The chairman and CEO of a specialty property/casualty insurance carrier called into question the notion that the industry is overcapitalized on last week, pointing to the changing nature of volatile risks as the reason for his skepticism.

Executive Summary

William R. Berkley raised questions about the level of capital in the property/casualty insurance industry, kicking off discussion at an industry conference last week where traditional capital, models supporting capital management decisions, and alternative capital were hot topics.

“We think we’re an overcapitalized industry, but I’m not sure we are overcapitalized in the ways we think,” said William R. Berkley, chairman and chief executive officer of W.R. Berkley Corp. during a CEO panel discussion at the Standard & Poor’s Annual Insurance conference recently.

Berkley went on to suggest that the ways in which the industry analyzes its risks are not adequate because these risks are now exhibiting greater volatility as they emerge, suggesting that levels of capital based on such analyses are inadequate as well.

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