Supplemental IE Report RSAI Sun & Marine - Royal and Sun Alliance

Milliman Client Report
1. INTRODUCTION
1.1 I, Gary G Wells, prepared three reports (the “Reports”) to the Court dated 4 July 2011 entitled:-
• “Report of the Independent Expert on the proposed transfer of some insurance business from the UK
Subsidiaries of Royal & Sun Alliance Insurance plc to Royal & Sun Alliance Insurance plc” (the “Report for
the RSAI Scheme”);
• “Report of the Independent Expert on the proposed transfer of some insurance business from Royal & Sun
Alliance Insurance plc and certain UK Subsidiaries of Royal & Sun Alliance Insurance plc to The Marine
Insurance Company Limited” (the “Report for the MIC Scheme”); and
• “Report of the Independent Expert on the proposed transfer of some insurance business from the UK
Subsidiaries of Royal & Sun Alliance Insurance plc to Sun Insurance Office Limited” (the “Report for the Sun
Scheme”).
1.2 The conclusions of these Reports were based on financial information up to 31 December 2010 and other information
available to me when I prepared the Reports. Since preparing the Reports I have been provided with more recent
financial information and other information in respect of the relevant companies. Details of the further information I
have received are set out in Appendix A.
1.3 In the light of the further information available to me I am providing in this report (the “Supplemental Report”) an
update on the conclusions set out in the Reports. In the Reports I stated that I would address the following in this
Supplemental Report:-
• The extent to which changes in assets and liabilities of the companies party to the proposed RSAI, MIC and
Sun Schemes (collectively the “Schemes”), relative to their respective positions as at 31 December 2010,
have been in line with expectations;
• The effect of the proposed transfers on the transferring reinsurance asset;
• My review of the RSA Group’s 2011 ICA;
• Arrangements between members of the RSA Group and the Institute of London Underwriters ("ILU"); and
• The extent to which the operational plans of the RSA Group (relative to their respective positions as at the
date of the Reports) have been in line with expectations.
I have addressed all these areas below, and I also comment on the final draft terms of the post-transfers reinsurance
arrangements.
1.4 In addition to the reports listed in paragraph 1.1 above, I also prepared a report to the Court dated 4 July entitled
“Report of the Independent Expert on the proposed transfer of the general insurance business of PA(GI) Limited to
Royal & Sun Alliance Insurance plc and The Marine Insurance Company Limited” (the “Report for the PAGI
Schemes”). I have produced a separate supplemental report updating my conclusions set out in the Report for the
PAGI Schemes.
1.5 This Supplemental Report should be read in conjunction with the Reports, as well as the Report for the PAGI
Schemes and the supplemental report for the PAGI Schemes, and the full terms of the Schemes and the PAGI
Schemes. This Supplemental Report has been produced on the same bases as set out at Section 1 of the Reports. In
particular, it has the same scope, and is subject to the same reliances and limitations. Terms used in this
Supplemental Report have the same meanings as in the Reports.
1.6 Reliance has also been placed upon, but not limited to, the additional information detailed in Appendix A. My opinions
depend on the substantial accuracy of this data, information and the underlying calculations. RSAI has provided me
with details of the procedures and processes it uses to ensure that the data it uses for setting claims reserves and for
use within their internal capital model is fit for purpose. I am satisfied that appropriate measures are in place to ensure
that data is fit for purpose; I have not however undertaken checks on the data underlying the information I have been
provided and give no warranty as to its accuracy. RSAI has confirmed to me in writing that to the best of its
knowledge and belief all data and information it has provided to me is accurate and complete (see Letter of
Representation, Appendix B).
1.7 All information I have requested from the RSA Group in relation to the Schemes has been provided to me.
Supplemental Report of the Independent Expert 3
November 30, 2011