Question-and-Answer Session
Operator
(Operator instructions) The first question comes from the line of Vinay Misquith – Credit Suisse.
Vinay Misquith – Credit Suisse
On the credit insurance and the political risk business, thanks for your update. Could you give us a sense for what trends you are seeing in terms of claims and since you have seen a stabilization in the credit markets should we see a lower impact on the loss ratio? This year I believe it was 11 points on the insurance and 4 points on the consolidated so should we see a lower impact next year?
John Charman
I think we said that we believe that stabilization has impacted our portfolio [fortunately] which we expected and I have said really over the last year to 18 months that the years that would be affected would be 2007, 2008 and hopefully with 2009 that would be the end of it and we would return to a more stabilized pattern of losses. So I am pretty comfortable with what I said in the last quarter and the quarter before that and the quarter before that about the outlook for this line of business. I don’t think it is quite the plague that some people think it is. I am as comfortable today as where we were in terms of the level of our reserves and the loss activity we have experienced.
Vinay Misquith – Credit Suisse
So what is the normalized combined ratio that you would normally write this business to that we could maybe expect in the next few years?
John Charman
As I have said to you before, many times, I don’t expect a significant amount of loss ratio from this underlying business in normalized years. I won’t go back how far I have been writing this business but if you look at Axis from 2002 through 2007 there was hardly any loss activity at all in those years. As the economic crisis started to develop naturally we saw loss activity increasing in 2007 through 2008 and peaking in 2009. As liquidity has increased globally and as the global crisis has abated we have seen a dramatic impact on the portfolio. So we don’t expect a lot of loss activity during normalized years.
Vinay Misquith – Credit Suisse
On capital management, I was curious as to what your views are for next year?
David Greenfield
Well I think I would just remind you of the comments I made earlier. We do have an authorization available to us of about $212 million. Where we find the opportunities are there in the markets in terms of growing our business we might deploy our capital in terms of repurchasing shares. Obviously we think that is the most attractive way to manage our capital, as I said. In terms of 2010 I am not going to comment on what our plans are at this point.
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