David Holland explores the evolution of reinsurance from its maritime origins to the present day
Reinsurance is basically insurance for insurance companies. James Park, writing in 1799, more colourfully stated it as: "RE-ASSURANCE, as understood by the law of England, may be said to be a contract, which the first insurer enters into, in order to relieve himself from those risks which he has incautiously undertaken, by throwing them upon other underwriters, who are called re-assurers."
In order for commerce to flourish, there has to be a way to deal with large financial risks. Both reinsurance and insurance evolved from the larger family of risk management.
The goals of this article are to discuss early risk management tools, the development of insurance, particularly marine insurance and fire insurance, and the origin and evolution of reinsurance.
From Hammurabi (1800 BCE) to Justinian (530 CE)
Shipping has always represented significant financial risk. Ships are expensive to build and maintain, the cargo they carry is an accumulation of financial risk, and the perils of weather and piracy are beyond individual control. Rather than retain the risk, it's easy to see how someone would want to transfer the risk to another party.
Around 3000 BCE, the Babylonians developed a system of maritime loans, which relieved the borrower from having to repay the loan in the event of the loss due to certain accidents.
Around 916 BCE, Rhodes promulgated a system of maritime law, which included such concepts as settling losses that were incurred for the benefit of all on the basis of the "general average" thereby "the loss of one was divided amongst several." In the times of the Greeks and Romans, it was possible to finance a venture by taking out a loan on the hull of the ship and to borrow money to purchase the cargo. These types of sea loans were later referred to as bottomry and respondentia bonds. Bottomry refers to the bottom or hull of the ship and respondentia refers to the cargo. A form of insurance was included in these transactions in that the loans would be forgiven in the event the ship is lost. A bottomry transaction would consist of a loan on the ship, an interest rate on the loan and a charge for the risk of loss.
In Roman times, there were other precursors to insurance. Burial societies provided an early form of life insurance. Annuities were utilized and related actuarial tables dated around 220 CE were cited by Ulpian and Macer.
From around 50 BCE up to the compilation of all Roman law by the Byzantine Emperor Justinian around 530 CE, the maximum interest rate had been set at 12%. However, the Code of Justinian created a sliding scale with 12% only applying to sea loans. The maximum rate of 12% for bottomry was "on the ground that this was not a mere lending of money, but an adventure involving the risks of the sea." The fall of the Roman Empire in the West is dated around 476 CE. The widespread implementation of the Code of Justinian in the West and the development of insurance and reinsurance were slowed by the ensuing Dark Ages.
The Evolution of Insurance and Reinsurance in the Middle Ages (circa 1000 - 1400)
Some feel that the church inadvertently played a role in the evolution of insurance. Sea loans (foenus nauticum) ran into conflict with church law dealing with usury; for some loans, the charge for the interest and risk could be as much as 30%, 40% or 50%. In 1236, Pope Gregory IX condemned sea loans as usurious and banned their use. Prior to this, sea loans were considered free from charges of usury because part of the payment was clearly a risk charge. However, other loans were being disguised as sea loans to get higher returns and to avoid charges of usury. The net result of this was to stimulate a change in the forms of financing. Some contracts were written on a basis that involved foreign exchange. Other contracts consisted of a joint venture sharing all business risks combined with a separate marine insurance. Thus, stand alone marine insurance was borne.
The rise of trade and the development of the city-states were also factors in the evolution of insurance. "The Hanseatic League (also known as the Hansa) was an alliance of trading guilds that established and maintained a trade monopoly along the coast of Northern Europe, from the Baltic to the North Sea, during the Late Middle Ages and Early Modern Period (c. 13th-17th centuries)." Bruges in Flanders (now Belgium) was one of the leading members of the Hanseatic League and a major centre of commerce. The use of the term "Assurance", in the modern sense, occurs for the first time in reference to Bruges in the 'Chronyk van Vlaendern''.
The development of insurance and reinsurance in England and France were slowed by the Hundred Years' War whereas commerce flourished under the Italian Renaissance.
Early agreements, which may be considered as reinsurance treaties developed along with insurance contracts in the 14th century. Gerathewhol cites an agreement dated 12th July, 1370 as the earliest known agreement that embodies the elements of reinsurance.
"The treaty, written in Latin, concerned the cargo of a ship sailing from Genoa to Sluis (near Bruges in Flanders) for which the direct 'insurer' transferred the more hazardous part of the voyage from Cadiz (in Andalusia) to Sluis to another 'insurer' who thus provided 'reinsurance coverage'. As was sometimes practiced in the transfer of risks, the treaty was, in legal terms, effected as a sales contract."
"The contract does not state what the premium was. However, such failure to mention the premium was typical of insurance contracts effected before notaries in Genoa up to the second half of the 15th century, and is most probably attributable to the canonical rule against usury...."
This contract meets the distinguishing characteristic of a true reinsurance contract in that the risk is transferred from the original insurer to a reinsurer without involving the original insured in the transaction.
The bottomry bonds, which are forgiven if the ship is lost, seem similar to today's catastrophe (CAT) bonds, which are forgiven in the case of a catastrophic event such as hurricane or earthquake. Bottomry bonds include a risk charge as a percentage of the amount of the risk; CAT bonds are often priced at the London Interbank Offered Rate plus a significant spread. Bottomry bonds include both financing and risk transfer, and a reinsurance treaty can also provide both. Canon law regarding usury led to a decomposition of bonds into risk and financing components just as today there are questions about splitting out risk transfer elements for accounting purposes. There was also concern in some cases as to whether or not there was sufficient risk transfer to qualify as a bottomry transaction. The 1370 reinsurance transaction could be structured as a sale with a put. The fact that this treaty was for pure risk transfer rather than capacity is notable.
As insurance continued to evolve, many large risks exceeded the capacity of any one insurer, and rather than reinsurance, coinsurance emerged as the predominant solution. Often, a broker would shop a risk to a number of potential insurers, and those interested would sign their name under the description of the risk and thereby truly "under write the risk." They would also specify the share of the risk taken. This is not reinsurance in that rather than having one insurer and one or more reinsurers, there were a multiple number of coinsurers.
The Renaissance and the Legal Base for Insurance (circa 1400 - 1600)
In medieval times and earlier, the legal basis for international commerce was "The Law Merchant" or Lex Mercatoria. Civil Law, including the Code of Justinian, was not efficient in resolving trade disputes that could stretch over a number of countries. Marshall indicates that the law of insurance was borrowed from the Lombards.
The oldest law dealing with insurance whereby there were specific premiums for the insurance risk is found in a 1435 ordinance passed in Barcelona. The law was "... to extirpate all manner of frauds that may take place in effecting insurances on ships, great and small, and on goods and merchandise. ....".
The first time that the equivalent of the words "to reinsure" appears - as the Italian term "rasichurare" - is in a document from Florence dated February 19, 1457. The oldest insurance law of the Italian maritime cities was a decree of the Grand Council of Venice in 1468.
A life insurance policy issued on 15th June, 1583 to William Gybbons is often credited as being the earliest extant life insurance policy, but it is probably so well known because it is the earliest known disputed life claim. The policy was written for 12 months. When the insured died nearly a year later, it was unsuccessfully claimed that the policy was for 12 lunar months of 28 days each and had thus expired.
From Queen Elizabeth to the American Revolution (circa 1600 - 1776)
The role of England in the world changed significantly during the reign of Queen Elizabeth. "In 1574, Queen Elizabeth granted Richard Candler the right to establish an insurance office in the Royal Exchange Building. ....". Although the Hanseatic traders and the money-lenders from Lombard were not expelled from England, they gradually moved away about this time. For most of the next 300 years, insurance policies issued at the Royal Exchange included the statement that, "It is agreed by us the insurers, that this policy of assurance shall be of as much force and effect as the surest writing or policy of assurance heretofore made in Lombard street."
To put the developments at the end of the 16th century into historical context, England's defeat of the Spanish Armada in 1588 marked England's rise as a world power and the changing role of trade, including insurance, was a natural consequence. In 1601, England passed its first legislation dealing with insurance. Sometimes referred to as the Francis Bacon Act, the preamble describes it as "AN ACTE CONCERNINGE MATTERS OF ASSURANCES, AMONGSTE MARCHANTES." The preamble recognizes the importance of insurance in commerce and complains that it was not as open as it had been.
One of the most notable catastrophes of England was the Great Fire of London in 1666. Gerathewohl credits the Great Fire with initiating the development of direct insurance.
In 1681, Louis XIV of France enacted the Ordonnances de la Marine, which was based on an earlier text known as the Guidon de la Mer. The Guidon was published in Rouen in 1671 but the original had been prepared much earlier; the Fédération Française des Sociétés d'Assurances (FFSA) dates it at 1570. A major point in the Ordinances and the earlier Guidon is that reinsurance is explicitly authorized.
Reinsurance was explicitly authorized in a law passed in Antwerp in 1609. It should also be noted that specific legislation relating to reinsurance was also passed in Venice (1705), Hamburg (1731), Bilbao (1738) and Prussia (1794).
With the bursting of the South Sea Bubble, only the Amicable Society for Perpetual Assurance survived. In the Bubble Act, King George I of England agreed to the Establishment of the Royal Exchange Assurance Corporation and the London Assurance Corporation, setting them up exclusive of all other corporations and societies.
In 1746, insurance in England had been found to create so many "pernicious practices" that remedial legislation was required. The Act prohibited any marine policy "without further proof of interest than the policy, or by way of gaming or wagering, or without benefit of salvage to the assurer."
Insurable interest and the prohibition on insurance used as a cover for wagers are important fundamental principles of insurance. Similarly, the absence of the right of salvage calls into question valid risk transfer. Paragraph 4 of the act provides that "... it shall not be lawful to make re-assurance ...." There is no specific rationale given for the prohibition of reinsurance. The ban on reinsurance was not repealed until 25th July, 1864 some 118 years later.
The development of reinsurance in England was no doubt slowed by the legal prohibition of reinsurance. By the 1770's, the insurance had started to emerge in the United States, but most large policies were still being written in England. After the revolution broke out, Americans were deprived of Lloyd's services and thus had to form more local insurance companies. Golding points out that local U.S. insurers may have reinsured amongst themselves during this period, but he feels it is more likely that insurers would only accept coverage for the amount they could retain. There is an ad from this period that states that a Boston firm has 20 underwriters who are available to accept a proportional part of each risk consistent with the well-known Lloyd's method.
Reinsurance in the Industrial Revolution and 19th Century
According to Kopf, the fire insurance business is chiefly responsible for the development of modern reinsurance business. Most fire reinsurance in the first half of the 1800's was written on a coinsurance basis by direct writing companies rather than by reinsurance companies. Risks were submitted facultatively to other insurers, who were most likely competitors. To avoid disclosing terms to competitors, companies would try to cede business to foreign companies.
In 1842, the city of Hamburg experienced a great fire that destroyed about one-fourth of the inner city leaving 20,000 people homeless. It took more than 40 years to rebuild after this conflagration. The City Fire Fund, which had been organized in 1667 (the year after the Great Fire in London), was depleted and a number of German insurance companies were "seriously embarrassed."
As insurance amounts rose, companies were faced with the option of limiting coverage, which would drive business to their competitors, use reciprocity which was soon exhausted, or reinsure with foreign countries. The Niederrheinische- Güter- Assekuranz-Gesellschaft, a German company based in Wesel, tried to reinsure one-third of its portfolio with a French company, and when negotiations fell through, they decided to offer the reinsurance to their own shareholders. Rather than see one-third of their business go out the door, the shareholders were willing to assume this risk and in 1842 set up a subsidiary company to reinsure this business. A number of companies followed this procedure and set up subsidiaries to reinsure the business of the parent.
The first independent professional reinsurance company was the Cologne Re. The need for such a company was evident following the losses of the Great Fire in Hamburg. On 22nd December, 1842 invitations were sent to deliberate on the founding of a reinsurance company in Cologne. Statutes were drafted in 1843 and the Cologne Re was founded on April 8, 1846. Its first official treaty was written in 1852.
Of 13 reinsurers founded in Germany in 1870-1871, most were out of business by 1880. Kopf notes: "The pressure of competition led to unwholesome practices, and soon many of these newly formed companies found themselves in dire straits." Retrocession dates back to 1854 when Le Globe Compaigne d'Assurance contre L'incinde ceded fire business to Riunione Adriatica.
In 1848, the Swiss adopted a new federal constitution that was greatly influenced by the U.S. Constitution and the ideas of the French Revolution. This constitution also set the stage for the founding of the insurance industry in Switzerland. In 1857, Swiss Life was founded, and by 1863, at least six companies had been founded in Switzerland. Reinsurance in Switzerland was originally practiced on a reciprocal basis, sharing risks amongst local companies.
The great fire of Glarus in 1861, like other great conflagrations, demonstrated the need for insurance and reinsurance. This led to the founding of the Swiss Re in 1863 by Helvetia General Insurance, Credit Suisse, and Basler Handelsbank. Foreign companies were also interested in doing business with Swiss Re and soon there were treaties with companies in Germany, Italy, France, Austria, England, Belgium and Russia.
The reinsurance system adopted in England was the use of mutual sharing risks with other direct insurers. This approach was adopted in other European countries and in the United States. According to Golding, the face amounts reinsured on life policies in earlier times was not large enough to warrant an organized system of reinsurance; a general system of life reinsurance only began in England in 1844. In 1854, the English and Scottish Life Offices drafted and approved a set of regulations to govern the conduct of reinsurance business. These regulations only provide for reinsurance on a facultative basis. Problems arose because original insurers did not always disclose retentions or even retain any part of the risk for their own account, and reinsurances were not always cancelled following the termiation of the original policy.
Cologne Re transacted life reinsurance during the period 1854 to 1860. Swiss Re wrote its first life reinsurance treaty in 1865. However, life reinsurance seemed to be rather slow in development and it seems that no company other than Swiss Re wrote life reinsurance from 1865 - 1880. Cologne Re started writing life business again in 1885. Life reinsurance was taken up by Munich Re in 1888-1889. In 1894, the Egid, a Swedish company, offered reinsurance on a risk-premium basis (i.e. yearly renewable term for the net amount at risk).
Although there were a number of reinsurers operating in Germany, the majority of the reinsurance premium was going abroad. In 1880, Carl von Thieme proposed the foundation of a reinsurance company to a group of bankers and industrialists in Munich. The proposal was accepted and in 1880, Munich Re was founded. One of Munich Re's early goals was to conduct business on an international basis, and by 1886, it had agents in Paris and Russia and by 1890, it had offices in London and New York.
Thieme felt that reinsurance should be a specialised line of business in and of itself; the monoline of indemnity reinsurance. He also felt there would be diversification benefits in writing in multiple fields, for example marine, fire and life, as well as multiple locations.
Turning to reinsurance in the United States, there does not appear to have been a prohibition to its use other than questions about the applicability of the Marine Act of 1746 before the Revolutionary War. In 1837, the Supreme Court of New York upheld the validity of a reinsurance contract. In 1847, Hone v. Mutual Safety Insurance declared reinsurance to be a contract of indemnity between the insurer and the reinsurer, which has been used as an argument that reinsurance is a separate line of business.
In June 1853, New York passed acts dealing with the incorporation of life and fire insurance companies. Each act provided that a company organized under the act has the authority to reinsure any risks taken.
Reinsurance companies were slow to develop in the United States. Kopf explains: "All the early American treaties seemed to be placed either with foreign unadmitted reinsurers or with the few native reinsurance offices, of which the first was the Reinsurance Company of America which was wound up in 1890. It was not until 1898 or 1899 that foreign reinsurance companies were admitted to business in the States under current conditions."
Reinsurance in America appears to have been mainly on a facultative basis, with Munich Re credited with introducing automatic treaty terms. Regarding the prohibition of reinsurers operating on a "non-admitted" basis, Golding comments: "About the year 1896 so many important States had passed laws, prohibiting reinsurance in non-admitted companies and refusing to allow credit of any kind for such reinsurance, that the direct-writing companies, having treaties with non-admitted companies, were embarrassed to considerable extent to maintain the high premium reserves required."
Gerathewohl also cites complaints about the treatment of foreign reinsurers by the United States: "The activities of foreign reinsurers in the USA were nevertheless hampered by protectionist legislation. As an example, foreign reinsurers had to put up substantial security, which prompted small companies to withdraw from the US market."
Life Reinsurance in the United States in the 20th Century
Catastrophes loomed heavily in the early years of the 20th Century. The great fire of Baltimore occurred in 1904. In relative terms, the San Francisco earthquake (18th April, 1906) and subsequent fire was the costliest insured event of the 20th century. Approximately one-fifth of the city was destroyed, representing some 80% of property value; 225,000 people were left homeless. Several insurers were unable to pay claims while others made their reputation and that of the insurance/reinsurance industry by their ability to pay. These were followed by the sinking of the Titanic (1912), World War I (1914-1918), and the 1918 influenza pandemic.
At the turn of the century, life reinsurance in the United States was mainly achieved by sharing of risks amongst direct companies. Some foreign reinsurance companies such as Cologne Re and Munich Re had become licensed in the United States, and there were a number of Russian companies involved in U.S. reinsurance. In terms of domestic reinsurance companies, the Reinsurance Company of America had wound up its business by 1890; otherwise, the next domestic American reinsurance company was founded in 1909.
As life reinsurance progressed, it was mostly a department within a direct company. In 1904, American Central Life (later American United Life or AUL) established a reinsurance division. In 1912, Lincoln National set up a reinsurance division and had written 14 treaties by the end of the year. One difficulty these new reinsurance operations faced was that because they were not necessarily licensed in all states, ceding companies encountered problems taking credit for reserves on the business ceded. One approach to address this was to modify the general coinsurance arrangement so that reserves were deposited with the ceding company. This arrangement is now known as modified coinsurance or mod-co and has proven useful for many different reasons.
At this time, there was still debate as to whether or not reinsurance should be considered a "monoline, multifield" business. In 1912, the First Reinsurance Company of Hartford was organized in Connecticut to "carry on a reinsurance business and to make reinsurance on insurance risks of every kind and description undertaken by other companies, associations or persons." This company has the distinction of being the only insurance company to operate in the United States writing all lines including fire, life and casualty. In 1913, the monoline question was raised by the Massachusetts insurance commissioner and in 1914, the Connecticut Commissioner presented papers in support of this at the convention of insurance commissioners. At the 1913-14 sessions of the New York, legislature bills were introduced which would permit the monoline approach for reinsurance. The bills were criticized in that it would adopt the "European system" in favour of the "American system" which separated certain lines. New York's view that life policyholders should not be subjected to fire and casualty type risks prevails even today.
To close the story on the First Reinsurance Company of Hartford, during the War the stock of the company was sold by the Alien Property Custodian to ten insurance companies. In 1925, interests allied with the Rossia Insurance Company (formerly St. Petersburg, Russia) acquired control and reinsured the life business to Sun Life of Canada.
As the stage was being set for World War I, the reinsurance world was divided into two camps - the supply countries and the demand countries. The supply countries included Germany, Switzerland, Austro-Hungary and Russia. The United States did not have a strong domestic system of reinsurance companies. The War did away with the German companies, which accounted for 67% of the total premium income of all the independent reinsurance companies in the world.
Before the War, approximately six Russian reinsurance companies were active in the United States, but after the Russian Revolution of 1917, the only survivor in the United States was the remnant of the Rossia. Kopf credits the principal innovation of the foreign companies to be that "they made it possible for institutions to cede reinsurance in large amounts without the obligation of accepting any reinsurance in return favor."
Shortly after the opening of the War, Britain and France prohibited trade with hostile countries and Germany responded by banning payments to France and England. After entering WWI in 1917, the United States passed the "Trading with the Enemy Act" which among other things prohibited all reinsurance relations with hostile countries. In order to meet the demand for reinsurance, there was an increase in business ceded to foreign countries that were not affected by the restrictions, for example Switzerland and Denmark. In Denmark, more than 100 new insurance companies were formed during the War, most of which were reinsurers. Most of these new companies were closed after the war. The other way to meet demand was by increasing the domestic reinsurance industry, and in the United States, ten new reinsurers were founded in 1910 - 1920.
In 1919, CG set up a reinsurance bureau within its actuarial department. Also in 1919, the Metropolitan Life Insurance Company (MET) organized a separate Reinsurance Division. Another reason for MET establishing a Reinsurance Division was that during the war, the Alien Property Custodian asked MET to take over the business of the Prussian Life Insurance and the Mercury Reinsurance Company. By the time Kopf wrote his excellent paper on the Origin and Development of Reinsurance in 1929, MET's reinsurance operation was the largest single life reinsurance unit in the world.
In 1923, the North American Reassurance Company was founded by Swiss Re. North American Re was set up to operate exclusively in the United States and Canada. This company wrote life reinsurance only and was the first life reinsurance company to be operated on such a large scale in United States. BMA, founded as a direct insurer in 1909, started writing reinsurance in 1928. Similarly, The Employers Indemnity Exchange was founded in 1908 and in 1928 became Employers Re. In 1930, Transamerica started accepting life reinsurance. Gerathewohl comments: "Following the experience gained in World War I, numerous international reinsurance treaties contained clauses rendering the treaty null and void in the case of an outbreak of war. Soon after World War II had broken out, trade with business partners in hostile countries was forbidden in many of the nations at war."
The depression era and the war years were difficult for reinsurers and they suffered tremendous losses. The post-war times through the remainder of the century were marked by favourable economic times and a significant growth in reinsurance, particularly in the founding of new life insurance companies and companies engaged exclusively in reinsurance.
In 1968, the face amount of life reinsurance inforce amounted to $23.5 billion with new business of $5.5 billion. The market leaders in terms of face amount inforce were Lincoln National, CG, North American Re (Swiss Re) and BMA.
The 1970's included some sensational developments involving reinsurance. The largest individual U.S. life insurance claim to date was on the murder of oil magnate Eugene Mullendore in 1970. He had taken out policies totalling $15m of which the insurer reinsured $14.96m. The primary reinsurer retroceded parts to others who in turn ceded parts of the risk. In the final accounting, more than 100 reinsurers were involved in this case. The partner of the agent who wrote the business was found murdered in Canada, and there was alleged mafia involvement in this case.
In 1973, Equity Funding committed what was then called "The Fraud of the Century" and the engine of the fraud was reinsurance. Equity Funding was a fast growing life insurance company that had such good experience that reinsurers were willing to pay first year commissions of well over 180% to 198%. Equity Funding realized that they could generate tremendous earnings just by fraudulently creating large amounts of new business; ultimately, the scheme was collapsed.
In the late 1970's and early 1980's, there were a number of modified coinsurance transactions which had significant financial benefits under the then existing Section 820 of the U.S. Internal Revenue Code.
Another major development during this period was the 1980 landmark paper by Michael J. Cowell and Brian L. Hirst on "Mortality Differences between Smokers and Nonsmokers". This was the same year that Jeffery Dukes and Andrew M. MacDonald published "Pricing a Select and Ultimate Annual Renewable Term Product". The resulting revolution in life insurance pricing increased the level of competition, which in turn increased the demand for reinsurance to support these new concepts. The tremendous growth in reinsurance in the remainder of this century began as a result of these fundamental changes.
The 1990's were characterized by failures of some of the largest direct insurance companies in North America including Executive Life, Mutual Benefit and Confederation Life. The growth in life reinsurance in the 1990's was fuelled by the introduction of increasingly competitive products including the use of preferred underwriting classifications. In addition to the pricing issues, reinsurers were also involved in providing capital support for the reserves associated with these products. The 1990's saw the beginning of a major consolidation movement as well as new life reinsurers being founded involving Bermuda or other off shore locations.
The continued growth in reinsurance in 2000 and beyond is also associated with the capital required to finance Regulation XXX reserves on term products. Reinsurers that were parts of a larger direct operation found themselves in competition for capital with the core direct business with the result that many direct companies sold their reinsurance operations. The quest for capital also stimulated offshore and capital markets approaches to this funding need. In 2002, reinsurance new business peaked at an historic high and has subsequently declined as reinsurers have focused on cost of capital and return on equity.
In 2007, the face amount of recurring life reinsurance inforce amounted to $6.3 trillion with recurring new business of $683 billion. The market leaders in terms of recurring face amount inforce were Swiss Re, RGA Re. Company, Scottish Re (US), Transamerica Re and Munich American Re.
Today's times are filled with issues such as principles-based reserves, optional federal charter, credit for reinsurance, risk transfer, capital market transactions, securitisation, economic capital, embedded value, enterprise risk management and the like. It will be interesting to see what the future holds.
However, insurance and reinsurance help make modern society possible. Airliners and satellites have replaced the risks associated with early sailing vessels. Hurricanes, earthquakes and terrorism present risks beyond the great fires of the past. Life reinsurers help provide financial capacity as well as the atomisation of risk. Reinsurance will be of long and continuing importance not only to the insurance business itself but to risk management worldwide.
David Holland retired in January 2008 as Vice Chairman, President and CEO after a career spanning nearly 40 years at Munich American Re. He has served as President of the Society of Actuaries and Chairman of LOMA. He is currently on the boards of MARC (Munich American Reassurance Company), IA American Life Insurance Company (Industrial Alliance) and the Actuarial Foundation.
This is a summarised extract from his paper. The full paper can be found at www.soa.org/library/newsletters/reinsurance-section-news/2009/february/rsn-2009-iss65.pdf