Global ReinsuranceResults and Trends

Discussion Outline

Global Reinsurance Results, Trends and Outlook

Global Reinsurance Market Capacity

Global Reinsurance Market Evolution

2

Segment Outlook – Global Reinsurance

3

Headwinds TailwindsIntense competition Cession rates increasingIncreasing interest from third-party capital

Cat losses temporarily stabilise rates

Earnings stabilise but remain under pressure

Favourable reserve development,but waning

Excess capacity hinders further improvement

Strong risk-adjusted capital

Potential for increased inflation Increase in interest ratesM&A

Although capitalisation remains strong and rate deterioration temporarily halted, pressure on margins continues. Over the intermediate term, returns for some reinsurers will fall short on a risk-adjusted basis. Maintain negative market outlook.

Central Bank Base Lending Rates

-1

0

1

2

3

4

5

6

7

8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

(%)

China

ECB

Japan

UK

US

4

Global GDP Growth – Major Economies

-6

-4

-2

0

2

4

6

8

10

12

14

16

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

(%)

China France Germany Japan United Kingdom United States *Forecast

5

2017 represented the most significant year for catastrophe losses since 2011

Hurricane Harvey, Irma, Maria combined with Earthquake in Mexico and Wildfire in California produced industry losses in the range of USD 80 to 100 billion

Despite timing of these events, negative reserve surprises have been limited thus far

6

Global Reinsurance Market Trends

Global Reinsurance Market TrendsOverall 2017 catastrophes amounted to an earnings events as rated balance sheets emerged flat for the year

Alternative capital did participate in the events in a meaningful way resulting in collateral locks prior and through the 1/1 and mid year renewal periods

Alternative capital investors were NOT hindered by the losses and brought additional capacity to the market for the renewals

7

Global Reinsurance Market TrendsOptimism

that followed quickly faded

as January renewal

negations progressed.

Significant push back from Clients not impacted by

losses. But hope lingered into the

June / July renewal.

Overall, reinsurance pricing stabilized. More

pronounced improvement in

underlying business.

As a result pricing is not optimal for certain classes and structures but there are opportunities out there...

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Total Economic and Insured Losses (USD billions)

9

Source: Swiss Re Institute

2017 2016 Annual Change (%)

10-YearAverage

% of 10-Year Average

Economic Losses

Economic LossesNatural Catastrophe 300 178 69% 178Man-made 6 10 -42% 12

Total 306 188 63% 190

Insured Losses

Natural Catastrophe 131 56 133% 51 29%Man-made 5 8 -45% 7 58%

Total 136 65 110% 58 31%

Global Reinsurance Market Trends

55.9% 56.2% 56.2% 60.6%

76.5%

60.6%

61.1%

31.9%33.5%

34.2% 34.7%

33.6%

33.9% 33.6%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0%

20%

40%

60%

80%

100%

120%

2013 2014 2015 2016 2017 2018 H1 5yr Avg

Expense Ratio

Loss Ratio

Loss ReserveDevelopment

Source: A.M. Best data and research

Global Reinsurance Sector – Combined Ratio

10

86.8% 88.1% 90.0%97.9%

114.0%

95.0%

2013 2014 2015 2016 2017 2018Q2

Combined Ratio by Reinsurance Sector

11

European “Big Four” U.S. & Bermuda Lloyd’s

86.6% 87.4% 90.7% 92.5%

109.0%

92.9%

2013 2014 2015 2016 2017 2018Q2

Loss Ratio Expense Ratio

89.3% 92.4% 91.8% 96.3%109.0%

95.0%

0%

20%

40%

60%

80%

100%

120%

2013 2014 2015 2016 2017 2018 Q2

Global Reinsurance Market Trends

13.0%

11.6%

9.5%8.3%

-0.3%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2013 2014 2015 2016 2017

Return on Equity Five-Year Average

Source: A.M. Best data and research

Return on Equity (2013 to present) and Five-Year Average

12

Global Reinsurance Market Trends

European “Big Four” U.S. & Bermuda Lloyd’s

Return on Equity by Reinsurance Sector

Five-Year AverageSource: A.M. Best data and research

2017

13

13.1%11.0% 11.5%

9.7%

2.7%

9.3%

2013 2014 2015 2016 2017 2018 Q2

11.4% 10.9%

7.5% 6.8%

-0.5%

6.0%

2013 2014 2015 2016 2017 2018 Q2

16.2%14.7%

8.9% 8.1%

-7.3%

4.3%

2013 2014 2015 2016 2017 2018 Q22017

Global Reinsurance Market TrendsGlobal Reinsurance Market

5 Year Average Return on Equity Less Reserve Development

Source: A.M. Best data and research

10.9%

8.3%

6.8%

4.5%

Composite at YE2016 Composite at YE2017

5 Year Average Return on Equity5 Year Average Return on Equity excluding Loss Reserve Development

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Global ReinsuranceMarket Capacity

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Global Reinsurance Market Capacity

Top 10 Global Reinsurance Groups –Non-Life

Top 10 Global Reinsurance Groups –Life

Munich Reinsurance Company

Swiss Re Ltd.

Berkshire Hathaway Inc.

Lloyd’s

Hannover Ruck SE

SCOR S.E.

Everest Re Group Ltd.

XL Group plc

Transatlantic Holdings, Inc.

PartnerRe Ltd.

Munich Reinsurance Company

Swiss Re Ltd.

Reinsurance Group of America Inc.

SCOR S.E.

Hannover Ruck SE

Great West Lifeco

Berkshire Hathaway Inc.

Pacific LifeCorp

PartnerRe Ltd.

Assicurazioni Generali SpA

Source: A.M. Best data and research. Ranked by unaffiliated gross premium written in 2017

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Global Reinsurance Market Capacity

Rank 1-1070.2%

Rank 11-2015.5%

Rank 21-307.2%

Rank 31-404.6%

Rank 41-502.5%

Life and Non-Life Reinsurance GPW Distribution by Ranking

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Global Reinsurance Market Capital

292 320 340 332 345 345 362

19

48 60 68

75 87 100

2012 2013 2014 2015 2016 2017 2018E

Convergence Capital

Traditional Capital

Estimate for Total Dedicated Reinsurance Capital (USD billions)

Notes and Sources: Estimates by Guy Carpenter and A.M. Best

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Global Market TrendsConvergence Capacity

(2018 estimated) (USD billions)

19

71

23

6

0

10

20

30

40

50

60

70

80

90

100

Direct Institutional Investors

Reinsurance Sponsored Managers

Dedicated Insurance-linked securities (ILS)Managers

Source: Guy Carpenter and A.M. Best

Global Market Evolution

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“Global” Franchises

• Arch• Aspen• AXIS• Everest Re• Hannover Re• Lloyd’s• Munich Re• RenaissanceRe• SCOR Re• Swiss Re

ShelteredFranchises

• Allied World• Endurance(Sompo Intl)• General Re• MS Amlin• Odyssey Re• National Indemnity• Partner Re• Tokio Millennium Re• TransRe• Validus• XL Catlin

Franchises That Are Gone

• Ariel Re• Flagstone• Harbor Point / Max (Alterra)• IPC Re• Montpellier • New Castle Re• Paris Re• Platinum Re

What Does The Future Hold?

• Fidelis• Greenlight Re• Hamilton• Harrington Re• Humboldt Re• Kelvin Re• Lumen Re• Maiden Re• Third Point Re• Watford Re

Market Landscape ~10 Years In Time

21

The Case for M&A

22

Broader product capability

Broader geographic reach

Greater influence

Greater attractiveness to alternative capital

Opportunity for growth

Alternatively…M&A is the result of a strategic

opportunity

Alternative Capital

23

Market is still largely

influenced by global leaders

M&A will continue

Alternative capital is driving change

Alternative capital is driving a great deal of structural change in the market

However, the market continues to be heavily influenced by the global reinsurance leaders

The Drive for Efficiency

24

The market will

continue to become

more efficient as all

players strive to

become closer to

the client

Global Market Trends

Traditional Dual Platform

Controlthe client

Build primary business

Alternative Capital Platform

Manage or have a relationship with

alternative capital

Build fee income stream

Mergers &Acquisitions

Relevanceand size

Ability to be small and nimble with parental

protection

Strategy Evolution

25

Q & A

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