You’re going to hear a lot about all the “losses” insurers are going to be taking on the catastrophe in Japan. For instance, this story in The Wall Street Journal today:

Moody’s: Insurers Face Heavy Losses

But don’t be confused: These losses don’t actually mean the insurers are going to lose money in the profit-and-loss sense. It just means they’re going to have to pay claims. Here’s what Audit Chief Adjuster Dean Starkman wrote a few years back about insurers and Hurricane Katrina:

That’s right, the worst “loss year” ever (2005) was also the best profit year since ship owners began sharing risk together at Lloyd’s Coffee House in London in the eighteenth century. How can that be? Here’s a hint: the insurance world’s use of the term “loss” is a misnomer. It’s just a claim that’s paid and has nothing to do with the profit/loss we normally associate with an income statement, which, trust me, is what counts.

An insurer who complains about having to pay claims is like Ford complaining about having to make cars. It’s what they do.

I could go on—and I will! Insurers by law are required to keep a policyholders’ surplus for unexpected claims, those that hit with unforeseen severity—like Katrina. But in 2005—annus horribilus, year of Katrina, Rita, Wilma, and Dennis—insurers had enough left over after profits, buying back shares, paying dividends, paying Ed Liddy and Tom Watson’s salaries, etc., to add to this reserve by $35 billion. Industry surplus now stands at a record $495 billion, ten times the size of the worst-ever property-casualty disaster (Katrina) on record.

So watch for insurers crying poverty over this and don’t confuse readers by talking about losses as if the insurance industry is actually in the red.

— The Journal reported Saturday that it looks like the government may not press charges against anybody at Lehman Brothers. This despite shenanigans like Repo 105 and Fenway, the former of which, at least, the SEC thinks may actually be legal.

The Journal says this (emphasis mine):

Mr. Fuld and other former executives could face charges of making misleading statements about the company’s health before it sank. That likely would be an uphill battle for the government, according to people familiar with the matter, partly because the executives relied on legal and accounting opinions.

British law firm Linklaters LLP signed off on the Repo 105 transactions, all done through the securities firm’s European arm. Linklaters declined to comment.

British law firm Linklaters, huh? Why did Lehman have a British law firm on that? Revisit this New York Times story from a year ago:

When Lehman first designed Repo 105 in 2001, however, there was one catch. The firm couldn’t get any American law firms to sign off on the aggressive accounting, namely that these transactions were true sales instead of what amounted to the parking of assets…

Enter Linklaters, which grounded its legal brief in English, rather than American, law. The firm explicitly said: “This opinion is limited to English law as applied by the English courts and is given on the basis that it will be governed by and construed in accordance with English law.”

Otherwise, Linklaters provided Lehman with exactly what it wanted to hear.

Might want to explain that, no? Were the Repo 105 transactions all done in England? Is it okay for firms to shop around the world for a lawyer who will tell you what you want to hear so you can make your books look better than they really are and escape future punishment? Just asking.

— Two headlines from The Wall Street Journal editorial page today will be worth keeping in mind in the coming days.

An editorial taking the media to task for focusing too much on the nuclear crisis in Japan:

Nuclear Overreactions

And an op-ed:

Japan Does Not Face Another Chernobyl

As of late on Monday here on the West Coast, here’s the Journal news pages’ banner headline:

Nuclear Crisis Escalates in Japan

And here’s The New York Times’s top story:

Japan Faces Prospect of Nuclear Catastrophe

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.