Actuary and Risk Manager -- A New Relatio nship

1. Actuary and Risk Manager -- A New Relatio nship Casualty Loss Reserve SeminarSeptember 18, 2000 Casualty Loss Reserve Seminar

2. Introduction Introduction Evolution Partners Examples Opportunities Casualty Loss Reserve Seminar

3. Evolution Introduction Evolution Partners Examples Opportunities Casualty Loss Reserve Seminar

4. Evolution of the Risk Manager • The Insurance Administrator • The Insurance Buyer • The Manager of Risk • The Enterprise Risk Manager • The Chief Risk Officer Casualty Loss Reserve Seminar

5. Evolution of the Risk Manager Today ChiefRiskOfficer EnterpriseRiskManager InsuranceAdministrator RiskManager InsuranceBuyer Key Activities • Stepping beyond just property and casualty • Risk is risk, whether fortuitous with no opportunity for gain, or other business risk • Insurance Agent purchases insurance • Insurance Administrator Pays the Premiums • Handles other Administrative Activities • Certificates • Auto Cards • Management began to notice expense of insurance on income statement • Ins. Admin. was put in charge of reducing the price • Board becomes aware of the significance of managing risk, and elevates the status of risk managers within the organization • Cost of insurance continued to increase • Ins. Buyer began to look for reduction opportunities • Reduce Losses • Manage claims • Alternative risk financing Casualty Loss Reserve Seminar

6. Partners Introduction Evolution Partners Examples Opportunities Casualty Loss Reserve Seminar

7. Partners Risk Manager Actuary Insurer Insurance Broker Casualty Loss Reserve Seminar

8. Partners A well conducted actuarial analysis can be one of the most valuable decision-making tools available Casualty Loss Reserve Seminar

9. Partners • Actuary’s involvement in renewal process • Independence working for the risk manager • Better knowledge of risk portfolio • Adds credibility to the process • Supports reasonableness of premiums Casualty Loss Reserve Seminar

10. Examples Introduction Evolution Partners Examples Opportunities Casualty Loss Reserve Seminar

11. Examples • Quantify retained losses • Aid in program structure • Allocate cost of risk • Evaluate mergers & acquisitions • Verify letters of credit Casualty Loss Reserve Seminar

12. Examples • Captive Insurance Subsidiaries • Balance Sheet Reserves • Loss Projections • Premium Reasonableness • Portfolio Transfer • Funding of Retentions Casualty Loss Reserve Seminar

13. Opportunities Introduction Evolution Partners Examples Opportunities Casualty Loss Reserve Seminar

14. Opportunities • ANNUALLY?? • Update previous loss analyses • Evaluate impact of changes to corporation • Compare to current market conditions • MARKETPLACE PRODUCTS • Asbestos Liabilities • Other Environmental Liabilities • Loss Portfolio Transfers Casualty Loss Reserve Seminar