Iordanou: some firms ‘cheating’ with reserves – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

Log In

Reset Password

Iordanou: some firms ‘cheating’ with reserves

Arch Capital's top executive accused some in the insurance industry of “cheating” with reserves.

Dinos Iordanou, chairman and chief executive officer of the Bermudian insurer and reinsurer, warned of “noise” in apparently strong balanced sheets among insurers that have mispriced risk.

His comments were reported by industry publication The Insurance Insider, which was hosting the InsiderScope conference at which Mr Iordanou was speaking.

“It's a self-grading exam — you decide what it's going to be on the day,” Mr Iordanou said. “There's a tendency within our industry to misprice risk, and there's a tendency to cheat, sometimes intentionally, sometimes unintentionally.

“There's noise in the underlying healthiness of the balance sheets,” he added. “Those who intentionally or unintentionally cheated the most have the worst problem.”

The Arch chairman added that the industry traditionally “has not done well in managing, financing and transferring risks for our clients in a smart and consistent way”, the Insider reported.

Mr Iordanou said he expected mergers and acquisitions to continue, with weaker companies becoming opportunistic takeover targets.

The reinsurance industry is awash with capital, one of the factors keeping pricing down. And Mr Iordanou did not see that trend changing any time soon.

“I think this cycle is going to be prolonged,” Mr Iordanou said. “There's not going to be an abrupt correction but an evolution, with companies improving.”

He added that tighter regulation and tougher auditing “has enhanced our ability to have less defects in our decision making”.

“In essence our ability to cheat is less,” he added.

Allegation: Dinos Iordanou, chairman of Arch Capital, says some rivals are 'cheating' with reserves

You must be Registered or to post comment or to vote.

Published February 10, 2017 at 8:00 am (Updated February 09, 2017 at 7:53 pm)

Iordanou: some firms ‘cheating’ with reserves

What you
Need to
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon