Sessions to be Offered

General Session

The area of financial risk management (FRM) has seen a significant increase in interest and activity during the last couple of years, resulting in an increase in the number of new types of financial products being offered. The general session will discuss this growth and FRM's present state of affairs. Speakers representing academia and insurance/financial products add knowledge and their insights into this relatively new and exciting area of finance.

Moderator: Gary R. Josephson, FCAS, MAAA, Milliman & Robertson, Inc.

Panelists: Cliff Smith, University of Rochester
Joseph W. Wallen, FCAS, MAAA, Gen Re New England Asset Management
J. Scott Bradley, Ph.D., FCAS, MAAA, FCIA, Swiss Reinsurance Company

Basic Track Sessions

Basics of Financial Risk Management

This session provides an overview of financial risks and an introduction to the tools available in the capital markets to address those risks. The session begins by answering the question, "Why do we want - or need - to manage financial risk?" The increased significance and volatility of interest rates, foreign exchange rates, and commodity prices are demonstrated with historical statistics and their potential impact on a firm's value and operations are discussed. Then, participants are introduced to the financial securities which have been developed to handle these risks - specifically, forwards, futures, options, and swaps. Examples of how these instruments are used to hedge risks are provided.

Panelist:   Rick Gorvett, Ph.D., FCAS, MAAA, ARM The College of Insurance

Basics of Insurance Securitization

One of the most exciting trends in the insurance industry recently has been the development of instruments designed to allow for the trading of insurance risks in the capital markets. This session provides an overview of the insurance securitization trend. Included is a discussion of the background and essential process of insurance securitization, and descriptions of the forms and structures of several types of transactions that have occurred or been proposed. Examples of insurance securitization tools that have been developed include catastrophe bonds and catastrophe equity puts.

Panelists:   Ron Keenan American Re-Insurance Company
Andrew Rippert, FCAS, MAAA American Re-Insurance Company

Exchange-Traded Derivatives

Although insurance derivatives were first proposed some twenty-five years ago, the idea was actually implemented only recently. This session describes the insurance derivatives being offered by the major financial exchanges. In particular, the session provides information on the current offerings - and possible future evolution - of insurance derivatives on the Chicago Board of Trade and the Bermuda Commodities Exchange. Included are discussions of critical issues such as catastrophe indices (e.g., Property Claims Service and Guy Carpenter indices used by the CBOT and the BCE, respectively), basis risk, moral hazard, and credit risk.

Moderator:   Chris M. Suchar, FCAS, MAAA Milliman & Robertson, Inc.

Panelists:   Bruce Thomas IndexCo, LLC
Gary Kerney, AIC, RPA American Insurance Services Group

Reinsurance, Financial Reinsurance, and Alternative Risk Transfer And Financing Mechanisms

Financial risk management techniques available to insurers include not only various capital market securities, but also more traditional insurance tools. This session examines the use of reinsurance and financial reinsurance as a financial risk management tool, and how they are being impacted by the evolving insurance securitization process. The session also provides an overview of alternative risk transfer and financing mechanisms, and how these techniques fit into the overall financial risk management framework.

Panelists:   David B. Powell Swiss Reinsurance America Corporation
Christy L. Simon, FCAS, Fireman's Fund Insurance Companies

Recent Trends in the Transfer of Capital Market Risk to the Reinsurance Sector

Most of the insurance and financial press has focussed on the transfer of insurance risk to the capital markets and the disintermediation of insurance companies, reinsurance companies, and brokers. However, the transfer of risk in the other direction - from the capital markets to the reinsurance market - is increasing more rapidly but gets much less attention.

This session will focus on the capital risks being transferred to the reinsurance market, the factors contributing to this trend, and the future of combined insurance and financial risk products including duel trigger covers and income statement covers.

Examples of recent transactions will also be discussed.

Panelists:   J. Robert Bredahl, E.W. Blanch Capital Markets, Inc.
Thomas A. Orofino, Asset Guaranty Corporation
Thomas C. Toce, FCAS, MAAA, Enterprise Advisors, Inc.

Basic Track Capstone Session: A Case Study

This session involves a theoretical and participatory case study which will allow the participants to apply financial risk management concepts in a realistic environment. A case company is presented, and the risks to which the company is exposed are identified. Then, appropriate financial risk management techniques are discussed and considered. This session is intended to be an interactive case study, which helps participants to summarize the issues presented in other Seminar sessions.

Moderator:   Glenn Meyers, Ph.D., FCAS, MAAA Insurance Services Office, Inc.

Special Topics

Pricing of Integrated Products

As these new multiline, multiyear insurance products are still in their infancy, pricing techniques are still in the developmental stages. This session will examine some of the complex business issues nested within the pricing of these new products, which may include:

Panelists:   Nathan J. Babcock, ACAS, MAAA, Deloitte & Touche LLP
Edmund S. Scanlon, FCAS, Zurich-American Specialties

Program Designs and Pricing Options for Integrated Risk Policies

This session will offer detailed insights from differing perspectives on the structure and design of Integrated Risk programs. A brokerage industry professional will discuss various program structures and pricing mechanisms, and discuss how to evaluate these structures once pricing is known. A commercial underwriter will address the risk issues associated with pricing, and discuss the major reasons for the renewed interest in multi-year/multi-line policies within the industry. Certain non-traditional types of integrated products will also be discussed within this session.

Moderator:   William F. Dove, FCAS, MAAA Centre Solutions

Panelist:   John W. Gradwell, ACAS, Guy Carpenter & Company, Inc.

Market Environment for Integrated Risk Policies

This session will explore the current state of the market for Integrated Risk Policies. How many and what types of programs are being quoted and written? What are risk managers looking for in these products? To what extent are programs including non-traditional insurance risks available? What barriers exist to growth of these products, as still only a limited number of deals have been done?

Panelist:   Christopher Haarmann, Zurich Corporate Solutions

Innovative Approaches to Managing Financial Risk

In this session participants will learn how the concept of "holistic" financial risk management is implemented in diversified financial services companies. Topics include:

Panelists:   Christopher M. Lewis, Ph.D. Ernst & Young LLP
Larry Berger, Ph.D. Swiss Re New Markets

Tools Necessary to Implement Financial Risk Management Practices

In this session participants will be exposed to the tools used to successfully manage financial risk. Topics include:

Panelists:   Neil D. Pearson, Ph.D. University of Illinois at Urbana-Champaign
Joseph W. Wallen, FCAS, MAAA Gen Re New England Asset Management
Robert F. Conger, FCAS, MAAA, FCIA Tillinghast - Towers Perrin

Reporting and Oversight Issues

This session will highlight the reporting and oversight concerns that have arisen as a result of the increased use of sophisticated risk management practices in the insurance industry. Topics include:

Panelists:   Alan Murray Moody's Investors Service
Greg McCray Ernst & Young LLP

Academic Research Session I

Presentations include:

Moderator:   Richard D. Phillips, Georgia State University

Panelists:   Richard D. MacMinn, Ph.D. The University of Texas
Robert E. Hoyt, Ph.D. University of Georgia
Samuel H. Cox, Ph.D., FSA Georgia State University

Academic Research Session II

Presentations include:

Moderator:   Richard D. Phillips, Ph.D., Georgia State University

Panelist: James R. Garven, Ph.D., Louisiana State University

Case Studies

Financial Risk Products

This session presents case studies of two leading-edge companies who are offering securitized risk products as part of their services to clients. Each case study will present the inside perspective of a securitization deal, including the pros and cons of various alternatives entertained, the considerations which led to the chosen solution, and the process they underwent to execute the securitization deal.

Panelists:   David Moran, Swiss Re New Markets
Joseph M. Fedor, CPCU U.S. RE Corporation

Buyers' View of the Financial Risk Products

This session presents case studies of two leading-edge companies who have purchased securitized risk products to handle a part of their own catastrophe exposures. Each case study will present the inside perspective of a securitization deal, including the pros and cons of various alternatives entertained, the considerations which led to the chosen solution, and the process they underwent to execute the securitization deal.

Panelists:   Rhonda K. Aikens, FCAS, MAAA United Services Automobile Association
Frank D. Pierson, FCAS, MAAA Centre Solutions Group TBD

Back to the 1999 Seminar on Financial Risk Management brochure