Connect the dots. Russell left a big one in his recent post, Where insurance finally meets the big bailout – AIG a massive ponzi scheme?
They [AIG]would sign a reinsurance contract with an insurance company, take a certain amount of money, and at the same time form a side agreement that essentially said: “We will not pay you on this policy.” Why would the insurance company do this: to lower their capital requirements. And since AIG did not perform much in the way of the services, they could kick some of the money back to the insurance company via an offshore entity which would allow the insurance company to write off all the money paid off to AIG, and then accept back part of the money back as tax free profits.
CLS has been leaving dots on the ALL Board for some time – here’s one from October 2007, for example.
Connect the dots in any fashion and they lead to a bottom line “short” on reinsurance in the face of the nation’s largest disaster; a legal storm as claims were denied; and to the scheme for a bail-out from the US Treasury via the NFIP.
In a February 2007 report, Congressional Research Service identified two broad sets of post-Katraina claims-adjustment issues that might be relevant to Congress… One set of these relevant issues is centered on the previously discussed policy language on causation; and, the other…
…is the alleged adverse impact on insureds of computerized claims settlement systems and products. Continue reading “The first bail-out: NFIP accessed by manipulation of construction price data following Hurricane Katrina”