MARKET UPDATEHOW IS THE INSURANCE MARKET ADAPTING TO NEW OPPORTUNITIES AND CHALLENGES?2013

Simon Howell

Placement Leader

Bowring Marsh

BOWRING MARSH

Profitability Peaks & Troughs in the P/C Insurance Industry 1975 - 2012

P&C Insurance Industry has experience 4 consecutive “10 years” cycles since 1975

History suggests next ROE peak will be in 2016-2017

BOWRING MARSH

Natural Disasters Worldwide, 1980 – 2013Number of Events

Number of CAT events or quality of its data collection is increasing with time

Insurance markets need to allocate increasing underwriting capital to account for the future anticipated larger CAT Losses

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Bowring Marsh P&U Portfolio (313,635 MW)

Rate per 100 TIV

Historical Rate per 100 TIV and Claims

- Globally Static Rates

- Regional differentials between traditional and emerging Insurance Hubs (London, Europe, Singapore, Middle East)

- Increased Quantum and Frequency of claims

- Increased technology complexity in manufacturing requirements

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USAAIG (US$1 BN)OIL (Mutual)

Middle EastLimitedAppetite

LondonExisting consolidated P&U expertise

(Zurich, Travelers, Scor..) New: Sciemus

Cont EuropeTraditional continental capacity expanding abroad

(MAPFRE, AXA, Generali…)

Asia Chinese capacity expanding abroad

(PICC, CPIC)

Key Global P&U International Insurers (existing and new)New, emerging or expanding insurance capacity

BOWRING MARSH

How is the P&U Insurance Market Adapting to Changes in Client Exposure Profile

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P&U Insurance Forecast for 2014

• Headline Premiums continue to have downward pressure.

• New and existing carriers will provide Innovation in Product and Design.

• Bespoke Solutions to changing Business Interruption Profiles.

• Spin-offs of Renewable Energy Portfolios to stand alone policies.

• Development of Deductible “buy down” Solutions.

BOWRING MARSH

The size and diversity of our global portfolio has enabled us to develop a market-leading Risk Analysis Modelling Platform (RAMP). This helps us benchmark Property Damage and Business Interruption insurance programmes.

In December 2012, the RAMP won the ‘International Broker Innovation of the Year’ Insurance Times award on behalf of Bowring Marsh.

Using data points such as critical catastrophe, deductibles, key sub-limits, loss limit, loss ratio, mega watts, region of exposure, total insured values and type of power generation, the RAMP enables us to provide important in-depth management information on a confidential basis to:

• Present a clear visual representation of how any insurance programme compares to that of others in the same industry

• Compare local programmes (in the same region as the insured) to those available from international markets

• Provide quick ‘ball-park’ estimates for either new or renewing business based on historical trends.

Risk Analysis Modelling Platform (RAMP)

BOWRING MARSH

Risk Analysis Modelling Platform (RAMP)

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Screen Shots of the Risk Analysis Modelling Platform

Tailored Risk Analysis Reports

Marsh Ltd conducts its general insurance activities on terms that are set out in the document "Our Business Principles and Practices".

Full details may be viewed on our website http://www.marsh.co.uk/aboutMarsh/principles.html

Registered in: England Number: 1507274

Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU

Marsh Ltd is authorised and regulated by the Financial Services Authority for insurance mediation activities only.

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