Sinners

1
Sinners Saints

• Bill McConnell (The Lloyds Actuary)
• James McPherson (A Lloyds Actuary)

2
Objective

• Improve Lloyds by our actions next year

3
How?

• Look at and discuss what we did well and badly
• Individual action plan to do it better

4
Sinners?

• Equitas Actuaries Lloyds is saved?
• High Salaries New Lloyds Problems ?
• We must deliver !

5
Where are the Saints?
6
Ideal time spent?

• Reserving
• Input to price
• Management decisions
• Opportunity spotting
• Profitability measurements
• Strategic projects
• Other projects

7
Ideal time spent?

• Reserving 10
• Input to price 35
• Management decisions 5
• Opportunity spotting 20
• Performance measurements 10
• Strategic projects 10
• Other projects 10

8
What Value Do You Bring to Lloyds?
9
How have Actuaries performed ?
10
Summary Movements CRTF
11
Summary Movements SLTF
12
Summary of Global Movements
13
Gross Ultimate Loss Ratios
14
Explanations of Movements U.S.
15
Explanations of Movements Global
16
Distribution of Catastrophe Claims
17
Movement in Catastrophe incurred Claims
18
Movement on Catastrophes
19
Initial Expected Loss Ratios
20
Forecast of Results
21
Other Points

• Claims Inflation.
• How many syndicates should an actuary be
  appointed to?
• Actuarial reports.

22
Actuaries Roles
23
Best Practice?
Underwriter
Consultant Actuary
Syndicate Reserve
Syndicate Actuary
Indicated Reserve
Managing Agency Board
Lloyds Corporate oversight
24
Consultants still signing

• In-House 11
• Consultants 89
• In the future?

25
Roles

• Managing Agency - Final say
• Underwriter / In-house actuaries propose
• Consultant gives independent benchmark check
  for comfort ( sign off?)

26
Do you do your bit?

• Get enough information?
• Improve the reserves / reserving process?
• Interpret the results better?
• Give better feedback on exercise?
• CUT THE TIME TAKEN ?

27
Practical Reinsurance Guide
28
Must do gross of reinsurance and then net down

• Reinsurance bad debt is the biggest issue for
  next year

29
It is not that hard each year separately

• Quota Share - adjusted gross ULR (PC etc)
• XL - tricky bit (unless Cat protection only)
  reinstatements
• Stop loss Read slip carefully (additional
  premiums, non renewal clauses)
• Financial talk with auditors

30
Likely issues

• Bad debt including delays
• Reinsurance exhaustion (all working layers?
  check slips)
• Much less protection for next year
• More expensive for next year
• Hence more finite arrangements?

31
Good rating index

• At Policy level
• Compared to unbiased / objective measure such as
  rating model
• Easy to use (no more than 2 inputs per policy)

32
Suggestions 1 in use

• Change in premium cash terms
• Change in non cash terms

33
Suggestions 2 not in use

• Expected ULR used in pricing
• Change in exposure due to change in terms
  change in ult exp claims

34
Very useful

• Target changes
• initial expected ultimate loss ratios
• Pricing
• Improving models (quality control cycle)
• Planning
• Corporate backers will need it.

35
Why dont we do this?

36
Or this?

37
This calculation is

• Easy
• Verifiable
• Done in most non-Lloyds contexts
• Rarely done in Lloyds !

38
Do all of Lloyds example

• If time (more than 10 minutes to go)

39
James improvement list

• All Gross to Net
• Write up clear Initial Ultimate Expected Loss
  Ratios for all main classes (Never Underwriters
  figure unless documented)
• Allocation by Lloyds risk code
• Benchmark against market stats
• Reinsurance costs
• Early warning (US Trust Funds)

40
Bills suggestion

• All Gross to Net
• Write up clear Initial Ultimate Expected Loss
  Ratios for all main classes (Never Underwriters
  figure unless documented)
• Allocation by Lloyds risk code
• Benchmark against market stats
• Reinsurance costs
• Early warning (US Trust Funds)

41
Your Improvement List ?