I didn’t go to school for accounting. I didn’t even go for business. I was an engineer, of the audio variety. For five years, through middle and high school, I mixed sound for bands, venues, and festivals. It seemed like the natural choice for college that I would pursue audio. And I did, graduating in 2006 with a degree that isn’t worth the paper it’s printed on. So it was back to school, this time to expand on the business minor I received with the audio degree. I enjoyed the accounting aspect of my minor, and that seemed another natural choice. So I quit my job, went to school full time, and graduated in May of this year with a Masters of Science in Accounting and Taxation. For the past six months, I’ve worked at a small firm in the suburbs. Maybe it’s because of my background, but I still don’t think of myself as an accountant. I’m the engineer that dabbles in accounting. This is just one of the issues that beset me as I embarked on my new career path.
Starting Out
As the name suggests, I’m an accountant. Or at least that’s the idea. I certainly don’t feel like much of an accountant. But what should I expect? I’ve only been at this since January. I didn’t even graduate until May. So I plan to explore my new profession here, and you’re invited along for the ride.
Enron and the Insurance Industry
Executive Summary
Insurers suffered substantial losses following the collapse of Enron Corporation. Many insurers, particularly those specializing in life, not only wrote policies to Enron, these companies also invested heavily in Enron-backed securities. Suddenly insurers found themselves caught between servicing their clients and serving the needs of the bankruptcy court. Many important lessons would come from the industry’s experience with Enron, however. Life insurers learned whether or not their long-term planning and asset management programs functioned adequately. While sustaining heavy losses related to Enron’s demise, not a single insurer had its debt rating downgraded as a result of either investment losses or exposure. Surety bond insurers learned the consequences of not acting on a suspicion, as they guaranteed millions in fictitious energy trades used as a vehicle for major financial institutions to provide Enron with low-cost, off-balance-sheet loans. Insurers have learned the importance of carefully evaluating policyholders and their business relationships in today’s complex world of structured finance. The directors and officers’ liability insurance (D&O) carriers suddenly found themselves in a morass, weighed down by years of complacence and poor risk management. Caught in the middle of shareholder and creditor lawsuits, many settled rather than risk admitting guilt. In certain cases, this further damaged an already tarnished corporate image. Just as Enron executives learned there was a limit to their greed, so did insurers that blindly underwrote Enron’s activities. Thus, these carriers were faced with the unpleasant task of substantially increasing premiums, thereby pricing customers out of the market. D&O carriers, and the industry alike, did gain some sense from Enron’s demise, however, which was quickly tested by successive corporate scandals.