1. Continuity is… delivering on our promises Andrew Wright Global Managing Director, Marine & Aviation Amlin plc Thursday 22 nd October 2015

2. Introduction – Andrew Wright 2 28 years in the Insurance industry 26 years at Amlin (or its predecessors) 20 years underwriting Upstream Energy for Amlin’s Syndicate 2001 5 years as the London Head of Marine & Aviation, Amlin 2014 Global Managing Director of Marine & Aviation, Amlin London Europe Singapore Dubai 250+ staff £400m income in my remit

3. Insurance Trends – The London Market 1 Marine market conditions Hull Cargo Liability General 2 Recent M&A activity 4 Conclusion and questions 3 UK Insurance Act 2015

4. Marine market conditions - Hull 4 Premium London - 23% of the worlds hull premium of which 17% is in Lloyd’s. Chinese insurance market growing. Overall income globally is falling caused by rating pressure, devaluing of vessels since the 2008 economic crisis and a slowing demand for new-builds. Capacity London capacity remains strong (too strong?) But so does capacity elsewhere. In particular local international markets are retaining more risk squeezing the business flowing into the traditional markets of London, Norway and the US. Global fight for market share.

5. Marine market conditions - Hull 5 Conditions  Rating falling again in 2015 by, on average, 5% but there are bigger headline reductions for certain quality fleets.  2016 expectation is another similar reduction.  Old vessels which traditionally were only able to purchase cover on restricted conditions now able to purchase All Risks. Profitability  Premium being eroded.  Long term positive trend in loss frequency.  Medium term flattening of severity cost due to falling values and economic crisis causing repair rates to be flat. But its very marginal and I would not recommend it to a new entrant.

6. Marine market conditions - Cargo 6 Premium The largest of the marine products. Over 50% of income is derived from cargo. Much of that premium is not traditional transit risk but is storage risk in Cat exposed areas. Around 12.5% of the global cargo premium is in London. The big far eastern export markets of China and Japan command around 17% of the income. World trade volumes are now back on track and growing after the economic crisis. But price of oil will have an effect on values traded. Capacity Huge global capacity for traditional transit risk (sideways exposure). Large capacity for Project Cargo and STP policies (vertical and Cat exposure). SME type business sticking more to local markets.

7. Marine market conditions - Cargo 7 Conditions  Gradual deterioration in rating (1%-3% per annum) for last 7-8 years.  Risk mitigation high on insurer’s agenda.  All risks cover is widely given with few exclusions.  War on land now widely available in troubled regions. Profitability  Margins are being squeezed but insurers can still turn a profit.  Tianjin Port explosion?

8. Marine market conditions - Liability 8 Premium  Roughly 7% of the Global marine premium is derived from liability.  62% of all P&I premium is written in London. Capacity  Fixed Premium P&I capacity increasing.  General marine liability capacity stable.

9. Marine market conditions - Liability 9 Conditions  Market rating is rapidly declining particularly in areas associated with energy business.  Liability insurers have faced 2 large marine losses in the recent past.  Dramatic increases in rating environment post 2009/10/11. Profitability  P&I book stable although rating under pressure to some degree.  Money still to be made in this class but it’s difficult, complicated and volatile and insurers need to be aware of changes in convention limits etc to be able to navigate their way through to an acceptable margin.

10. Marine market conditions - General Very little investment return to mitigate the costs of operating (including the ever increasing regulatory burden befalling the financial sector) 10 Low Oil Price Risk mitigation Capacity Interest rates Values at risk – Premium levels Symptom of demand – Lower volumes? Lower frequency of losses particularly in Hull All time high in all areas Pressure on rating and other terms and conditions

11. Recent M&A Activity in London  Spate of mergers and acquisitions in both underwriting and broking communities:  What does this mean and will it continue?  Broking consolidation.  Underwriting consolidation.  Will it continue? 11 RK Harrison/Howden XL/Catlin (1.6x NTA) Mitsui/Amlin (2.4x NTA) Willis/Miller

12. UK Insurance Act 2015  The most significant reform of UK insurance contract law since the Marine insurance Act of 1906.  Intention is to change the way the business of insurance is conducted.  Duty of fair representation.  Knowledge of insured and insurer.  Remedies for breach of duty of fair representation.  Warranties and terms not relevant to the loss. 12 In effect: A modernisation of business insurance contracts to bring them in line to a certain degree with consumer insurance contracts, without losing the differentiation of a b2b contract between professionals.

13. Conclusion and questions 13 It’s a tough market out there….. Leading to…..The future….. Over capacity Rating pressure Low investment returns Increasing expense base Diminishing returns Lots of unknowns but traditional markets need to adapt to the changing needs of the client and perhaps need to re- evaluate the ROE sought in the past for a more sustainable return. Further M&A to gain economies of scale and greater efficiencies in all parts of the business.

14. Thank you