Insurance Market Update

1. May 26 & 27 Insurance Market Update Simon Delchar - MARSH Global Markets Lisa Hansford-Smith - MARSH

2. Simon DelcharManaging DirectorGlobal Markets

3. State of the World-wide Property Market 01 January 2005 Renewal Season - London Market Catastrophe Perils Despite loss activity in the USA, Asia & Europe, property rates have continued to fall in 2005 by an average of 10% Fire Perils Plenty of capacity & pricing variance, heavily influenced by individual territory results. Rates continuing to fall for accounts with no major loss activity by an average of 15%. Greater reductions available if market longevity not crucial Deductibles Stable, but can look to reduce with good loss record & information. Generally, not sufficient credit given for increased retentions. Capacity No shortage of capacity. Global market capacity in excess of USD 7 billion for fire; less for natural catastrophe depending on location.

4. State of the World-wide Property Market12 months to the present date Natural Disasters Losses April 2004 - Oklahoma Hailstorms USD75-100,000,000 May/June 2004 - US Midwest Tornadoes USD500,000,000 June 2004 - Colorado Hailstorms USD625,000,000 June 2004 - Texas Severe Weather USD175,000,000 June 2004 - Asian Typhoon Mindulle USD100,000,000 July 2004 - Japan Floods USD190,000,000 August 2004 - Asian Typhoon Rananim USD2,000,000,000 (direct economic losses) August 2004 - Caribbean/Florida Hurricane Charley USD7,600,000,000 August 2004 - Asian Typhoon Chaba USD950,000,000 August 2004 - Asian Typhoon Aere USD269,800,000 (direct economic losses) August/September 2004 - Caribbean/Florida Hurricane Frances USD4,700,000,000 August/September 2004 - Asian Typhoon Songda USD3,000,000,000 September 2004 - Caribbean/Florida Hurricane Ivan USD11,700,000,000 September 2004 - Caribbean/Florida Hurricane Jeanne USD4,500,000,000 September 2004 - Asian Typhoon Meari USD215,000,000 October 2004 - Asian Typhoon Ma-On USD195,000,000 October 2004 - Asian Typhoon Tokage USD1,100,000,000 October 2004 - Japan Earthquake USD450,000,000 December 2004 - Indian Ocean Earthquake & Tsunami USD2.5 - 4,000,000,000

5. Property Placements - Key issues • Intangible Property (data) Crucial for exposure to be evaluated and separate products/risk transfer effected if required. • Contingent Business Interruption Suppliers and Customers Interdependency • Catastrophe Limits Asia - existing operations and growth opportunities • Loss Mitigation

6. The Key to Success: Strategic Planning • Quality, relevance & depth of information • Timing • Benchmarking can help validate limits, retentions and pricing • Rating tools ensure a feel for market pricing- don’t let the market dictate the pricing! • PML’s - One common standard • A clear placement plan - Target key markets with appetite and understanding of Technology industry exposures - Geographic diversity of market to create competition • Pro-active relationship with your insurance/reinsurance panel - Mid -Term Strategic Review Meetings - Visits to key locations

7. Market reform • Best terms • Split terms/ Composite pricing • Potential pitfalls: • - Who is the leader? • - Multiple agreement parties for wordings, claims and amendments • - Could lead to: • delay of policy issuance • inconsistency of coverage • appointment of multiple experts • perceived breach or trust

8. Conclusion • Rate reductions are continuing and no sign of upturn • Information= differentiation • Relationships are important for most clients and underwriters

9. Lisa Hansford-SmithFINPRO

10. State of the D&O Marketplace • Companies are now tending towards purchasing Side A or Side A&B only and reducing Side C cover. • We are seeing softening premiums across all industry groups (with the exception of Pharma). • Issues such as poor financials, governance, outstanding claims are still of concern to underwriters. • We are continuing to see increasing levels of capacity – approximately USD 400 million. • Exclusions – some of the hard market exclusions are being removed such as failure to maintain insurance.

11. State of the E&O Marketplace • There are several strong Technology lead Errors & Omission markets - HISCOX, AIG, Beazley, Chubb. • Premiums -5% to 10%. • Loss Experience • Uncertainty of what the next high tech issue may bring – i.e. privacy claims. • Capacity • Good levels of capacity available (approx 250 million dollars).

12. The State of the E&O Market What underwriters are not writing from an E&O perspective!! • Single project cover • Single project cover is very difficult to obtain and in most cases not cost effective. • Patent cover • In some cases all IPR cover. Where are underwriters being cautious • Security liability cover • Cyber and Virus cover

13. State of the Marketplace Tech D&O and E&O Strategies • Underwriter Information/Face to Face Meetings • Start renewals early and ensure that all information is present in submission form. • Explain/introduce CFO/CIO/GC (if possible) to demonstrate coordination, control & process • In terms of E&O coverage: • Milestone management • Meet with contract managers (this is for the E&O coverage) • How does the company handle dissatisfied customers (how soon does it move beyond the project manager to a more senior level manager?)