For 2008, the underwriting results posted by the Exchange are generally in line with the property and casualty (P&C) industry as a whole, demonstrating that our efforts to discipline the business process are yielding more consistent operating performance. Our losses on invested assets are also within the range of industry experience, but 2008 was anything but a typical year. The fiscal hurricane that blasted through the world’s financial markets in recent months has transformed the shibboleth Enterprise Risk Management (ERM) into a shillelagh and battered the financial services industry.

While property and casualty (P&C) insurance fared far better than most sectors, the impact is nonetheless significant. There is a “soap opera” quality to the headlines these days: overwrought tales of poor risk management practice characterized by failure to diversify assets, improper securitization, and overly aggressive leveraging by financially savvy people who should have known better. But they didn’t. And the sad saga of the proliferation of credit default swaps, asset-backed debt securities (with emphasis on the debt rather than the assets) Ponzi schemes and other “innovative” financial products have become the tale of the tape in the financial markets over the past year. Today’s financial markets bring into sharp focus the criticality of clearly and completely understanding what it is you are purchasing in any financial transaction.