Tài liệu Bảo hiểm và sản phẩm bảo hiểm Insurance document

Academy of Finance INSURANCE FUNDAMENTALS In English Co- compiled by Dr Hoang Manh Cu MA Vo Thi Pha HA NOI, 2009 Table of Contents Table of Contents PREFACE .7 CHAPTER OVERVIEW OF INSURANCE 1.1 Risks and insurance .8 1.1.1 Concept of risk 1.1.2 Concept of Risk Management 12 1.1.3 Concept of Insurance 16 1.1.4 Insurance Contracts 19 1.2 Principles of insurance 22 1.2.1 Insurable interest .23 1.2.2 Utmost Good Faith 25 1.2.3 Principle of Indemnity .26 1.2.4 Subrogation .28 1.2.5 Contribution / Double insurance .30 1.2.6 Proximate cause 31 Foreseeability: It determines if the harm resulting from an action was reasonably able to be predicted 32 Direct Causation: The main thrust of direct causation is that there are no intervening causes between an act and the resulting harm An intervening cause has several requirements - it must: 32 ○ be independent of the original act, 32 ○ be a voluntary human act or an abnormal natural event, and 32 ○ occur at some time between the original act and the harm 32 1.3 Insurance market .33 1.3.1 The buyers of insurance 34 1.3.2 The intermediaries .34 1.3.3 The sellers 38 1.3.4 Other insurance related professions and bodies 43 Actuaries are essential to the insurance and reinsurance industry, either as staff employees or as consultants Insurance actuaries can be defined as qualified professionals concerned with the application of probability and statistical theory to problems of insurance, investment, financial management and demography 43 CHAPTER .45 GENERAL INSURANCE 45 2.1 Overview of general insurance 45 2.2 Commercial general insurance 46 2.2.1 Marine Insurance and Oil & Gas Insurance 46 2.2.2 Non - marine General Insurance .54 Reduction in turnover 58 Increased cost of working 58 2.2.2.3 Motor Vehicle Insurance 59 - Insurable risks 61 Commonly, insurable risks in the construction and erection insurances include: 61 Many exclusions exist under the construction/ erection insurance policies, commonly such as: .62 - Overview 64 - Types of liability insurance 65 As we have seen, the concept of liability insurance concerns a wide range of various types of liability However, in this section we focus on the types of policies that not yet discussed .65 Professional liability insurance protects professionals such as architectural corporation and medical practice against potential negligence claims made by their patients/clients Professional liability insurance may take on different names depending on the profession For instance, professional liability insurance in reference to the medical profession may be called malpractice insurance Notaries public may take out errors and omissions insurance (E&O) Other potential E&O policyholders include, for example, real estate brokers, Insurance agents, home inspectors, appraisers, lawyers and website developers .66 ▪ Public liability insurance 66 ▪ Product liability insurance 66 - Hull "All Risks" .67 - Spares insurance .67 - Hull War Risks 68 - Hull Total Loss Only Cover .69 This is similar to Hull All Risks cover given above but will respond only to total losses of aircraft, whether actual, constructive or arranged This is particularly given for old aircraft since the old aircraft are heavily depreciated and insured for low sums and premium on such low sums would result in low premium, which would be inadequate for the partial losses The ratio of partial losses to total losses in such old aircraft is distorted 69 - Liability Insurance 69 2.3 Personal general insurance .69 2.3.1 Personal accident insurance .70 2.3.2 Medical and health insurance 71 2.3.3 Worker compensation insurance 72 2.3.4 Consumer credit insurance 73 CHAPTER .75 LIFE INSURANCE 75 3.1 Overview .75 3.2 Term/Temporary Term Insurance 76 3.2.1 Concept 76 3.2.2 Annual renewable term 77 3.2.3 Level Term Life Insurance 78 3.3 Permanent life insurance 79 3.3.1 Concept 79 3.3.2 Whole life insurance 79 - Participating policy 81 - Indeterminate Premium 82 - Economic 82 3.3.2 Universal life insurance .83 Types of universal life insurance: 84 - Single Premium 84 - Flexible Premium .84 3.3.4 Variable universal life insurance .84 - Characteristics of variable life insurance 86 Premium Flexibility 86 Investment choices/ Investment options 87 - Risks of Variable Universal Life 87 3.4 Endowment Insurance and Pure endowment 88 3.4.1 Endowment Insurance .88 - Traditional With Profits Endowments 89 - Unit-linked endowment 89 - Full endowments 90 - Low cost endowment .90 - Traded endowments .90 3.4.2 Pure endowment 91 3.5 Income stream products 91 Annuities can be clarified also into follows: 92 Fixed and variable annuities 92 Guaranteed annuities 92 Joint annuities .93 Impaired life annuities 93 3.6 Group life insurance policies .94 Beside the basic covers that are listed above, life insurance companies always offer many Riders or Optional Benefits or Supplementary benefits to insurance buyers These are modifications to the insurance policy and change the basic policy to provide features desired by the policy owner Depending on the types of life insurance, the riders/optional/ supplementary benefits are diverse The following brings out the main point of some these benefits: 95 CHAPTER .96 REINSURANCE 96 4.1 Overview .96 4.1.1 The Concept 96 4.1.2 Functions of Reinsurance 97 - Risk transfer .97 - Income smoothing 97 - Reinsurer expertise 97 - Creating a manageable and profitable portfolio of insured risks .98 - Surplus relief and Managing cost of capital for an insurance company 99 4.2 Methods of reinsurance 100 4.2.1 Facultative Reinsurance 101 4.2.2 Treaty Reinsurance 102 4.2.3 Facultative/ Obligatory Treaty 104 4.3 Types of Reinsurance .105 4.3.1 Proportional Reinsurance 105 4.3.2 Non – Proportional Reinsurance .109 4.3.2.1 Excess of Loss reinsurance 109 Risk-attaching Basis 112 Loss-occurring Basis 112 Claims-made Basis 112 ▪ Paid Basis, such as: 15/12: Incurred in 15 month period / paid in 12 month contract period For example, Policy Period: 1/1/07 - 12/31/07; Incurred Dates: 10/1/06 to 12/31/07 -> Paid Dates: 1/1/07 to 12/31/07 113 4.4 Non - Traditional Reinsurance 113 4.4.1 The Concept .113 4.4.2 Types of Financial Reinsurance Contract 116 CHAPTER .120 FINANCE AND ACCOUNTING IN INSURANCE .120 5.1 Implementing the IASs/IFRS in the insurance industry .120 5.1.1 Overview 120 5.1.2 Financial statements of insurance companies in accordance with IAS/IFRS 129 5.1.2.2 Financial statements in accordance with the IAS / IFRS .133 ▪ Objective of financial statements 133 ▪ Underlying assumptions 133 ▪ Qualitative characteristics of financial statements 133 ▪ Elements of financial statements 133 ▪ Recognition of elements of financial statements 134 ▪ Measurement of the Elements of Financial Statements 134 ▪ Concepts of Capital and Capital Maintenance 135 ▪ Content of financial statements .135 5.2 Assessing Financial Strength of insurance companies 136 5.2.1 Financial strength ratings methodologies of rating agencies 136 5.2.2 Capital adequacy and solvency of insurance companies 141 5.2.3 Ratios used in assessing insurance company’s financial condition 144 5.2.4 Roles of Actuaries, independent Auditors, internal audit and internal control in the financial management 148 CHAPTER .152 LEGAL ASPECTS OF INSURANCE .152 6.1 Overview 152 6.2 Legal aspects of insurance contract 153 6.2.1 Concept of insurance contract 153 Generally, in comparison with others contracts, the insurance contracts have following characteristics : 154 6.2.2 Essentials of a Valid Insurance Contract 154 6.2.3 Content of an insurance contract .156 Generally, an insurance contract consists of: 156 6.2.4 Entering into contracts of insurance .157 Industry association rules and “best practice” codes 157 Law - Either common law, statutory law, or both .157 - Insurer’s legal obligations 157 An insurer will normally have obligations to provide the applicant with a copy of the proposed contract terms as well as a document which includes the following information if relevant: 158 Depending on local law and custom, an insurer may have additional obligations as follows: 159 Provide required disclosures and notices .159 Avoid misleading or deceptive conduct 159 Express documentation in plain language 159 Ensure that products sold are suitable for the applicant’s circumstances 159 Post-inception obligation 159 An insurer will normally have obligations to: .159 Interpret its contract terms with utmost good faith 159 Comply with the terms of its own contract 159 6.2.5 Cancellation of insurance contract 162 6.3 Insurance Regulation and supervision 164 6.3.1 Objectives of Insurance Regulation and supervision 164 It is important to recognise that any participant in the insurance market has taken the necessary actions to meet regulatory requirements 165 6.2.2 Prudent supervision of insurance company solvency 167 6.3.3 Globalisation of the regulatory framework .175 Appendix 184 Appendix 186 Appendix 194 PREFACE “Insurance Fundamentals” is a module of the training program for students of the Insurance Department of the Academy of Finance prepared to provide a fundamental knowledge of the insurance in English This textbook is a lecturer training framework designed to provide students with fundamental insurance and risk management knowledge The content of the textbook focuses on issues closely related and greatly impacted by international integration in the insurance markets, issues which have achieved basic unification and become international standards in insurance business The module aims: - to improve knowledge of insurance and risk management; - to provide knowledge of international insurance issues; - to provide the basic knowledge needed in practice of international insurance business The Academy endeavors to provide the most accurate and useful information possible Every attempt has been made to ensure that the information contained in the textbook is current at the time of printing of the text However, the information of this publication may be affected by changes in law or industry practice We would like to thank Mr Michael Abadie, Director of Risk Management Services, ADI Joint Stock Company, for sharing his experience and advice to complete this textbook This textbook is provided for training program of the AOF The writer and AOF are not engaged in other uses such as professional advice Written by Dr Hoang Manh Cu and Ma Vo Thi Pha; Published by Academy of Finance, Hanoi, 2009 CHAPTER OVERVIEW OF INSURANCE 1.1 Risks and insurance 1.1.1 Concept of risk - Definition of risk In general, risk is defined as: “The probability of something happening that will have an adverse impact upon people, plant, equipment, financials, property or the environment and the severity of the impact.” Basically, the concept of risk has three elements: - The perception that something could happen - The likelihood of something happening - The consequences if it happens Risk implies some form of uncertainty about an outcome in a given situation and the outcome is not favorable In the insurance area, as a basic insurance term, risk may be definned as “the chance of something happening that may have an unfavorable financial impact upon subject matter of insurance” However, the term “Risk” is also used in various senses, notably: - The subject matter of insurance; - Uncertainty as to the outcome of an event; - Probability of loss; - The peril insured against; - Danger; - A particular unfavorable outcome such as fire damage or a broken arm The term “risk” can be used as a noun as in the above examples or as a verb in which the usual meaning is to “take a chance” on something For example a mountain climber risks a broken arm and even risks death if he were to fall - Types of risks Risk takes many forms, normally being classified into two main types being: ▪ Speculative (or Dynamic) Risk and Pure (or Static) Risk Speculative (dynamic) risk is a situation in which either gain or loss is possible Examples of speculative risks are betting on a horse race, investing in stocks/, bonds and real estate In these situations, both gains and losses are possible In the daily conduct of its affairs, every business establishment faces decisions that entail elements of risk The decision to venture into a new market, borrow additional capital, etc., carry risks inherent to the business The outcome of such speculative risk is either beneficial (profitable) or loss In contrast to speculative risk, a pure risks involves possibility of loss only or at best a “no gain” situation The only outcome of pure risks are adverse (in a loss situation) or neutral (with no loss), never beneficial A pure risk does not include the possibility of gain Examples of pure risks are premature death, occupational disability, catastrophic medical expenses, damage to property and the loss ability to generate revenue from the asset which has been lost or damaged It is important to distinguish between pure and speculative risks for three reasons: - First, through the use of general insurance policies, insurance companies generally insure only pure risks Speculative risks are not considered insurable, with some exceptions - Second, the “law of large numbers” can be applied more easily to pure risks than to speculative risks The law of large numbers is important in insurance because it enables insurers to predict loss figures in advance - Finally, society as a whole benefits from speculative risk even though a losses sometimes occurs, but is only harmed by pure risk This is to say, society would not benefit when pure risks such as earthquakes occur but benefits from speculative risks taken by entrepreneurs since jobs and wealth are created by them in the process ▪ Particular risk and Fundamental risk Particular risks are risks that affect only a single or relatively few individuals, not the entire communnity Examples of particular risks are burglary, theft, auto accident and dwelling fires In contrast to particular risks, fundamental risks affect the entire economy or large numbers of people or groups within the community Examples of fundamental risks are high inflation, unemployment, war and natural disasters such as earthquakes, hurricanes and floods, etc The distinction between a fundamental and a particular risk is important, since government assistance may be necessary in order to insure fundamental risks Social insurance, government insurance programs, and government guarantees and subsidies are used to meet certain fundamental risks which are not insurable by private insurance companies ▪ Financial risk and Non - financial risk A financial risk is the situation in which the outcome must be capable of measurement in monetary terms Example of financial risk: damage to the 10 (Accumulated Deficit) Treasury Stock - Common -8,450.0 Other Equity, Total -6,328.0 Total Equity 52,710.0 Total Liabilities & -6,685.0 3,731.0 95,801.0 -1,897.0 -2,197.0 9,110.0 6,967.0 101,677.0 86,317.0 -2,211.0 9,444.0 79,673.0 860,418.0 1,048,361 979,410.0 853,051.0 801,145.0 Shareholders’ Equity Total Common Shares 2,689.67 2,529.58 2,601.2 2,596.65 2,596.42 Outstanding Total Preferred Shares 4.0 0.0 0.0 0.0 0.0 Outstanding Income Statement Financial data in U.S Dollars Values in Millions (Except for per share items) Period End Date Period Length 2008 2007 2006 2005 2004 12/31/200812/31/200712/31/200612/31/200512/31/2004 12 Months 12 Months 12 Months 12 Months 12 Months Total Premiums Earned Net Investment Income Realized Gains (Losses) Other Revenue, Total Total Revenue 83,505.0 12,222.0 -84,086.0 -537.0 11,104.0 79,302.0 28,619.0 -15,064.0 17,207.0 110,064.0 74,213.0 26,070.0 106.0 12,998.0 113,387.0 70,310.0 22,584.0 341.0 15,546.0 108,781.0 66,625.0 18,465.0 44.0 12,532.0 97,666.0 Losses, Benefits, and 63,299.0 66,115.0 60,287.0 64,100.0 58,212.0 Adjustments, Total Amort Of Policy Acquisition 27,565.0 20,396.0 19,413.0 29,468.0 24,609.0 188 Costs Gross Profit -79,760.0 23,553.0 33,687.0 15,213.0 14,845.0 Selling/General/Administrative0.0 0.0 0.0 0.0 0.0 Expenses, Total Depreciation/Amortization 0.0 Interest Expense (Income), Net 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Operating Unusual Expense (Income) Other Operating Expenses, 758.0 11,236.0 0.0 9,859.0 0.0 8,343.0 0.0 0.0 0.0 0.0 Total Operating Income -108,761.0 8,943.0 21,687.0 15,213.0 14,845.0 0.0 0.0 0.0 Non-Operating Gain (Loss) on Sale of Assets 0.0 0.0 Other, Net 0.0 0.0 Income Before Tax -108,761.0 8,943.0 0.0 0.0 21,687.0 0.0 0.0 15,213.0 0.0 0.0 14,845.0 Income Tax – Total Income After Tax -8,374.0 1,455.0 -100,387.0 7,488.0 6,537.0 15,150.0 4,258.0 10,955.0 4,407.0 10,438.0 Minority Interest Equity In Affiliates U.S GAAP Adjustment Net Income Before Extra 1,098.0 0.0 0.0 -99,289.0 -1,136.0 0.0 0.0 14,014.0 -478.0 0.0 0.0 10,477.0 -455.0 0.0 0.0 9,983.0 Interest Income (Expense), Net 0.0 0.0 -1,288.0 0.0 0.0 6,200.0 Items Total Extraordinary Items Accounting Change Net Income Total Adjustments to Net Income Preferred Dividends 0.0 0.0 0.0 0.0 -99,289.0 6,200.0 34.0 0.0 -144.0 34.0 0.0 -144.0 14,048.0 10,477.0 9,839.0 -400.0 0.0 -400.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 189 General Partners' 0.0 0.0 0.0 0.0 0.0 Distributions Basic Weighted Average 2,634.0 2,585.0 2,608.0 2,597.0 2,587.0 Shares Basic EPS Excluding -37.85 2.4 5.37 4.03 3.86 Extraordinary Items Basic EPS Including -37.85 2.4 5.39 4.03 3.8 Diluted Weighted Average 2,634.0 2,585.0 2,623.0 2,627.0 2,637.0 Shares Diluted EPS Excluding -37.85 2.4 5.35 3.99 3.84 Extrordinary Items Diluted EPS Including -37.85 2.4 5.36 3.99 3.79 0.42 0.77 0.65 0.63 0.29 Common Stock Primary Issue Gross Dividends - Common 1,105.0 1,964.0 1,690.0 1,615.0 755.0 Stock Interest Expense, 17,007.0 4,751.0 3,657.0 5,700.0 4,400.0 Supplemental Depreciation, Supplemental Normalized Income Before 3,523.0 3,913.0 -52,489.0 13,643.0 3,564.0 22,631.0 2,200.0 15,213.0 2,035.0 14,845.0 Tax Normalized Income After -63,810.0 11,423.0 15,809.0 10,955.0 10,438.0 Taxes Normalized Income Available -63,112.0 10,135.0 14,673.0 10,477.0 9,983.0 5.63 5.6 4.03 3.99 3.86 3.84 Extraordinary Items Extraordinary Items Dividends per Share - to Common Basic Normalized EPS Diluted Normalized EPS -23.96 -23.96 3.92 3.92 190 Cash Flow Financial data in U.S Dollars Values in Millions (Except for per share items) Period End Date Period Length 2008 2007 2006 2005 2004 12/31/200812/31/200712/31/200612/31/200512/31/2004 12 Months 12 Months 12 Months 12 Months 12 Months Net Income/Starting -99,289.0 6,200.0 14,048.0 10,477.0 9,839.0 Line Depreciation/Depletion 3,523.0 3,913.0 3,564.0 2,200.0 2,035.0 Amortization 0.0 0.0 0.0 0.0 0.0 Non-Cash Items 140,760.0 22,338.0 9,346.0 6,842.0 9,691.0 Unusual Items 110,287.014,850.0 1,263.0 -3,072.0 264.0 Equity in Net Earnings (Loss) 5,410.0 -4,760.0 -3,990.0 -1,421.0 -1,279.0 Other Non-Cash Items 25,063.0 12,248.0 12,073.0 11,335.0 10,706.0 Changes in Working -44,239.0 2,720.0 -20,706.0 3,894.0 7,849.0 Capital Other Assets Taxes Payable Other Liabilities Other Assets & Liabilities, 141.0 -8,992.0 -1.0 -9,447.0 1,538.0 -3,709.0 989.0 5,975.0 Net Investment Securities, - -2,328.0 - Gains/Losses Deferred Policy Acquisition 23,117.0 - Costs Insurance Reserves Cash from Operating -1,908.0 2,003.0 408.0 -101.0 -3,763.0 1,543.0 140.0 -1,981.0 486.0 1,356.0 -16.0 1,972.0 -4,636.0 -5,433.0 18,552.0 - - 14,610.0 15,987.0 15,486.0 14,454.0 13,334.0 11,787.0 16,242.0 12,930.0 27,045.0 22,818.0 755.0 35,171.0 6,252.0 23,413.0 29,414.0 Activities Capital Expenditures -4,817.0 -5,642.0 -7,106.0 -7,134.0 -5,503.0 191 Purchase of Fixed Assets -4,817.0 -5,642.0 -7,106.0 -7,134.0 -5,503.0 Other Investing Cash 52,301.0 -62,192.0 -59,808.0 -54,325.0 -87,093.0 Flow Items, Total Sale of Fixed Assets Sale/Maturity of 430.0 303.0 697.0 573.0 1,219.0 163,940 142,231 125,512 151,783 128,097.0 Investment Investment, Net Purchase of Investments 0 0 -3,032.0 -23,484.0 -10,620.0 1,801.0 - -2,542.0 - 169,974 177,071 176,521 207,322 194,866.0 0 0 Other Investing Cash Flow 60,937.0 -4,171.0 1,124.0 -1,160.0 -19,001.0 Cash from Investing 47,484.0 -67,834.0 -66,914.0 -61,459.0 -92,596.0 Activities Financing Cash Flow -101,532.0 11,864.0 Items Other Financing Cash Flow - 24,237.0 24,755.0 63,798.0 11,864.0 24,237.0 24,755.0 63,798.0 101,532 Total Cash Dividends -1,628.0 -1,881.0 -1,638.0 -1,421.0 -730.0 Paid Issuance (Retirement) of 47,355.0 190.0 143.0 -94.0 -925.0 Stock, Net Issuance (Retirement) of 13,886.0 23,134.0 37,499.0 14,857.0 2,074.0 Debt, Net Cash from Financing -41,919.0 33,307.0 60,241.0 38,097.0 64,217.0 Activities Foreign Exchange 38.0 50.0 114.0 -163.0 52.0 Effects Net Change in Cash 6,358.0 694.0 -307.0 -112.0 1,087.0 Net Cash - Beginning 2,284.0 1,590.0 1,897.0 2,009.0 922.0 192 Balance Net Cash - Ending 8,642.0 Balance Cash Taxes Paid 617.0 Data provied by Thomson Reuters 2,284.0 1,590.0 1,897.0 2,009.0 5,163.0 4,693.0 2,593.0 3,060.0 193 Appendix Prudential Financial, Inc: Financial statements Balance Sheet In Millions of USD As of As of As of As of (except for per share 2008-12-31 2007-12-31 2006-12-31 2005-12-31 items) Cash & Equivalents Short Term Investments Cash and Short Term 15,028.00 - 11,060.00 - 8,589.00 - 7,799.00 - - - - - - - - - - - - - - - - - - - - - - Investments Accounts Receivable Trade, Net Receivables - Other Total Receivables, Net Total Inventory Prepaid Expenses Other Current Assets, Total Total Current Assets Property/Plant/Equipment, Total - Gross Goodwill, Net Intangibles, Net Long Term Investments 236,449.00 Other Long Term Assets, 1,106.00 Total Total Assets 445,011.00 Accounts Payable Accrued Expenses Notes Payable/Short Term 10,134.00 Debt Current Port of LT 421.00 Debt/Capital Leases Other Current liabilities, 452.00 238,320.00 230,383.00 217,442.00 0.00 - - 485,814.00 454,266.00 413,374.00 13,912.00 12,093.00 10,374.00 1,745.00 443.00 740.00 3,553.00 3,108.00 2,214.00 194 Total Total Current Liabilities Long Term Debt Capital Lease Obligations Total Long Term Debt Total Debt Deferred Income Tax Minority Interest Other Liabilities, Total Total Liabilities Redeemable Preferred Stock, Total Preferred Stock – Non Redeemable, Net Common Stock, Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock Common Other Equity, Total Total Equity Total Liabilities & Shareholders' Equity Total Common Shares Outstanding 20,290.00 20,290.00 30,845.00 23,733.00 431,589.00 14,101.00 14,101.00 29,758.00 26,291.00 462,357.00 11,423.00 11,423.00 23,959.00 26,302.00 431,374.00 8,270.00 8,270.00 19,384.00 22,737.00 390,611.00 - - - - - - - - 6.00 6.00 6.00 6.00 21,912.00 20,856.00 20,666.00 20,501.00 10,502.00 11,841.00 8,844.00 5,947.00 -11,655.00 -9,693.00 -7,143.00 -4,925.00 -7,343.00 13,422.00 519.00 22,892.00 1,234.00 22,763.00 447.00 23,457.00 445,011.00 485,814.00 454,266.00 413,374.00 423.32 449.37 473.11 499.49 195 Income statement In Millions of USD (except for per share items) Revenue Other Revenue, Total Total Revenue Cost of Revenue, Total Gross Profit Selling/General/Admin 12 months 12 months 12 months 12 months ending ending ending ending 2008-12-31 2007-12-31 2006-12-31 2005-12-31 29,275.00 34,401.00 32,268.00 31,347.00 - 11,527.00 Expenses, Total Research & Development Depreciation/Amortization Interest Expense(Income) Net Operating Unusual Expense (Income) Other Operating Expenses, Total Total Operating Expense 30,393.00 Operating Income -1,118.00 Interest Income(Expense), Net Non-Operating Gain (Loss) on Sale of Assets Other, Net Income Before Tax -1,118.00 Income After Tax -657.00 Minority Interest Equity In Affiliates -447.00 Net Income Before Extra -1,104.00 Items Accounting Change Discontinued Operations Extraordinary Item Net Income -1,073.00 Preferred Dividends - 11,744.00 10,674.00 10,491.00 - - - - - - - - - - - - 29,715.00 27,874.00 27,073.00 4,686.00 4,394.00 4,274.00 - - - - - - 4,686.00 3,441.00 246.00 4,394.00 3,149.00 208.00 4,274.00 3,471.00 142.00 3,687.00 3,357.00 3,613.00 3,704.00 - 3,428.00 - 3,540.00 - 196 Income Available to -1,072.00 3,550.00 3,141.00 3,374.00 -1,041.00 3,567.00 3,212.00 3,301.00 - - - - - - - - - - - - 0.00 0.00 0.00 0.00 429.70 468.30 494.00 520.90 -2.49 7.58 6.36 6.48 - - - - 0.58 1.15 0.95 0.78 - - - - - - - - - - - - Based Comp Expense Depreciation, Supplemental Total Special Items Normalized Income Before Taxes Effect of Special Items on - - - - - - - - - - - - - Common Excl Extra Items Income Available to Common Incl Extra Items Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding Extraordinary Items Diluted EPS Including Extraordinary Items Dividends per Share Common Stock Primary Issue Gross Dividends - Common Stock Net Income after Stock Based Comp Expense Basic EPS after Stock Based Comp Expense Diluted EPS after Stock 197 Income Taxes Income Taxes Ex Impact of Special Items Normalized Income After Taxes Normalized Income Avail to Common Basic Normalized EPS Diluted Normalized EPS - - - - - - - - - - - - -2.49 7.58 6.36 6.48 198 Cash Flow In Millions of USD 12 months 12 months 12 months 12 months (except for per share ending 2008-ending items) Net Income/Starting Line Depreciation/Depletion Amortization Deferred Taxes Non-Cash Items Changes in Working 12-31 -1,073.00 656.00 663.00 2007-12-31 2006-12-31 3,704.00 3,428.00 272.00 350.00 -915.00 -726.00 2005-12-31 3,540.00 501.00 -852.00 10,592.00 2,905.00 1,323.00 843.00 10,838.00 5,966.00 4,375.00 4,032.00 - - - - Capital Cash from Operating Activities Capital Expenditures Other Investing Cash Flow Items, Total Cash from Investing Activities Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock, Net Issuance (Retirement) of Debt, Net Cash from Financing Activities Foreign Exchange Effects Net Change in Cash Cash Interest Paid, Supplemental ending ending -10,780.00 -5,004.00 -10,147.00 -11,273.00 -10,780.00 -5,004.00 -10,147.00 -11,273.00 5,089.00 -806.00 4,338.00 1,762.00 -317.00 -533.00 -440.00 -394.00 -2,056.00 -2,779.00 -2,346.00 -1,926.00 1,097.00 5,657.00 4,970.00 7,706.00 3,813.00 1,539.00 6,522.00 7,148.00 97.00 -30.00 40.00 -180.00 3,968.00 2,471.00 790.00 -273.00 1,468.00 1,602.00 1,230.00 794.00 199 Cash Taxes Paid, Supplemental 508.00 653.00 -384.00 509.00 Data provided by Thomson Reuters 200 201 References “IAIS Revised insurance core principles, Approved in Singapore on October 2003”, http://www.iaisweb.org William H beaver; George Parker “ Risk Management: Problems & Solution”, Stanford University, International Editions 1995 “Comercial general Insurance” Written and Published by Singapore College of Insurance Limited, first Edition – 2002 “Personal general Insurance” Written and Published by Singapore College of Insurance Limited, first Edition – 2002 Hurrient E Jones, Demi L Long “Principles of Insurance: Life, Health, and Annuities”, LOMA, 1996 “Law on Insurance Business and Contract of Insurance” Australian and New Zealand Institute of Insurance and Finance, 2007 “Reinsurance”, The Chartered Insurance Institute, London 1999 “Accouting and Finance for Managers in Insurance” Published by The Malaysian Insurance Institute – Copyright © The Chartered Insurance Institute, London 1991 “EC Insurance Solvency Study” Designed and produced by KPMG’s UK, Design Services, May 2002 10 “Sigma, No 1/2003”, Economic Reseach & Consulting, Swiss Reinsurance Company / Zurich, Switzerland - 202 ... Liability Insurance 69 2.3 Personal general insurance .69 2.3.1 Personal accident insurance .70 2.3.2 Medical and health insurance 71 2.3.3 Worker compensation insurance. .. general insurance 45 2.2 Commercial general insurance 46 2.2.1 Marine Insurance and Oil & Gas Insurance 46 2.2.2 Non - marine General Insurance .54 Reduction in turnover... OVERVIEW OF INSURANCE 1.1 Risks and insurance .8 1.1.1 Concept of risk 1.1.2 Concept of Risk Management 12 1.1.3 Concept of Insurance 16 1.1.4 Insurance