Summary of Reinsurance Activities and Rating Actions Tied to Selected Insurers Involved in the Failed "Unicover" Venture
Abstract
As you requested, this report provides information about activities associated with the highly publicized losses of an estimated $1 to $2 billion experienced by companies involved in reinsuring the occupational accident portion of workers' compensation (W/C) insurance policies. These W/C "occupational accident" policies, commonly referred to as W/C "carve-out" policies, were brought to the reinsurance market by Unicover Managers, Inc. (Unicover), a reinsurance pool manager and intermediary. As explained further in enclosure I, reinsurance is the acceptance by one insurance company (the reinsurer) of a portion of the risk or claims loss underwritten by another insurance company for a share of the premium to support that risk. In a reinsurance pool arrangement, a number of reinsurers combine their capital and delegate underwriting authority to a pool manager that is normally not exposed to risk from the reinsurance. At the time this report was being prepared, legal and settlement activities were ongoing among insurance companies, firms engaged as reinsurance brokers, and the reinsurance pool managers involved with the failed Unicover reinsurance activities. As a result, for this report, we relied on information from sources other than the involved industry parties. As agreed with your office, the objectives of this correspondence are to (1) summarize the business activities and events associated with losses of the failed Unicover venture and (2) describe the actions taken by five rating agencies on selected companies that were exposed to these losses. Additionally, we agreed to provide a brief update of regulatory efforts that were initiated as a result of the Unicover matter.
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 24, 2001
- Accession Number
- ADA394303
Entities
People
- Deatra Brandon
- Jim Black
- Lawrence D. Cluff
- Rosemary Healy
- Thomas Givens Iii
Organizations
- United States Government Accountability Office