1. The current economic climate. “Will tomorrow be as good or as bad as today?” CILA SIG conference

2. My theme - from "Macro to Micro" 1 Where can we learn about the financial future? 2 What does that information tell us? 3 Some thoughts on 2 sectors banking and retail 4 What does the stock market tell us - is it a bell weather of recession or its own market? 5 What is the shape of this recession? How do we turn the corner? 6 What might this mean for us?

3. Setting the scene FSCS –Set up under FSMA – the fund of last resort –10,000 to 25,000 compensation claims a year –Contingency planning for industry failures –Forecast and budget – predicting the future What do adjusters bring to the table? –Crisis management –Claims handling –Real answers to real problems

4. Sources of views IMF FSA - Financial risk outlook Bank of England economic review Mintel sector reports Analyst and city reports Robert Peston (and other journalists) Others – CBI, IOD, LSE

5. Winners and losers?

6. Winners and winners?

7. Some of the winners?

8. Stock market growth Good years –79 of the last 109 years have seen +ve growth –Greatest number of returns + 10 – 20 % –Beware a +ve skew as the market recovers prior year losses And the bad –Very bad years often followed by good ones –But…. Not always –A negative year does not always mean another will not follow Source: Credit Suisse Investment Returns Yearbook

9. What type of recession are we in? W V L U BUT: –Recession deeper in manufacturing than services –Shape reflects market as a whole –Only when there is recovery will shape be clear

10. What could this mean for us Sector versus individual performance There are counter recessionary influences Need to look at the micro – the business Trends do not always continue – when do they turn? Companies are now more sophisticated at managing production –Keep stocks low –Ramp up fast

11. Why does this matter? Actual Sales Date of Loss Covered Loss? Economy Actual Sales Loss Insured Loss? Economic impact Actual Sales

12. Closing thoughts Around '75 when the recession hit, club owners started going to disco because it was cheaper for them to just buy a sound system than it was to hire a band. So we’re thinking 2009 is going to be the worst of it We are enjoying sluggish times and not enjoying them very much.