1. Reinsurance / Reaseguro / Resseguro
Dr. Sebastian von Dahlen
Santiago de Chile
15 November 2007

2. Introduction / Introducción / Introdução
Señoras y señores,
Disculpen que mi presentación sea en inglés. Mis escasos conocimientos de español y portugués solo me permiten decirles que pueden sentirse dichosos de que me esté limitando a esta sola página.
¡Muchas gracias!
Estimados senhoras e senhores,
Peço desculpa por proferir a minha conferência somente em língua inglesa, mas os meus escassos conhecimentos das línguas portuguesa e espanhola são apenas suficientes para lhes comunicar que se podem considerar felizes que agora acabo por continuar a falar apenas em língua inglesa.
Muito obrigado!
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

3. Today‘s schedule on IAIS and reinsurance
Index of contents
During PANEL (now)
Some background on:
– Current IAIS reinsurance work
– Selected Latin American data
B) During CASE STUDY (later)
Some basic insights:
– Reinsurance supervision
– Problems and solutions
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

4. Importance of the IAIS IAIS Mandate
Standards and guidance for insurance supervision
Assist national supervisors
Promote cooperation among insurance supervisors
Coordinate with other financial sector and international organizations (Basel Committee, IOSCO, Joint Forum, Financial Stability Forum, etc.)
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

5. Reinsurance and the IAIS
Reinsurance Subcommittee
1. Main focus on
Mutual Recognition
Reinsurance Transparency
2. Work also on
 Revision of IAIS Papers
Since my previous speaker, Commissioner Walter Bell, is not only from the USA, but also the President of the NAIC, I would like to mention at this point that the United States of America is, among a few other jurisdictions, providing very significant input to the IAIS Reinsurance Subcommittee. Most important, it is again a US citizen, Commissioner Steven Goldman from the State of New Jersey, who chairs the IAIS Reinsurance and other forms of risk transfer Subcommittee.
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

6. Reinsurance Transparency Subgroup
Global Reinsurance Market Report
Participants of report
Supervisors from Bermuda, France, Germany, Japan Switzerland, the UK and the USA
56 significant reinsurance entities
Representing a very high proportion of the worldwide reinsurance market
Aim of report
Increase transparency concerning worldwide reinsurance market
Indicate resiliency of the reinsurance market
 Source of information for supervisors around the world
Let‘s talk now about the IAIS Global Reinsurance Market report. The report is published annually. The seven largest providers of reinsurance protection, namely Bermuda, France, Germany, Japan Switzerland, the UK and the USA collect and provide relevant reinsurance data to the IAIS. The IAIS global reinsurance market report is a relevant source of information for insurance and reinsurance supervisors worldwide.
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

7. IAIS Global Reinsurance Market Report
Edition 2007 – new structure & new layout
Insights to relevant reinsurance market developments
New in the report: more reference to the overall capital market
Example:
Average CDS spreads for reinsurance, insurance and banks
You are the first persons, who are provided with the above data, since the IAIS Global Reinsurance Market Report is only scheduled for publication beginning of December this year. Moreover, I would like to announce that the persons, who participate in the scheduled case study after this session will also briefly touch the issue of credit default swap spreads. Decreasing spreads indicate decreasing risks.
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

8. IAIS Global Reinsurance Market Report …
… Edition 2007 – some life reinsurance focus …
…“Chapter III” provides assessments on:
a) pandemic risks b) mortality risks
 e.g. potential avian flu  e.g. graph below
Let me consider the graph now. In order to predict future mortality trends, it is first necessary to look at historic patterns of development in mortality. Clearly, trends change over time, and this is demonstrated by the graph here. During the 1970s, life expectancy increased in the USA by four months every year. This trend reduced during the 1980s, and the diagram shows the actual data and also what the position would have been had the previous trend continued. The IAIS Global Reinsurance Market Report highlights some crucial areas with respect to mortality risks. The 2007 Edition of the Global Reinsurance Market Report will be published free of charge at the IAIS website as of December 2007.
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

9. Mutual Recognition Subgroup
Mutual Recognition of Reinsurance Supersvision
Reinsurance protection
Important risk mitigation tool for insurers
Provide economic benefits for primary insurers and their policyholders
Example: major natural catastrophes
(e.g. severe storms)
- Reinsurance provides protection
- Global risk diversification is important
 Supervisors should support, if possible and appropriate, a worldwide diversification of reinsured risks
The IAIS Reinsurance Mutual Recognition Subgroup issues an IAIS Discussion Paper on the Mutual Recognition of Reinsurance Supervision, just a few weeks ago during the annual IAIS conference at Ft. Lauderdale, Florida, USA. The discussion paper states in paragraph 3 (quote): “Reinsurance is one of the most important risk mitigation tools for insurers. Through risk diversification and more efficient use of capital, the transfer of risk to reinsurers can provide significant economic benefits for primary insurers and their policyholders“ (unquote).
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

10. Mutual Recognition Subgroup
IAIS aim concerning mutual recognition
To facilitate a system of efficient insurance and reinsurance supervision: avoid unnecessary burdens
 Example: appropriate information sharing among supervisors
instead of a duplication of supervisory requests
Please check IAIS website for the recently published
“Discussion Paper on the Mutual Recognition of Reinsurance Supervision”
The IAIS discussion paper on the mutual recognition of reinsurance supervision also specifies (in paragraph 35) that both cooperation and trust among supervisors from different jurisdictions are necessary prerequisites for any system of mutual recognition. The overall idea of mutual recognition is to alleviate both supervisory work and administrative burdens to some extent.
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

11. Reinsurance Subcommittee
Additional work planned for the near future
Revision and updating of existing reinsurance related IAIS papers
„Standard on the evaluation of the reinsurance cover of primary insurers“
„Guidance Paper on finite reinsurance“
Members of the IAIS Reinsurance Subcommittee have been asked to specify their preferences concerning the ongoing work earlier this year. The result of that prioritization approach reads as follows: besides the work towards mutual recognition and the important work on the annual Global Reinsurance Market Report, which are identified as the top priorities, Members of the Reinsurance Subcommittee were especially interested in the two following topics: a) revision of the existing „Standard on the evaluation of the reinsurance cover of primary insurers“, and b) upgrading the existing „Guidance Paper on finite reinsurance“.
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

12. Insurance and Reinsurance
Some insights into Latin America
Premium shares
Premium growth
Market penetration
Growth expectation
Until now I talked primarily about the work of the IAIS. Next, I want to provide you with some insights into the Latin American insurance market. Since the Latin American insurance market is the basis to talk about reinsurance here at an ASSAL-IAIS-FIDES meeting. The reminder of my presentation provides three slides with some data about the Latin American insurance market in general. And one slide, since we are here in Santiago de Chile, comprises an outlook concerning the further growth of the insurance market here in Chile.
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

13. Latin America Non Life premium shares Latin America
This graph displays the distribution of non life premium shares in Latin America as of It becomes quite clear that only six jurisdictions account for more than 87 percent of the non life insurance premiums in Latin America: Brazil, Mexico, Venezuela, Argentina, Colombia and Chile.
Source: VERA
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

14. Latin America Non Life premium growth 2000-2005
As I said before, Latin America is an increasingly important insurance market. On average, if we consider the recent years ( ) the growth rate in Latin America is with 4.9 percent above the worldwide growth rate (4.4 percent). Venezuela and Chile even displayed growth rates in the range of two digits.
Source: Munich Re
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

15. Latin America Insurance market penetration
Insurance penetration shows substantial diversity. The graph here relates non-life insurance penetration to the overall economic prosperity in acountry. Let me now explain this quite interesting graph. The Y axis displays the insurance penetration. Insurance penetration indicates how much is spent on insurance premiums compared to the Gross Domestic Product (GDP). The X axis displays the Gross National Income (GNI). The graph also shows that a per-capita income increase and insurance penetration are to some extent correlated. Finally the red global trend line indicates that the insurance penetration in Latin America will most likely increase in the future with rising income levels.
Source: VERA
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

16. Chile Growth expectation for a primary insurance market
Since this conference is hosted here in Santiago de Chile, I would like to provide you with some data concerning the development here in Chile. The Graphs here indicate projected primary insurance premiums until the year 2015 under different scenarios. The key message here is: all different scenarios indicate growth for Chile.
source: AACH (history), Munich Re
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS

17. Reinsurance / Reaseguro / Resseguro
A source for further questions und answers:
Thank you very much.
2007 / Santiago de Chile
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS