1. University of Illinois Finance 230 – Intro to Insurance Presentation by Gail M. Ross, FCAS, MAAA October 13, 2006

2. Agenda Background Insurance / Actuarial Career CAS Activities Challenges for the P/C Actuary Exciting Assignments Contact Info Q&A

3. Background Chicago Native Grew up in Skokie Grew up in Skokie Graduated Niles East Graduated Niles EastCollege B.S. Math – University of Illinois B.S. Math – University of Illinois M.A. Math – University of Miami M.A. Math – University of Miami

4. Insurance / Actuarial Career Began with Travelers Insurance Co.-1976 Underwriter in Miami Field Office – 2 Yrs. Underwriter in Miami Field Office – 2 Yrs. Transferred to Hartford Home Office – 8 Yrs. Transferred to Hartford Home Office – 8 Yrs. Product Management Department Actuarial Department Got into Consulting Upon Becoming an FCAS Tillinghast – 1985 Tillinghast – 1985 Am-Re Consultants – 1995 Am-Re Consultants – 1995 Milliman - 2003 Milliman - 2003

5. Casualty Actuarial Society Became active in CAS in 1985 Volunteered on Committees Volunteered on Committees Appointed Chair of Syllabus Committee Appointed Chair of Syllabus Committee Asked to Chair Task Forces Asked to Chair Task Forces Elected to the Board of Directors Elected to the Board of Directors Elected as President-Elect (2001/2002) Elected as President-Elect (2001/2002) Served as President (2002/2003) Served as President (2002/2003) Served as Board of Directors Chair (2003/2004) Served as Board of Directors Chair (2003/2004) Current Chair of CAS Centennial Committee (2014) Current Chair of CAS Centennial Committee (2014)

6. Challenges for the P/C Actuary Setting the Price to Charge for the Insurance Product

7. Non-Insurance Pricing

8. Insurance Pricing

9. Challenges for the P/C Actuary Determining the appropriate level of reserves to set – varies by exposure: Short “Tail”– Property, Physical Damage Short “Tail”– Property, Physical Damage Medium “Tail” – Auto Liability Medium “Tail” – Auto Liability Long “Tail” – Workers Compensation Long “Tail” – Workers Compensation What Will the Lawyers Dream Up Next “Tail” – Asbestos, Pollution, Tobacco, Firearms, Mold What Will the Lawyers Dream Up Next “Tail” – Asbestos, Pollution, Tobacco, Firearms, Mold

10. Challenges for the P/C Actuary Enterprise Risk Management – Helping businesses manage all risks facing the organization: Hazard Risk Hazard Risk Financial Risk Financial Risk Operational Risk Operational Risk Strategic Risk Strategic Risk

11. Enterprise Risk Management - Example Coldhard Steel Company (CSC) manufactures steel products. It’s a family owned business operating in the Midwestern US and has a unionized labor force.

12. Enterprise Risk Management - Example Types of Risk Hazard Risk Hazard Risk 1 st Party – Loss to building & equipment due to fire, tornadoes, etc. 2 nd Party – Injury or illness to employees included work related injuries 3 rd Party – Slip/falls, product recalls, product lawsuits

13. Enterprise Risk Management - Example Types of Risk Financial Risk Financial Risk Foreign exchange risk - CSC has large volumes of sales in Latin America Commodity risk – changes in prices of raw materials Credit risk – CSC has a large accounts receivable

14. Enterprise Risk Management - Example Types of Risk Operational Risk Operational Risk Labor relations Family succession planning Assessment of the reliability of machinery and processes

15. Enterprise Risk Management - Example Types of Risk Strategic Risk Strategic RiskCompetition Regulatory/political issues Technological advances that could leave CSC obsolete

16. Enterprise Risk Management - Example The Casualty Actuary will: Assess the hazard risk Assess the hazard risk Work with others to assess the financial, operational and strategic risks Work with others to assess the financial, operational and strategic risks Develop models that will integrate all of the potential risk outcomes/probabilities so that an overall impact on CSC’s results can be understood and managed. Develop models that will integrate all of the potential risk outcomes/probabilities so that an overall impact on CSC’s results can be understood and managed.

17. Actuarial Career Why Consulting ? Diverse Diverse Challenging Challenging Projects Completed in Short Timeframe Projects Completed in Short Timeframe Deal w/ Senior Management Deal w/ Senior Management Global Opportunities Global Opportunities Very Good Compensation Very Good Compensation

18. Actuarial Career Why Not Consulting ? Long Hours Long Hours Often Unpredictable Often Unpredictable Actuaries in the “Hot Seat” Actuaries in the “Hot Seat”

19. Exciting Assignments M&A Due Diligence Assignments Operational Reviews Reserve Reviews Captive Insurance Assignments

20. Closing Thought “It’s not your father’s old insurance world anymore!”

21. Web-Sites and Contact Info Good web-sites to learn more about an actuarial career: www.BeAnActuary.org www.BeAnActuary.org www.BeAnActuary.org www.casact.org www.casact.org www.casact.org www.actuarialfoundation.org www.actuarialfoundation.org www.actuarialfoundation.org My contact info: gail.ross@milliman.com gail.ross@milliman.com gail.ross@milliman.com Actuarial jokes: http://users.aol.com/fcas/jokes.html http://users.aol.com/fcas/jokes.html

22. Questions

23. Thank You !