Welcome to the 7th Annual International Briefing and Golf Outing

1. Welcome to the 7th AnnualInternational Briefing and Golf Outing

2. 2

3. Welcome RemarksEd BairdPresident, Prudential Group Insurance

4. The Challenges and Solutionsof Global Mobility Michael Angel, CRP SVP, Prudential Relocation

5. 5 Costs Associated with Global Mobility Long-term assignments can cost 3-4 times the employee�s annual salary Expatriate assignments can cost anywhere from 1.5 to 4 times what hiring a local employee would cost Largest costs associated are often housing and taxes (estimated up to 60% of some assignments) Double taxation Benefits prior to departure Long-term temporary housing or housing contribution

6. 6 So, Why International Assignments?Three Primary Reasons Companies Send Employees on International Assignments Global expansion: open/start-up new facility Skills/knowledge transfer: train local staff Global leadership development and succession: provide international experience to employees on fast track

7. 7 Reducing Global Mobility Costs? Maximizing tax planning strategies and assignment-related costs Exploring options related to shorter-term assignments Developing more stringent candidate assessment and election programs: candidate pools Focusing on assignment ROI and softer benefits that may help increase ROI Formal repatriation programs

8. 8 Practical Cost Savings Ensuring effective tax planning strategies are in place Gaining a keen understanding of actual assignment costs, etc. Evaluate areas of spending (add benefits that carry a small cost, but have large perceived value for the assignee) Engage organizations who core competency is managing mobility.

9. 9 Alternative Assignments Extended business travel Short-term assignments (three months to one year) Commuter assignments Localization of expatriates (paying closer attention and tracking assignment lengths to ensure there aren't any "lifetime" expatriates)

10. 10 Candidate Assessment and Selection Building a Candidate Pool Self-assessment and self-selection Different tools and resources (behavioral testing, interviews with employees, management input) Performance Management

11. 11 Assignment ROI How does an organization measure success? Quantifying the "unquantifiable" How do benefits affect the assignment�s outcome? What benefits are most important for YOUR organization? The key: soft benefits carry a small cost in comparison with the cost of a failed assignment

12. 12 Repatriation Programs Begin repatriation process before assignment begins Maintain contact with assignee Ensure periodic visits with home organization Gain an understanding of the assignment "investment" Repatriation is more than the physical return to the home country

13. Global Benefits Strategy & Compliance for Multinational Corporations Peter Godfrey, FIA, EA Principal, Global Retirement & Financial Management Hewitt Associates

14. 14 Agenda What is Global Benefits Strategy? Why have one? Elements of Global Strategy Plan Governance Taking it forward � next steps

15. What is Global Benefits Strategy?

16. 16 What is strategy? OED definition Management of an army�in a campaign, art of so moving or disposing troops or ships or aircraft as to impose upon the enemy the place and time and conditions for fighting preferred by oneself My definition A framework and set of principles and guidelines for designing, financing and delivering worldwide benefit programs in a way that best meets an organization�s human resources and financial objectives

17. 17 What is a Global Benefits Strategy? An articulation of: Guiding principles for designing and assessing the effectiveness of current programs; The desired degree of global consistency across programs; The mix of programs to be offered and the role of each; The organization�s competitive market for talent and its intended position in that market; and The roles and responsibilities of the various parties; e.g. Corporate HR, Regional HR, local HR, Corporate Finance, Region, Division, etc. More a statement of intent than a list of practices

18. Why have a Global Benefits Strategy?

19. 19 Why have a regional or global strategy? Better governance: documentation needs; better risk management; clarify decision-making processes Benefit design: consistent approach Business strategy: improved alignment of benefits Cost: improved financial management Temporary Assignments: minimizes barriers to cross-country transfers Employee engagement: increases as benefits better understood and targeted Data: improved data and knowledge Mergers and Acquisitions: improved risk assessment and consistent approach

20. 20 Plenty of external factors are driving benefit strategies

21. 21 Why Risk Management is a Big Deal Today Over the last several years� Populations are aging, and Retiree populations are growing Interest rates have decreased in many countries, and Asset returns have been lower and more volatile, leading to�. Heightened focus and increased legislation around global HR and benefits governance, leading to�.. Provider consolidation and global management of benefits Accounting has created more transparency Emerging trend to develop global healthcare strategy and manage healthcare at a global level

22. 22 Which has resulted in�.. Much larger and more volatile liabilities, Less asset coverage, Less control and more short-term focus, and Companies creating inventories and REACTING You are not in control in a reactionary mode Why Risk Management is a Big Deal Today

23. 23 Where are You on the Risk Spectrum?

24. 24 Benefits risk exposure Financial Funding/accounting volatility Investment Pension liabilities compared to company size Legislative/compliance Benefit design Under- or over-competitive / inappropriate benefits Communication Not delivering the right message, leading to.. Lack of employee awareness and under-appreciation of benefits Delivery Technology Administrative errors Fiduciary Reputational

25. 25 Differences Around the World Some country examples Occupational pensions vs. the State Tax relief Cultural approach to risk Investment markets Company structure and size

26. Elements of Global Benefits Strategy

27. 27 Pillars of Global Benefits Strategy Plan Design Plan Financing Employee Communication Plan Administration Taking Control � Decision-Making and Plan Governance

28. 28 Pillars of Strategy - Design Links with business goals/HR strategy Eligibility for Plan Participation Target benefit levels after full career Risk sharing with employees (e.g., DB/DC) Cost sharing Competitive positioning, e.g. median of comparator group

29. 29 Pillars of Strategy - Design Portability Inclusion of incentive/variable pay in pay definition Retirement Ages � early, normal and late Mode of payment (lump sum vs. annuity) Benefits for special groups (e.g., executives and expatriates) Retention issues (e.g., vesting) Employee choice (e.g. contributions and investments) Coordination with social/mandatory programs

30. 30 Pillars of Strategy - Financing Funding Accounting Investment Strategy Tax management Risk management/control Multinational pooling

31. 31 Pillars of Strategy � Employee Communication Training and Employee Development Messages should reinforce: The value of each benefit component How programs work How changes in employee behavior will influence the success of the business The skills, experience, and behaviors that are necessary to succeed

32. 32 Pillars of Strategy � Employee Communication Audience � who should receive messages Media � what media should be used to deliver messages Messages � should everyone receive similar messages or should they vary

33. 33 Pillars of Strategy - Administration In-house/outsourced Vendor selection/management Preferred vendors

34. 34 Pillars of Strategy � Decision-Making Governance process - local, central or shared Roles and responsibilities � governance structure Accountability - who makes decisions about what Approval process

35. Plan Governance

36. 36 Why do we need a global governance framework? Improve delivery of retirement benefits Improve risk management Improve quantity and quality of management information available Support M&A activity Improve central control and monitoring Improve central support to the businesses

37. 37 Governance Framework Governance process - local, central or shared Roles and responsibilities � governance structure Accountability - who makes decisions about what Approval process First step is discovery? �What�s out there?�

38. 38 Range of Approaches to Governance

39. 39 Roles and Responsibilities

40. 40 Roles and Responsibilities

41. Taking it forward � next steps

42. 42 Taking it forward � next steps Collect benefit plan data Establish multi-country, multi-functional task force Communicate objectives and key drivers Establish areas of consensus Resolve tough issues Evaluate alternatives and implications for programs Articulate strategy and seek approval

43. Europe, Asia, Latin AmericanBenefit Update Danny Saelen Chief Operating Officer, Insurope

44. 44 Agenda Europe The Netherlands : the new WIA Disability Act The UK : age discrimination Asia South Korea : retirement pensions China : Benefit overview Latin America Brazil : New legislation Mexico: some trends

45. The Netherlands The new WIA Disability act

46. 46 The New WIA Disability Act First two years: employers responsible for continued payment & re-integration efforts After two years: UWV determines degree of disability Two legal coverages

47. 47 Based on degree of disability WGA � resumption of work for partially disabled persons if above 35% and below 80% If above 80% but not permanently disabled IVA � income provision for long term fully disabled persons If above 80% and permanently disability

48. 48 WGA 1st phase wage-related benefit paid (capped, 70%) Limited in time 6 months to 5 years (dependent on age)

49. 49 WGA 2nd phase USAGE OF EARNINGSCAPACITY Ex. Wage � 50,000 and earningscapacity � 25,000 Disability degree 50%

50. 50 WGA 2nd phase (1) Person does not �work enough�(<50%) Wage(capped*) related benefit disability degree determines % capped by minimum wage* Ex. Disability degree 50% - wage � 50,000 35% of min(wage,�16,392*) ie � 5,737 �WGA Continuation�

51. 51 WGA 2nd phase (2) Person does �work enough� (>50%) wage(capped*) related benefit (ex. � 50,000) disability degree (ex. 50%) capped by WIA max wage* 70% of (43,848* � 25,000) ie � 13,194 �WGA Income supplement�

52. 52 IVA Wage-capped related benefit Ex. Wage � 50,000 70% of min(wage,�43,848) ie � 30,694

53. 53 Coverage A � WGA Gap Person does NOT �work enough� (<50%) Supplements the �WGA continuation� benefit Based on disability degree and WIA capped wag Ex. Disability degree 50%, wage �30,000 35% * (30,000 - min(wage,�16,392)) ie � 4,763

54. 54 Coverage B � WGA Additional Benefit Person does �work enough� (>50%) complements the �WGA Income Supplement� Up to 70% of WIA capped wage*disability degree (ie 70% * 50% * 43,848 = 15,347)

55. 55 Coverage C � WIA Top Hat Scheme Same coverage as old WAO Supplemental Insurance, but now for both IVA and WGA benefit IVA top hat scheme: complement state benefit based on below WIA cap : 10% of salary or above WIA cap : complement up to 70/75/80% of full salary

56. 56 Coverage C � WIA Top Hat Scheme WGA top hat scheme: Similar to IVA system but pay-out ratio dependent upon disability degree below WIA cap : 10% of WIA capped salary *pay-out ratio or above WIA cap : (70/75/80% of wage � 70% of WIA capped wage) * Payout ratio

57. The UK Age discrimination

58. 58 EMPLOYMENT EQUALITY (AGE) REGULATIONS 2006 October 1, 2006: new regulation outlawing all unjustified direct or indirect discrimination, harassment and victimisation on the grounds of age in employment in the UK

59. 59 EMPLOYMENT EQUALITY (AGE) REGULATIONS 2006 Main issue: retirement age: Government default age = 65 Unless employer can justify lower retirement age, employee allowed to work to age 65

60. 60 EMPLOYMENT EQUALITY (AGE) REGULATIONS 2006 When employer maintains NRA < 65: unless objective justifications of NRA, employee have the right work to age 65 as of 1 October 2006: Canada Life will allow normal cover (GLA, GIP, GCI) to be extended to age 65, (below free cover) if employee actively at work* Remark : For GIP expiry age maintained = no cover

61. 61 EMPLOYMENT EQUALITY (AGE) REGULATIONS 2006 When employer increases NRA to age 65 for all employees: Cover will be provided to employee wef date of change. Employees whose cover ceased at previous benefit cease age, but who continue active employment: automatically included (below free cover), if actively at work when benefit cease age is extended. Remark : Claims in payment will stop at old NRA

62. 62 EMPLOYMENT EQUALITY (AGE) REGULATIONS 2006 When employer maintains or extends to age 65, but allows employees to continue after that age: Continuation of insured benefit subject to evidence of insurability (= actively at work statement) Canada Life will allow cover up to maximum age 70. Remark : Claims in payment will stop at old NRA

63. South Korea New Retirement plans

64. 64 Employee Retirement Income Security Act (ERISA) will be effective as of December 1, 2005. All employers with more than 5 employees need to select at least one retirement program out of current Retirement Allowance System (RAS), Defined Benefit plan and Defined Contribution plan.

65. 65 Comparison

66. 66 Comparison

67. China Benefit update

68. 68 Life/AD&D

69. 69 Supplementary Medical Plan

70. 70 Occupational Pension Voluntary �second pillar� Co-contribution by employer and employee Trust-based system Transferable but not withdrawal compatible 5 key roles:Trustee, Administrator, Investment manager, Custodian, Intermediary

71. 71 Occupational Pension 37 financial institutes qualified for providing OP service No one-stop provider, our member company Ping An obtained the license of trustee and investment manager Local tax incentives on the employer contribution

72. 72 Policy based pension Simple & flexible DC & DB plan Conditional withdrawal right No tax incentive Offered only by insurance companies

73. 73 Market trend of supplementary pension Most buyers are domestic and local companies Only a few MNC subs in China have set up pension plans Many are interested and waiting�

74. Brazil New legislation

75. 75 Typical benefits Life AD TPD in case of illness or accident Dependants cover Medical

76. 76 Some key elements TPD reform ��functional disability�� ��working disability�� ��accidental�� Renewal Implicit versus explicit

77. 77 Some key elements (cont�d) Commission disclosure Contributory schemes Benefit changes Local dividend Claims turnaround (30 days max)

78. Mexico Some trends

79. 79 Trends Non-Par versus Par Market share 35% versus 65% Par option compatible to pooling Increase of use of network providers GNP now 80% Flex plans

80. Insurope Update Jim Wallace Chief Executive Officer, Insurope

81. 81 New network partners Bosnia & Herzegovina : Raffeisen Osiguranje Bulgaria : Vitosha Life Croatia : Uniqa Russia : Ergo / Russ

82. 82 Change of network partner Ireland : - Hibernian Life and Pensions

83. 83 Network partners Representation in 78 countries

84. 84 Network survey 2005 : Insurope Number of clients - maintained position as No 2 Pooled premiums - continued to increase market share

85. 85 Pricing Margins in small cases Competitive pressures on larger plans: - will not pool in certain circumstances

86. 86 Loss carry forward system Option : maximum loss carry forward period to add to Cancellation above a multiple of premium or USD amount

87. 87 �World Investment Prospects to 2010: Boom or Backlash� EIU / Columbia Program on International Investment

88. 88 FDI - drivers Global economic growth Better business environments Technological change Competition � search for competitively priced skills; low cost destinations

89. 89 FDI - constraints Security threats Fears of consequences of globalisation Protectionism ��Economic patriotism��

90. 90 Leading outward investors (Outward FDI stock 2005)

91. 91 Outward investment Multinationals from emerging markets Regional approach Cultural ties

92. 92 Inward FDI Stock 2005

93. 93 Expected ranking of inward FDI recipients 2006 to 2010

94. 94 Expected ranking of inward FDI recipients 2006 to 2010

95. 95 China General Assembly 2006 Insurope representative based within Ping An � Daniel Zhou

96. 96 China Significant market growth rate Competition Staff turnover

97. 97 China Issues on medical Cross-subsidy from other covers To pool or not to pool

98. 98 U.S.A. Continued growth in pooled business with Prudential Market pressure on employer paid group life premiums Lack of coordination of U.S. domestic and international benefits

100. 100

101. Afternoon Logistics Hugh GallagherNetwork Marketing DirectorInsurope

102. Afternoon Logistics