On Reinsurance

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On Reinsurance
Closing Remarks What are the Practical
Considerations? David Alexander Head of Life
Health, Hong Kong Macau Swiss Reinsurance
Company
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Topics

• 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

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Epidemics
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How safe do you feel?
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Insurance Company Risk
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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

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The 10 worst catastrophes in terms of victims
19702005
Victims1 Insured loss (in USD m, indexed to 2005)2 Date (start) Event Country
300 000 14.11.1970 Storm and flood catastrophe Bangladesh
255 000 28.07.1976 Earthquake in Tangshan (M 7.5) China
220 000 2 068 26.12.2004 Seaquake (MW 9), tsunami Indonesia et al
138 000 3 29.04.1991 Tropical cyclone Gorky Bangladesh
73 300 08.10.2005 Earthquake (Mw 7.6) landslides Pakistan, India et al
66 000 31.05.1970 Earthquake (M 7.7), rock slides Peru
50 000 172 21.06.1990 Earthquake (M 7.7), landslides Iran
26 271 26.12.2003 Earthquake (M 6.5) in Bam Iran
25 000 16.09.1978 Earthquake (M 7.7) in Tabas Iran
25 000 07.12.1988 Earthquake (M 6,9) Armenia, former USSR

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1 Dead and missing 2 Property and business
interruption losses, excluding life and liability
insurance losses
Source Swiss Re, sigma No 2/2006
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Systematic RiskSouth Africa - Mortality
projections
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All regions, All races, Both sexes, All ages

Source ASSA 2000 South African Society of
Actuaries Swiss Re
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Accumulations9/11 Industry loss estimates
(Billion)
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Insured Losses Estimate 32.5B
Source Insurance Information Institute
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AccumulationsWider Implications
Currency Volatility
Reinsurance Capacity
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via Insurance Linked Securities
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We can all influence the Outcome

• 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

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On Reinsurance
The End David Alexander Head of Life Health,
Hong Kong Macau Swiss Reinsurance Company