The Capital Challenge

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The Capital Challenge

• by
• Shaun Tarbuck
• Chief Executive (Designate)
• ICMIF

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Future Challenges

• Increasing regulation
• Increasing capital requirement
• Increasing customer choice
• Increasing risks
• Increasing consolidation

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Future Challenges - Regulation

• National and international,
• Solvency II,
• risk based supervision
• Corporate Governance,
• Accounting standards, IFRS 3 and 4
• Solvency increases
• Leading to consolidation in mutual market

4
Future challenges new risks

• Genetically modified foods
• Occupational risk, stress, backs, repetitive
  strain
• Mobile technology
• Nanotechnology
• Global warming
• Responsibility for pension liabilities moving
  from government to commercial
• Increased terrorism

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Increased Pressure on Existing Capital
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Capital Solution

• 91 of ICMIF members require capital in next 10
  years
• Pooled subordinated debt program
• Low coupon
• Minimizes offering costs
• Minimal intrusion on management time
• Leading institutional specialist, Merrill Lynch,
  Benfield
• Targeted at small and medium insurers
• Loans between 5 mill and 25 mill
• 30 year debt at low interest rates
• Rates dependant on shadow rating
• Subordinated debt is allowable for solvency
  purposes
• In-built flexibility

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