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Property and Casualty

Property and Casualty. Insurance Marketplace Update November 2009 Tim de Jonge BComm, CIP, CRM Account Executive Aon Global Energy. Agenda. Marketplace Overview Industry Results ― 2008 Industry Forecast ― 2009-2010 Line of Coverage Review Property Casualty. Rates Insurable losses

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Property and Casualty

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  1. Property and Casualty Insurance Marketplace Update November 2009 Tim de Jonge BComm, CIP, CRM Account ExecutiveAon Global Energy

  2. Agenda • Marketplace Overview • Industry Results ― 2008 • Industry Forecast ― 2009-2010 • Line of Coverage Review • Property • Casualty

  3. Rates Insurable losses Investment environment Global economic recession Property losses ― risk and natural catastrophe events Industry Surplus YE 2008 = $438 billion, -16% from $518 billion YE 2007 Net Written Premium -1.4% Treaty or portfolio reinsurance ― 2009 increases 10%-20% 2008 combined loss ratio = 105.1% 2008-2009 Insurance Marketplace Overview

  4. Insurers overall capital losses 2008 reflects developments in financial markets and insurers’ need to write-down investments that became impaired as a result of the recession, foreclosures, and the crisis in the financial system • S&P 500 -38.5 %, • NASDAQ & NYSE composite indexes -40 % • ISO estimates $26.9 billion in pretax capital losses on impaired investments. • 1Q 2009 S&P 500 -11.7 %

  5. Industry Results 1st Half of 2009 Resilience demonstrated: • Record catastrophe losses • 100% combined loss ratio • 9.5% return on surplus • Sluggish growth in net written premium: 1.3% • Profitability returns

  6. 2010 — Forecast • Small underwriting profit • Net written premiums growth of up to 5% • Hardened Property market • Difficult market for coastal/cat • Spillover into Casualty? • Demand for underwriting discipline to lift returns • Combined Ratio of under 100%

  7. Property — Average Rate Change

  8. Property Capacity Industry surplus lower than a year ago, particularly in Nat/Cat areas; Capacity appears adequate and stable • Market Outlook: The Remainder of 2009 and Beyond • Upward rate pressure through the active Atlantic Storm Season • Modest downward pressure on rates in the late fourth quarter and into 2010

  9. Primary Casualty — Average Rate Change

  10. Casualty Capacity • Competition remains very strong in the primary casualty marketplace • Few changes in the number and quality of carriers actively writing large primary casualty business with at least 12 viable markets competing for this business, • Excess casualty capacity is at record levels • Significant new and additional excess casualty capacity entering the marketplace in the last 14 months. • Casualty insurance carriers continue to try to maintain incumbent relationships and aggressively pursue new business opportunities.

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