Thursday, 13 December 2007

The Subprime Century Mark

Advisen now details 101 different large loss events and actions related to the Subprime lending debacle. Subprime is one of over 425 root causes to which the 7,500 loss events in Advisen's loss database are linked. The breakdown by case type:

19 Fraudulent Trade Practices
1 Banking Malpractice
4 Derivative Action
11 ERISA Class Action
5 Other
1 Legal Malpractice
2 Auditing Malpractice
11 Underwriting Malpractice
47 Securities Related

Additionally, the regulatory actions include:
• The SEC opening at least 12 investigations into potential securities fraud with respect to securitization and sale of sub-prime loans.
• Regulators looking into predatory sales tactics used by mortgage lenders.
• NYAG investigating inflated appraisals.
• EU announcing an investigation into rating agencies.
• FSA published review of UK sub-prime market criticising bother brokers and lender and referring 5 firms to enforcement actions.

Exposures to the insurance industry could affect policies covering:
• Directors & Officers Liability
• Fiduciary Liability
• Partnership Liability
• Errors & Omissions
• Lawyers
• Auditors
• Financial institutions
• Credit Risk Insurance

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