INARM ERM Webinar January 16 th , 2008 Draft Plan Post Second Conference Call, Sept 17 th 2007

1. INARM ERM Webinar January 16th, 2008 Draft Plan Post Second Conference Call, Sept 17th 2007

2. Agenda • Agreement on Broad Structure • Draft Global Topics – Basic Components • Draft Regional Extensions • Next Steps

3. We have identified a number of core ERM topics that people have agreed would be of high interest to the actuarial community and risk professionals in the financial services industry Some of the topics will lend themselves to a two level treatment: Level 1: Basic Introduction to the topic via a pre-recorded session. This will typically be a “global” treatment (i.e. the same pre-recording available in each region) Level 2: More advanced treatment via a live session. These sessions will typically have a “regional” adaptation (i.e. with different emphasis for each region) The webcast for level 2 will be by way of slides together with voice recording and the possibility for a “chat” style Q&A, to be co-ordinated by a “moderator” It is possible that the pre-recorded sessions for Level 1 could be via voice and video. This is to be confirmed. Sequencing of the sessions will need to be carefully orchestrated to enable “newcomers” to a topic to take advantage of the Level 1 pre-recorded sessions ahead of their participation in the more advanced Level 2 regional treatment (sample sequencing is provided attached) It was agreed to look into allowing the broadcasts to be available 1 week before and 1 week after the event of January 16th An overall 1 hour Introduction will be recorded, linking all the topics together Agreement on Broad Structure

4. Embedding ERM in the DNA of an Enterprise: Risk Governance, Risk Culture CFO, CEO, Board perspectives Securing buy-in from profit centres – with adaptation to P&C and L&H Special challenges for small/medium and mutual insurers Economic Capital – a passing fad or brave new world? Basics of EC and core applications – to be covered by a separate presentation (appendix) Importance of market consistent foundation in the presence of multiple GAAP and STAT accounting regimes Limitations of EC and key areas requiring judgement (e.g. time horizon, risk aggregation, capital allocation, capital fungibility, MVM) IAIS Developments Importance of “Pillar II” processes (feedback/model adaptation, governance, stress testing) Key issues for P&C , Key issues for L&H Draft Global Topics (1 of 3)

5. Stakeholder views: regulators, rating agencies, sell-side analysts/investors Are external stakeholder requirements for capital & risk management converging or diverging? How to satisfy the interests of shareholders vs. policyholders? Can insurers use ERM in a way that satisfies all stakeholders? Challenges for global insurers operating in multiple regions Active Risk Controls How does ERM deal with irrational insurance markets? How does ERM deal with turbulent financial markets? How can centralised global risk controls be made effective at the local/regional level? Application to life policies with policyholder guarantees (e.g. variable annuities, with profits, etc) Application to P&C reinsurance pricing Draft Global Topics (2 of 3)

6. Setting Risk Appetite and Measurement of Economic Value Creation Measurement and definition of risk appetite Technical issues : incorporation of franchise value, linkage to firm value (as opposed to run-off value), translation from economic volatility to accounting volatility Obtaining management buy-in – embedding in the capital and earnings planning process Linkage to senior management compensation Role of Senior Management, the Board, ERM Emerging Risk Management Establishing an effective emerging risk management process Economic scenario wild cards Impact of climate change (P&C focus) Impact of life style factors (L&H focus) Draft Global Topics (3 of 3)

7. Embedding ERM in the DNA of an Enterprise: Focus here could be on regional corporate governance challenges, regulatory impediments, lessons learnt from regional industry “disasters” (e.g. HIH in Australia, Capital Markets Crisis of 2002-2002 in Europe, etc.), differences in Board structures, etc.. The application to small insurers should also be addressed regionally. Economic Capital – a passing fad or brave new world? Focus here could be a survey of local regulatory applications and developments (e.g. Solvency II in Europe) Differences in the degree of acceptance in the global actuarial community (e.g. the UK may want to do a case study on the early strong resistance from senior figures in the actuarial community in 2000-2002) Special challenges for some lines of business (e.g. Casualty lines subject to socio-political influences) relevant to a region, adaptation to “incomplete markets” (e.g. China), etc. Draft Regional Extensions (1 of 2) It is suggested that Topics A, B,C and D warrant “regional extension”, with Topics E and F having more of a global character – to be debated

8. Stakeholder views: regulators, rating agencies, sell-side analysts/investors Focus here could be on degree of acceptance of economic balance sheet concepts (e.g. contrast the analyst community in the US with their counterparts in Europe) IAIS developments versus regional departures Rating agency standards – degree of harmonisation and adaptation to local GAAP/STAT reporting, etc. Active Risk Controls Focus here could be on tangible examples of translation of group wide controls and limits for insurance and financial market risk to local legal entity practice Which risks trade in a global market and which trade regionally if they trade at all? Case studies could include the management of longevity risk in Europe, Cat Risk in the US and the low interest rate environment in Asia Draft Regional Extensions (2 of 2) It is suggested that Topics A, B,C and D warrant “regional extension”, with Topics E and F having more of a global character – to be debated

9. Decision re Global Topics – there was broad agreement that the 6 topics we have selected were the “hot topics” Regional Co-ordinators now need to Flesh Out Content for Level 2 of Topics A, B, C and D and assign to presenters Preference was expressed for a dominance of practitioners over academics and consultants, though no hard quota will be applied Speakers to be recruited for Global Topics are to be recruited by this Steering Committee Speakers to be recruited for Regional Topics by Regional Committee with agreement of Global Steering Committee to ensure overall programme fit – task of Regional Co-ordinators to provide a short update at all future Global SCs going forward Next Conference Call will focus on key speakers and decision on the ideal format for each global session – i.e. standard presentation, interview/discussion panels, voice only/ voice and video We agreed that because the regional sessions are not “country sessions” (i.e. they may cover participants with many different “mother tongues”), all sessions and presentations will be in English We agreed that each session should be a minimum of 60 mins and a maximum of 90 minutes. Sufficient time should be built in for Q&A – suggest between 15% and 25% of the live session times. Pre-recorded sessions may take the form of a panel discussion. Where they are straight presentations, they should not exceed 60 minutes Next Steps