CONSTRUCTION RISK PARTNERS LLC, A JLTGROUP COMPANY ... · A JLTGROUP COMPANY AMERICAN GAS ASSOCIATION JULY, 2017. Market Review. Casualty Market. Property Market ... Construction

CONSTRUCTION RISK PARTNERS LLC, A JLT GROUP COMPANYAMERICAN GAS ASSOCIATIONJULY, 2017

Market ReviewCasualty MarketProperty Market

Emerging RiskForecast

AGENDA

JLT Specialty USA | CRP | AGA Presentation 2017 2

Construction Risk Partners

Established in 2006, Construction Risk Partners is privately held by 11 partners with a singular focus onserving the insurance and surety needs of the construction & energy industries. We have vast experience withmany of our partners having worked together for more than 30 years.

Recently ranked one of the top specialty brokers in the North America


JLT Specialty USA | CRP | EMCOR Presentation | February 2017 4

BY THE NUMBERS

JLT ENERGY & UTILITY

$2bn+In claim payments collected by JLT team members in 2015

$16bn+Annual premium currently placed by JLT Specialty’s operations

10K+Employees in 135 countries

20+Average years of insurance industry experience per Energy Account Executives and Claims Staff

97%JLT Client Retention

8Of the top 10 global oil companies

2MMMiles of pipeline represented

80%+US year over year revenue growth

50K+Energy vehicles insured by JLT US

JLT is the largest specialty insurance broker globally, comprised of experienced professionals focusing on the placement and risk consulting for the Energy Industry.

The Energy & Utility Industry requires specialization and market knowledge to insure the most efficiently priced risk and insurance program. We seek custom solutions to ensure coverage matches operations. A policy is only as valuable as the claim it pays.

#1Fastest growing US energy insurance broker

COMPANY STOCK PRICE – JULY 1, 2015 STOCK PRICE – JULY 5, 2016 STOCK PRICE – JULY 5, 2017

AGL Resources 47.66 65.97

Alliant Energy 30.05 40.39 40.45

Ameren 38.24 50.71 54.12

Atmos Energy Corporation 53.33 80.47 82.75

Avista Corporation 30.89 44.87 42.45

CenterPoint Energy 19.12 24.05 27.46

Dominion 66.69 77.86 77.06

Duke Energy Corporation 68.04 82.81 83.32

EQT Corporation 76.55 79.33 59.01

Eversource Energy 45.57 60.25 60.18

National Grid 66.43 74.36 62.93

New Jersey Resources 26.37 38.25 39.9

NiSource Inc. 16.91 26.66 25.39

Great Year!


COMPANY STOCK PRICE – JULY 1, 2015 STOCK PRICE – JULY 5, 2016 STOCK PRICE – JULY 5, 2017

Northwest Natural Gas Company 42.23 65.37 59.9

ONE Gas, Inc. 43.49 65.63 69.61

Piedmont Natural Gas 35.28 60.00

Questar Corporation 21.50 25.19

SEMCO Energy Gas Company

Sempra Energy 101.10 113.49 112.99

South Jersey Industries 25.19 31.74 34.26

Southern 42.89 54.25 47.46

Southwest Gas Corporation 55.16 78.13 72.83

Vectren Corporation 39.39 50.14 58.26

Washington Gas Light Company

WEC Energy Group 47.26 65.05 61.47

Xcel Energy 32.50 47.27 45.31

Great Year ! continued


7JLT Specialty USA | CRP | AGA Presentation 2017






• Most brokers expected 2017 to be a year with slowed reductions in the property market. However, after the Jan.-July 1 renewal season, rate reductions again hit double digits.

• More capacity continues to enter the market place. Lloyd’s and other non-traditional insurance markets continue to increase “blind” capacity.

• 2016 again, was a mild natural catastrophe season. However in the downstream energy sector, many insurers loss ratios exceeded 100%. 2017 has also seen losses excess of $1M already exceed $1.6bn.

PROPERTY


PROPERTY


• Berkshire Hathaway and other new market entrants continue to compete for property risk in the United States.

• Zurich, Aspen, Aig, Chubb (Ace), FM Global, Ironshore, XL, Lloyds continue to compete for market share.

• Aegis remains strong with their capacity of $350M via larger consortium support.

• With rates decreasing, insurers continue to seek capacity increases to compete for premium dollars

• Major insurers also look to cut cost and restructure in the US.

• Global Capacity now easily exceeds $4.2bn

PROPERTY


• Industry Mutuals (Aegis and EIM) remain strong players in the power and utility space.

• Aegis continues to provide some of the most robust and comprehensive coverage available with an extremely high client retention rate.

• Surplus exceed $1.2bn for 2015 and with reserves of almost $3bn

• Aegis continues to maintain rate with mostly flat renewals but is also offering ‘continuity credits’ to clients

THE MARKET - PRIMARY CASUALTY


• In general, the market is very competitive and capacity remains aggressively priced for well managed risk.

• Workers Compensation has finally stabilized and the industry will again become competitive. Pricing has reflected medical cost inflation and now has rebalanced. Still state specific

• Auto remains a problematic. Increase in commercial auto claims industry wide due to increased vehicle use and lack of skilled drivers is increasing claim activity. Severity driven.

PRIMARY CASUALTY


• EIM maintains a large share of the first layer excess of Aegis on a Follow Form basis.

• Surplus now exceeds $1bn• 98% client retention rate• $100m Liability limit to sit excess of Aegis• Rating remains generally flat depending on exposure base change.

THE MARKET - EXCESS LIABILITY


• Bermuda remains the dominant market supplying capacity in excess of EIM.

• Capacity available exceeds $800M on a ‘Follow Form’ basis with limitations and enhancements. Punitive Damages coverage included.

• Continuing focus on safety programs, pipeline integrity and vegetation management.

• Underground storage, Product Transportation and Wildfires are of particular interest.

• High Concentration Areas “HCA’s” continue to require focus.

• Aggregate management remains a focus particularly for multi client contracts

• Bermuda markets renewals have typically incur circa 5% premium decreases.

THE MARKET - EXCESS LIABILITY


• XL Catlin – $75m• Oil Casualty - $100m • Sompo (Endurance) - $50m• Allied World - $75m• Markel - $25m• Arch -$25m• Argo - $75m• Iron-Starr - $100m • AIG - $150m• Chubb - $150m• Aspen - $25m• Hamilton - $25m

THE BERMUDA MARKET – EXCESS LIABILITY CAPACITY AVAILABLE


• AEGIS• American Fire & Casualty• Berkshire• Everest• Markel• Travellers• Zurich• AIG• ARCH• Chubb• Great American• Navigators

THE BERMUDA MARKET – PUNITIVE DAMAGES WRAP AVAILABILITY


• Us Specialty• Allianz• Aspen• CAN• Ironshore• Starr Insurance• WR Berkley• Allied World• AXIS• Sompo• Liberty• XL Catlin

Companies engaged in the generation, transmission and distribution of electricity including the transmission or distribution of gas. (Source; Chubb Bermuda)

UTILITIES SECTOR - SOME CASUALTY LARGE LOSSES L


2007 Water from hydroelectric power plant damaged nearby property - USA $173 million2007 Wildfire USA - $2.2 billion2007 Utility company vessel crashed into anchored oil tanker causing oil spill China - $142 million2007 Wildfire USA - $370 million2008 Impoundment failure USA - $1.1 billion2008 Gas line explosion resulted in fatality and injuries USA - $25 million2009 Explosion at hydroelectric plant with multiple fatalities Russia 3rd Party Unknown2009 Electrocution caused fatality USA - $109 million2009 Bushfire resulted in multiple fatalities and property damage Australia - $379 million2009 Bushfire resulted in property damage Australia - $50 million2010 Pipeline explosion with multiple fatalities and property damage USA - $650 million2010 Natural gas pipeline explosion with multiple fatalities USA - $27 million2012 A natural gas explosion resulting in multiple injuries and property damage2012 Downed power line caused electrocution resulting in fatality USA - $60 million2013 Tree collapsed causing a fatality and multiple injuries USA - Pending2013 Gas explosion resulted in fatality and multiple injuries USA - Pending2013 Multiple fatalities as a result of electrocution USA - Pending2013 Alleged negligence during maintenance resulting in serious injuries USA - $22 million2014 Gas explosion at residential building resulted in multiple fatalities and injuries. USA $153 million2014 Contamination of drinking water USA - Pending2014 Home explosion resulted in fatality and multiple injuries USA - Pending2014 Alleged negligence resulted in apartment explosion USA - Pending2015 Wildfire USA - $750 million2015 Gas leak caused explosion at residence resulting in third party property damage and several injuries - USA - Pending2015 Natural gas leak resulted in alleged illnesses and mandatory evacuation of a few thousand families USA - $717 million2016 Gas build up in apartment basement lead to explosion and fatalities USA - Pending2016 Dam/Reservoir spillway release alleged to contribute to the flooding damage of hundreds of homes USA - Pending

Companies engaged in exploration, production, refining, processing, marketing and distribution of natural gas, oil, liquids and derived products, including contract drilling and other oilfield products and services. (Source; Chubb Bermuda)

OIL & GAS SECTOR - SOME LARGE LOSSES L


2006 Broken gas well caused fatalities Indonesia - $100 million2006 Ship unloaded waste in ocean resulting in fatalities and injuries Ivory Coast - $468 million2006 Oil spill USA - $245 million2006 Oil Spill USA - $150 million2007 Oil spill Mexico - $45 million2007 Fire/explosion at natural gas procession plant USA - $83 million2007 Offshore oil spill South Korea - $103 million2008 Fire/explosion at refinery USA - $150 million20093 Pipeline leak USA - $144 million2009 Oil spill Australia - $160 million2010 Gulf of Mexico sub-sea well blowout with multiple fatalities USA - $20 billion2010 Pipeline leak USA - $1.2 billion2010 Coal mine explosion with multiple fatalities USA - $210 million2010 Oil refinery explosion USA - $39 million2011 Oil Spill Brazil - $42 million2011 Class action resulted after oil spill USA Pending2011 Offshore oil leak China - $267 million2011 Drilling services provider battery pack explosion resulted in fatality USA - $29 million2012 Gasoline spill due to a ruptured pipeline USA - Pending2012 Oil spill Canada - Pending2012 Explosion at oil refinery resulted in multiple fatalities Venezuela - $1.8 billion2012 Sinkhole resulted in contamination USA - $48 million2012 Tractor-trailer driveshaft assembly broke off in transit and killed passenger in oncoming truck USA - $282 million2013 Oil pipeline rupture USA - Pending20133 Well water contamination USA - $816 million2013 Plant fire and explosion USA - $30 million2014 Oil rig explosion resulted in multiple fatalities and injuries USA - Pending2014 Oil rig explosion resulted in a fatality and several injuries USA - Pending2015 Oil rig explosion resulted in multiple fatalities and injuries Brazil - Pending2015 Gas leak at storage facility USA - Pending2015 Oil pipeline rupture and spill USA - $269 million2015 Oil spill Nigeria - $84 million

• Property - rate decreases in 2017/2018 of 10%-15% will be considered average as long as there is not major natural catastrophe or other large insurable event.

• Casualty – rate stabilization in 2017/2018. This is loss dependent over a 5 year period per risk but aggressive pricing and coverage terms & conditions still exist if marketed. Auto Liability is the problematic line especially with risks with large fleets.

• Excess Liability – rate decreases of 0-5% should be expected due to the competitiveness of this market driven by the new capacity. Large losses still create uncertainty but the overall profitability of the Insurance and reinsurance business will drive these decisions. Markets will look to retain key accounts

• Further market consolidations similar to XL/Catlin, Chubb/ACE, Liberty/IronShore, Allied World/Fairfax Financial.

FORECASTS


Joseph J Kent, Partner

25

Joe has over 20 years of experience working within the Construction and Energy Industries in various risk management capacities. Starting as a risk manager for Marker, a steel erection company near State College, PA, in the late 1980’s and then moving back to Philadelphia to work for two Insurance Brokers Willis and Aon, Joe’s has been responsible for all facets of risk management solutions with a specialty in complex insurance placements. From his early years managing claims, environmental and safety solutions for Marker, Joe was promoted to Risk Manager which gave him the unique experience of designing a risk management program for a contractor in an extremely high hazard industry. From there Joe joined the Insurance Brokerage Community in 1995 working for both Aon and Willis. He held various roles during his years at the two national brokers with the last being Executive Vice President and Managing Director of Construction focusing on large account management.

[email protected](o) 484.654.0576(c) 610.888.9290

JLT Specialty USA | CRP | AGA Presentation 2017

mailto:[email protected]


Rob leads JLT’s US downstream energy, power and renewables team. He has a deep knowledge and understanding of the risk profiles industries such as electric utilities, refining, petro-chem, as well as alternative energy sectors. Prior to joining JLT, Rob was a Senior Vice President and Account Executive with Aon in Dallas, TX. He served as a leader in the National Power & Renewables Group. He has been involved in risk coordination and insurance services of some of the top downstream energy & power and utility accounts in the world. He has been named Power Broker by Risk & Insurance Magazine, specifically for Power and Utilities and received the same accolades from Business Insurance and Reactions magazines.Rob began his career with Global Special Risk broking specialty insurance for energy clients.Rob is a graduate of University of Texas at Austin.

[email protected]

Rob Battenfield, Senior Vice PresidentHouston, Texas

mailto:[email protected]

Documents

CONSTRUCTION RISK PARTNERS LLC, A JLTGROUP COMPANY ... · A JLTGROUP COMPANY AMERICAN GAS ASSOCIATION JULY, 2017. Market Review. Casualty Market. Property Market ... Construction