LLOYD's AUSTRALIA > Underwriting Agencies

1 © Lloyd’s 2012 < Picture to go here >

LLOYD’S – Local Global Insurer

Adrian Humphreys Managing Director - Lloyd’s Australia

February 2014

Disneyland for brokers 1

Can Lloyd’s pay? 2 Policies in and claims out 3 Are Lloyd’s local? 4 Current market 5

AGENDA Australia vs London 6

1688: Edward Lloyd’s coffee house is first mentioned in the London Gazette. It is frequented by ship owners and merchants seeking shipping news, which attracted those providing insurance for ships and cargo – the underwriters

CORPORATION OF LLOYD’S

Management

54 191 Managing < Lloyd’s Agents Australian Broker Brokers Members Picture

. Direct Service 89 • Corporate to Companies* Syndicates Members go here Agents . Reinsurance Coverholder • Individual Underwriting >

BUSINESS FLOW CAPITAL PROVISION

Source: Lloyd’s Relationship Management, January 2013. Includes 11 Special Purpose syndicates

“Insurance is a promise to pay”, understanding the security behind your policies is vital when securing your clients future.

Financial results (in USD million) Dec 2011 Dec 2012

Gross written premiums 37,563 40,500

Combined ratio 106.8% 91.1%

Investment return 1,528 2,084

(Loss) / Profit before tax (800) 4,517 < Picture Return on capital (pre-tax) (2.8)% 15% to go here Market ratings re- + > Fitch Ratings A+ (strong) affirmed and apply to Standard & Poor’s A+ (strong) A each policy issued by lloyd’s A.M. Best Source: Lloyd’s pro forma financial statements, 30 June 2012 A (excellent) A

Lloyd’s strengthened position is recognised by the rating agencies

S&P rating actions since January 2002 - Lloyd’s IFS rating has been upgraded to A+, despite downgrades in the wider market

Upgraded Unchanged Downgraded

Negative outlook

Sources: Source: AM Best, Fitch and S&P, 2009 © Lloyd’s 2012 Policies in & Claims out < Picture to go here >

Routes to the Lloyd’s market

Underwriting Agency Management

Australian London Broker 57 Broker Insurance Companies (Direct or Acct & Service Re-insurance) Settlement Companies Xchanging 88

Syndicates Policyholder Arch Ironshore Underwriting Beazley Newline Catlin Starr Sportscover

Source: Lloyd’s Australia, (2013)

Routes to the Lloyd’s market

ECF and Local claims segmentation

handling

Underwriting Management Agency or TPA 57 Australian Insurance Lloyd’s Broker Broker Companies Acct & (Direct or Settlement Re-insurance) Service Xchanging 88 Companies Syndicates

Policyholder Underwriting

Arch Ironshore Beazley Newline Catlin Starr Sportscover

Source: Lloyd’s Australia, (2013)

Nine out of 10 Nat Cat and all in the last eight years

Year Event US$ bn 2005 Cyclone ‘KRW’ – US & Gulf of Mexico 8.0 2001 Terrorism WTC – US 3.0 2012 Superstorm Sandy 2.5 2011 Thailand Floods 2.2 2008 Cyclone ‘Ike’ – US & Gulf of Mexico 2.1 2011 Japan Earthquake & Tsunami 1.95 2005 Cyclone ‘Rita’ – US & Gulf of Mexico 1.5 2010 Chile Earthquake 1.4 2011 New Zealand Earthquake 1.4 2005 Cyclone ‘Wilma’ – US 1.0

2010 Australian floods 0.4

Source: Lloyd’s Australia, (2013)

LLOYD’S MAJOR CLAIMS: NET ULTIMATE CLAIMS 5000 4,703 4500

4000

3500 < 3000 Picture £m 2500 2,290 to 2000 1,816 go here 15 YEAR AVERAGE 1500 £1,436m >

1000

500

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

US Non-US

Source: Lloyd’s pro forma basis. Indexed to December 2012 Claims in foreign currency translated at the exchange rate prevailing at the date of loss

2012 MARKET PLAYERS: TOP 7 General Insurers Lloyd’s is local (Excluding global business; *Includes subsidiaries) Others* • Licenced General Insurer • Principal Strategic Partner of UAC 4.6 6.8* • Board member: Insurance Council of Australia 1.2 2012 Non Life • Insurance Code of Practice Insurance premiums 1.3 • Insurance Advisory Committee (FSL) US$ 40.1bn GWP 2.0** Aon 2012 Survey (350 Companies) Lloyd’s ranked: (US$ 29.8bn NWP) • Top insurer for >$1bn revenue 6.6* companies 3.2 (up 7 places), takes top spot from Allianz

• 2nd for mid-sized ($100m - $1bn) companies (up 4 places) **On a country of 4.6 origin basis. May differ rd from APRA statistics. • 3 for smaller companies, (up 3 places) Please see Appendix for further details

Source: Aon Survey and J.P. Morgan General Insurance Industry Survey (2012); APRA, (2012); Company Annual Reports, (2013); Exchange rates as per Appendix

2008 – 2011 LLOYD’S PREMIUMS: BY CLASS 2000 Gross Signed Premiums in: million US$

1800 285.2 Casualty

1600 PA & Health

1400 349.9 158.1 Property Treaty

1200 86.3 Property (D&F) 302.6 66.0 126.8 1000 98.3 Energy 78.6 231.5 79.7 50.9 800 239.5 Casualty Treaty 216.9 58.3 60.4 50.5 774.2 600 49.0 64.3 Marine 45.4

629.4 400 Overseas Motor 505.1 449.2 455.2 200 Aviation 241.0 70.6 85.5 112.7 0 56.5 2007 2008 2009 2010 2011

Source: Market Intelligence calculation on Xchanging figures. Rates of exchange calculated as per Appendix

! Lloyd’s data is based on Xchanging “REG 258”, (2010); unaudited figures based on country of origin and processing by calendar year; please refer to Appendix for detailed summary of Lloyd’s Data Limitations. © Lloyd’s 2012 Lloyd’s > Agency Overview Australian Territorial Extensions 2009-2012 Total GSP for U/w agencies

900 865 2011 271 817 614 600

2010 250 424

300

2009 244

0 230 240 250 260 270 280 2009 2010 2011 2012 SOURCE: Lloyd’s Australia, (March 2012) SOURCE: Market Intelligence based on Gross Signed premiums; Xchanging (2012)

2007 – 2011 Number of Binder by Class 2009-2012 Total # of Individual U/w agencies 107 2007 2008 2009 2010 2011 100 99 Aviation 0 0 0 0 3 79 85 Casualty 98 134 202 206 189 75 Energy 4 4 4 2 8 Marine 24 29 41 28 35 50 Motor 9 8 13 13 19 PA & Health 23 29 40 26 57 25 Property 120 129 132 136 121 0 Grand Total 278 333 432 422 432 2009 2010 2011 2012

SOURCE: Lloyd’s, Delegated Authority, (2012) SOURCE: Lloyd’s, Delegated Authority, (2012)

Lloyd’s data is based on Xchanging “REG 258”, (2011); unaudited figures based on country of origin and processing by calendar year; please refer to Appendix for detailed summary of Lloyd’s Data Limitations.

Number of Coverholders Number of Binders

0 0

26 45

14 26

9 14

64 140

35 74

1 5

149 Total Number of Coverholders 304 Total Number of Binders

Number of active coverholders by region Number of active binders by region

0 64 0 140

Lloyd’s agencies and service companies you may recognise…..

Jardine Lloyd Thompson PI Direct Insurance Brokers AFA Cinesure JMD Ross Insurance Brokers Professional Risk U/w Affinity Risk Partners Brokers CKA Risk Solutions JUA Underwriting Agency QBE Placement Solutions AIS Insurance Brokers Columbus Direct Travel Ins. Latitude Resource Underwriting Pacific Altiora Insurance Solutions Coverforce Underwriting Lawsons Underwriting Australasia Richard Oliver Aon Risk Services Coversure Leisureinsure Southern Cross Underwriting Arch Underwriting at Lloyd’s Dolphin Insurance Logan Livestock Insurance Agency Suresave Asia Mideast Insurance & Reins. Dual Australia London Underwriting Transcorp Underwriting ASR Underwriting Agencies East West Insurance Brokers Macquarie Underwriting Tasman Underwriting ATC Insurance Solutions Elkington Bishop Molineaux Magic Millions Insurance Brokers Sterling Insurance Austagencies Epsilon Insurance Broking Mansions of Australia Savannah Insurance Agency Australian Income Protection Services Manufactured Homes Ins Agency SLE Worldwide Australian Insurance Agency Fenton Green & Co Marsh Sportscover Pool FP Marine Millennium Underwriting SRS Underwriting Agency Australian Reinsurance U/w Svs Fitton Insurance Brokers Miller & Associates Ins Broking Starr Underwriting Australis Group Underwriting Freeman McMurrick Miramar Underwriting Agency Strathearn Austruck Insurance General Security Insurance Mobius Underwriting Specialist Underwriting Axis Underwriting Services Brokers National Underwriting Agencies Agencies Beazley Underwriting Go Unlimited Nautilus Marine Insurance Agency Trafalgar Risk Management Bizcover Gow-Gates Insurance Brokers Newline Insurance Travel Insurance Direct Blue Sky Guardian Underwriting Services Newmarket Insurance Brokers Trident Insurance Group Brooklyn Underwriting High Street Underwriting Agency Nova Underwriting Trinity Pacific U/w Agencies Brooks Inglis Insurance Brokers H W Wood OAMPS Australia Willis Catlin IBL (Planned Professional Risks) Online Insurance Brokers Windsor Income Protection CBD Underwriting Insurance Advisernet Panoptic (Midas) Winsure Insurance Group CEMAC Insurance Facilitator Pantaenius Woodina Underwriting Cerberos Brokers Insure That Parmia World Nomads Cerberus Special Risks Ironshore Australia

Cheap Travel IRS Steadfast

London vs. Australia < Picture to go here >

Year of account Combined ratio ROE 1985 106 – 108% 12% 2001 98 – 101% 12% 2012 84.5 - 88.7% 12%

= Managing the cycle, Costs & look for growing markets

US & Canada Europe 41% (including UK) 33% 12% 2011 < 10% 2010 Picture Central Asia & Asia Pacific 9% 2009 to 13% go here 8% 2008 (Total US &Canada) Rest of > the World 7% 2007 41% 2011 Other 8% 2011 5% Americas 43%2010 7% 2010 8% 45% 2009 6% 2009

46% 2008 5% 2008

49% 2007 4% 2007

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