Risk Manager as Value Creator How to Speak the Same Language to Influence the C Suite

Risk Manager as Value Creator

How to Speak the Same Language to Influence the C Suite

Rocky Mountain RIMSFebruary 25, 2010

Kathleen Felderman, CRM, CIC, CRISAon Risk ServicesManaging DirectorNational Real Estate Practice [email protected]

Value Creation – Overview Understanding value creation CEO vs. CFO value creation strategies

– How they’re different

– Linking Risk Management into CEO and CFO value streams

Rethinking existing strategies for value preservation vs. value creation distinctions

Additional value creation strategies (including “quick hits”) Communicating value creation results to internal stakeholders Top 10 List – Ways to achieve Value Creator status

2

Understanding Value Creation What it is:

– Defining ‘value creation’

– Value preservation vs. value creation

Why value creation matters 4 main drivers of enterprise value

– Profitability

– Competition

– Growth

– Cost of capital

Strategy vs. tactical actions Measuring value creation

3

A Seat at the Table “Finance helps to set strategic direction and imperatives for

the firm”:– Only 20% of CFOs strongly agreed with this statement– 40% of CFOs were neutral, disagreed or strongly disagreed with this

statement

Who IS at the table??

4Source: IBM Global Business Services, The Global CFO Study 2008

Focus: The CEO How has CEO role changed?

– CEOs now have an active boss

– Enterprise risk continues to increase

– Many more uncertain variables in running a business than only a few years ago

– Time demands are increasing

Observations from IBM Global CEO Survey 2008:– “CEOs anticipate staggering amounts of change ahead. Are CFOs and

their organizations shining the headlights in the right direction? Can their analytical expertise help the entire enterprise manage change more effectively?”

– “More CEOs than ever – 8 in 10 – not only foresee dramatic change but also plan to make bold moves in response. Yet the confidence of CEOs to enact that change is not nearly as high.”

5Source: IBM Global Business Services, The Global CEO Study 2008

7 Biggest Worries for Board Members

1. Risk – Managing it, what it is and isn’t, and committees that should and shouldn’t handle it

2. The long arm of the government

3. Executive compensation – to restructure or not?

4. Economic uncertainties and preparing for the future

5. Shareholder relations – companies that have constructive dialogue with shareholder bases will be well positioned for legislative changes that may impact the upcoming proxy season

6. Focusing on the Role of the Board

7. Succession planning

6

Source: “Seven Smokin’ Hot Buttons” by Laura J. Finn, Corporate Board Member, September 2009

Board and General Counsel Concerns

Boards and GCs feel these risk areas need the most work: 45% - Understanding operational risk 18% - Understanding financial risk 13% - Understanding M&A risk 11% - Understanding governance changes 9% - Understanding HR risk 4% - Understanding shareholder litigation risk

7

Source: Corporate Board Member/FTI Consulting 2009 Legal Study

CFO Perspective on Finance and Risk CFOs are key owners of risk management in 70% of the

enterprises that are very effective to effective at supporting/managing/mitigating risk– However, only 50% of the organizations surveyed had the Risk

Management function reporting to the CFO 52% of CFOs surveyed said their organization encountered a

major risk event in the past 3 years that substantially affected their operations and/or results– Only 50% of those who experienced such a risk event said their

organization was Very Prepared, Prepared or Adequately Prepared Only 50% of CFOs surveyed said they factor risk into

performance monitoring 80% of CFOs surveyed said their organizations do not

manage risks across functions

8Source: IBM Global Business Services, The Global CFO Study 2008

Focus: The CFO How has CFO role changed?

– Finance is in the spotlight

– Risk management is now a priority

– Investment decisions are being delayed

– The CFO is more involved in strategy (but to what extent?)

– Levels of communication have increased, internally and externally

– Traditionally focused on credit, liquidity, compliance, but now must:• Address issues that required less attention in the past: cost of capital,

optimum leverage, debt maturities, cash flow, arranging financing• Be capable of evaluating a growing list of market, geopolitical and

operational risks as well

– Must have good understanding of opportunity as well as risk, and the timing implications of both

– Need stronger decision-support capabilities: predictive models and tools, and perceptive people

9Source: IBM Global Business Services, The Global CFO Study 2008

CFO Perception of Enterprise Risk Roles

10

High appetitefor risk

Low tolerancefor risk

Risk profile

Tactical Strategic

Organizational mind-set

Image makers Adventuresome visionaries

Daily operators Operational leaders

Internal Auditor

Controller

CRO

CIO

COO

CFO

Sales

Marketing Line Executive

CEOStrategist

Source: IBM Global Business Services, The Global CFO Study 2008

CFO Perception of Enterprise Risk Roles

11

High appetitefor risk

Low tolerancefor risk

Risk profile

Tactical Strategic

Organizational mind-set

Image makers Adventuresome visionaries

Daily operators Operational leaders

Risk Manager

Internal Auditor

Controller

CRO

CIO

COO

CFO

Sales

Marketing Line Executive

CEOStrategist

Source: IBM Global Business Services, The Global CFO Study 2008

Conclusions CEO's first foundational task is to achieve a balance between taking

economic risk (promoting creativity and innovation) and managing economic risk

The second redefined foundational CEO task is to fuse this high performance with high integrity. That means adhering to the spirit and letter of formal rules, voluntary adoption of ethical standards that bind the company and its employees, and employee commitment to core values of honesty, candor, fairness, reliability, and trustworthiness—which together are in the enlightened self-interest of the corporation and reduce legal, ethical, and reputational risk

The CFO's role in value creation is threefold. – First, the CFO must be certain that controls are in place and that

meaningful and timely reporting and analysis occurs. – Second, there is another set of risks--the more traditional set around

risk transference whether insurance or financial risks--such as hedging and derivatives.

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Conclusions (cont.)– Third, and this is where the CEO and CFO come together, is that the

CFO must be ready to support initiatives meeting the strategic needs of the organization. Credit must be available, working capital managed. But more than that, the CFO must be a main player in the risk identification process partnering with the CEO.

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Top 10 Strategies to be a Value Creator

1. Understand distinction between value preservation and value creation

2. Understand the dynamics of your C-Suite leaders and how their roles have changed or are changing

3. Anticipate the evolving interest of your Board as respects risk management and position your department and your C-suite leadership to proactively address those concerns

4. Recognize the distinctions of the CEO and CFO value creation strategies for your own organization

5. Know how to evaluate and measure your value creation project results

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Top 10 List (cont.)

6. Know how to identify and implement new value creation strategies that may be appropriate

7. Incorporate key learnings to make your value creation strategies resonate

8. Develop a communication template that highlights your quantitative decision process when communicating value creation proposals and/or results to internal stakeholders

9. ERM can provide the infrastructure to underpin your value creation strategies; look at your current ERM implementation status and consider next steps along the roadmap to maturity

10. Speak the language of your audience, and facilitate your CFO’s move towards an Integrated Finance Organization

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Basic vs. Value-Added Functions of Risk Manager – Sample list

Basic Functions (Examples) Evaluate vendors based on cost. Cost of

Purchase insurance.

Collect exposure information for renewal.

Have broker obtain quotes at different retentions.

Report claims.

Value-Added Contrast (Examples) Evaluate vendors based on balance of cost, ability to achieve strategic objectives,

quality of team, innovation. Evaluate insurance purchasing decisions that optimize risk transfer costs vs. retained

liabilities, tax & cash flow goals. Evaluate risks, including contingent loss exposures and other hidden costs, as well

as emerging risks. Request, analyze and communicate results of decision-support tools such as

actuarial analyses, financial modeling, benchmarking, etc. Analyze claims results and trends and develop risk control plans that mitigate loss.

Interview and select TPA to maximize claim management.

Sample Template to Inventory Existing Work

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Category Project, Task or Initiative

Value Preservation (Does it mitigate

unfavorable variability of risk?)

Value Creation (Does it improve results

or create value that didn't exist previously?)

Actuarial Reserve analysis XActuarial Loss Forecast XActuarial Retention Analysis XActuarial Collateral Review XActuarial Risk Transfer Pricing Analysis XActuarial Risk Decision Financing Platform X XActuarial The "Money Sheet" X XERM ERM X XClaims TPA Marketing - Implementation & Utilization of the AGRC Selection Process X XClaims Early Claim ID Project X XClaims Internal Accident Investigation - Enhanced Approach X XClaims Best Practices Claims Manual Design & Development X XClaims Claims Benchmarking and Key Indicator Reporting X X

Determining Value Creation Potential - Template

18

Source: Beiersdorf AG; CFO Executive Board research, “Ten Questions You Are Probably Asking Yourself About Improving Decision Support”, Corporate Executive Board, 2007

Evaluation Criteria No RoleLeading

Role1. What impact will this project have on the company? Low High2. What level of risk is involved? Low High3. How urgent is this project? Not Urgent Urgent4. How new-to-company is the task? Known New5. How easily can results be measured? Difficult Easy6. What data must be tracked to measure results?

Contributing Role (Sliding Scale)

Optimizing Risk Management Outputs Risk Manager is an internal service provider to the company. You

need to sell yourself to C-level mgmt and others. Goals and objectives should align with corporate goals and

objectives. Focus on analysis – not just collecting and providing information.

– Provide a context to make decisions.– Decision-support analytics bring statistical credibility to results and

recommendations.

Content is important, but how you deliver service distinguishes between perception of competent vs. outstanding.

Utilize technology to help you merge information for analysis, measure results and create meaningful reports.

Ensure your communications (written and verbal) achieve strategic goals and articulate the value RM brings to the table.

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Speak in Your CFO’s Language

Satisfaction = Perception - Expectation Neither perception nor expectation necessarily reflects reality. Both

are psychological states of mind.

People and organizations turn to professional services providers (such as the Risk Manager or Broker) for matters of significant uncertainty, importance and risk.

Quality work doesn’t necessarily mean quality service.

The practical meaning of good service and “outstanding” vs. “competent” extends far beyond technical excellence.

– Responsiveness and attitude will drive more trust, confidence, peace of mind. C-level management assumes technical competence.

3 most important keys to success are availability, affability and ability, in that order.

Source: Managing the Professional Service Firm, David Maister

Value Creation – Recap Understanding value creation CEO vs. CFO value creation strategies

– How they’re different

– Linking Risk Management into CEO and CFO value streams

Rethinking existing strategies for value preservation vs value creation distinctions

Additional value creation strategies (including “quick hits”) Communicating value creation results to internal stakeholders Top 10 List – Ways to achieve Value Creator status

22

Extras……

23

CEO Value Creation Strategies

24Source: IBM Global Business Services, The Global CEO Study 2008

CEO Value Creation Strategy Description Questions CEOs are Asking Themselves

How are we improving decision support capabilities within the Finance organization?

How broad is our view of risk? And is risk management integrated into performance management processes?What are the more discriminating and useful measures to track not only the degree but the effectiveness of change?

How am I helping the business detect shifts in customer preferences and behaviors?

How easily and objectively can we compare business cases across different products / brands, geographies and customers?

What complexities and silos are impacting my enterprise's ability to gain new insights?

How can CFO guide me towards the best bets in addition to policing budgets?

Is the Finance organization positioned to enable these transformations?

Can Finance further integrate itself globally?

How consistent are our processes and data definitions across the Finance organization?

Who is responsible for stewarding enterprise information and maintaining "the truth"? If not Finance, do I have sufficient voice in the stewardship?

What role are global process owners playing in our standardization efforts?

Will the structure of the Finance organization be an enabler of growth?

How is Finance laying the groundwork to help identify and enable new business models?

Who is responsible for supplying data and analysis to drive insight?

How am I identifying and learning from best practices in other industries?

How can Finance ensure the business does well while doing good?

Is CSR on my radar?

Do I have the ability to quantify the true costs and benefits of my enterprise's CSR activities?

Am I incorporating CSR considerations into performance and risk management?

Be not just generous, but genuine

CEOs are increasing investment in CSR by 25% over the next 3 years. Almost 70% of CEOs believe customers' rising CSR expectations are actually an opportunity, a chance to differentiate.

Innovate Beyond Customer Imagination

CEOs are investing in new markets and new ways to engage more informed and collaborative customers.

Hungry for Change - Anticipate and lead change, and perceive market and industry shifts as a chance to surpass the competition

CEOs anticipate staggering amounts of change ahead. More than just responding to change, CEOs want to anticipate and lead change.

Become Globally Integrated - Establish an interdependent network of worldwide assets with the ability to optimize resources horizontally and vertically

CEOs are making major business design changes to capitalize on global integration opportunities. However, Finance oftentimes is structured in a multinational fashion while the enterprise behaves in a more integrated fashion.

Disruptive by Nature - Business model innovation has a much stronger correlation with operating margin growth than the other types of innovation

Business model innovation - particularly changes to enterprise models - is high on the CEO agenda. 44% of CEOs are implementing enterprise model innovations over the next 3 years. They are focused on becoming more specialized and differentiated by rethinking what is done in-house vs.through partners. Implementing these innovative business models requires greater levels of collaboration.

CEO vs CFO Value Creation Strategies

25

CEO Value Creation Strategy

Business model innovation cuts across divisions, functions and departments and requires the integration of strategy, data and technology; Finance can facilitate innovation by standardizing and simplifying processes and information definitions wherever possible

To make decision support more robust, Finance needs to incorporate external market, competitor and customer data to strengthen the underlying assumptions of the organization's planning and forecasting models so that executives can more confidently take bold action to innovate the business models and potentially disrupt the industry to the organization's advantage

Rethink what is done in-house vs. through partners

CFO serves as conscience and intellect as respects CSR and is uniquely positioned to be the steward for CSR data and help with the performance monitoring and reporting

Finance can play a role in incorporating CSR into the enterprise's overall performance management strategy and establish processes and systems that integrate information across the entire value chain

CFO will be called upon to consider issues like: linkage of CSR initiatives to the enterprise's value drivers, quantification of the costs and benefits of CSR, tracking of real assets (such as carbon offsets), financial risks of not complying with CSR sentiments.

Implement enterprise-wide data definitions; a common "financial language" across the enterprise makes meaningful, objective comparisons possible (example: IFRS vs. GAAP)

Implement enterprise-wide standard chart of accounts

Implement enterprise-wide standardized processes; helps facilitate simplification, scalability and adaptability to new business models, as well as positioning organization to optimize operating models by consolidating routine, repeatable activites to capitalize on economies of scale, specialized labor and implementation of best practices

Establish global owners for key processes (global process ownership is critical to overcoming internal boundaries and barriers)

Explore transactional shared services and outsourcing as alternatives for performing routine, repeatable activities

One of the most critical contributions CFOs and the Finance organization can make is providing market intelligence interwoven with valuable channel and financial insights; in an uncertain and changing environment, Finance must provide leadership in areas well beyond accounting and must help set strategic direction and assist in growing the business. They must bring historical hindsight and a fact-based perspective on the future to support entrepreneurs and new business models while maintaining and improving today's performance

Keep an eye not only on the past and present, but on the future as well

CFO must guide CEO as to best bets, particularly when capital is scarce

Finance needs a systematic method for evaluating potential opportunities, which links performance and risk management to build a more accurate picture of the true costs and benefits

CFO must enable strategic analysis by providing a simplified, single version of "the truth" across the enterprise (facilitates apples-to-apples comparison among various customer, segment, product and market opportunities)

CFO must combine disparate financial and operational data to allow for unique insights and market intelligence that can help shape or influence customer behavior; organization must be able to predict (not just detect) shifts in customer preferences

Finance can facilitate innovation by standardizing and simplyfing process, information and definitions wherever possible.

Be not just generous, but genuine

Hungry for Change - CEO wants to anticipate and lead change and perceive market and industry shifts as a chance to surpass the competition

Become Globally Integrated - Establish an interdependent network of worldwide assets with the ability to optimize resources horizontally and vertically

Innovate Beyond Customer Imagination

Disruptive by Nature - Business model innovation has a much stronger correlation with operating margin growth than the other types of innovation

CFO Value Creation Strategy

Develop stronger decision support capabilities, including predictive models and tools as well as perceptive people

Implement risk-adjusted performance management reporting that integrates information across the enterprise

Expand Finance's view of risk beyond credit, liquidity and compliance; include a growing list of market, geopolitical and operational risks as well (only 52% of CFOs surveyed had any sort of formal program to manage risk)

Develop a set of discriminating and useful measures to track not only the degree but the effectiveness of change

Source: IBM Global Business Services, The Global CFO Study 2008

How CFOs view the Finance Organization

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Source: IBM Global Business Services, The Global CFO Study 2008

Key to responses:Importance: Critical, Important, Moderately Important, Somewhat Unimportant, Unimportant. We're only focusing on Critical and (Critical + Important) in the above exhibitEffectiveness: Very Effective, Effective, Moderately Effective, Slightly Ineffective, Ineffective. We're only focusing on Very Effective and (Very Effective + Effective) in the above exhibit

CriticalCritical or Important Very Effective

Effective or Very Effective

Measuring/monitoring business performance 38% 81% 18% 60%

Continuous process improvement/business improvement 30% 70% 6% 40%

Inputs into identifying and executing growth strategies 35% 70% 7% 40%

Supporting/managing/mitigating enterprise risk (ERM) 22% 64% 8% 44%

Driving integration of information across the enterprise 22% 64% 5% 30%

How important is this area of responsibility to your Finance

organization?

How effective is your Finance organization in performing this area of responsibility?

Finance Organization Task

CFO Efforts to improve Decision Support

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Source: “Ten Questions You Are Probably Asking Yourself About Improving Decision Support”, Corporate Executive Board, 2007

CFO Questions about Improving Decision Support

Best Practice Response (see full document for details)

Company Providing Best Practice Response

1. What are Finance Team's strengths & weaknesses? Review areas of business unit dissatisfaction CFO Executive Board

2. How does CFO structure Finance Team to support the highest impact decisions? Create a finance decision support role Best Buy

3. How does Finance decision support differ at the center from the line? Coordinate line decision support teams Best Buy

4. How does CFO clarify which decision support activities staff is held accountable for? Clarify decision support roles Nestle

5. How does CFO ensure Finance is involved in the most value-adding projects? Prioritize high impact projects Beiersdorf

6. How does CFO build the right mix of leadership, technical and decision support skills? Map training initiatives against decision support objectives Unilever

7. How does CFO ensure the line uses the analysis that Finance provides them? Embed financial rigor in line decisions Lockheed Martin

8. How does CFO improve the impact of Finance's communications to the line? Create actionable communications strategies The Pepsi Bottling Group

9. How do other companies enhance the quality of decision support over time? Review best-in-class decision support tools Unilever10. How do other CFOs evaluate Finance's performance in decision support? Don't use only financial measures Kimberly-Clark

Some Metrics Don’t Measure Value Well

28Source: “EVA Momentum: The One Ratio That Tells the Whole Story” by Bennett Stewart, EVA Dimensions, Journal of Applied Corporate Finance, Volume 21 Number 2, Spring 2009

Metric Definition Challenges

Sales Growth Rate delta sales/sales 1. Ignores costs and capital expended to achieve the growth

1. Net income follows accounting logic rather than business economics. To meet short-term goals, managers defer or cut discretionary spending, postpone valuable restructuring initiatives, and manipulate bookkeeping entries instead of generating cash

2. EPS incorrectly mixes operating and financing decisions, tempting managers to boost EPS with transitory share repurchases and off-balance-sheet financings

3. EPS is easily "manufactured" by investing in low return projects that give investors less profit than they could earn elsewhere at the same risk

1. Market share is not a value driver per se, but is the result of doing other things well

2. A temptation is to "buy" share instead of earning it through a superior business model

1. Lower margins can be more than offset by more rapid growth

2. Lower margins can be more than offset by more rapid asset turns (for example, outsourcing assets and vertical de-integration tend to reduce margins in exchange for reducing capital)

1. Value increases when new projects cover the cost of capital, but ROC increases when new projects earn more than the existing average return on capital

2. To increase ROC, profitable divisions will reject projects they should accept, and struggling ones will accept ones they should reject

3. ROC goals encourage managers to scale individual projects to maximize incremental return, which is generally well short of the size that maximizes total net present value

Return on Capital (ROC) profit/capital

Earnings per Share (EPS) net income/shares

Market Share sales/sector sales

Profit Margins profit/sales

29

Speak in Your CFO’s Language

Raw LossCurrent Program

Alternative Program Improvement

Expected EPS $4.56 $4.57 $4.58 $0.01Success rate at risk tolerance level - $2.20 89.5% 89.6% 89.7% 0.1%

EPS at:25th Percentile $6.40 $6.41 $6.42 $0.0150th Percentile $4.56 $4.57 $4.58 $0.0175th Percentile $3.14 $3.17 $3.18 $0.0195th Percentile $1.53 $1.65 $1.66 $0.0199th Percentile $0.42 $0.77 $0.78 $0.0199.9th percentile ($1.75) ($0.45) ($0.44) $0.01

Insurance Portfolio Options

The Money Sheet

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EPS ImpactPremium Credit - "The Money Sheet" ThousandsPresented in Thousands (000's)

Average<------------------ Retentions --------------------> <-----Incremental Change ----> 500m 1mm 5mm 10mm(A) (B) (C) (D) (E) (F) (G) Net 12,442 12,042 8,293 7,400

(A) - (B) (A) - (C) (A)-(D) Tax Shield 35.00% (4,355) (4,215) (2,903) (2,590)Loss Net of Tax 8,087 7,827 5,390 4,810

500m to 500m to 500m to 500m 1mm 5mm 10mm 1mm 5mm 10mm

Actuarial Mean - Retention 1,742 2,112 3,023 3,400 (370) (1,281) (1,658) Shares - Basic 180,000 180,000 180,000 180,000Shares - Diluted 185,000 185,000 185,000 185,000

Hypothetical Market Premium 10,700 9,930 5,270 4,000 770 5,430 6,700Total 12,442 12,042 8,293 7,400 400 4,149 5,042 Effect on EPS - Basic 0.0449 0.0435 0.0299 0.0267Basic EPS Impact 0.0449 0.0435 0.0299 0.0267 0.0014 0.0150 0.0182 Effect on EPS - Diluted 0.0437 0.0423 0.0291 0.0260

Probability of Risk Within Retention Increase in Risk 1 in 10500m 1mm 5mm 10mm

1 in 10 Year Event 2,630 3,430 6,480 7,890 (800) (3,850) (5,260) Net 13,330 13,360 11,750 11,890Premium 10,700 9,930 5,270 4,000 770 5,430 6,700 Tax Shield 35.00% (4,666) (4,676) (4,113) (4,162)Total 13,330 13,360 11,750 11,890 (30) 1,580 1,440 Loss Net of Tax 8,665 8,684 7,638 7,729Basic EPS Impact 0.0481 0.0482 0.0424 0.0429 (0.0001) 0.0057 0.0052

1 in 50 Year Event 3,250 4,490 9,250 12,750 (1,240) (6,000) (9,500) Shares - Basic 180,000 180,000 180,000 180,000Premium 10,700 9,930 5,270 4,000 770 5,430 6,700 Shares - Diluted 185,000 185,000 185,000 185,000Total 13,950 14,420 14,520 16,750 (470) (570) (2,800)Basic EPS Impact 0.0504 0.0521 0.0524 0.0605 (0.0017) (0.0020) (0.0101) Effect on EPS - Basic 0.0481 0.0482 0.0424 0.0429

Effect on EPS - Diluted 0.0468 0.0469 0.0413 0.04181 in 100 Year Event 3,500 4,880 10,750 14,610 (1,380) (7,250) (11,110)Premium 10,700 9,930 5,270 4,000 770 5,430 6,700Total 14,200 14,810 16,020 18,610 (610) (1,820) (4,410)Basic EPS Impact 0.0513 0.0535 0.0579 0.0672 (0.0022) (0.0066) (0.0159)

500m to 1mm500m to 5mm500m to 10mm 1 in 50500m 1mm 5mm 10mm

Net 13,950 14,420 14,520 16,750Tax Shield 35.00% (4,883) (5,047) (5,082) (5,863)Loss Net of Tax 9,068 9,373 9,438 10,888

Shares - Basic 180,000 180,000 180,000 180,000Shares - Diluted 185,000 185,000 185,000 185,000

Effect on EPS - Basic 0.0504 0.0521 0.0524 0.0605Effect on EPS - Diluted 0.0490 0.0507 0.0510 0.0589

1 in 100500m 1mm 5mm 10mm

Net 14,200 14,810 16,020 18,610Tax Shield 35.00% (4,970) (5,184) (5,607) (6,514)Loss Net of Tax 9,230 9,627 10,413 12,097

Shares - Basic 180,000 180,000 180,000 180,000Shares - Diluted 180,000 180,000 180,000 180,000

Effect on EPS - Basic 0.0513 0.0535 0.0579 0.0672Effect on EPS - Diluted 0.0513 0.0535 0.0579 0.0672

(0.0200)(0.0150)(0.0100)(0.0050)0.0000 0.0050 0.0100 0.0150 0.0200

500m to 1mm 500m to 5mm 500m to 10mm

Earn

ings

Per

Sha

re

Impact of Moving to a Greater Retention

Incremental Basic EPS AFTER Premium Credit

Average 1 in 10 1 in 50 1 in 100