That was the year that was

1
That was the year that was

• Armoghan Mohammed and James McPherson
• 12-15 October 2004, Hotel Europe, Killarney,
  Ireland

2
Profitability Boom/Bust UnderwritingUS P/C
Combined Ratio
2001 115.7 2002 107.2 2003 100.1 2004 Q1
93.3
105 2000-04
109 1980s
Combined Ratio
108 1990s
100 1970s
Sources A.M. Best ISO, Information Insurance
Institute
2004 figures based on first quarter results.
3
Profitability UK
Lloyds
bn
CR90.7
CR98.6
CR 140.3
1Market Share based on 2003 year end figures, as
a percentage of the top 20 companies
4
End of the hard market Strength of Recent Hard
Markets by Change in Real NWP
Note Shaded areas denote hard market periods
Source A.M Best, III
2004 based on 1st quarter results from ISO
5
Rating watchDowngrade/Upgrade Ratio
Sources Impairment Rate and Rating Transition
Study 1977 to 2002, A.M Best Co 2003E from
SP
U.S property/casualty and life/health insurers
6
Reason for General Insurance Company Insolvencies
(1993 2002)
Source A.M Best III
7
The ChallengeInsurance Industry Prior Year
Reserve Development
Negative numbers indicate favorable development
positive figures represent adverse
development Sources A.M Best, Morgan Stanley,
Dowling and Partners Securities, III
8
The Perfect Storm?
PS04/16 (CP190)
Sarbox
NGI
THE PERFECT STORM?
Insurance Groups Directive
IFRS
Solvency 2
9
On The Right Path?
Good New World
More Standardisation More able to trade
pan-European Better understanding
Regulation
PS04/16
Bad New World
Sarbox
More Bureaucracy Using regulation as
excuse Dull Job More Costs
IFRS
10
Morris whats the story?

• Terms of reference of the Morris review
• "Consider what professional and/or other
  regulatory framework would best promote
  recognised, high-quality and continuously
  developing actuarial standards, openness in the
  application of actuarial skills, transparency in
  the professional conduct of actuaries,
  accountability for their actions and an open and
  competitive market for actuarial advice in the
  UK.
• http//www.hm-treasury.gov.uk/independent_reviews/
  morris_review/review_morris_index.cfm

11
GI Actuaries PLC
Revenue Account 12 Months Benefits
Costs 50m
Profit ?
Balance Sheet Assets Reputation Skills Knowledge
Liabilities Historical Baggage
12
In Profit?
38
3
8
3
3(?)
3(?)
3(?)
8
8
8
6 out of 10
13
A Uniquely Actuarial Perspective
ACTUARIES
Actuary
Everyone Else
14
That was the year that was

• Armoghan Mohammed and James McPherson
• 12-15 October 2004, Hotel Europe, Killarney,
  Ireland