Banks dismiss traders for selling far outofthemoney puts. Those positions can potentially wipe a firm out. The credit exposures AIG just marked down by $11.2bn look pretty similar. Insurers say they manage fattail risks better than traders. It s not clear they do.
First Friends Provident, now Standard Life, have lost out in the auction for the UK insurer. Failure has damaged both. Sure, they were never going to find rival bidder Hugh Osmond a pushover. But in biting off more than they could chew, they appear to be following a wellworn script for former mutuals.