A conscious uncoupling …

1. A conscious uncoupling … Should your model go its separate ways?

2. The disclaimers This is certainly not a Solvency II presentation. It needs to be tempered, where required, by the need to fulfil regulatory requirements. Do not follow me blindly.

3. Goal of this presentation To have you think more broadly than the “Capital Model” (and to have no more bullet points)

4. Uses of a capital business model Portfolio optimisation Reinsurance optimisation Capital calculation Business planning Risk appetites Scenario testing Investment optimisation Pricing M&A assessments

5. Use quadrants Run often Secret sauce Embedded Simple Complex Opportunity cost Cumbersome and dusty Run seldom

6. Use scale Run often Secret sauce Embedded Pricing Investment optimisation Business planning Reinsurance optimisation Risk appetites Portfolio optimisation Scenario testing Simple Complex M&A assessments Capital calculation Opportunity cost Dusty Run seldom

7. Reporting scale Implications based Results based Risk appetites Portfolio optimisation Reinsurance optimisation Scenario testing Capital calculation Business planning Investment optimisation Pricing M&A assessments

8. Maturity scale Reinsurance optimisation

9. Maturity scale Risk appetites Portfolio optimisation Reinsurance optimisation Scenario testing Business planning Investment optimisation Pricing M&A assessments Capital calculation

10. Implications of “use test” in Solvency II Capital calculation Solvency II internal model Capital calculation Pricing M&A assessments Pricing M&A assessments Business planning Reinsurance optimisation Business planning Reinsurance optimisation Scenario testing Investment optimisation Scenario testing Investment optimisation Risk appetites Portfolio optimisation Risk appetites Portfolio optimisation

11. An alternative (I): Risk components M&A assessments Pricing Business planning Scenario testing Capital calculation Investment optimisation Risk appetites Reinsurance optimisation Portfolio optimisation

12. An alternative (II): Risk principles M&A assessments Business planning Pricing Capital calculation Well defined, comprehensive, detailed set of risk principles dictating how risk within the business is quantified. Unified technology for assessing risk Scenario testing Investment optimisation Risk appetites Reinsurance optimisation Portfolio optimisation

13. Competitive advantage • Build a capital model consistent with the market template, use it for all decisions • Find material hidden risks, dependencies or feedback loops that others haven’t • Run your model in a tighter, more robust environment where you can get results to where they are needed faster

14. Competitive advantage The 95% The winner