated Accident and Health Reinsurance Underwriters (AAHRU) Facility.

In its 2Q filings, CNA explained: “CNA believes it has valid and enforceable reinsurance contracts with the AAHRU Facility and other reinsurers with respect to the IGI Programme, including the United States workers compensation carve-out business. However, certain reinsurers have disputed their liabilities to CNA, and CNA has commenced arbitration proceedings against such reinsurers. CNA has resolved its dispute with respect to the validity and enforceability of ceding IGI Programme losses to the AAHRU Facility, including the United States workers compensation carve-out business; however, an arbitration is still pending with certain members of the AAHRU Facility related to a dispute over the allocation of such losses to pool years.

The reinsurer continued: “As a result, the Company increased its insurance reserves related to the IGI programme by $18mn in the second quarter of 2004. An arbitration with another reinsurer is also still pending.

The reinsurer also warned that exposures may continue to dog the company with operations being “adversely affected” by further reserve boosts. CNA said that despite pursuing a number of “loss mitigation strategies”, the “the estimate of ultimate losses is subject to considerable uncertainty”.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree