Transcript Download Handout 2

CARe Seminar
Executive Session
M. Grandisson
June 6, 2005
\\Arlbmdc01\Common\Actuarial\CAReSeminarJune6.ppt
Strategies for maximizing profits through cycle
A. Underwriting cycles will always be a part of our industry
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Strategies for maximizing profits through cycle
B. The best strategy to maximize profit through the cycle is to expand
into other lines of business
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Strategies for maximizing profits through cycle
C. The best strategy to maximize profit through the cycle is to shift the
mix of business between XOL and Quota Share
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Strategies for maximizing profits through cycle
D. The best strategy to maximize profit through the cycle is to be
willing to increase and decrease the amount of business written any
given year
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Strategies for maximizing profits through cycle
E. The leading cause that explains underwriting cycles is:
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Management's
Direction
Actuaries'
Mis-Pricing /
Mis-Reserving
Broker
Wall Street
Expectations
Herd Mentality
Other
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Strategies for maximizing profits through cycle
E. The leading cause that explains underwriting cycles is:
Other causes that explain underwriting cycles
• Capitalization / Capacity imbalance
• Uncertainty of true cost
• Long tail nature of business
• Quality of information
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Role of the actuary
A. Actuaries can play a stabilizing role through the underwriting cycle
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Role of the actuary
B. Actuaries have lost credibility from the last trough in the
underwriting cycle
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Role of the actuary
C. The Property Cat model (i.e. establishment of standard statistical
analysis of loss expectation) is exportable to other lines of business
beyond Personal Lines
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Role of the actuary
D. Actuaries are most valuable in the reserving process as opposed to
the pricing process
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