
The science of insurance and the notion of technical risk 223
These events are not without precedence, all the way to failure of insurance
companies. First Executive and First Capital Holdings failed in 1991 because of large
concentrations of poorly performing junk bonds. Also in 1991, disastrous real estate
investments triggered the insolvencies of Monarch Life and Mutual Benefit Life.
The insurance industry’s regulators, too, must bear part of the blame. During the
investigations into the failure of HIH Insurance, Australia’s biggest-ever corporate
collapse, it emerged that the group’s liquidator had filed a A$5.6 billion ($3 billion)
negligence suit ...