Solvency Update2008 CAS Spring Meeting – Quebec City 1 Solvency Update The session will provide a survey of the solvency issues facing the insurance industry, and how they are being addressed in various jurisdictions and from various perspectives (e.g., that of the regulator and the insurance company.) Included will be an update on Solvency II, the comprehensive solvency framework being developed in the European Union for the insurance industry, and how elements of this framework are impacting proposals being considered in other jurisdictions. Ralph Blanchard, Moderator Alessa Quane Kris DeFrain Stuart Wason

Solvency Update2008 CAS Spring Meeting – Quebec City 2 Today’s paradigm – globalization Since the 1990s, capital markets increasingly global Global market hampered by inconsistent standards & regulation Need consistent stds to improve global capital market access & efficiency Push for international consistency started with banks – Basel Committee of the Bank for International Settlements (BIS) (Basel I, Basel II) Push extended to investment firms (IOSCO), insurance (IAIS)

Solvency Update2008 CAS Spring Meeting – Quebec City 3 Changes are happening The old paradigm – everyone does their own thing The new paradigm – consistency across borders

Solvency Update2008 CAS Spring Meeting – Quebec City 4 Some of the players Europe FSA, or Financial Services Authority – U.K. regulator of all financial services (Banks, investment firms, insurers) EC, or European Commission – Executive branch of the European Union. Canada OSFI, or Office of the Superintendent of Financial Institutions – Regulator of banks, insurers and federally regulated pension plans

Solvency Update2008 CAS Spring Meeting – Quebec City 5 Some of the players U.S. NAIC, or National Association of Insurance Commissioners – Association of state insurance regulators, Created to support cooperation and consistency across the states. (Some state regulators regulate only insurance, some regulate all financial services in the state) International IAIS, or International Association of Insurance Supervisors – International version of the NAIC, Supporting cooperation and consistency across various national insurance supervisors / regulators throughout the world.

Solvency Update2008 CAS Spring Meeting – Quebec City 6 Our presenters Alessa Quane – Europe (Solvency II) Kris DeFrain – U.S. (NAIC) Stuart Wason – Canada (OSFI)