1. Sinners & Saints Bill McConnell (The Lloyd’s Actuary) & James McPherson (A Lloyd’s Actuary)

2. Objective Improve Lloyd’s by our actions next year

3. How? Look at and discuss what we did well and badly Individual action plan to do it better

4. Sinners? Equitas + Actuaries = Lloyd’s is saved? High Salaries + New Lloyd’s Problems = ? We must deliver !

5. Where are the Saints?

6. Ideal time spent? Reserving Input to price Management decisions Opportunity spotting Profitability measurements Strategic projects Other projects

7. Ideal time spent? Reserving10% Input to price35% Management decisions5% Opportunity spotting20% Performance measurements10% Strategic projects10% Other projects10%

8. What Value Do You Bring to Lloyd’s?

9. How have Actuaries performed ?

10. Summary Movements CRTF

11. Summary Movements SLTF

12. Summary of Global Movements

13. Gross Ultimate Loss Ratios

14. Explanations of Movements U.S.

15. Explanations of Movements Global

16. Distribution of Catastrophe Claims

17. Movement in Catastrophe incurred Claims

18. Movement on Catastrophes

19. Initial Expected Loss Ratios

20. Forecast of Results

21. Other Points Claims Inflation. How many syndicates should an actuary be appointed to? Actuarial reports.

22. Actuaries Roles

23. Best Practice? Consultant Actuary Syndicate Actuary Underwriter Managing Agency Board Indicated Reserve Syndicate Reserve Lloyd’s + Corporate oversight

24. Consultants still signing In-House 11% Consultants89% In the future?

25. Roles Managing Agency - Final say Underwriter / In-house actuaries propose Consultant gives independent benchmark + check for comfort (+ sign off?)

26. Do you do your bit? Get enough information? Improve the reserves / reserving process? Interpret the results better? Give better feedback on exercise? CUT THE TIME TAKEN ?

27. Practical Reinsurance Guide

28. Must do gross of reinsurance and then net down Reinsurance + bad debt is the biggest issue for next year

29. It is not that hard – each year separately Quota Share- adjusted gross ULR (PC etc) XL- tricky bit (unless Cat protection only) reinstatements Stop loss – Read slip carefully (additional premiums, non renewal clauses) Financial – talk with auditors

30. Likely issues Bad debt – including delays Reinsurance exhaustion (all “working” layers? – check slips) Much less protection for next year More expensive for next year Hence more finite arrangements?

31. Good rating index At Policy level Compared to unbiased / objective measure such as rating model Easy to use (no more than 2 inputs per policy)

32. Suggestions – 1 – in use Change in premium cash terms % Change in non cash terms %

33. Suggestions – 2 – not in use Expected ULR used in pricing Change in exposure due to change in terms % change in ult exp claims

34. Very useful Target changes initial expected ultimate loss ratios Pricing Improving models (quality control cycle) Planning Corporate backers will need it.

35. Why don’t we do this? Ult premiums 1999£50m Renewal percentage80% Change in terms non cash3% Change in terms cash5% New Business£10m Ult premiums 2000£52m* *

36. Or this? Ultimate loss ratio 1999120% Premium Rate change8% Claim inflation5% Initial loss ratio116.7%* *

37. This calculation is Easy Verifiable Done in most non-Lloyd’s contexts Rarely done in Lloyd’s !

38. Do all of Lloyd’s example If time (more than 10 minutes to go)

39. James improvement list All Gross to Net Write up clear Initial Ultimate Expected Loss Ratios for all main classes (Never Underwriters figure unless documented) Allocation by Lloyd’s risk code Benchmark against market stats Reinsurance costs Early warning (US Trust Funds)

40. Bill’s suggestion All Gross to Net Write up clear Initial Ultimate Expected Loss Ratios for all main classes (Never Underwriters figure unless documented) Allocation by Lloyd’s risk code Benchmark against market stats Reinsurance costs Early warning (US Trust Funds)

41. Your Improvement List ?