TAPPING THE OPPORTUNITIES OF HAVING A FLAG REINSURANCE COMPANY TOWARDS ASEAN ECONOMIC COMMUNITY Bali, Indonesia October 2014

Contents: Opportunities for Flag RI in Asean Economic Community 1.Flag RI v global/regional RI? Defined by Purpose and Role 2.Flag RI and ASEAN Integration 3.Opportunities: roles for Flag RIs

“WHEREAS, it is the policy of the nation to promote and develop a strong national insurance industry and to provide for its integration in the country's economic and social development;” For Emerging Markets, the Flag Reinsurer’s reason for being: to protect local policyholders. One risk in Emerging Markets: flight of foreign capital during times of crisis at Corp HQ. What would happen to Hungarian policyholders if all foreign reinsurers leave? To Mexican depositors if all foreign banks leave? Even temporarily? THESIS To protect policyholders from flighty capital it is prudent for a flag reinsurer to develop and use knowhow and capital to support locally owned insurance firms to be sustainable going concerns so that they are not dependent on protectionist legislation to thrive and serve the public. Source: Presidential Decree 1270, Republic of the Philippines

4 GAME: NAME THIS ATHLETE

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8 What do a centre midfielder, a quarterback and a point guard have in common? TypeFlagLocalRegionalCatGlobal DiversificationLo Med Hi ScaleLo Med Hi Access to RI Talent Lo MedHi Development al Mandate HiMed Lo Access to Govt HiMed Access to Trade Assn HiMed Access to Development Agencies HiLoMed

1.Flag RI v global/regional RI? – Playmaker to protect local policyholders 2.Flag RI and ASEAN Integration 3.Opportunities: roles for Flag RIs Contents: Opportunities for Flag RI in Asean Economic Community

How does a flag reinsurer help local companies who now have 620M local customers? Source: Key Indicators 2014, ADB

AEC Strengthens ASEAN without isolationism 1.ASEAN operates in an increasingly globalised environment, with interdependent markets and globalized industries. ASEAN must therefore look beyond the borders of AEC and consider regulations outside the region in forming policies related to AEC, including the adoption of international best practices and standards in production and distribution. 2.This will be critical in enabling businesses in the region to compete successfully in global markets, achieve production objectives to become key global suppliers and ensure the ASEAN market remains attractive to foreign investors. Source: Introduction to the ASEAN Economic Community in ASEAN Economic Community Handbook for Business

Flag RI Supports Competitiveness: Global Competitiveness Index Rankings Source:

Top Economies by 2050 Source: HSBC’s The Wider World in 2050

1.Flag RI v global/regional RI? - Purpose 2.Flag RI and ASEAN Integration 3.Opportunities: roles for Flag RIs a.Facilitator for industry initiatives b.Best Practices Consultant to local risk carriers c.Expert on Country-Specific risk Contents: Opportunities for Flag RI in Asean Economic Community

15 3a: Facilitator for industry initiatives Flag RI as Playmaker for Cat Pool Regulator / Gov’t Trade Association Development Finance Corp Global RI community

16 3b: Best Practices Consultant to local risk carriers Transparency to CUOs / Capital Owners: industry LoB portfolio pricing, Cat Aggs, Capital modeling Technical Talent Software/Hardware tools Data Warehousing UW Process Knowhow

17 3c: Expert on Country-Specific risk Data consumers Algorithm writers Commercial Data Providers Public & Private Data Owners

THANKS FROM NRCP Bali, Indonesia October 2014