Aon Risk Services Client Seminar 2009 State of the ART RISK Management during the Crisis

1. Aon Risk Services Client Seminar 2009State of the ART RISK Management during the Crisis Amsterdam, 10th September, 2009 August Pröbstl

2. Agenda • About Us • Trends / Developments • One of our answers MARP – August Pröbstl – AON Risk Services

3. Munich Re GroupHalf-year facts & figures 2008 and 2009 Munich Re Group is a strong and reliable risk partner these days and, it goes without saying, as well in the future. MARP – August Pröbstl – AON Risk Services

4. Risk Management within Munich Re GroupOur strength – your added value Reduced impact of weak capital market Hedging strategy proved successful in financial crisis Binding strategic risk criteria and operational limits driving Group-wide risk management Hardly exposed in stock market, ~73% very well rated government FI bonds Group-wide strategic risk management framework Reasonable exposure to financial sector Pro-activeinternal Risk Management Swift reaction to changed market conditions and targeted measures across all LoB Risks generally well captured by existing risk models Ongoing analysis of scenarios Reliable risk modeling MARP – August Pröbstl – AON Risk Services

5. Munich Re Group’s Business Model More than reinsurance Traditional reinsurance solutions Large individual risks solutions Specialtycommercialsolutions Personal specialtysolutions Standard retailsolutions Riskcapacity Distributionpower Riskknow-how MARP – August Pröbstl – AON Risk Services

6. MARP’s presence in the worldFurther local offices to be continuously explored London Paris Munich NY/ Princeton Singapore As an integral part of Munich Re Group, MARP offers global (re-)insurance covers for Fortune 5000 companies and leading players in their industries either via fronting or via captives MARP – August Pröbstl – AON Risk Services

7. MARP’s lines of businessTraditional products and individual risk solutions available Client Management as well as a claims handling and operations unit support our lines of business. MARP – August Pröbstl – AON Risk Services

8. Agenda • About Us • Trends / Developments • One of Our Answers MARP – August Pröbstl – AON Risk Services

9. Some global cycle indicators implying moderate price increases >> MARP – August Pröbstl – AON Risk Services

10. >> Some global cycle indicators impacting moderate price increases MARP – August Pröbstl – AON Risk Services

11. Financial CredibilityCrisis disclosed interesting insights about the insurance market CDS Spreads 1 Jan 2008 to 31 Aug 20091Source: Datastream 1Raw beta to DJ Stoxx 600, total return, daily basis, 1-year. 5-year credit default swaps (spreads in basis points p.a.). Clients increasingly focus on security and financial credibility of business partners when considering the intrinsic value of capacity and overall economics in placements. MARP – August Pröbstl – AON Risk Services

12. Introduction of a risk-based capital approach Regulatory capital requirement for a captive and its types of risk current capital requirement potential requirement under Solv II requirement after individual risk transfer • Risk-based capital approach reveals opportunity costs of self-insurance via captive • Insurance buying driven by exposures rather than available budgets MARP – August Pröbstl – AON Risk Services

13. Company • Pursuing profitable growth • Seizing opportunities • Taking new risks Increased awareness for new types of risk Liquidity risks and intangible assets in the spotlight Customers Market Environment • Cost-conscious and demanding • Well informed (e.g. via internet) • Diminishing loyalty • Highly competitive • Global and dynamic • Shortened product cycle Financial Crisis Other Important Parties Regulatory Requirements • New or pending requirements • Spinney of regulations • Various, regional distinctions • Analysts • Investors • Rating agencies “Of all our identified risks that we face, I am only able to transfer 7% to the insurance market, although I am aiming for more than 10%.” … says a corporate risk manager. MARP – August Pröbstl – AON Risk Services

14. Agenda • About Us • Trends / Developments • One of Our Answers MARP – August Pröbstl – AON Risk Services

15. Special Enterprise Risk (SER)SER’s objective is to fully comprehend client’s ERM needs   What does SER do? What does SER not do? • Develop innovative solutions for individual risk profiles • Tailor-made solutions, not “off the shelf” products • Close collaboration with clients and their broker • Project-driven, not product-driven • Cover 100% of client’s mitigation need without reservation • Cover standard exclusions on a stand alone basis • Cover strategic business risk or management decisions • Cover success of market entry MARP – August Pröbstl – AON Risk Services

16. SER’s working modelQuite flexible, trying to identify and focus on promising topics • Boundaries are given by conceptional design and issue based work. • Solutions are developed for individual as well as across all industries. • In principle global with current focus Europe and US • SER is not a “product developing unit”. Reputational/ Brand Value Risk Pandemic  Ext. Warranty  One Specific Industry Across All Industries REACH Multi Year & Line  Renewable Energies  CBI  Clinical Trials  Legend A few current examples Conceptional Design Issue Based  Deal done MARP – August Pröbstl – AON Risk Services

17. SER solution for a pharmaceutical company Structured solution for a multi line & multi year deal 1 • Captive‘s situation • Efficient capital structure using RI • FSA induced activities • Coverage is 7LoB, e.g. • NDBI • Product recall • Business travel accident • Motivation • Capital adequacy directive (similar to Solvency II) • Limited risk transfer using captive’s liquidity situation 2 4 • Deal structure • Multi year and multi line • Traditional underwriting via MARP UK 3 MARP – August Pröbstl – AON Risk Services

18. © 2009 Münchener Rückversicherungs-Gesellschaft © 2009 Munich Reinsurance Company Thank you very much for your INTEREST August PröbstlHead of MARPMunich Re GroupTel.: +49 (0) 89/ 38 91 – 2626 Fax: +49 (0) 89/3891 – 72626 E-mail: aproebstl@munichre.com