Advanced Topics Panel and Small Group Project

1
Advanced Topics Panel and Small Group Project

• Moderator
• Alice Underwood, FCAS, Executive Vice President,
  Willis Re Inc.
• Panelists
• Charles Goldie, FCAS, Senior Vice President,
  Manager of Specialty Lines, Partner Re U.S.
• Jeff Dollinger, FCAS, Senior Vice President
  Chief Actuary, Endurance Reinsurance Corporation
  of America
• Daniel R. Kamen, FCAS, Vice President,
  Folksamerica Reinsurance Company

2
Paul Ingreys Reinsurance Clock
EUPHORIA!

• Pricing starts to drop

All companies flourish
Companies compete to increase market share
Capacity gets expensive
Prices fall dramatically
Prices up sharply
Crunch
Profits slide
Results horrible
AM Best writes this decades letter of concern
Pricing CANNOT go lower
Source David Skurnick, The Underwriting
Cycle http//www.casact.org/pubs/forum/93sforum/9
3sf377.pdf
3
What Triggers Underwriting Cycles?

• Catastrophic events
• New legal theories
• Interest rates
• Wall Street
• The demands of growth
• Naïve capital

4
What Fuels Underwriting Cycles?

• You get the money FIRST
• and you pay claims LATER
• Incentive plans
• Feeding the Beast
• Herd mentality
• Actuaries?

5
What Dampens Underwriting Cycles?

• Regulation
• Nimble capital
• Actuaries?

6
Whats the Actuarys Role?