1. Lloyd’s Strategy 2011-2013 January 2011

2. © Lloyd’s2 Lloyd’s vision Key Characteristics A subscription market backed by mutual security A broker market; brokers are Lloyd’s distribution arm and are critical to its ongoing success A London-based international business Diversity across all aspects of the market Role of the Corporation To undertake the overall risk and performance management of the market To maintain and develop the attractiveness of the market “ To be the market of choice for insurance and reinsurance buyers and sellers to access and trade specialist property and casualty risks.”

3. © Lloyd’s3 The principal challenges in Lloyd’s competitive environment remain broadly the same as last year Maintaining market performance Maintain the attractiveness of London as the leading centre for specialist (re)insurance Maintain the attractiveness of Lloyd’s compared to other specialist insurance centres Maintain access to changing business flows and distribution A changing supervisory and regulatory environment

4. © Lloyd’s4 Given the stable competitive environment, the market's strategic priorities for the plan period remain the same Maintain and develop the attractiveness of the Lloyd’s market Maintain and promote the competitiveness of London as a financial services centre Continue to improve the efficiency of business flows and placement, accounting and claims handling Protect Lloyd’s capital and licensing advantages against an evolving regulatory landscape Resolute focus on underwriting discipline and risk management Continued application of performance management framework Ensure high quality risk management developed and embedded at individual and aggregate levels

5. © Lloyd’s5 Corporation priorities for 2011 Market Oversight Solvency IIThe Exchange Claims Transformation Access to Business

6. © Lloyd’s6 Lloyd’s strengths need to be maintained, and in some cases, further developed Market Oversight Given the current state of the insurance cycle and need to avoid syndicate failures wherever possible, the Corporation will emphasise its challenging business partner role Brand & Reputation Maintain the strong position of the Lloyd’s brand, protecting against any risks arising from negative perceptions of the wider financial services industry or the actions of managing agents as they grow and develop their own brands Access to business Ensure Lloyd’s international licence network and London location continue to provide access to significant flows of specialist (re)insurance business

7. © Lloyd’s7 Lloyd’s strengths (cont.) Capital Efficiency and the Chain of Security Lloyd’s capital structure provides financial security to policyholders and capital efficiency to members Mutuality and market cohesion The layer of mutuality represented by the central fund underpins Lloyd’s capital strength, licences, ratings and the market’s reputation for claims payment. It also provides market participants with a common interest, helping to make the market more influential than the sum of its parts Subscription market The subscription market remains a key characteristic of the Lloyd’s market and operates to the benefit of market participants Solvency II remains a major priority over the plan period and underpins many of Lloyd’s strengths

8. © Lloyd’s8 Lloyd’s strengths (cont.) Diversity in market composition Diversity is an important characteristic across all aspects of the market and is desirable from a risk management perspective and in Lloyd’s offer to its clients and stakeholders Underwriting expertise and innovation Lloyd’s has a reputation for underwriting expertise and product innovation Ratings Lloyd’s ratings – independent opinions of Lloyd’s financial strength and ability to meet ongoing insurance policy and contract obligations – remain at the market’s target level

9. © Lloyd’s9 Areas of focus: Market Portfolio Diversification The Lloyd’s market portfolio has some notable areas of concentration Product – a gradual shift towards catastrophe business over the past decade Geography – heavily focused on North America and the UK Response The response to these trends is unchanged. It is for managing agents to decide on their business mix The Corporation will support that activity through its market development activity; o Promoting Lloyd’s in established and emerging markets o Pursuing distribution initiatives o Securing regulatory access to new markets in response to market demand

10. © Lloyd’s10 Areas of focus: Distribution Model Lloyd’s is a broker market This model continues to serve the market well The consolidation of brokers continues, both in Lloyd’s and the wider industry. This concentrates much of the flow of business to Lloyd’s with a small number of brokers Response Broker relationships – the importance of brokers and the need for mutually beneficial relationships between brokers, managing agents and the Corporation is unchanged Coverholders – delegated authority arrangements continue to be an important part of Lloyd’s distribution model, subject to appropriate controls Routes to Market – the development of deeper relationships with local producing brokers and continue efforts to improve processing and operational efficiency remain important

11. © Lloyd’s11 Areas of focus: Market modernisation Market modernisation is about changing the way business is processed. The guiding principles are: To improve market efficiency and give more choice around how to operate To reduce cost and risk Response A number initiatives will deliver key aspects of Lloyd’s future operating environment: Enabling Initiatives Lloyd’s Information and Reporting Project Information Use and Management The Exchange Future Processing Model (including Claims Business Systems Options)

12. © Lloyd’s12 Lloyd’s faces challenges in the medium to long term in ensuring it continues to meet its need for talent Response Continue to work with the Lloyd’s market bodies and other industry groups to promote the industry, and specifically Lloyd’s, to potential employees Where appropriate, to lead initiatives to attract and develop talent for the benefit of the market as a whole To attract and develop the appropriate skills and expertise to allow the Corporation to deliver its role efficiently Areas of focus: Market talent

13. © Lloyd’s13 Visit lloyds.com/strategy for more information

14. © Lloyd’s14