I think when it comes to everything else it’s not really my term that governs it. It’s more what is going on out there in the industry; we’re obviously very, very focused on the housing market. In the industry in general, insurance accounting changes that are being proposed by the IASB (International Accounting Standards Board) are taking up a lot of time right now. There’s a lot of concern in the industry about insurance accounting changes.
Aside from that, it’s the follow up from the G20 work plan to deal with the global financial crisis. I spent the weekend at Montebello to attend a Ditchley conference and it was all about the financial crisis and “are we out of the financial crisis or not”. The conclusion seemed to be that we are not out of the financial crisis.
You can tell that by the extraordinary monetary policy, particularly emanating from the U.S. Federal Reserve. Until that is withdrawn, which goes way beyond just tapering – tapering only refers to the Federal Reserve cutting back on the amount of borrowing every month. We hope other issues, what you do with a balance sheet that has exploded and the U.S. central bank’s balance sheet has probably not grown as much as other central bank balance sheets around the world.
Others – like Japan – seem to be jumping on the bandwagon. There’s a huge amount of liquidity to unwind. I consider that to be an indication that this is still a very challenging world in which we live. People should be very, very focused on what that could mean for financial market performance, which means in this industry you really are dealing with two things – your traditional risks, your underwriting etc. and with catastrophe risk and everything added on to that. That’s a big, big challenge, but the whole financial market side of things, your big investors, is something to really be focused on.
I’ve talked about monetary policy. I haven’t even mentioned the whole European side of things, where a considerable amount remains to be done even though the markets have decided that Europe looks good. I think underneath not a lot has changed. I would encourage everyone in the industry to keep very focused on what is actually going on and separate fact from fiction, I guess.
Question: Can you comment on developments on convergence and regulation, IAIS (International Association of Insurance Supervisors), things you were talking about, Solvency II, single regulators and global groups, that kind of thing? Is there any development on that you want to comment on? (continued.)