Stan Andrews said that for most of 1989 he had expected his specialist catastrophe syndicate to break even for 1988, despite its exposure to the total loss of the North Sea platform that year. He reported to the Gooda Walker board losses below the level of reinsurance protection he had bought.
Jonathan Gaisman for 3,095 Gooda Walker names - investors in four of the group's loss-making syndicates - produced records from Mr Andrews' syndicate 298 showing that losses it had reported to reinsurers exceeded losses reported to the board until September 1989. The actual losses had by then been greater than the reinsurance cover for several months.
Mr Gaisman said: 'You are telling the board one thing and you are telling the reinsurers another - that is what it looks like, does it not, Mr Andrews?' Mr Andrews replied: 'Yes.'
Mr Andrews said he had calculated what he thought the worst possible result from Piper Alpha could be at the end of 1988. Even though the losses incurred were dollars 100m by June 1989, this was lower than the reinsurance cover.
Mr Andrews agreed he had not thought the syndicate could be vulnerable to a single catastrophe, and had arranged its reinsurance accordingly. He said the total loss of a North Sea platform was 'unthinkable'. Mr Gaisman said: 'Your attitude was a ridiculous attitude for a catastrophe underwriter to hold - that the thing you were insuring against could not happen.'
Mr Andrews said he had known that many names had belonged to more than one Gooda Walker syndicate involved in the action. Even so, he had reinsured the other syndicates because he preferred to do business with other members of his own group rather than competitors.
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