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Jim, you're an actuary. Actuarial pricing is known as being as much an art as a science. No actuary can price something perfectly - there are too many unknowns. You look at risk and the potential payout for different scenarios. You don't have perfect information and there are things you know are so remote they are unlikely to happen - however, occasionally they do. When those outliers occur, your company is going to take a big hit for that. Katrina was 1 of those outliers and many Insurance Companies went out of business bc their reserves were not adequate – they did not anticipate a hurricane of that magnitude and thus didn’t reserve for that many claims. Our embassies are always going to be vulnerable bc we want them to show how open we are as a society. They are going to always be vulnerable to a mortar being shot into them. As much as we like, we can’t put them on an island with a dome over them.
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