Presented by: Sahib Singh Khosla AASK
18 October 2016
Radisson Blu, Nairobi
$AUD2 billion in
premium - Reputation
in the market for
aggressive pricing to
win business
2000
Late 1990
Expanded into
California workers
compensation with
limited due
diligence
2
Purchase of FAI
1999
Bought back Care
America after selling it
in 1994 on favorable
terms
1996
Early 1990
Listed as a public
company
Late 1993
Established a branch
in the UK
1960
General Insurance
Company launched
One of the largest
public listed general
insurers in Australia
specializing in volatile
liability classes
4
The beginning of the
end!
6
7
Risks not identified and
managed properly.
Unpleasant information hidden,
filtered or sanitized
Lack of accountability among
senior management and the
Board of Directors
Actuarial reports or summaries
of them never tabled at meetings
of the board or the board audit
committee
Lack of skeptical
questioning and analysis
when and where it mattered
Little analysis at the board
level of the future strategy
of the company
Board’s independence
compromised by the
influence of management in
relation to its deliberations
Compliance officers,
auditors and regulators
failed to see, remedy and
report what should have
been obvious
Financial reinsurance was used
to ‘paper over cracks’ and the
side letters used to negate risk
transfer
Reporting structure not effective
- lack of quality management
information
Values
Behaviors
Outputs
Values
UK
Regulatory
Regime
Behaviors
Outputs
US
Regulatory
Regime
• Most studies focused on outputs
Values
• Implies static ‘adopt best practice’ then stop - one off event focus
• Not long-term
Behaviors
Outputs
• Miss governance as risk management & operational value
generation
• Need ongoing, evolving, flexible processes
• There is nothing wrong in ticking boxes, but…
• Outputs are necessary but not a sufficient condition for achieving effective risk management
UK
KENYA
Formal structures
alone will never be
sufficient
Good governance
depends on culture
Good risk managers
will lead by example
Actuaries may have
some things to learn
from here