- Summer of turmoil; both political and terrorism
- What will it take to move premium rates upward?
- Monte Carlo interlude and what we all missed over the years
- Roger sees England remaining in the EU while looking at his crystal ball
- Quick Bytes: 60 Minutes story leads to big claim; Hamas not covered by war exclusion; Wells Fargo doubles down on London; Arch keeps eye on Watford and pulling the wrong throttle when not playing a video game can be deadly
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Thank you for reading the July edition of CATEX Reports. A bit of housekeeping first. Following our practice for the past years we will not issue a newsletter in August. This means you will simply have to wait to get your Roger Crombie fix or --better yet --enjoy your vacations.
We are hard at work firming up our schedule for the annual reinsurance Rendezvous in Monte Carlo scheduled for September 11-14.
Our flights from the US will come in and out of Nice making the truck terror attack in the city, 12 miles from Monte Carlo, particularly pertinent. Our deepest condolences are extended to the families of all those killed and injured on July 14th.
We can't help but notice the measures markets are taking just trying to survive in what is a very difficult environment. There seems a clamor for any positive signs of a rate uptick. One question emerging though is whether that increase will be broad enough to actually provide relief.
We've noted as well in this issue the seemingly inevitable march of alternative capital as it clearly moves into supporting medium-tail casualty risks and reaches down to the primary insurance level.
There was also news concerning a capacity arrangement that TransRe has made with Warren Buffett's Gen Re. This seems to be the first stake in the ground for the new Gen Re CEO Kara Raiguel and it likely will have far-reaching effects.
And as we all know there has been a significant increase in reported insured losses for weather and natural CAT events in Q2. Will it be enough to move the needle and increase premium rates?
column is here too. Roger believes that despite the "Leave" vote the UK is unlikely to ever leave the EU. He has several trenchant observations concerning so-called "millennials" who woke up the day after finding their fellow countrymen not on the same page they were. Or, as Roger notes, maybe that "same page" actually does extend beyond their coterie of Facebook friends?
As always if you have any questions or comments about CATEX Reports, or want more information about CATEX or our products, please feel free to contact me.
Thank you very much.
Stephanie A. Fucetola
Senior Vice President/CATEX
One would think
in a time of great uncertainty, heightened by from what all accounts is an increase in the concern people have for their own safety,
that insurance and reinsurance would play an outsized role in providing a reassuring response.
It seems an
unfounded hope. Even
governments, with far greater resources than the largest (re)insurers,
cannot seem to come to grips with the problems posed by terrorism, uncertain political conditions and economic disruption. The attack in
Nice provided a jarring juxtaposition between national pride and unity as families and onlookers joined to watch
Bastille Day fireworks while a killer was bearing down on them at 30 mph through the throngs on the
For a few minutes thousands, if not millions of people throughout France, may have finally been gaining some hope that the
Paris terror attacks of November were behind them. Then a more personal carnage was unleashed, involving an ordinary instrument which we see dozens of times daily, killing over 80 unsuspecting citizens.
there has been an
unprecedented wave of attacks on law enforcement personnel
resulting in an ever-increasing death toll. In response, many police departments in the US
ended solo patrols
and mandated that
meal breaks be taken with at least two officers
. Law enforcement has been advised to be extra vigilant in dealing with the public.
If the police don't feel safe how can anyone feel safe? If law enforcement has been warned to be extra vigilant with those they are sworn to protect doesn't the potential then increase for more mistakes resulting in questionable shootings of civilians which could lead to more protests?
It's a terrible conundrum. Law enforcement personnel would be less than prudent to not exercise increased vigilance when interacting with the public. To do less would be foolhardy. In many ways that
extra wariness is the same defense that police throughout Europe have had to adopt in the wake of French and Belgian terror attacks. To do any less would be imprudent at best and suicidal at worst.
This is the state of play as we move into Summer, 2016. Putting any lingering personal safety concerns aside there
does remain a host of other issues
. Add into the mix the uncertainties surrounding the
new British government's internal discussion
about what their Brexit proposal will be to the EU. Pile on
Scotland's First Minister Sturgeon's adamant pro EU stance
, and top it off with the
Irish Prime Minister
that the Brexit vote offers the best chance yet for a
to regain the six Northern Ireland counties. Reassuring? Hardly.
More uncertainty ahead
And of course there is the
political situation in the United States to consider as well. That process is well on its way to ensuring that which ever side loses the election an inevitable refusal will result in recognizing the victor as a legitimately elected leader. It would be
hard to envision a situation more polarized.
We're not quite finished. Many economists are
still predicting a UK recession
Interest rates in the UK may yet go lower
this year. The
US stock market seems to be defying gravity
meaning that a correction is inevitable.
China plans to ignore the recent decision of the international tribunal in The Hague
, which ruled that their claims over several reefs and micro-islands in the South China Sea were invalid. The
US Navy has moved a nuclear powered aircraft carrier battle group
into the area which would seem to imply that the Americans at least don't plan to ignore the ruling. And to top it off
certain industry observers are saying "there is unshakeable sentiment among many involved in this year's June and July 1 US property CAT renewals that reinsurers and ILS investors will both take significant CAT losses."
This is a lot to absorb. What happened to the old axiom that
"nothing much happens in the summer?" From the perspective of an individual there's no doubt that if you're experiencing one of those "glass half-empty" days you'd be better off going back to bed. However all of this, and we mean all of it,
is the sandbox that chief risk officers and head underwriters play in everyday.
It is against this backdrop that we examine the news of the past month. Right now, though,
those sunny tables at the Cafe de Paris in Monte Carlo where we will be meeting with clients,
seem a long way off.
What will it take to move the needle?
A number of carriers have released
higher than expected natural catastrophe and weather related losses
. Using the word "expected", in the context of unforeseen weather and earthquake losses, is always a bit odd but modeling can do wonders we suppose. Models can at least predict anticipated losses based on historical frequency and event severity and then overlay those predicted losses on updated property values. Compared to what was available to underwriters a generation ago this ability is priceless. Yet it remains inexact --even the modelers will tell you that.
It seems that nearly
$14 billion of CAT losses will be or have been reported in Q2
. The list of carriers announcing losses exceeding expectations is long with many pointing to losses incurred by the
Ft. McMurray wildfire, the April Japanese earthquake and severe storms in Texas
that the ten year historical Q2 insured CAT loss for the industry as a whole is an average of $9 billion so the $14 billion figure is
55% higher than the ten year average
Is the $14 billion figure enough to
"move the needle"
and start premiums in an upward direction? Before we answer note that
Aon Benfield the insured CAT losses for the first six months of 2016 reached $30 billion
which is the highest level since 2011. Thus the losses of Q2, which at a more "normal" level have served as a "buffer" against winter losses incurred in Q1, have
produced a first half level of insured CAT losses not seen in five years
The short answer to whether the Q2 losses, or the cumulative losses of Q1 and Q2, are enough to start rates upward seems to be "no". Morgan Stanley
espite a significant volume of losses in the second-quarter, Morgan Stanley analysts don't expect this to result in a turn in pricing, predicting further declines in the coming months."
Not good news if you are hoping for an upward tick in premiums but it gets worse. The next comment, coming from J.P Morgan this time, noted the first half losses and said "This is likely to be the most expensive period for reinsurers since 2011, and suggests that we have entered the U.S. hurricane season without the usual buffer that has been enjoyed in recent years."
Yes, the hurricane season. Bill Dubinsky, of Willis Capital Markets & Advisory said this month "With hurricane season now underway, combined with the expectation that 2016 will be a La Nina year, there is an unshakeable sentiment among many involved in this year's June and July U.S. property catastrophe renewals that reinsurers and ILS investors will both take significant CAT losses."
We've heard the same talk. Possibly the realization that first half losses are higher than usual, combined with an over ten year absence of a landfalling hurricane, have begun to make people nervous. After all, how many bullets can the southeastern US dodge and for how long. Everyone pays lip service to the credo that eventually a major strike is inevitable but apparently people believe the time has come.
So how "major" does a CAT loss need to be to result in a change in pricing conditions? Some observers say a $50 billion insured loss event would do it. For comparison, in 2005 Hurricane Katrina caused $41 billion insured property losses, the 9/11 terrorist attacks caused $24 billion and the 1992 Hurricane Andrew losses were $16 billion. A $50 billion event would be an unprecedented single event loss but the current over-capacity in the market, it seems, can only be weakened by an event of such a magnitude.
Even if only such a huge loss would "move the needle" it's still not out of the realm of possibility. As Dubinsky notes, the "unshakeable belief" is already there. Once a hurricane forms and is subjected to warm ocean temperatures its strength and path are anyone's guess. It has, could and will happen --no one doubts about that. If the Katrina loss is adjusted to 2015 dollars it would exceed $49 billion. So there's your $50 billion loss if that's what you're looking for to correct the current market. It's far from impossible and there are many who apparently believe we're overdue for
something to happen.
But would even that be enough?
It's no secret that historically reinsurance pricing has followed a cyclical path. Heavy claim hits mean increased payouts but also mean higher rates. Buyers are more amenable to price increases if they've recently received large claim payments and understand the need for a reinsurer to replenish reserves.
But if there has been a decrease in claim activity over a period of time then buyers not only won't accept premium increases they will push for a rate cut. They will rightly bargain their way down from the immediate premium set after a large claim loss and point to annual claim experience and insist on reductions. The more years of no claim activity means the more years of price reductions. Morgan Stanley says that, cumulatively, property CAT pricing has reduced by about 40% in just the last three years.
How low can prices go during a "down" cycle? Apparently they can go even lower if you believe the
Prudential Regulatory Authority
in the UK which
that in the absence of a significant loss event
rates will continue to fall in 2016
. Even now there are stories about carriers writing below their technical levels and supposedly, in some instances, writing business below projected modeled losses. Big markets can get away with unprofitable pricing --they are better diversified per peril and geography. Writing below expected losses can make sense if you're trying to retain clients and can make up that gap elsewhere in your book. Simply put, there are just things reinsurers have to do in down markets.
Some of the other steps that are taken in down markets include
claim reserve releases
and adjustments in
terms and conditions
. There have been
about concerns related to perceived excessive claim reserve releases just as there have been concerns raised about expansive terms and conditions in contracts. Carriers are boxed in because interest rates are historically low. It's nearly impossible to generate a return if your incoming premiums plummet and investment returns are non-existent.
These defensive steps
can make sense only if the expected upsurge in rates appear --eventually. We all know that eventually the claims will appear and appear in a big way. But will the "cycle" continue and
will we see the steep increase in rates after the "necessary" $50 billion loss?
Maybe not. Noting the fact that even some
ILS fund managers, joining traditional reinsurers, have exhibited enough discipline to step away
from low rates in many Japanese and European property CAT programs it's becoming apparent that the ILS market has become pretty savvy when it comes to risk. This means that they, too, are waiting for the upswing.
Worse yet, from the perspective of the traditional carriers, is a
"Expect rush of ILS capital post-loss, reduced payback"
. The lead sentence says it all: "Third-party capital from insurance-linked investors
can be expected to rush into the reinsurance market after the next major loss events
, and while this won't make the pricing cycle disappear altogether,
it will reduce payback to reinsurers
." This is according to
Willis Capital Markets & Advisory
There has been an evolving view of
or what was once viewed as
in the reinsurance market. It's generally agreed that
alternative capital is here to stay
people involved now in ILS carriers are insurance industry people
and whispered complaints about
. More important is that
carriers themselves have absorbed the new capital playbook
and many of them are bringing cheaper capital to the market, via sidecars or partially owned ILS reinsurers, to match the less expensive capital with risks bearing premiums which their more expensive rated capital can't underwrite.
It stands to reason that if alternative capital has been flowing into insurance and reinsurance in a time of premium famine it's certainly not going to miss the boat if severe losses begin to drive prices up. "Rush of ILS capital" indeed --it may be a virtual torrent --and here's why.
Investment returns are just horrible
. For example, the
California Public Employee's Retirement System (CALPERS)
, which has a bit over
$300 billion in assets
, produced a
return of 0.06 percent
on its investments in the last fiscal year. With returns like this uncorrelated assets, such as investing in fully collateralized insurance and reinsurance contracts, become even more compelling. An investment not linked or correlated to stocks or bonds is going to attract attention.
It would seem that the
traditional defenses employed by the industry in times of decreasing premium rates, such as writing at or near technical levels, and employment of claim reserve releases to bolster revenue,
could lead to significant exposure if a new rush of alternative capital joins the already augmented premium base to dramatically dilute any sharp increases in premiums.
How many carriers are betting on a cyclical upside that can reload claim reserves, replenish underwriting results and ward off poor investment returns can't be determined. However, in some sense no doubt all of them are. The real question could be how prepared they will be to weather what may only be slight rate increases, while continuing to deal with anemic investment returns.
Gen Re makes its balance sheet available to TransRe
The news that
that will have Trans Re underwrite and manage a new treaty book means that
brokers will have access to Gen Re's traditionally direct-only capacity
via the new platform. TransRe will act as
exclusive underwriting manager
on behalf of Gen Re for US and Canadian P&C treaty reinsurance business produced by brokers and intermediaries.
You may recall that when Berkshire's
the new CEO of Gen Re, following the retirement of
, he said he wanted to address a
that Gen Re
"has become less relevant in the marketplace than it once was." The arrangement with TransRe may mean that Gen Re is "prepared to contemplate the growth of the facility to circa $2 billion of premiums" as TransRe indicated that the new Gen Re capacity will allow it to "offer twice as much of its expiring capacity should it choose to do so." It's thought that TransRe writes at least $1.8 billion of US business with additional premium coming from its Canadian arm.
TransRe will control the underwriting and claims and signaled that it does not intend to change its risk appetites and underwriting standards. What the deal does do from TransRe's perspective is to vault it from the seventh largest US reinsurer in terms of premium to possibly even one of the top three. With access to as much as $2 billion of Gen Re capacity (based on estimates), TransRe will be able to compete with any reinsurer in terms of scale without having had to go the M&A route. TransRe will use its own paper "an overwhelming majority of the time" on risks being bound with part of the Gen Re capacity.
From Gen Re's perspective the direct reinsurer is able to establish a solid presence in the intermediary market. And of course, being a Berkshire Hathaway company, the added premium volume will contribute to the all-important "float" that Berkshire uses to drive its legendary financial engine. If TransRe is being paid to handle the business sourcing, underwriting and claims, Gen Re can collect its premium share and pay claims as required. If the figures being discussed are true it could mean an additional $2 billion of premium flowing to Gen Re.
It's known that Berkshire is sensitive about its brand and reputation. There's nothing wrong with that. It's even more sensitive about handing its underwriting pen over to others. You may recall its involvement three years ago with an Aon-sponsored follow-form facility at Lloyd's. Aon Underwriting Managers, Aon's in-house managing general agent, had delegated underwriting authority to grant cover on behalf of Berkshire.
Yet only two years later Berkshire pulled out of the Aon follow form facility "because it no longer believes that its underwriting return hurdles - which are lower than those employed by many in the market due to its investment returns - can be met."
So what's changed in the 10 months since Berkshire pulled out of the Aon facility? Premium rates have certainly not increased thus the reportedly inadequate underwriting returns that caused Berkshire's pullout would still seem to be a concern.
Possibly we're overlooking the obvious. It was a broker-owned underwriting manager setting the rates supported by the Berkshire capacity. And while, no doubt, contractual incentives were included to ensure that both the upside and downside of the adequacy of the broker-set rates were shared by both parties there was no obscuring the fact that claim payments would come from Berkshire and not from the broker. And certainly claims play a big part of an "underwriting return".
The Gen Re-TransRe arrangement is different. Both are reinsurers and both are on the risk. The so-called "skin in the game" can't be any more clear. There also is a cultural affinity. Joe Brandon, the EVP of TransRe's parent Alleghany Insurance, was Chairman and Chief Executive Officer of Gen Re Corporation from 2001 to 2008. Alleghany's CEO, Weston Hicks, "is often compared to Berkshire because CEO Weston Hicks follows Buffett's strategy of using insurance funds to help pay for deals in other industries."
One interesting note is a caveat about data which TransRe felt compelled to convey to its clients. Lest TransRe clients be concerned that Berkshire is interested in "harvesting data ahead of a standalone competitive push" TransRe hastened to inform them that "Gen Re underwriters will never have access to any information sent to TransRe".
It may be a horse of the same color but they're still competitors.
Monte Carlo Interlude: A reminder of previous meetings
We're wondering what the tone will be at the annual Reinsurance Rendezvous in Monte Carlo in September. This year will mark our fourth consecutive year of attendance but we remain mere novices in comparison to most other attendees.
A good friend of ours who has attended many Monte Carlo meetings once described for us the mood at the Rendezvous on September 11, 2001 the day of the terror attacks in the US. You could have heard a pin drop at our table as he told of the hushed conversations and the horrified looks in people's eyes as they frantically tried to check with co-workers in the World Trade Center.
In our brief span of attendance we've seen the swing from alternative capital going from being on the outside looking in to having become mainstream. Our very first Rendezvous in 2013 had strong comments about alternative capital not being quite ready for prime time. Comments were made about the lack of underwriting skills and how the traditional industry had weathered other such intruders in the past. And, of course, the ultimate verbal assault was that alternative capital investors would wilt facing the prospect of losing their principal in the event of a claim.
Times change. Who could have envisioned such an absence of major claims over these years? Who could have predicted that investment returns would remain at historic lows? Who could have predicted that alternative capital, instead of being discouraged by claim losses, in fact began to line up to underwrite lower attaching lines, if not primary lines, with more regular claim frequency? Who could have predicted that mainstream (re)insurers would adapt the alternative capital model as their own and use it to write business that had seen such rate decreases that their own rated capital could no longer sustain keeping?
And who would have thought that climate change would finally graduate from a debate about its very validity to becoming a top concern for the industry and global governments? Finally, of course, who could have predicted that all that good-natured complaining by our English friends about fiats, edicts, and regulations coming from Brussels, would actually lead to the British decision to leave the European Union?
It goes to show that there are forces afoot that move without our knowledge and without us being able to see them. What we do know and what we can see --the basic blocking and tackling of reinsurance --is what now seems to be threatened. If rates are so low that carriers can't make a profit, and any prospect of a healthy investment return that could counter an underwriting loss is impossible to find, then we've entered a difficult period. Many would argue that we've been in this period for quite some time.
For those waiting for the inevitable upswing, those who have been hanging on, releasing reserves when they can, while cutting back on written premium but who continue to suffer from poor investment returns, hope for an uptick in rates may be all they have left.
The cruelest news from the perspective of the industry that we see this month is the prediction that alternative capital not only won't disappear after an industry-jolting claim event but that more capital is waiting on the sideline to come in after such an event. Thus the hoped for rate uptick is likely to be much more muted than expected. How a significant claim event, followed by minimal rate increases, will affect certain markets we certainly don't know.
We venture to make a prediction. After such a claim, and if the rate increases are indeed as gentle as some think, we think we will see another round of M&A and this time it will be a buyer's market. There may be some people with no choice but to sell. One can only hold on for so long.
Roger looks in his Crystal Ball at the future of England
Doubts from a Leave supporter that an Exit will ever happen
Circumstances force me to address Brexit, although I'd rather write about anything else. Right now, however, there isn't anything else.
The period since Brexit has been the most important in British history since World War II. If you're in insurance, you will be worried that the decision will affect your business, one way or the other.
The bad news is: in the short term, it might. Fear of the unknown rules the markets, and all bets are off when that happens. But the good news for you is that there will be no Brexit. I've been saying this for months, and it has never been truer than it is now that we've had a sneak preview of how it would go.
There'll be a lot of toing and froing, and hoohing and hahing, but there'll have to be a second vote. The exact mechanism by which this will be achieved is not clear in my crystal ball, but in a few months, it will happen. Trust me.
The Europeans need the British for their financial contributions, and the British need the Europeans because sovereignty and financial control are greatly less important to most modern Britons than being able to go to Prague for a cheap stag weekend.
It will take months to arrange the details, partly because the issues are so complex, but mainly because everyone in Europe takes the summer off. When they return grudgingly in September, matters will be arranged in an orderly fashion, asset values will continue to move forward, and the events of the summer will seem less important. Plus, the soccer season will have started, offering people a focus for their lives.
That concludes the forecasting section of this column. What follows is colour commentary, by way of a crazed rant, built up following weeks of pressure in the trenches.
The system in which I grew up required that respect be shown to our elders. The deal was a trade: be nice to old people when you're young, and when it's your turn to be old, people will be nice to you.
That deal is off.
To be old - a vague term, but by 50, it seems, you qualify - is to have become the one minority group that no longer requires respect. Say anything horrible, or anything at all, really, about any minority in Britain, and a charge of hate crime won't be far away. By contrast, blaming an entire generation for blighting its children's future, which they haven't, shows you're cool, hip and fresh.
From the tone, you might have grasped that I am old. I am Hrothgar, destroyer of hope. Using only the power of my vote to Leave, I have cut off Britain's youth from its chances of prosperity and success, blighted the remaining countries of Europe, and sown the seeds of World War III.
Or so I am informed by most of the people that I have met since the vote. All of them voted Remain, or would have done if they could have been bothered, which most of them couldn't.
It's arrant nonsense, of course. Britain's future will be fine, it's just that we'll have to be responsible for it. That's what has the youngsters spooked: the belated discovery that they have a social responsibility to a group larger than their friends on Facebook.
Briefly, panic was everywhere. Financial markets around the world were spooked, before realising that they'd behaved like schoolchildren faced with no milk for elevensies. Everything then went back to normal, except the exchange rate of sterling, of course, which will provide a massive boost for British exports and slow imports. Members of the Euro club, having voluntarily given up the ability to control their own economic policy, would kill for such an opportunity.
When the earth shakes, all the nuts fall off the trees. We have thus seen the Spanish start demanding the return of Gibraltar, with much the same authority of a tenant demanding last year's rent money back from the landlord. The Irish Republican Army has reasserted its right to murder, but events will not allow them the pleasure.
Scotland is unhappy because it will have to do as it is told. London would like to secede, but constitutionally, it is powerless to do so. Oh, and its inhabitants would starve. Plus, you know, really ...
Rant over. Won't happen again. When the second referendum is in favour of remaining, I shan't say a word.
is an American Society of Business Publication Editors national award winner. An English chartered accountant who lives in
Eastbourne, on England's South Coast, he writes and broadcasts news and opinion in the US, UK, Bermuda and the Caribbean, in print and online. His main beat is insurance and financial services, with 30-year sidelines in music and humour. All views expressed in Roger's columns are exclusively his own. Contact Roger at
Copyright CATEX Reports
July 26, 2016
CATEX will be at their tables at the Cafe de Paris in Monte Carlo during the annual Rendezvous. We have a full schedule but can always squeeze more in if you're interested in hearing about or seeing Data Vera or Pivot Point...The US news program "60 Minutes" featured a story last year about formaldehyde-laced flooring sold by the firm Lumber Liquidators reportedly has resulted in a payout by six insurers of $35 million under a D&O policy claim...Despite the gloom about Brexit, and the decline of London as a finance center, "one of the largest single office deals in the City of London market this year" was consummated when Wells Fargo agreed to buy an office block near the Bank of England on King William Street...Artemis reports that new global ILS issuance in Q2 was about $1.6 billion, marking the first time since 2011 that second quarter issuance failed to top $2 billion. Low rates affect everyone it seems...A French court ruled that the government backstop provided to Caisse Centrale de Reassurance (CCR) for its natural CAT products would need to end or CCR would have to notify the EU of the arrangement. Notifying the EU of what could be deemed an unfair market advantage provided by a home country government is usually frowned upon in Brussels. The court ruled in response to a petition by SCOR which claimed that the French government's backing of CCR had created a "virtual monopoly"...Venezuelan President Nicolas Maduro ordered the Kimberly-Clark plant in Venezuela, which had produced diapers and facial tissues, seized by the government after the company closed it in response to the country's economic situation which the company said had made it impossible to obtain raw materials...Arch Insurance Europe's CEO James Weatherstone said the hedge fund reinsurer Watford Re, partially owned by Arch, is "eating our lunch" as it prepares to compete directly with Arch in the primary insurance market...Speaking of hedge fund carriers Standard & Poors said that lower premiums and diminished investment returns meant that "we might start to see bigger cracks in certain hedge fund reinsurer models"...When NBC Universal Media was forced to halt production of a TV show in Israel in 2014 because of rocket attacks from Palestinian group Hamas the company filed a claim with its insurer Atlantic Specialty Insurance. The insurer is contesting the claim under the policy's war exclusion but NBC says that since Hamas isn't a sovereign entity the exclusion doesn't apply. The claim is headed to court...The Taiwanese Aviation Safety Council has ruled that the TransAsia plane crash in Taiwan last year that killed 43 people was caused by engine failure and flight crew errors. The twin engine ATR 72 had a malfunctioning engine shortly after takeoff from Taipei and the crew didn't perform "the documented abnormal and emergency procedures to identify the failure." This omission caused the pilot to then shut down the only working engine, exclaiming "Wow, pulled back the wrong throttle", seconds before the crash...
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