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AGENDA

REINSURANCE AND THE FLORIDA INSURANCE MARKET Presented by John Auer President & CEO American Strategic Insurance Group. AGENDA. Overview of ASI General timeline of reinsurance placement Reinsurance program considerations Structure of the 2011 ASI reinsurance program

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AGENDA

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  1. REINSURANCEAND THE FLORIDA INSURANCE MARKETPresented by John AuerPresident & CEOAmerican Strategic Insurance Group

  2. AGENDA • Overview of ASI • General timeline of reinsurance placement • Reinsurance program considerations • Structure of the 2011 ASI reinsurance program • Participating reinsurance companies • Factors affecting the price of reinsurance • Premium impact

  3. OVERVIEW OF ASI • American Strategic Insurance group (ASI), headquartered in St. Petersburg, Florida, is the fourth largest property insurer in Florida and currently insures over 350,000 Floridians. • ASI is rated A- Excellent by A.M. Best. • ASI was founded in 1997 to provide a voluntary insurance market for Florida residential property. • In 2003, ASI expanded into commercial lines of property insurance. • ASI currently writes approximately $650 million of business in 16 states and D.C. • Florida currently represents 56% of ASI’s total nationwide premium volume.

  4. Placement complete Firm order to market Proposal to market Quotes received February March April May GENERAL TIMELINE Visit reinsurers

  5. REINSURANCE PROGRAM CONSIDERATIONS • Solvency • Ensure financial ability to keep our commitments to insureds • PML • Multiple events • Pricing • Rating Agencies

  6. REINSURANCE PROGRAM CONSIDERATIONS • Modeling Data • Managing exposure is a priority at ASI and many departments are involved, including Product Development, Underwriting, Finance, Marketing and Agents. • ASI licenses two hurricane models in an effort to better estimate hurricane risk. • ASI gradually incorporates model revisions into rates and overall portfolio management strategies. • ASI focuses on maintaining quality data to ensure that our rates and modeling results are accurate.

  7. AIR v11 – 1:361 Year RMS v10 – 1:485 Year AIR v12 – 1:196 Year RMS v11 – 1:111 Year (Top of 2010 program –$ 975M) AIR v11 – 1:218 Year RMS v10 – 1:311 Year AIR v12 – 1:136 Year RMS v11 – 1:83 Year REINSURANCE STRUCTURE

  8. REINSURANCE PARTICIPANTS • The 2011-2012 ASI catastrophe reinsurance program has 42 participating reinsurers • No reinsurer participates on more than 15% of the ASI catastrophe reinsurance program

  9. REINSURANCE PRICING Marketwide Price Determinants Worldwide catastrophe activity Catastrophe models Supply and demand Investment yields • Company Specific Price Determinants • Reinsurers’ evaluation of the company: • Amount of insurance to home value • Claims handling practices • Underwriting guidelines • Quality of data • Concentration of business

  10. CONCENTRATION OF BUSINESS 2010 Market Share by County 6 3 10 9 4 5 8 7 1 2 *FHCF TIV as of 12/31/10 ** ASI data as of 12/31/10

  11. PREMIUM IMPACT * A 10% increase in private reinsurance costs would result in an additional need of approximately 2.8% of premium plus expenses.

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