JLT Aerospace

Airline Group Placings & Airline Consolidation

Presented by Ian Krise

1 October 2010

RAASI XV Aviation and SpaceInsurance Conference

Agenda

AXIOM InRe and JLT Aerospace Airline Group Placings

– What are the Options and Why?– Insurance Benefits– Insurance Drawbacks

Airline Consolidation– A worldwide phenomenon– A merger or an acquisition?– Long term consequences and who benefits

JLT Aerospace

JLT Aerospace handles approximately 15% share of worldwide airline market, over 20% excluding US market. Our share is rising

JLTOther

Marsh

Willis

Aon/ Benfield

JLT Aerospace 2010

2010 Airline wins include :

STC Rossiya

Indigo program including Avia Nova,

Tiger Airways, Spirit Airlines, Mandala and Wizz Air

DHL

NACIL (Indian Airlines /Air India)

Airline Group Placings: 3 Options

Combined Slip

All airlines

Combined Slip

All airlines

Off-slipAirline A

Off-slipAirline A

Off-slipAirline B

Off-slipAirline B

Main slipMain slip

Off-slipAirline C

Off-slipAirline C

Slip for Airline A

Slip for Airline A

Slip for Airline B

Slip for Airline B

Slip for Airline C

Slip for Airline C

A. Combined Slip

B. Main slip and off-slips

C. Simultaneous marketing

Airline Group Placings: Advantages and DisadvantagesInsurance Advantages Obviously Premium volume and

resultant rating levels Coverage benefits - Smaller

Airlines obtain the same or similar coverages as larger airlines

Market presence for any issues that may arise during the placement

Insurance Disadvantages Claims may adversely effect all

airlines in the Group Any claim resultant rise in

premium needs to be subject to an agreed formula for "who pays what"

Difficulty for an Airline to leave an Airline Group placing - Higher Stand alone rates/premium

Group placings can prove restrictive for smaller airlines - Lack of influence

Insurers spread of risks diminishes - Either insurers write one whole group or miss out altogether

Airline Group Placings: Summary

Airline group placings are here to stay and are increasing globally

Only Insurers/Reinsurers & Brokers that have the required size and expertise can handle them

Overall it is a benefit to Airlines Represents a loss of premium income and

underwriting choice for Insurers/Reinsurers

Airline Consolidation

A worldwide phenomenon - why?

A merger or an acquisition?

Long term consequences - who benefits?

Airline Consolidation: Summary

Global mega carriers are not new and are increasing globally

Excluding niche airlines - a matter of survival for airlines

Historically new start ups and LCCs have helped to mitigate the merger and acquisition activity