My Ceding Company's Data is Not Credible, So NOW What Do I Do? Directors and Officers Liability Linda Bjork, FCAS, MAAA American Re-Insurance Company

Data Sources National Economic Research Associates Huron Consulting Group Towers Perrin - Tillinghast Stanford Law School Insurance Services Office (ISO) Reinsurance submission data Reinsurance claims and reserving data

National Economic Research Associates “Recent Trends in Shareholder Class Action Litigation: Bear Market Cases Bring Big Settlements” (2005)  Information Available  Review of trends in size of settlements  Review of federal filings  Discussion on relationship of size of settlement to amount of investor loss  Commentary related to current events  Uses: Trend  Limitations: High-level information

Huron Consulting Group “2004 Annual Review of Financial Reporting Matters” (2005)  Information Available  “Huron’s report analyzes the leading causes of and trend in financial restatements filed in amended filings with the U.S. Securities and Exchange Commission (SEC) for the year ending December 31, 2004.”  Uses: Trend  Limitations: High-level information

Towers Perrin - Tillinghast “2004 D&O Liability Survey Executive Summary: Understanding the Unexpected”  Information Available  Results of D&O liability survey of over 2400 U.S. organizations  Premium cost index  Coverage limits by asset size  Change in deductibles and retentions  Claimant distribution by ownership  Uses: Trend  Limitations: High-level information

Towers Perrin - Tillinghast “2004 D&O Liability Survey U.S. and Canadian Results”  Cost: $700 ($350 for participants)  Data Available  Expert Roundtable Section  Survey using repeat participants – 1,347 U.S. organizations that responded to 2003 and 2004 survey “Peer Group Report”  Cost: $575 ($385 for participants)

Stanford Law School Securities Class Action Clearinghouse Data Available  Clearinghouse Research  “Securities Class Action Filings 2004: A Year in Review”: Trends in number of claims and size of settlement  “Post-Reform Act Securities Settlements: Updated Through December 2004”: Contains analysis on settlements filed after the passage of the Private Securities Litigation Reform Act  Indices of securities class action filings  Database of federal class action securities fraud litigation  Filings  Settlements  Decisions

Stanford Law School Securities Class Action Clearinghouse - continued Uses  Trend  Size of loss distribution Limitations  Time required to retrieve data  Filings limited to filings in the Northern District of California since the Private Securities Litigation Reform Act of 1995 became effective

©Copyright © 2001 Stanford Law School. Reprinted with permission.

Insurance Services Office Directors and Officers Database Data Available  Loss experience of over 9,000 claims  Represents approximately 15% of industry  Splits profit and non-profit classes  Triangles up to 183 months  Paid/incurred loss and allocated loss adjustment expense (ALAE)  Occurrence counts  Size of loss distributions  Five years of data (accident or report)  Limited loss data for the 100k, 250k, 500k, 750k, 1MM, and total limits policy limits Cost: $20,000 Uses  Development factors  Size of loss distributions Limitations  New data: unknown issues

Reinsurance Submission Data Data Available (many formats)  Primary rate and price changes  Historical loss data  Aggregate loss  Large loss Uses  Development factors  Historical price and rate changes  Size of loss distributions Limitations  Quality of data  Time and resources needed to collect data

Reinsurance Claims and Reserving Data Data available  Historical individual losses Uses  Development factors  Comparisons to size of loss distributions  Conditional average severity to layer  Probability of a loss exhausting the layer limit given that it has penetrated into the layer Limitations  Reinsurance reserving system  Cost to extract and manipulate data

Questions?

Data Source - Specifics National Economic Research Associates   Publications section Huron Consulting Group   Resource Library Towers Perrin – Tillinghast   Publications Stanford Law School Securities Class Action Clearinghouse in Cooperation with Cornerstone Research 

Additional Data Sources Institutional Shareholder Services: U.S. Equal Employment Opportunity Commission: U.S Securities and Exchange Commission:

Thank you for your Interest. This material is being provided to you for information only, and is not permitted to be further distributed without the express written permission of American Re. This material is not intended to be legal, underwriting, financial or any other type of professional advice. © Copyright 2005 American Re-Insurance Company. All rights reserved. The American Re names and logo are registered marks owned by American Re- Insurance Company.