1. ab University of Hong Kong On Reinsurance 3 November 2006 On Reinsurance Closing Remarks : What are the Practical Considerations? David Alexander Head of Life & Health, Hong Kong & Macau Swiss Reinsurance Company

2. ab Slide 2 Topics University of Hong Kong On Reinsurance 3 November 2006 Slide 2/15 Reinsurance is an integral part of the development of society As society and the environment change so does the need for new risk management solutions We can all influence the outcome

3. ab Slide 3 University of Hong Kong On Reinsurance 3 November 2006 Slide 3/15

4. ab Slide 4 University of Hong Kong On Reinsurance 3 November 2006 Slide 4/15 Epidemics

5. ab Slide 5 How safe do you feel? University of Hong Kong On Reinsurance 3 November 2006 Slide 5/15

6. ab Slide 6 Insurance Company Risk INSURANCE RISK ASSET RISK CREDIT RISK OPERATIONAL RISKS PROCESS risk…. random claims fluctuations SYSTEMATIC risk…. secular changes in claims EXPERIMENTAL risk …. pricing uncertainty Insurance business is subject to significant risks …... Many of these risk are difficult to diversify away ….. …and accumulations are possible University of Hong Kong On Reinsurance 3 November 2006 Slide 6/15

7. ab Slide 7 Insurance Risk INSURANCE RISK PROCESS risk One-off very large claims e.g. Windstorm, epidemic SYSTEMATIC risk AIDS Liability regimes EXPERIMENTAL risk New products/risks New Distribution Channels e.g. e-business University of Hong Kong On Reinsurance 3 November 2006 Slide 7/15

8. ab University of Hong Kong On Reinsurance 3 November 2006 University of Hong Kong On Reinsurance 3 November 2006 Slide 8/15

9. ab Slide 9 The 10 worst catastrophes in terms of victims 1970–2005 Source: Swiss Re, sigma No 2/2006 1 Dead and missing 2 Property and business interruption losses, excluding life and liability insurance losses Victims 1 Insured loss (in USD m, indexed to 2005) 2 Date (start) EventCountry 300 000–14.11.1970Storm and flood catastropheBangladesh 255 000–28.07.1976Earthquake in Tangshan (M 7.5)China 220 0002 06826.12.2004Seaquake (M W 9), tsunamiIndonesia et al 138 000329.04.1991Tropical cyclone GorkyBangladesh 73 300 – 08.10.2005Earthquake (Mw 7.6); landslidesPakistan, India et al 66 000–31.05.1970Earthquake (M 7.7), rock slidesPeru 50 00017221.06.1990Earthquake (M 7.7), landslidesIran 26 271–26.12.2003Earthquake (M 6.5) in BamIran 25 000–16.09.1978Earthquake (M 7.7) in TabasIran 25 000–07.12.1988Earthquake (M 6,9)Armenia, former USSR University of Hong Kong On Reinsurance 3 November 2006 Slide 9/15

10. ab Slide 10 Systematic Risk South Africa - Mortality projections Source: ASSA 2000; South African Society of Actuaries; Swiss Re All regions, All races, Both sexes, All ages University of Hong Kong On Reinsurance 3 November 2006 Slide 10/15

11. ab Slide 11 Accumulations 9/11 Industry loss estimates ($Billion) Insured Losses Estimate: $32.5B Source: Insurance Information Institute University of Hong Kong On Reinsurance 3 November 2006 Slide 11/15

12. ab Slide 12 Accumulations Wider Implications Reinsurance Capacity Currency Volatility University of Hong Kong On Reinsurance 3 November 2006 Slide 12/15

13. ab Slide 13 University of Hong Kong On Reinsurance 3 November 2006 Slide 13/15 via Insurance Linked Securities

14. ab Slide 14 We can all influence the Outcome University of Hong Kong On Reinsurance 3 November 2006 Slide 14/15 Invest in risk management Ensure you have “Contract Certainty” Keep investing in new models for forecasting and pricing risks Influence the market and society price and terms champion the causes you believe in

15. ab University of Hong Kong On Reinsurance 3 November 2006 On Reinsurance The End David Alexander Head of Life & Health, Hong Kong & Macau Swiss Reinsurance Company