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JOINT REGIONAL SEMINAR 2011 ECONOMIC CAPITAL

PRESENTED BY: Donald J. Segal

July 2011

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Welcome!

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Global Issues Economic Capital International Financial Reporting Standards (IFRS) Solvency II and its implications Longevity Mortality improvement trends Pension plan valuation

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Economic capital Regulatory capital Rating agency capital Economic capital

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Economic vs. Rating Agency Capital Economic capital – Based on calculations specific to a company’s risks Regulatory or rating agency capital – Based on industry averages which may or may not be suitable to any particular company

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Considerations for Defining Economic Capital What is the time horizon?

Which risks should be included?

What level of confidence should be targeted?

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