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Self-test answers ix

Chapter 9 self-test answers

1. Any five from:
• political stability;
• a good geographical location;
• a quality transport system;
• developed communication systems;
• highly qualified personnel;
• office at competition prices;
• multi-lingualism;
• a stable legal and regulatory environment;
• liberal attitude by authorities;
• quality family life;
• a favourable time zone;
• a foreign presence;
• a developed financial centre;
• a strong national industry;
• centralisation in one principal city or region;
• tight economic controls;
• a strong currency;
• good arbitration facilities.
2. Lloyd’s and the London Market companies, the latter represented by the IUA.
3. The syndicates’ assets, the Members’ funds at Lloyd’s and its central assets (for example, the Reference copy for CII Face to Face Training
Central Fund, the Corporation’s assets, subordinated debt and securities and a ‘callable layer’).
4. Three from: Guernsey, Luxembourg, Ireland and the Isle of Man.
5. Reinsurance regulation in the USA is at individual state level although interstate cooperation is
encouraged through the National Association of Insurance Commissioners (NAIC).
6. The attack on the World Trade Center in September 2001.
7. Japan, China and India.
8. Market capacity is freely available and investment returns are high.
9. If investment returns are low, underwriting returns are necessary for profit.
10. Ratings are formally evaluated at least once every twelve months and following events such as an
ownership change, merger or recapitalisation. In addition, ratings are continually re-evaluated for
other significant changes that arise during the year.