Regis Mutual Management Ltd Presentation to Dubrovnik Conference March 2009.

Transcription

1 Regis Mutual Management Ltd Presentation to Dubrovnik Conference March 2009.

2 A Mutual for developing markets? What is a Mutual? A Mutual for developing markets Why mutualise? Structures used Financial Structure Who are we? How we develop a concept The Future

3 What is a Mutual? Group with commonality of risk Not necessarily identical risk Group pools together all or some of the risk Acts as a shock absorber Insurer owned and controlled by the members not outside shareholders Entirely member focussed

4 A Mutual for developing markets? No essential difference in Structure of Mutual May start cautiously depending on risk Some sense in members all in same boat

5 Characteristics of good Mutuals Selective Cover bad luck not bad husbandry Good spread of business Different partnership with Insurance Industry Mutual retains expected risk Transfers unexpected risk Systemic risk thought through Risk management embedded

6 Why form or join a Mutual? Particular group out of sync with insurance market Cover required not available Premiums unrelated to claims experience Group requires stability of premiums Achieving results as a group that not available individually Plus or minus Or at high cost No incentive Avoid cyclical market Collective

7 Why form or join a Mutual? (cont d) Cover as wide as is prudent Costs close to cost price as is possible Premiums related to actual claims experience Control rests with members Superior data Proactive risk management Superior claims handling and service Not minimum necessary Structural efficiency No cross-subsidisation subsidisation An elected board And dissemination Incentive Membership control

8 Structures Usually has members not shareholders Three types of Mutual possible: 1) Mutual Insurance Company 2) Discretionary Mutual 3) Hybrid

9 Insurance Company Mutual Regulation similar to Insurance Company in most onshore jurisdictions Similar capitalisation requirements of a conventional insurer unless offshore. Some discount given if recourse to members under Constitution Usually onerous reporting regime

10 Discretionary Mutual Discretionary Mutual not regulated Claims paid at discretion of Board No regulatory Capital No reporting to Regulator Not recognised in some jurisdictions

11 Hybrid Can be best of both worlds Mutual retention discretionary Excess policy sits above Can produce efficient results

12 Domicile Onshore or Offshore Most common offshore domiciles Bermuda, Channel Islands, Isle of Man etc Best where mutuals have special status and Doctrine of mutuality applies

13 Financial Structure Balance between risk retained and risk transferred Mutual aims to retained all expected losses Reinsurers unexpected losses Ideally systemic losses spread through wide geographical spread Ultimately cover finite in meltdown or recourse to additional premiums Possible role for government Money in is never lost to industry

14 Financial Structure Excess Insurance or reinsurance Mutual Retention Aggregate Cover Members Deductibles

15 Who are we? Independent Managers RMML manages Mutuals across a range of Industries RMML is not a Broker not an Insurer Civil Servants of the Industry

16 Mutual process Identify potential membership Critical mass? Risk sharing? Data gathering and analysis Validation Feasibility Acceptance Still critical mass? Implementation Migration strategy Start Industry Group Premium Volume Explicit C p in / C p out ** ** Same Prospectus Members Premium Volume Military Precision Forces of Darkness Go

17 Future in developing markets Growing interest in mutuality worldwide Issues are always selectivity and critical mass Most mutuals enjoy excellent relationship with their insurer/reinsurance partners - Or can develop them once confidence achieved Aquaculture difficult area Ideal for mutuality Encourage further exploration

18 Any Questions? Paul Koronka