Solvency SurveillanceSolvency Surveillance

What is Working and What Is NotWhat is Working and What Is NotCasualty Loss Reserve SeminarCasualty Loss Reserve SeminarLas Vegas Nevada 9/14/2004Las Vegas Nevada 9/14/2004

Chap Cook MBA Actuaries, Inc.Chap Cook MBA Actuaries, Inc.

Solvency SurveillanceSolvency Surveillance

View From the Bottom -- Memoirs of a former CEO

What did not work in my own case: Replacing the former CEO (with me) Eliminating half the business New but funny capital (it was phony too) Cease and desist orders from little states Replacing me (with an experienced crook)

Solvency SurveillanceSolvency Surveillance

What was actually helpful in my own case: Capital Infusion from parent Very frank discussions with Auditor New Board of Directors:

Parent and Grandparent controller and CEO An Agent in each country An Insurance Economist A retired professional director with time available

Solvency SurveillanceSolvency Surveillance

What was actually helpful in my own case: Disciplined Reinsurer Support

They really can help if you ask them

Early planning with Home State RegulatorsFor instance, helped us get out of some small

markets more quickly

Good Tax AssistanceRecovered significant cash from IRS

Sold off Canadian Subsidiary – a distraction

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What was confusing or confounding or counterproductive in my own case: Premiums that went up when we withdrew

from business (tail coverage) Pools that kill you if you leave

Profitable cessions stop -- but lousy assumptions continue – it seems like forever

State Agency termination restrictionsDo these really protect agents?

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View From the Press Box -- Memoirs of a consultant (and witness)

What does not work in my experience: Suing everybody in sight

indiscriminately Accusing Management

If they didn’t do anything really stupid or illegal Retaining Management

If they are guilty of something

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View From the Press Box -- Memoirs of a consultant (and witness)

What does work in my experience: Early Intervention

RBC Company Action Level is the best idea ever!If and only if the state gets the plan, negotiates

on it, and monitors it -- and measures the effects Try to keep the good stuff -- “cease and desist” or

“no renewals” are excessively blunt instruments

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View From the Press Box -- Memoirs of a consultant (and witness)

What does work in my experience:Direct state assistance with downsizing

Agent replacement (especially MGA’s) Rate filings expedited Comfort and soothe the other states Don’t reduce premiums, reduce exposure!

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View From the Press Box -- Memoirs of a consultant (and witness)

What does work in my experience: Sell off the good parts – a win, win, win idea

Management must be serious Sell it all – people, files, office lease Regulators – help with a novation agreement Try a contingent price

Solvency SurveillanceSolvency Surveillance

View From the Bench -- Memoirs of a sometime Special Master, Mediator, and Second Opinion

What does work in my experience: Always get a second opinion!

We have seen sound companies almost seized Whatever you must do, do it quickly!

Seize, fix and release must be done within daysSome companies need to be stopped right nowYou can’t sell the good pieces after they cancel

Dead fish will never smell better