Liberty International Underwriters University of Houston Energy Case Study Steven P. Weiss, CPCU, AMIM, NAMS-CMS Vice President, Marine Engineering and Project Cargo

Liberty International Underwriters What are we going to do? What is Risk Management What is risk financing What is the insurance industry and how does that play with Risk Management How do the insurance players all interact Who are the major players Take a submission from cradle to grave

Liberty International Underwriters What is Risk Management The identification, control and management of risks/hazards within an environment to ensure that they are always at a tolerable or negligible level

Liberty International Underwriters How is this done? There are five steps –The identification and analyses of loss exposures –Examination of the feasibility of Alternative Risk management Techniques –Selection of the best Risk management techniques –Implementation of the techniques –Continual monitoring of the program

Liberty International Underwriters The identification and analyses of loss exposures What are the exposures? –First Party –Third Party –Financial –Employee

Liberty International Underwriters The identification and analyses of loss exposures (cont) First Party –Own Property

Liberty International Underwriters The identification and analyses of loss exposures (cont) Third Party –Contractual –Personal Injury –Property Damage (others)

Liberty International Underwriters The identification and analyses of loss exposures (cont) Financial –Business Interruption –Delay in Start Up –Self Insured Retentions –Deductible

Liberty International Underwriters The identification and analyses of loss exposures (cont) Employee –Workers Comp –Jones Act –Longshore and Harbor Workers

Liberty International Underwriters Examine feasibility of Alternative Risk Management Techniques Contracts to transfer risk Training of Employees Engineering solutions Exit lines of business Contractors Insurance

Liberty International Underwriters Selection of the best Risk management techniques In my situation, what works best? –Probably some combination of the above

Liberty International Underwriters Implementation of the techniques Get the contracts signed Engineer and install the solutions Exit/sell lines of Business Find the proper contractors Purchase the Insurance

Liberty International Underwriters Risk Financing What is Risk Financing Where do you get it? –Deductibles/Self Insured Retentions –Mutual Agreements –Cash flow –Insurance

Liberty International Underwriters Insurance Industry Insured Broker/Agent Insurance Company Reinsurance Company Insurance Company Broker/Agent

Liberty International Underwriters Flow of Business Insured Broker Insurance Company Reinsurer

Liberty International Underwriters Top Global P&C Companies ($ billions) RankCompany 1State Farm$35.0 2Allianz29.2 3AXA20.7 4Zurich Insurance18.6 5Allstate18.6 6AIG18.3 7Royal & Sun Alliance12.8 8Winterthur12.4 9Assicurazioni Generali Munich Re11.4 Gross Written RankCompany Premium $ % 1Allianz$ % 2AIG % 3State Farm % 4AXA % 5Zurich % 6Liberty Mutual + Safeco % 7Assicurazioni Generali % 8Munich Re % 9Allstate % 10Berkshire Hathaway % ’96 – ‘08 Increase Liberty Mutual 6.3 Source: Company Filings

Liberty International Underwriters Top U.S. P&C Companies ($ billions) Rank CompanyDWP 1State Farm$35.0 2Allstate18.0 3AIG13.5 4Zurich Insurance12.3 5Travelers9.0 6Nationwide8.6 7CNA7.1 8Liberty Mutual5.8 9Hartford5.6 10USAA4.7 RankCompanyDWP 1State Farm$49.9 2AIG32.1 3Zurich Insurance28.2 4Allstate26.8 5Liberty Mutual26.3 6Travelers21.8 7Berkshire Hathaway16.2 8Nationwide15.8 9Progressive Hartford11.1 Source: Highline Data Services Note: LMG includes a full year of Safeco

Liberty International Underwriters The path of a submission Choosing a Broker Preparation Of a submission Market Presentation Submission of Quotes Binding of a Project Life Completion Genesis of a Project

Liberty International Underwriters Here is what we discussed What is Risk Management What is risk financing What is the insurance industry and how does that play with Risk Management How do the insurance players all interact Who are the major players Take a submission from cradle to grave

Liberty International Underwriters Do you Have any questions?