what insurers can expect from their investments today an overview of the global investment...

What Insurers Can Expect from Their Investments Today

An Overview of the GlobalInvestment Environment

The Royal Institute of International AffairsLondon, UK

2 February 2004

Robert P. Hartwig, Ph.D., CPCU, Senior Vice President & Chief EconomistInsurance Information Institute 110 William Street New York, NY 10038

Tel: (212) 346-5520 Fax: (212) 732-1916 [email protected] www.iii.org

Presentation Outline

• Overview of Global Investment Environment

• Global Economic Situation

• Insurer Asset Allocation in the Wake of the

“Perfect Storm”

• Hot Spots: Are Some Markets Too Risky

• Q&A

GLOBAL INVESTMENT ENVIRONMENT OVERVIEW

CEOs: Biggest Threats to Our Business* (%**)

17%

18%

15%

11%

11%

10%

10%

8%

6%

5%

3%

0 5 10 15 20

Stock-market volatility

Corporate-governance issues

Emerging technologies

Cost of Capital

Reputational risk

Global terrorism

Loss of key talent

Price deflation

Currency fluctuations

Increased competition

Overregulation

*Survey of 1,394 CEOs globally during fourth quarter of 2003. **Due to multiple answers percentage exceeds 100.

Source: PriceWaterhouseCoopers

Stock Market Index Performance in 2003: Ranked in Local Currency Terms

Source: Wall Street Journal, January 2, 2004.

25.3%

13.6%

24.5%

13.9%

37.1%

16.1%

24.3%

11.1%

0 10 20 30 40

US (DJIA)

UK (FTSE 100)

Japan (Nikkei)

Italy (Milan MIBtel)

Germany (DAX)

France (CAC 40)

Canada (Toronto 300 Composite)

Australia (All Ordinaries)

Stock Market Index Performance in Local Currency Terms 2001-2003

-21.9 -19.8-23.5

-16.2

-33.7

-43.9

-18.6

-24.5

16.1

37.1

24.5

13.6

-50

-40

-30

-20

-10

0

10

20

30

40

50

France (CAC 40) Germany (DAX) Japan (Nikkei 225) UK (FTSE 100)

2001 2002 2003

Source: Securities Industry Association (SIA), and Wall Street Journal 1/2/2004

% change on previous year

Short-term Interest Rates(% per annum)

0

1

2

3

4

5

6

7

8

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

FranceGermanyJapanUKUS

*Three-month money market rates where available, or rates on proximately similar financial instruments.

Source: OECD, December 2003

Recent Peak to Trough Declines:US: 530 bpUK: 370 bpFrance/Germany: 210 bpJapan: 70 bp

Long-term Interest Rates(% per annum)

0

1

2

3

4

5

6

7

8

9

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

FranceGermanyJapanUKUS

*10-year benchmark government bond yields where available or yield on proximately similar financial instruments.


ECONOMIC ENVIRONMENT OVERVIEW

Real GDP By Country 1994-2003(% change on previous year)

2.4%

2.3%

1.4%

2.4%

2.8%

2.8%

3.7%

0.9%

0.5%

2.4%

1.8%

0.8%

1.5%

1.9%

3.1%

1.0%

0.2%

0.0%

1.0%

1.9%

1.8%

-1.1

%

0.1% 0.

4%

0.2%

2.7%

4.4%

2.8%

3.3%

3.1%

2.8%

3.8%

2.1%

1.7%

1.7%

3.4%

2.8%

3.6%

4.0%

2.7%

4.4%

4.3%

4.1%

3.8%

0.3%

2.4%

2.9%

1.9%

1.7%

2.7%

-2%

-1%

0%

1%

2%

3%

4%

5%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Euro Area Germany Japan US UK


Forecast GDP Growth by Country 2004/2005 (% change on previous year)

1.4%1.7% 1.8%

2.7%

4.2%

2.3% 2.4%

1.8%

2.9%

3.8%

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Germany France Japan UK US

20042005


US GDP is forecast to grow by just over 4% in 2004, more than double that

expected for Japan and EU countries.

Industrial Production(% change on year ago)

0.5

0.8

2.4

0.9

1.6

0.9

0 0.5 1 1.5 2 2.5

France*

Germany*

Japan**

UK*

US**

Euro Area*

*Year to October 2003; **Year to November 2003

Source: The Economist, January 3, 2004.

Unemployment Rates1996-2005 (% of labour force)

0

2

4

6

8

10

12

14

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

France Germany Japan UK US


By 2005, unemployment is expected to be at least 8% in France and Germany, compared with around 5% in America, Japan and the UK.

Employment Rates 2002-200563

.7%

63.4

%

63.2

%

63.2

%69.9

%

68.9

%

68.7

%

69.3

%

73.4

%

73.5

%

74.0

%

74.3

%

71.7

%

71.9

%

71.9

%

71.9

%

71.0

%

62.2

%*

0%

10%

20%

30%

40%

50%

60%

70%

80%

2002 2003 2004 2005

France Germany Japan UK US

*US figure for 2003 from Bureau of Labor Statistics data.


Consumer Prices Forecast 2003-2005 (% change on previous year)

-0.2

%

0.9

%

2.0

% 2.3

%

2.8

%

-0.2

%

0.8

%

1.7

%

2.6

%

1.4

%

-0.2

%

0.7

% 0.9

%

1.8

%

2.7

%

-0.5

0

0.5

1

1.5

2

2.5

3

Japan Germany France US UK

2003 2004 2005


In the US and UK consumer prices are expected to rise by around 2-3% in 2004 and 2005. However, Japan continues to experience deflation.

Current Account Balancesas a % of GDP

2.6

%

2.5

%

2.8

%

2.9

% 3.6

%

0.1

%

-0.6

%

0.0

% 0.7

%

0.1

%

0.1

%

0.3

%

4.3

%

2.1

%

-5.1

%

-5.0

%

-5.0

%

-4.6

%

-4.2

%-3.1

%

-3.9

%

-6%

-4%

-2%

0%

2%

4%

6%

1999 2000 2001 2002 2003* 2004* 2005*

Japan US EU


America’s current account deficit continues to grow and remains one of the biggest risks to economic stability.

Government Budget Balancesas a % of GDP

-7.4

% -6.8

%

-4.1

% -3.7

%

-3.5

%

-4.0

%

-3.7

%

-3.5

%-2.9

%

-2.9

%

-3.2

%

-6.9

%

-3.9

%

-3.1

%

-4.2

%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

2003 2004 2005

Japan US Germany France UK


EXCHANGE RATES

Euro vs US Dollar

0.8

1

1.2

1.4

Dec-01

Dec-02

Jan-03

Feb-03

Mar-03

Apr-03

May-03

June-03

July-03

Aug-03

Sept-03

Oct-03

Nov-03

Dec-03

Jan-04*

The dollar continues its slide and hit an all-time low against the Euro of $1.2853 on January 9, 2004.

U.S. Dollars per Euro

*Rate on Jan. 21, 2004.

Source: Federal Reserve Board

Exchange Rates: US Dollar vs British Pound*

0.4

0.5

0.6

0.7

0.8

0.9

1999 2000 2001 2002 2003 2004 2005

Pound/$

*2003, 2004 and 2005 estimates are on the technical assumption that exchange rates remain at their levels of 3 November 2003


Average of Daily Rates

Exchange Rates: US Dollar vs Japanese Yen* (Average of daily rates)

113.9

107.8

121.5

125.3

118116.4 116.4

105

110

115

120

125

130

1999 2000 2001 2002 2003 2004 2005

Yen/$

*2003, 2004 and 2005 estimates are on the technical assumption that exchange rates remain at their levels of 3 November 2003


ASSET ALLOCATION:

IN THE WAKE OF THE STORM

CEA Insurer Investments in Shares (Stocks) in Total 1992-2001

23.9%26.4% 25.3% 25.9%

27.5%

31.0% 32.0%

37.6%

33.3%

36.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Source: Comite Europeen Des Assurances European Insurance Figures, 2003

%, 1992-2001

CEA Insurer Investments in Debt & Other Fixed Income Securities in Total 1992-2001

36.2% 36.5%37.3%

38.9%

40.2%

39.0% 39.0%

34.5%

36.4%

34.8%

31%32%33%

34%35%36%37%38%

39%40%41%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001


%, 1992-2001

CEA Insurer Investments in Land, Buildings and Participating Interests in Total

9.0%

8.2% 8.0%7.3%

6.4%5.7%

5.3%4.9% 4.9%

5.0%

0%1%2%

3%4%5%6%7%

8%9%

10%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001


%, 1992-2001

European Insurers’ Asset Allocation, 1992-2000 (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1992 1994 1996 1998 2000

Other

Cash & short-term assetsLoans

Bonds

Shares (Stock)

Investments inaffiliatesReal estate

Includes separate accounts. “Loans” include mortgage loans.

Source: Swiss Re, Sigma No. 5/2002

Between 1992 and 2000, European insurers invested increasingly in equities, some 37.1% in 2000, up from 23.4% in 1992. However, there is substantial variation among European countries.

US Insurers’ Asset Allocation, 1992-2000 (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1992 1994 1996 1998 2000

Other

Cash & short-term assets

Loans

Bonds

Shares (Stock)

Real estate

Includes separate accounts. “Loans” include mortgage loans.

Source: Swiss Re, Sigma No. 5/2002

By far the largest investment by US insurers is in bonds, although the industry’s share in equities rose between 1992 and 2000.

US Insurers’ Asset Allocation, 1998-2002 (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998 2000 2002

Other

Cash & short-term assets

Bonds

Common andpreferred stock

Real estate andmortgages

Source: Insurance Information Institute and A.M. Best Co

Insurance Asset Allocation for Key European Markets, 2001 (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

UK France Germany Italy Netherlands Switzerland

Investments in affiliates

Land and buildings

Other

Deposits with creditinstitutions

Loans

Debt securities & otherfixed income

Shares (Stock)


Total Investment Holdings of UK Insurers (December 31, 2002)

Cash & other investments

11%

Other overseas company securities

9%

Overseas ordinary stocks & shares

10%

UK public sector securities (inc. gilts)

17%

Other UK company securities

12%

Property8%

Unit trusts6%

UK ordinary stocks and shares

28%

Overseas public sector securities

5%

Source: Association of British Insurers (ABI).

The UK insurance industry had a total £1,016 billion invested at 12/31/02, the majority in stocks and shares. Altogether, UK insurers own one fifth of all UK company equity.

$0

$50

$100

$150

$200

$250

$300

$350

75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 0203*

U.S. Policyholder Surplus: 1975-2003*

Source: ISO, Insurance Information Institute *First Nine Months

$ B

illi

ons

Surplus (capacity) peaked at $336.3 Billion in mid-1999 and fell by 15.5% ($52 billion) to $284.3 billion at year-end 2002 (a trough?)

•Surplus during the first nine months of 2003 rose by $34.5B or 12.1% to $319.9B

“Surplus” is a measure of underwriting capacity. It is analogous to “Owners Equity” or “Net Worth” in non-insurance organizations

$34.5 Billion

US Insurer Invested Assets as a Percentage of Policyholder Surplus 1980-2003*

2.0

2.5

3.0

3.5

4.0

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*

Ass

ets

as %

of

Pol

icyh

old

er S

urp

lus

Assets as % of PHS

*Insurance Information Institute Estimate based on first nine months 2003

Source: A.M. Best

Hot Markets:

If It’s Too Good to be True…

Net Financial Flows to Emerging Market Economies by Region

$196.2$187.5

$124.2$126.5

$0

$50

$100

$150

$200

2001 2002 2003E 2004F

Asia/Pacific

Africa/MiddleEast

Europe

LatinAmerica

Source: Institute of International Finance

$ Billions

On a regional basis, Asia is projected to account for 50% of total net flows to emerging markets in 2004. Emerging Europe’s share of total net private flows is expected to

increase to 27% this year, up from 22% in 2003.

Estimated Total Nonperforming Loans in Asia 2002

$10.06

$20.67

$25.04

$35.18

$46.76

$62.4

$104

$480

$1,243.35

Phillipines

Indonesia

India

Malaysia

Thailand

Taiwan

South Korea

China

Japan

$ Billions

Source: Ernst & Young, The Wall Street Journal 1/13/04

China Bank Bailouts

$22.5

$22.5

$35

$40

0 10 20 30 40 50

China ConstructionBank

Bank of China

Agricultural Bank ofChina**

Industrial &Commercial Bank of

China**

$ Billions

Source: China’s central government and private-sector economists; Shenyin & Wanguo Securities,

The Wall Street Journal 1/13/04

Capital Adequacy Ratios*

5.54%

1.44%

8.15%

6.91%

*The minimum capital-adequacy ratio of banks must be 8% to meet international standards. ** Tentative amounts.

SCANDAL, CORPORATE GOVERNANCE &

IMPACTS ON INSURERS

Serious Implications for Financial Institutions

• Insurers exposed to a wide variety of risks:

Investment risk (as institutional investors)

Insurance risk (surety, D&O, E&O, etc.)

Litigation risk (as both plaintiff & defendant)

Regulatory risk

Reputational risk

Corporate Governance: Expensive and Hard-Learned Lessons

• Crisis of Confidence—skepticism/cynicism is high

Ratings agencies Analysts Regulators

Investors/Creditors Employees Lawmakers

• Regulatory/Legislative Fallout Unclear

SEC opening record number of investigations

SEC, Administration & Congressional proposals vary

States will take own legal action (e.g., NY)

• Surge in shareholder suits has already begun

Terrorism

Market Malaise

Weak Profit Performance

Geopolitical Instability

Crisis in Corporate

Governance

Market Malaise

Houston…We Have a Problem

Source: Loss estimates from Morgan Stanley as Feb. 8, 2002; Insurance Information Institute.

Surety26%

Multiple7%

D&O1%

Fin. Guarantee2% Investment

64%

Total Exposure (Life & Non-Life): $3.796 BillionEnron is the biggest bankruptcy in US history ($31B+)

Equity/debt widely-held as S&P 500 company

Biggest impact in institutional investors/creditors

11 Congressional investigations

56 suits against officers & directors

Will spark similar suits

WorldCom to WorldCon?Insurer Exposure

*As of 7/1/02; Includes $5.4B in debt assuming default, $100 mil D&O, $225 mil CDO (still collateralized). As of 7/1, WCOM debt trading at about $0.15 of par, stock trading at $0.08/share. Equity losses are indeterminant.

**Does not include disclosed but unquantified exposure to credit default swaps

Source: Insurance Information Institute based in from Moody’s, company announcements, III research.

D&O2%

Financial Guarantee**

4%

Investment94%

Total Exposure (Life & Non-Life): $5.725 Billion*WorldCom could default on ($29B+) in debt.

Equity/debt widely-held as S&P 500 company

Biggest impact in institutional investors/creditors

SEC/Congressional investigations underway

Suits against officers & directors imminent

Total Exposure to Parmalat($ Millions)

$689

$494

$384

$377

$274

$145

$82

$44

0 100 200 300 400 500 600 700

Banco Popolare di Verona

Barclays Capital**

Monte di Paschi di Siena

Bank of America*

Sanpaolo IMI

Aflac

Capitalia

Citigroup*

*As of Dec. 31, 2003, before taxes; Bank of America said that total exposure to Parmalat was previously $647 million but that a large part of that was insured or backed by cash collateral. **After hedging; estimated.

Source: Wall Street Journal 1/21/04

$ Millions Charge

$372 million, before tax

$270-$302 million

$257 million

N/A

$206 million, before tax

N/A

N/A

N/A

Parmalat Exposure: Top 10 US Life Insurers

$54.5

$64.0

$73.2

$85.6

$86.5

$98.5

$104.8

$117.2

$162.1

$383.7

0 100 200 300 400

UnumProvident

New York Life

Principal Financial

Aegon USA

TIAA Group

Pacific Life

Prudential of America

John Hancock

AIG

AFLAC

Source: Moody’s

US life insurers’ total investment exposure to

Parmalat is estimated at around $1.6 billion as of December 31,

2002, a small amount in comparison to the industry’s

consolidated statutory capital of $238 billion.

$ Millions

Who’s Who in the Corporate House of Ill-Repute

Corporate Hall of Shame

Company Problem Potential ChargesD&Os created complex outside partnerships that kept billions in losses of Enron’s balance sheet; Accused by CA of manipulating energy market

•Securities Fraud

•Insider trading

•Perjury

Lax oversight of some client books, conflicts of interest, shredded documents

•Guilty of obstruction of justice

•Individual partners may be liable

Inappropriately accounted for $3.8B in expenses, inflated profits

•Fraud


Company Problem Potential ChargesEx-CEO Dennis Kozlowski indicted for tax evasion on art purchases

•Tax evasion

•Misuse of corporate funds

•SEC accounting query

Bogus capacity swaps inflated revenues (Qwest did too); Dynegy = “round-tripping” to inflate revenue

•Securities fraud

•Insider trading

Ex-CEO Sam Waksal indicted June 12 for tipping off family & friends that FDA did not approval of cancer drug Erbitux

•Insider Trading


Company Problem Potential Charges$4.6B in undisclosed loans to founding Rigas family; Misc. unconventional transactions, questionable accounting

•Securities fraud

•Misuse of corporate funds

•SEC accounting query

Questionable acctg. in sales of fiber optic capacity; Ex-CEO Nacchio under fire for excessive compensation & questionable stock sales

•Fraud

•Possible insider trading

Complex projects exaggerated cash flow; “Round-tripping” to inflate revenue

•Possible fraud

Martha Stewart Omnimedia fell by more than 50% after Imclone

insider trading scandal broke out

This sumptuous New England lobsterbake

is available at MarthaStewart.com

for just $250!

WorldCom: From $60/share in to6 Cents in Three Years

As of July 1, 2002

Source: Low trade for July 1, 2002.

Xerox: From $60/share in to$6.60 Cents in Three Years*

As of July 1, 2002

Source: Opening price, July 1, 2002.

U.S. Insurance Industry Stock and Bond Holdings, 2002

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

CorporateBonds

CorporateStocks

State/LocalBonds

U.S. Gov't Bonds

Life P/C

In B

illi

ons Total $1650

Total $905

Total $211

Total $549

Source: Insurance Information Institute from Board of Governors of the Federal Reserve System.

P/C $198Life $1,452

P/C $156Life $749

P/C $190Life $21

P/C $165Life $384

Total Industry Holdings = $3.3 Trillion

U.S. Institutional Investor Market in Corporate Equities

Market Value of Holdings, as of December 31, 2002All Others

$456.18%

Insurers$904.615%

State & Local Gov't Retirement

Plans$1,004.3

17% Private Pension Funds

$1,487.825%

Mutual Funds$2,188.4

36%


Total: $6,041.1 billion

Insurers are the 4th largest holder of corporate stocks

U.S. Institutional Investor Market in Corporate and Foreign Bonds

$ Billions Year-End 2002

Banks, SIs, Trusts$494.613%All Others

$432.811%

Insurers$1,649.7

42%

State & Local Gov't

Retirement Plans$363.0

9%

Private Pension Funds

$340.49%

Mutual Funds$666.917%

Source: Insurance Information Institute from Board of Governors of the Federal Reserve System

Total: $3,947.4 billion

Life = $1,451.8 (88%)

Non-Life = $197.9 (12%)

Insurers are the largest holder of corporate bonds

U.S. Insurance Industry: Corporate Equity Holdings, 1995-2002

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1995 1996 1997 1998 1999 2000 2001 2002

P/CLife

In B

illi

ons

Total $450B


P/C

$13

4L

ife

$315

P/C

$14

9L

ife

$414

P/C

$18

6L

ife

$559

P/C

$20

0L

ife

$733

P/C

$20

8L

ife

$965

P/C

$19

4L

ife

$941

P/C

$17

4L

ife

$855

$563B

$745B

$933B

$1,173B$1,135

B $1,029B

P/C

$15

6 L

ife

$749

$905B

U.S. Insurance Industry: Corporate Bonds Holdings, 1995-2002

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

1995 1996 1997 1998 1999 2000 2001 2002

P/CLife

In B

illi

ons

Total $993B

Source: Federal Reserve, Flow of Funds Report as of Dec. 31, 2001.

P/C

$12

3L

ife

$870

P/C

$14

2L

ife

$949

P/C

$16

0L

ife

$1,0

46

P/C

$17

1L

ife

$1,1

30

P/C

$18

1L

ife

$1,1

73

P/C

$18

8L

ife

$1,2

22

P/C

$19

6L

ife

$1,3

43

$1,091B$1,206B

$1,301B$1,3543B

$1,410B

$1,539B

P/C

$19

8L

ife

$1,4

52

$1,650B

Aviva Equity Exposure2001 vs. 2002

£3.1

£4.9

0

1

2

3

4

5

6

2001 2002

Source: Aviva 2002 Annual Report

“This reduction reflects the divestment of businesses during the year, the impact of falling markets and the reduction of equity exposures.”

- Aviva 2002 Annual Report

Aviva’s exposure to equities reduced from £ 4.9 billion at 31 December 2001 to £ 3.1 billion at year-end 2002. This represents 18% of its total capital employed.

Swiss Re Equity Exposure 1999-2003

62%69%

75%81% 86%

34%26%

20%14%

10%

4% 5% 5% 5% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003*

OtherInvestments

Shares

Fixed IncomeInvestments

*As of June 30, 2003

Source: Swiss Re

“Strong growth in fixed income portfolio reflects reallocation of funds from equity portfolios, cash inflows, market appreciation and two Admin Re transactions.”

- Swiss Re Analysts’ Meeting, 08/29/03

Swiss Re’s fixed income portfolio increased to CHF 81 billion at the end of the first half of 2003, up from CHF 74 billion at year-end 2002.

Allianz Group Equity Exposure 1999-2003*

54% 55%67%

73% 77%

37% 36%26% 19% 16%

6% 6% 4% 5% 4%3%3%3.0%3% 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003*

Other

Real Estate

Equities

Fixed IncomeInvestments

*As of September 30, 2003.

Source: Allianz Group Financial Results 9M 2003.

Allianz’s equity exposure has reduced significantly since 1999.

AXA Equity Exposure2000-2003*

57% 63% 66% 65%

17%16% 15% 15%

4%4% 4% 4%10.0%

10.0% 8.0% 7.0%11.0% 7.0% 7.0% 9.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003*

Cash & cashequivalent***

Mortgage, policyand other loans

Real Estate

Equities

Fixed incomeinvestments**

*As of June 30, 2003. **Including mutual funds in bonds. ***Not netted of bank overdrafts.

Source: AXA Group Financial Results 6M 2003/Full year 2002/2001/2000.

Axa’s equity exposure has stayed pretty steady, while its fixed income investment has increased.

Beginning of the End:Bursting of the Tech Bubble

Source: BigCharts.com

Composite of Nasdaq 100 Stocks

Corporate Governance

Accounting Problems are Getting Many Companies into Trouble

•Enron was tip of an iceberg

•Major implications for insurers (p/c and life)

Shareholder Class Action Lawsuits*

*Securities fraud suits filed in U.S. federal courts. Figures include IPO allocation Filings.**Suits of $100 million or more. ***2004 figures as of 1/29/04Source: Stanford University School of Law;Woodruff-Sawyer & Co.; Insurance Information Institute

164202

163

231188

108

173

240204 214

491

268

213

14

0

100

200

300

400

500

600

Shareholders typically recover just 2.56% of amount lost; 1/3 of that

goes to lawyers & expenses**

Insurance Information Institute On-Line

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