1. Solvency Surveillance What is Working and What Is Not Casualty Loss Reserve Seminar Las Vegas Nevada 9/14/2004 Chap Cook MBA Actuaries, Inc.

2. Solvency Surveillance View From the Bottom -- Memoirs of a former CEO What did not work in my own case:  Replacing the former CEO (with me)  Eliminating half the business  New but funny capital (it was phony too)  Cease and desist orders from little states  Replacing me (with an experienced crook)

3. Solvency Surveillance What was actually helpful in my own case:  Capital Infusion from parent  Very frank discussions with Auditor  New Board of Directors: Parent and Grandparent controller and CEO An Agent in each country An Insurance Economist A retired professional director with time available

4. Solvency Surveillance What was actually helpful in my own case:  Disciplined Reinsurer Support They really can help if you ask them  Early planning with Home State Regulators For instance, helped us get out of some small markets more quickly  Good Tax Assistance Recovered significant cash from IRS  Sold off Canadian Subsidiary – a distraction

5. Solvency Surveillance What was confusing or confounding or counterproductive in my own case:  Premiums that went up when we withdrew from business (tail coverage)  Pools that kill you if you leave Profitable cessions stop -- but lousy assumptions continue – it seems like forever  State Agency termination restrictions Do these really protect agents?

6. Solvency Surveillance View From the Press Box -- Memoirs of a consultant (and witness) What does not work in my experience:  Suing everybody in sight indiscriminately  Accusing Management If they didn’t do anything really stupid or illegal  Retaining Management If they are guilty of something

7. Solvency Surveillance View From the Press Box -- Memoirs of a consultant (and witness) What does work in my experience:  Early Intervention RBC Company Action Level is the best idea ever! If and only if the state gets the plan, negotiates on it, and monitors it -- and measures the effects Try to keep the good stuff -- “cease and desist” or “no renewals” are excessively blunt instruments

8. Solvency Surveillance View From the Press Box -- Memoirs of a consultant (and witness) What does work in my experience:  Direct state assistance with downsizing Agent replacement (especially MGA’s) Rate filings expedited Comfort and soothe the other states Don’t reduce premiums, reduce exposure!

9. Solvency Surveillance View From the Press Box -- Memoirs of a consultant (and witness) What does work in my experience:  Sell off the good parts – a win, win, win idea Management must be serious Sell it all – people, files, office lease Regulators – help with a novation agreement Try a contingent price

10. Solvency Surveillance View From the Bench -- Memoirs of a sometime Special Master, Mediator, and Second Opinion What does work in my experience:  Always get a second opinion! We have seen sound companies almost seized  Whatever you must do, do it quickly! Seize, fix and release must be done within days Some companies need to be stopped right now You can’t sell the good pieces after they cancel  Dead fish will never smell better