In your article about CIGNA Property & Casualty Insurance Co.'s recent restructuring and reserving action, I believe you have done the company--and the insurance industry--a very significant disservice ("Is CIGNA creating a time bomb?" Finance, Nov. 6). Rather than addressing the hard facts about our company's actions, you have chosen instead to cite the uninformed opinions of competitors, who are clearly eager to protect their market share and avoid the reserve issues that we have addressed.

Contrary to the assertions that were made by American International Group, Chubb, and St. Paul--which stand to benefit substantially from their criticisms of our actions--the real threat to the guaranty funds comes from those insurance companies that have not yet faced up to their responsibilities for asbestos and environmental (A&E) liabilities.

Our objective was to address A&E liabilities in a way that improved the position of past and current policyholders. We have made it clear to regulators and rating agencies that we are not walking away from the past. On the contrary, by strengthening our reserves, we have addressed the issue from a practical, economic perspective. The active and inactive operations we have created are linked by a common parent, tax-sharing agreements, reinsurance arrangements, and shared services. Clearly, we would not have established such linkages if we planned to disengage ourselves from this business. The restructuring protects past policyholders by doubling A&E reserves to nearly $2 billion and providing $7 billion in assets as well as future investment income, resulting in resources that are far more than any losses that can be reasonably expected. In addition, the active companies will provide a $500 million excess of loss coverage to the inactive operations as further protection.

As an insurer committed to meeting the obligations of our policyholders--past and present--and subject to the same guaranty fund assessments as our competitors, CIGNA P&C has just as much interest in ensuring the success of Brandywine, the company that will manage the A&E liabilities, as does any of our competition.

Gerry Isom


CIGNA Property & Casualty


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