My Ceding Company's Data is Not
Credible, So NOW What Do I Do?
Directors and Officers Liability
Linda Bjork, FCAS, MAAA
American Re-Insurance Company
Data Sources
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National Economic Research Associates
Huron Consulting Group
Towers Perrin - Tillinghast
Stanford Law School
Insurance Services Office (ISO)
Reinsurance submission data
Reinsurance claims and reserving data
National Economic Research Associates
“Recent Trends in Shareholder Class Action
Litigation: Bear Market Cases Bring Big
Settlements” (2005)
 Information Available
 Review of trends in size of settlements
 Review of federal filings
 Discussion on relationship of size of settlement to
amount of investor loss
 Commentary related to current events
 Uses: Trend
 Limitations: High-level information
Huron Consulting Group
“2004 Annual Review of Financial
Reporting Matters” (2005)
Information Available
 “Huron’s report analyzes the leading causes
of and trend in financial restatements filed
in amended filings with the U.S. Securities
and Exchange Commission (SEC) for the
year ending December 31, 2004.”
Uses: Trend
Limitations: High-level information
Towers Perrin - Tillinghast
“2004 D&O Liability Survey Executive
Summary: Understanding the
Unexpected”
 Information Available
 Results of D&O liability survey of over 2400 U.S.
organizations
 Premium cost index
 Coverage limits by asset size
 Change in deductibles and retentions
 Claimant distribution by ownership
 Uses: Trend
 Limitations: High-level information
Towers Perrin - Tillinghast
• “2004 D&O Liability Survey U.S. and
Canadian Results”
 Cost: $700 ($350 for participants)
 Data Available
 Expert Roundtable Section
 Survey using repeat participants – 1,347 U.S.
organizations that responded to 2003 and 2004
survey
• “Peer Group Report”
 Cost: $575 ($385 for participants)
Stanford Law School
Securities Class Action Clearinghouse
• Data Available
 Clearinghouse Research
 “Securities Class Action Filings 2004: A Year in Review”: Trends in
number of claims and size of settlement
 “Post-Reform Act Securities Settlements: Updated Through
December 2004”: Contains analysis on settlements filed after the
passage of the Private Securities Litigation Reform Act
 Indices of securities class action filings
 Database of federal class action securities fraud litigation
 Filings
 Settlements
 Decisions
Stanford Law School
Securities Class Action Clearinghouse - continued
• Uses
 Trend
 Size of loss distribution
• Limitations
 Time required to retrieve data
 Filings limited to filings in the Northern District of California
since the Private Securities Litigation Reform Act of 1995
became effective
©Copyright © 2001 Stanford Law School. Reprinted with permission.
Insurance Services Office
Directors and Officers Database
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Data Available
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Loss experience of over 9,000 claims
Represents approximately 15% of industry
Splits profit and non-profit classes
Triangles up to 183 months
 Paid/incurred loss and allocated loss adjustment expense (ALAE)
 Occurrence counts
 Size of loss distributions
 Five years of data (accident or report)
 Limited loss data for the 100k, 250k, 500k, 750k, 1MM, and total limits policy
limits
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Cost: $20,000
Uses
 Development factors
 Size of loss distributions
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Limitations
 New data: unknown issues
Reinsurance Submission Data
• Data Available (many formats)
 Primary rate and price changes
 Historical loss data
 Aggregate loss
 Large loss
• Uses
 Development factors
 Historical price and rate changes
 Size of loss distributions
• Limitations
 Quality of data
 Time and resources needed to collect data
Reinsurance Claims and Reserving Data
• Data available
 Historical individual losses
• Uses
 Development factors
 Comparisons to size of loss distributions
 Conditional average severity to layer
 Probability of a loss exhausting the layer limit given
that it has penetrated into the layer
• Limitations
 Reinsurance reserving system
 Cost to extract and manipulate data
Questions?
Data Source - Specifics
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National Economic Research Associates
 www.nera.com
 Publications section
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Huron Consulting Group
 www.huronconsultinggroup.com
 Resource Library
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Towers Perrin – Tillinghast
 www.towersperrin.com/tillinghast
 Publications
Stanford Law School Securities Class Action Clearinghouse in
Cooperation with Cornerstone Research
 http://securities.stanford.edu
Additional Data Sources
• Institutional Shareholder Services:
www.issproxy.com
• U.S. Equal Employment Opportunity
Commission: www.eeoc.gov
• U.S Securities and Exchange
Commission: www.sec.gov
Thank you for your Interest.
This material is being provided to you for information only, and is not permitted to
be further distributed without the express written permission of American Re. This
material is not intended to be legal, underwriting, financial or any other type of
professional advice.
© Copyright 2005 American Re-Insurance Company. All rights reserved. The
American Re names and logo are registered marks owned by American ReInsurance Company.