New Advisen Total Accrual Measure (ATACm), Combined with Other Leading Indicators of Securities Litigation,
Determines Likelihood of Class Action Suits Against 9000 Companies
NEW YORK, October 4, 2004 – Advisen Ltd., the leading provider of analytics, benchmarking and information for the commercial insurance industry, today unveiled new analysis of corporate accounting practices for over 9000 companies which, when combined with other analytics, offers statistically significant indications on the probability of securities class action suits and Directors and Officers (D&O) liability risk.
The total accrual scoring system, called the Advisen Total Accrual Measure (ATACm) leverages recent academic research into aggressive accounting practices and applies it specifically to the D&O insurance markets for the first time. It represents the initial component in a series of new analytics currently under development at Advisen. Total accrual scores, which quantify overly-aggressive accounting practices, have been proven by Advisen research to be a leading indicator of securities class action suits.
The company is building a comprehensive management liability risk assessment tool which combines total accrual scores, along with other well-established tools to assess the risk of D&O liability, such as the Z-score Bankruptcy Predictor and the Kristy Score, and new leading indicators of management liability claims based on proprietary Advisen research. These analytics offer D&O underwriters, brokers and risk managers increased ability to assess management liability risk and predict the frequency of D&O claims.
“ATACx is the latest Advisen analytic, programmed and designed to provide greater insight for insurance professionals assessing risk,” said Tom Ruggieri, CEO of Advisen. “Research has proven that overly-aggressive accounting is at the heart of many securities class action lawsuits. Now, with a tool to spot and quantify these dangerous accounting practices, we can better predict future securities litigation and D&O liability.
The New York-based company currently serves nearly 350 of the leading insurers, insurance brokers and risk management departments of major corporations, providing real-time analytics on over 70 macro-industries and over 1.5 million companies through a Web-based workstation, as well as daily alerts and reports, and proprietary research.
Advisen provides data and analytical tools to support the broad spectrum of risk assessment methodologies used by D&O underwriters today,” said David K. Bradford, executive vice president of Advisen. “Now we offer insurance professionals a powerful new formula that puts more science into the art of assessing risk. The correlation between high total accrual scores, indicating overly aggressive accounting, and an increase in the frequency of securities class action suits is very meaningful.
Advisen continues to enhance its creation of high-value solution dedicated exclusively to the commercial insurance industry. Over the last three years, Advisen has introduced critical data on business risk analysis and analytic tools designed to enhance the efficiencies of insurance transactions.
Advisen is designed for professionals across the commercial insurance industry. Advisen provides insurance underwriters with a single, customizable information platform for assessing risk exposure, which can be integrated into existing workflow and systems. Brokers utilize Advisen to both service existing clients and prospect new ones. Advisen offers risk managers a unified resource for unbiased information and tools to help drive better risk decisions, more efficiently manage insurance programs, and provide insight into market conditions.
About Advisen
Advisen Ltd. offers strategic information services to the global commercial insurance industry, combining comprehensive market data with proprietary analytic and benchmark modeling services via the Internet. Advisen serves the world’s leading insurance companies, brokers and risk managers by providing a systematic perspective on writing, marketing and purchasing lines of commercial insurance.
