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Medical Malpractice

Medical Malpractice. Now Curable? Blair Sanford, CFA. Background. Our Firm – Cochran, Caronia & Co Your Speaker Prior Experience Journalism / Software Marketing / Equity Trading / Business School 10 Years an Insurance Analyst Value Focus Company by Company Look

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Medical Malpractice

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  1. Medical Malpractice Now Curable? Blair Sanford, CFA

  2. Background • Our Firm – Cochran, Caronia & Co • Your Speaker • Prior Experience • Journalism / Software Marketing / Equity Trading / Business School • 10 Years an Insurance Analyst • Value Focus • Company by Company Look • Firm Focus brings Benefits

  3. CC&Co Universe

  4. Outline • History • Medical Malpractice Overview • Structure • The St. Paul Factor • Trends • Expectations

  5. History • 1970s Liability Crisis • Widespread Distress • Walkouts • Crisis of Care • Liquidity • Reinsurance • Tort Reform - Nationwide • Birth of the Bed Pans

  6. Med Mal Overview – Structure • State by State Proposition • Regulatory • Legislative • Legal • Corporate

  7. Med Mal Overview - Structure

  8. Med Mal Overview – The St. Paul Factor

  9. Med Mal Overview – The St. Paul Factor

  10. Med Mal Trends

  11. Med Mal Physics • NPV Breakeven at 116% CR – Current Book • NPV of 10% requires a 103% CR – @ current new money yields • Elasticity - 100 bp change in yields requires 3 combined points.

  12. Med Mal Trends - Lower Yields

  13. Med Mal Trends - Lower Leverage?

  14. Med Mal Trends – Public Valuations – Low Expectations

  15. Med Mal Trends – Emerging Premium Growth

  16. Med Mal Trends – Improving AY Results?

  17. Med Mal Expectations • Higher Rates • “Tail” Pressure • Dislocation • Companies with Issues – ERC et al? • Outcries • Legislative / Regulatory Attention • Provider Revolts

  18. Med Mal Expectations • Tort Reform – Not a Panacea • Halo States Not Immune – Kevin Bacon Syndrome • Headlines • Consolidation • New Vehicles • => Gradual ROE Improvement

  19. Med Mal Expectations • 1975 = 2002?

  20. Medical Malpractice Now Curable? Blair Sanford, CFA

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