ERM Webcast December 10, 2015 Actuarial Consulting Congress of Asia presented in cooperation with Society of Actuaries (SOA) ERM Webcast December 10, 2015

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Disclaimer Presentations are intended for educational purposes only and do not replace independent professional judgment.  Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Society of Actuaries, its cosponsors or its committees.  The Society of Actuaries does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.  Attendees should note that the sessions are audio-recorded and may be published in various media, including print, audio and video formats without further notice.

Presenters and Moderators Tomoya Nomura, PwC Japan Julia Zhang, EY China Frank Ashe, Independent Consultant Anu Kukar, KPMG Australia Paul King, Review Panel of CERA Board Raymond Cheung, ERM Webcast Chair Hideyuki Yoshida, ACCA Chair Sanchit Maini, Aviva Singapore Eric Lu, Deloitte China Liyaquat, ACCA Executive Director

Agenda ERM Webcast Chairman introduction speech ACCA Chairman introduction speech Regulatory Update – ORSA, Q&A C-ROSS, Q&A Strategic Decision Making and ERM: risk assessment with no models and no data, Q&A ICAAP: An Australian Experience, Q&A CERA: Preparing ERM Professionals, Q&A

Introducing ACCA WELCOME - Hideyuki Yoshida, Chair Actuarial Consulting Congress of Asia Not-for-profit, non-political, non-government and non- religious organisation created with the key objective of strengthening the subject of consulting in general and delivery of actuarial advice in particular in the Asia Region History – IAA, APACA, ACCA www.accaasia.org 6

Actuarial Consulting Congress of Asia ERM Webcast ORSA - updates Tomoya Nomura PwC, Japan Actuarial Consulting Congress of Asia ERM Webcast Presented in cooperation with

Risk environment and overview of ORSA 8

Risks change time to time and geographical environment 2015 Asia-Pac* 2015 Global 2013 Global 1 Change management 1 Regulation (1) 2 Cyber risk 2 Macro-economy (3) 2 Investment performance (4) 3 Distribution channels 3 Interest rates (-) 3 Macro-economic environment (3) 4 Human talent 4 Cyber risk (-) 4 Business practices (18) 5 Regulation 5 Investment performance (2) 5 Natural catastrophes (5) 6 Interest rates 6 Change management (15) 6 Guaranteed product (-) 7 Natural catastrophes 7 Guaranteed products (6) 7 Quality of risk management (15) 8 Investment performance 8 Distribution channels (11) 8 Quality of management (14) 9 Macro-economy 9 Natural catastrophes (5) 9 Long tail liabilities (7) 10 Quality of risk management 10 Quality of risk management (7) 10 Political interference (11) *Australia, China, Hong Kong, Japan, Malaysia, New Zealand, Singapore, South Korea, Taiwan, Vietnam 9

ORSA readiness Points of Focus ORSA has already implemented in these countries Communication start with regulator ORSA “Use” in business is more focused. ORSA comes with market – consistent based liability valuation as risk sensitive measurement. Japan Singapore Malaysia Australia 10

Current status in each county Australia All insurers* *Exemption for run-off companies Execution of ICAAP (GPS para11) Preparation of ICAAP summary statement (GPS para12) Annual ICAAP report filing to APRA (GPS para 14 / 15) Jan. 2013 - Singapore *Depending on the size & risk profile etc. Mandatory (MAS notice 126 para 10 – 46) ・Risk identification and measurement ・Risk management policy ・Risk appetite statement etc. Voluntary (MAS notice 126 para 47-) Jan. 2014 Malaysia All insurers Execution of ICAAP (Guideline on ICAAP for insurers) ・Internal governance, risk management and internal audit of risks. ・Measurement of risks and quantification of the capital needed to cover them etc. Sep. 2012 Japan * Exemption for small insurers(SMST) ORSA report filing (IBA para 128) ・Business strategy and recognition of risks ・Risk profile and risk measurement ・Use in business etc. March. 2015 11

ORSA in Japan as one example of Asian situation 12

PwC survey unveils the detail situation in Japan Scope Industry Number Group1* Group2 Life 33 12 21 Non-life 31 8 23 Total 64 20 44 Source: PwC survey * Life group 1 defined as companies over 5trillion yen assets. Non-life group 1 defined as companies over NPW 100billion yen targeting scope of ERM interview by FSA. Soundness (Risk & Capital) Profitability (Capital & Profit) Stability of Profit (Risk & Profit) Liquidity Operational Others 95% 59% Risk Appetite 59% 34% 37% Source: PwC survey 12% 13

Change in assets allocation Ineffective SMR during the financial crisis Yamato Life went bankrupt a half year after it counts 555% SMR in March, 2008. AIG showed the importance of group perspective. Dynamic change in assets allocation in Yamato life. Seeking high return to compensate guaranteed rate in the insurance contract. Especially, equity and foreign stock has been increased. Then, the financial crisis struck Yamato life through change in price of equity and foreign structured bond etc. SMR didn’t work as an early alarm in solo. March, 2008, SMR counted as over 500%, which means TMA is over 2 times larger than TRA. But a half year later, Yamato went bankrupt. SMR didn’t work as an early alarm in group. AIG shock showed the importance of group perspective. Change in assets allocation In Yamato Life Unit In million yen Prepared by speaker 14

ERM interview & New supervisory guideline ERM interview in 2011 Number of companies undisclosed, majors involved Technical development (VaR／Market consistent valuation) has proceeded already. ORSA officially implemented through filing ORSA report until the end of Sep. 2015 (Based on status on March 2015.) ERM interview in 2012 23 companies joined Internal rules for ERM has been developed dramatically ERM interview in 2013 22 companies joined Risk appetite concept gradually penetrates into the center of risk management ERM interview in 2014 22 companies joined 8 items released as the potential contents of the ORSA report 15

New IAIS rule hit Japanese solvency regime Big challenge to current SMR regime not only SMR itself but also reform of the risk management framework including ORSA FSAP : Financial Sector Assessment Program A comprehensive and in-depth analysis of a country's financial sector. FSAP assessments are the joint responsibility of the IMF and World Bank in developing and emerging market countries and of the Fund alone in advanced economies. G20 supports FSAP activities and FSB member jurisdictions commit to implement international financial standards and undergo an assessment under the FSAP every five years. Japan undergo the FSAP in very first time since New ICPs, the benchmark for FSAP, released in Oct, 2011 Valuation (ICP14) …this (CF over the full time horizon consideration) is not necessarily the case in the subsequent testing of their sufficiency,….as well as the absence of an explicit valuation of some options and guarantees, create the possibility that liabilities might be understated. ERM for solvency purpose (ICP16) …It (the FSA) should also provide more explicit guidance regarding the performance of own risk and solvency assessment. Capital Adequacy (ICP17) The required solvency margin should include risk margins for any mismatching of assets and liabilities, not just a risk margin for interest-rate risk. 16

Materiality drives companies investment Insurance Risk Market Credit Operational 67% Internal Model 75% 63% Source: PwC survey 41% RORAC RAROC Economic value added Economic Capital Embedded Value Return on Capital (non-adjusted) Traditional Measurement 25% 29% KPIs in ERM 83% 58% 33% Source: PwC survey 17% 17

Top management initiatives As we plan to accelerate growth in line with our medium-term management plan, our business expansion should correspond to the evaluation based on the ERM framework. Our ERM framework not only focuses on internal control and risk management but also emphasizes risk-taking when implementing our strategy. Dai-ichi life CEO Koichiro Watanabe http://www.dai-ichi-life.co.jp/english/investor/event.html#a27 The introduction of ERM makes possible comprehensive assessment and more rational management decision-making in determining whether risk is excessive vis-à-vis capital and whether capital policies and revenue management are adequate. T&D CEO Kenji Nakagome http://www.td-holdings.co.jp/en/csr/message/ 18

Q&A 19

Opportunity and Challenge C-ROSS Introduction Julia Zhang EY China Actuarial Consulting Congress of Asia ERM Webcast Presented in cooperation with

Agenda 1. Background 2. Development 3. Framework 4. Opportunity and Challenge 3. Framework 21

Overview of China Insurance Market CAGR=16% CAGR=20% Life Insurance The past ten years have been the golden era for the rapid growth of the life insurance market in China. Main drivers were: Continuous high growth in GDP Aging population Urbanization Change in the social benefits. Insurance premium mainly came from participating business and bancassurance channel Non-Life Insurance Motor insurance has dominated the Chinese non-life market. Commercial property insurance, agriculture insurance and liability insurance are the next three most significant product lines. Motor insurance class of business will continue to dominate given the enormous growth in the motor industry and high demand from consumers for car ownership. Natural catastrophe events in China in recent years have raised awareness of the need for property insurance and catastrophe insurance. 22

Total Asset Under Management ten thousand billion yuan 23 23

Chinese insurance risks have become more versatile and complex pro Chinese insurance risks have become more versatile and complex pro Traditional Participating (cash dividend / reversionary bonus) Universal life Unit linked Variable annuity Products Corporate bond Mutual fund Stock Real estate Private equity Oversea investments Cash Government bond Term deposit Invested Assets Insurance asset managers Health insurers Pension companies Insurance groups Conglomerates Mutual insurers 170 Insurers Life insurers P&C insurers Reinsurers Market Participants 24

Deregulation of Investment： Market Oriented Reform of China’s Insurance Industry Deregulation of Investment： Relax the different asset classes for investment choices Release the upper limits of investment restrictions Investment regulatory on investment products change from approval process to registration only Deregulation of Pricing： Traditional life（2013） Universal life （2015） Participating life（2015） Auto insurance（2015） 25

The Facts and Main Issues of “C-SI” C-SI Facts Main Issues Does not comprehensively reflect risks Low sensitivity to risks Capital requirement rather than risk management Prudent asset and liability valuation Volume based fixed ratio capital requirement 16%/18% of non-life insurance net premium 4% of life insurance reserve Difficult to meet the requirements of: The management and regulation on more versatile and complex risk profile. Market oriented reform of insurance market. Sustainable and healthy growth of insurance industry 26

Worldwide Reforms of Solvency Regulation 27

Initiation of C-ROSS Chinese English Full name：中国风险导向的偿付能力体系 International insurance regulatory rules become increasingly convergent. Banking has unified regulatory rules. There is no unified rules for insurance industry all over the world The increasing risk scale and difficulty of risk management of insurance industry Market-oriented strategy of “release the top-end, hold the back-end” C-SI is not suitable for emerging market. It is urgent to enhance risk management of insurance industry Develop a risk oriented solvency system Full name：中国风险导向的偿付能力体系 Simplified name：偿二代 Chinese Full name ：China Risk Oriented Solvency System Simplified name ：C-ROSS English 28

Agenda 1. Background 2. Development 3. Framework 4. Opportunity and Challenge 3. Framework 29

Goals and Principles of C-ROSS Scientifically measure risks Promote effective risk and capital management Mechanism to enhance enterprise risk management Provide useful experience to other emerging markets Overall Goals Core Principles Risk oriented Characteristics of China’s market Internationally comparable 30

Technical Process Parameter Testing Calibration Testing Sample Testing Alternatives Testing Publish consultation paper Run the IQT Companies submit IQT results with feedback Refine consultation paper Sample companies run quantitative testing 31

Timetable of C-ROSS 32

Agenda 1. Background 2. Development 3. Framework 4. Opportunity and Challenge 3. Framework 33

Risk Stratification Pillar I Pillar II Pillar III Supervisable Risks Inherent Risk Quantifiable Risk Insurance Risk Market Risk Credit Risk Unquantifiable Strategy Risk Operation Risk Reputation Risk Liquidity Risk Control Risk Systemic Risk Pillar I Pillar II Pillar III Unsupervisable Risks 34

Regulatory Rules Risk-based Practicability Comparable Capital Requirement Risk Management Requirement Information Disclosure Requirement No. 1：Actual Capital No. 2： Minimum Capital No. 3： Liability Assessment under Life Insurance Contract No. 4： Minimum Insurance Risk Capital (For Non-Life Insurance Business) No. 5： Minimum Insurance Risk Capital (For Life Insurance Business) No. 6： Minimum Insurance Risk Capital (For Reinsurance Companies) No. 7： Minimum Market Risk Capital No. 8： Minimum Credit Risk Capital No. 9：Stress Test No. 10: Comprehensive Risk Rating (Classified Regulation) No. 11: Solvency Risk Management Requirements and Assessment No. 12: Liquidity risk No. 13: Solvency Information Disclosure No. 14: Solvency Information Exchange No. 15: Credit Ratings of Insurance Companies No. 16 Solvency Report No. 17: Insurance groups Solvency Risk Management Strategic/ Asset/ Liability/ Asset-liability management / Capital Management/ Solvency Risk Management 35

Pillar I – Total Balance Sheet Approach CSI C-ROSS CAS Asset: admitted value Statutory liability: Net premium based Overly conservative assumptions Minimum capital: fixed ratios of reserve and premium size Asset: market and amortised Policy liability: Gross premium based BEL+Risk Margin (assumptions subject to certain regulatory requirements)，should cover the cost of guarantees Minimum capital: quantify the risk capital more elaborately Asset: market and amortised Policy liability: Gross premium based BEL+Risk Margin +Residual Margin (assumptions based on best estimates) 36

Pillar I – Capital Requirement 37

Pillar I - MC Calculations Composite factor based method: MC=EX × RF which: EX is the risk exposure; RF is the risk factor; RF = RF0× (1+K) RF0 is the base risk factor, K is the characteristic factor Ki is the characteristic factor based on specific risk or entity , n is the number of characteristic factors Scenario based method: Used to calculate one year VaR; Applied on catastrophe risk for non-life, interest rate risk and insurance risk for life insurers Based on China’s industry data Fit probability distribution Calibrate at 99.5% percentile Standard formula to calculate MC Pillar I - MC Calculations 38

Pillar II - Integrated Risk Rating (IRR) Regulator assesses the overall risk of the insurance company quarterly Integrated Risk Rating A B C D Pillar II Qualitative Risks Operation Risk Strategy Risk Reputation Risk Liquidity Risk Pillar I Quantitative Risks Insurance Risk Market Risk Credit Risk Pro-Cyclical Risk Systemically Important Risk 39

Pillar II - Solvency Aligned Risk Management Requirement and Assessment (SARMRA) 40

Pillar III – Market Discipline Insurance Company Information Disclosure Regulator Information Disclosure Insurance Company Credit Rating 41

Agenda 1. Background 2. Development 3. Framework 4. Opportunity and Challenge 3. Framework 42

C-ROSS Opportunities and Challenges --Capital release, no pressure of financing, largely develop business The increase of solvency ratio for some companies is mainly due to release of life insurance product policy reserve. The decrease of solvency ratio for some other companies is from higher minimum capital requirement, especially from interest rate risk and counterparty default risk. The volatility of both available capital and minimum capital increase under C-ROSS, which makes the solvency ratio difficult to manage. 43

C-ROSS Opportunities and Challenges --Comprehensive consideration of liability end product design and product strategy Assess the relationship between actual capital and the minimum capital contribution occupation, balanced products business value and competitive new products between Not only concerned about the business value of the product itself, but also need to assess the impact of new products on the solvency of the company's business portfolio level How to adjust the new pricing index (NBV factor) and new business assessment index Critical illness insurance High cash value products Reserve MC Reserve+MC Reserve MC Reserve+MC C-SI C-ROSS C-SI C-ROSS 44

C-ROSS Opportunities and Challenges Comprehensive consideration of the asset side of asset allocation and accounting classification Asset-side minimum capital requirements: a good balance of investment assets categories, asset accounting classification, counterparty, duration, and credit rating Need to evaluate alternative investments (such as debt plan, trust schemes, unlisted equity investments, subsidiaries and other equity investments, foreign currency assets and investment real estate, etc.) for the impact of the minimum capital requirement, the minimum capital requirement to balance income and investment objectives and requirements 45

C-ROSS Opportunities and Challenges Necessity of risk management construction and embedding business decisions 46

Q&A 47

Actuarial Consulting Congress of Asia ERM Webcast Strategic Decision Making and ERM: risk assessment with no models and no data Frank Ashe Actuarial Consulting Congress of Asia ERM Webcast Presented in cooperation with

Q&A 49

ICAAP: An Australian Experience Actuarial Consulting Congress of Asia ERM Webcast Presented in cooperation with

Creating your ICAAP so that it adds value Anu Kukar Director Risk Consulting Sydney, Australia 10 December 2015 © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. 51

Disclaimer The information contained in this presentation is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The views and opinions contained in the presentation are those of the author and do not necessarily represent the views and opinions of KPMG, an Australian partnership, part of the KPMG International network. To the extent permissible by law, KPMG and its associated entities shall not be liable for any errors, omissions, defects or misrepresentations in the information or for any loss or damage suffered by persons who use or rely on the information contained in this presentation. © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Overview of session: Creating Value at 3 key stages of your ICAAP 1. Development 2. Actual Document 3. In-Use © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

A bit about me… Australia Experience implementing Risk & Compliance from two of the major Australian Banks – Westpac Banking Group and The Commonwealth Bank of Australia Sydney Risk Awards: Winner of CEO Employee of the Year – Group Functions Finalist Best Risk Team Insurance & Investments Finalist Risk Professional Finalist Risk Employee Finalist Risk Innovator © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Creating Value at 3 key stages for your ICAAP: 1. Development Process 2. Actual Document 3. In-Use 1.1 What stakeholders do you engage in the process? 1.2 How do you create value during the ICAAP development for your stakeholders? 2.1 Which areas are of value to your stakeholders? 2.2 How do you make these areas valuable? 3.1 Do you have alignment across your ERM & an effective feedback loop? 3.2 Do you know how you compare to others? © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Identifying and engaging all your stakeholders up front 1 Identifying and engaging all your stakeholders up front Your ICAAP Board Business Leaders Business Risk Champions Actuaries Risk & Compliance Internal & External Auditors © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

1 Creating value by understanding: the role of each of your identified stakeholders Understand their role – what challenges do they face? Engage your stakeholder – create value through: Use of existing Governance structures Through your embedded 3 Lines of Defense model Early engagement Business Leaders © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

1 Creating value by understanding: the role of each of your identified stakeholders Risk & Compliance Understand their role – what challenges do they face? Engage your stakeholder – create value through: Clarity on roles and responsibilities Ability to identify and manage emerging risks Actuaries © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

1 Creating value by understanding: the role of each of your identified stakeholders Understand their role – what challenges do they face? Engage your stakeholder – create value through: Early and throughout engagement Input on end output at the outset Board © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

2 Creating value by understanding: the way the ICAAP can be used by each of your stakeholders Understanding implications of business decisions Creating well rounded business leaders Development of future leaders Business Leaders © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

2 Creating value by understanding: the way the ICAAP can be used by each of your stakeholders Risk & Compliance Actuaries Better fulfilment of role Clarity for teams Oversight & monitoring of capital © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Fulfilment of obligations Report on outcomes Insight into future risks 2 Creating value by understanding: the way the ICAAP can be used by each of your stakeholders Fulfilment of obligations Report on outcomes Insight into future risks Board © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

3 Creating value by understanding: how you can continuously enhance your ICAAP Undertake: a benchmark exercise to compare to industry Review & Assess: use as intended - in particular during business transformation alignment to other components of your ERM feedback loop scenario’s and stress testing © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

3 Key Takeaways: Creating value by: 1. Development Process 2. Actual Document 3. In-Use being Agile & Efficient Integrate into existing governance structures. ensuring Emerging Risk Management Create transparency of implications from business decisions. integrating ICAAP as part of your ERM Ability to update and align ERM components as and when your business is changing. © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Thank you Anu Kukar Director Risk Consulting Sydney, Australia E: akukar@kpmg.com.au M: +61 418 804 975 D: +61 (02) 9346 5462 © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

© 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Q&A © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.                                     KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.   The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 67

The CERA Qualification for Actuaries Paul King, Chair Review Panel Global CERA Board Actuarial Consulting Congress of Asia ERM Webcast Presented in cooperation with

CERA Global Association (CGA) Dedicated to promoting and administering the CERA qualification worldwide Chartered Enterprise Risk Actuary Chartered Enterprise Risk Analyst

CERA Global Association Creating A Global Credential Standardisation of ‘ERM toolkit’ Standardisation of education Rapid spread of ERM skills for actuaries International mobility International recognition Globalisation of the risk profession 70

CERA Global Association Our history and what have we achieved so far? 71

Hyderabad Treaty (Nov 2009) 13 Actuarial associations signed a Treaty in Hyderabad, India – 13 November 2009 globalizing SOA credential There are now 19 members of CERA Global Association (registered in Switzerland) Original CGA members: Institute of Actuaries of Australia, Canadian Institute of Actuaries, Institut des Actuaires (France), Deutsche Aktuarvereinigung e.V.(Germany), Israel Association of Actuaries, Institute of Actuaries ofJapan, Mexico, Het Actuarieel Genootschap (Netherlands), Actuarial Society of South Africa, Swenska Actuarieföreningen (Sweden), Institute and Faculty of Actuaries (UK), Casualty Actuarial Society (USA) and Society of Actuaries (USA) 72

CERA Global Association The qualification 73

One qualification based on mastery of one set of learning objectives with accreditation applied on a consistent basis worldwide 74

Recognised and portable internationally The CERA qualification has the most rigorous and advanced curriculum underpinned by actuarial science, with an emphasis on ERM and professionalism There are now 16 actuarial associations who can accredit CERA (using a common syllabus but administered locally and in many languages) Recognised and portable internationally Consistent with modern, effective methodologies Applies both qualitative and quantitative insight to ERM Instills the highest professional standards, with an impeccable code of ethics and unparalleled educational requirements Best equips risk management professionals to empower better business decisions 75

Syllabus Seven topics: ERM concept and framework Structure of the risk management function Risk categories and identification Risk modelling and aggregation Risk measures Risk management tools and techniques Capital management 76

Syllabus Forty five detailed learning objectives: Bloom’s Level No. Objectives Understand 1 Understand / apply 3 Apply Apply / analyse 21 Analyse Analyse / evaluate 12 Evaluate Evaluate / synthesize 2 Synthesize 77

Key aims of the syllabus The CERA qualification encompasses a world-class curriculum that combines actuarial science with the theoretical, practical and professional principles of ERM The curriculum instils in successful candidates the key principles underlying the implementation and application of ERM within an organisation, including governance and process as well as quantitative methods of risk measurement and modelling 78

Our advice to all candidates, make sure you get a good education in ERM and get your CERA as part of that. You can take your CERA anywhere…………. 79

CERA Global Association CERA Quality Assurance 80

CERA Global Association The CGA Board is committed to maintaining the CERA qualification as being at a very high standard within the risk management world 81

CERA Global Association The treaty includes a strong quality assurance program to maintain the high quality of the qualification The initial evaluation process, conducted by trained external reviewers, includes a review of participating associations’ processes to award the qualification and a thorough review of the learning objectives, syllabus and learning material on which each association’s award will be based Accredited organisations are required to undergo an annual review of testing processes, pass rates and quality assurance, and will undergo a much more in-depth review every three years 82

CERA Global Association What value do CERAs bring to an organisation? 83

CERA Global Association CERAs make confident decisions related to complex financial challenges affecting business by applying qualitative and quantitative insights to risk management CERAs add value to enterprise risk management through their rigorous training, making them the best equipped to provide a 360-degree view of an organisation’s risk profile As actuaries, CERAs are bound by a code of professional conduct to act with integrity, care and competence CERAs are trained through a rigorous multi-year examination process to identify, measure, and manage risks and opportunities within complex enterprises CERAs are equipped to develop models which reflect the real world and can inform strategic decisions 84

CERA Success 2910 CERAs worldwide CERAs filling senior risk positions within insurance and financial services industries including Chief Risk Officer Gaining recognition amongst employers as credential with appropriate risk training 85

CERA Global Association Why Become a CERA? 86

CERA Advantages A CERA, because of their training and experience, can assess and manage the entire risk spectrum of an organisation, including financial, operational and strategic risk CERAs are well-qualified for more strategic risk mangement positions such as risk analyst, risk manager, chief risk officer, and are contributing in a broad range of fields, including: Life insurance; General insurance; Banking; Asset management; Pension funds; Other financial services; Technology; Consulting; Energy; Transportation; Healthcare 87

CERA Global Association Update at December 2015 88

CERA Global Association After passing tough global quality assurance (“QA”) tests, 16 CERA signatory associations have already been granted power to award CERA 16 CGA members from: Australia, Canada, Chinese Taipei, Denmark, France, Germany, India, Israel, Japan, Netherlands, South Africa, Sweden, Switzerland, UK, USA(2) Over 2900 CERA-holders worldwide! 89

CERA Holders December 2015 TOTAL 2,910 Australia – A1 241 Canada – CIA 8 France – IA 119 Germany – DAV 143 Japan – IAJ 33 Netherlands – AG 27 South Africa – ASSA 57 Sweden 5 Switzerland 6 UK – IFoA 429 USA – CAS 144 USA – SOA 1,698 TOTAL 2,910 90

CERA Global Association For more information on the curriculum and paths to CERA visit the CERA global website www.ceraglobal.org 91

CERA Global Association Hire a CERA; we can assure you that they have been properly trained and educated 92

Q&A

Actuarial Consulting Congress of Asia ERM Webcast Closing Remarks Raymond Cheung ERM Webcast Chair Actuarial Consulting Congress of Asia ERM Webcast Presented in cooperation with

Thank you! 95