Underwriting chief Humphreys says firm has extensive reinsurance and improved claims settlement

Markerstudy’s latest released accounts have revealed its actuary believed the insurer was under-reserved by up to £4.25m and could have breached solvency margins in the face of large losses.

Actuary EMB said Markerstudy’s reserves were “within an acceptable range” but needed another £4.25m to meet best estimates for reserves gross of reinsurance recoveries.

The 2008 accounts, released last month, stated: “Any significant variance in the claims reserves could result in the company not meeting its required solvency margin at the end of the year.”

Underwriting chief Gary Humphreys said the firm had good excess of loss reinsurance coverage, meaning the business could withstand significant claims.

Humphreys added: “The other thing to bear in mind is the actuary’s best estimate of reserves is not based on historical claims settlement patterns.

“We removed the claims handling from our outsource providers and brought it in-house. This has resulted in significantly improved settlement performance, which is why, again, based on historical data the actuary’s opinion is slightly different from our own.”

Humphreys, speaking after the business posted pre-tax profits up from £525,697 in 2007 to £765,574 in 2008, said 2009 was likely to bring the reserves forecasts more in line.

He said: “We would expect them to be closer. You never know until the numbers are run through the actuary’s models. Obviously, we use EMB, who have a reputation perhaps for being more cautious reserving than most.”

Humphreys has also been made underwriting chief for Zenith, which the Gibraltar-based insurer snapped up at the start of the year.

The results come as Markerstudy said it had made a number of management changes at recently acquired Zenith, in the wake of former chief executive Peter Austin’s departure.

Markerstudy chief executive Kevin Spencer has taken the helm at Zenith, in the wake of Austin’s departure prior to the takeover, and Keith Barber has slotted in as finance director.

Humphreys said there had been a number of redundancies, some voluntary, but the business was also hiring 20 staff.