1. Insurance Insolvencies Casualty Actuarial Society Annual Meeting November 12, 2003 Vincent Laurenzano

2. STROOCK 2 Insurance Company Failures 1980’s Ideal Mutual Integrity Mission Transit Casualty

3. STROOCK 3 United States House of Representatives Committee on Energy and Commerce, Subcommittee on Oversight and Investigations (Dingle Committee) “Failed Promises-Insurance Company Insolvencies” February 1990 Fraud Mismanagement Regulatory Failure

4. STROOCK 4 National Association of Insurance Commissioners Solvency Agenda Accreditation Program CPA Statutory Opinion Loss Reserve Opinion Risk Based Capital

5. STROOCK 5 Loss Reserve Opinion Assurance reported loss reserves are reasonable Risk Based Capital Formula No Silver bullet Earlier Regulatory Intervention

6. STROOCK 6 Ten Years Later Reliance Frontier Fremont Superior National Regulatory Failure Regulatory System Free to fail Regulatory schemes aiming to prevent all insolvencies stifle innovation and growth

7. STROOCK 7 Property/Casualty Insurance Insolvencies Catastrophes Product pricing difficult Competitive pressures result in inadequate rates

8. STROOCK 8 Very Low Barriers to Entry 9/11 $10 Billion Capital raised in 3 Months Opportunistic capital Shorten Hard Markets Fuels Soft Markets

9. STROOCK 9 Difficult to withdraw Institutionalized capital Infrastructure Human Nature

10. STROOCK 10 Insurance Company Failures Regulatory Actions Supervision Rehabilitation Liquidation

11. STROOCK 11 Rating Agencies Coveted A Rating Run off

12. Vincent Laurenzano 212-806-6282 VLaurenzano@stroock.com