Timothy Aman, FCAS MAAA Managing Director, Guy Carpenter Miami European Pricing Approaches CARe Philadelphia, PA 7 May 2007

2 Introductions Isaac Mashitz, Chief Pricing Actuary, Swiss Re (Armonk, NY) Bryan Ware, Director, Navigant Consulting (Philadelphia, PA) Steve White, Managing Director, Guy Carpenter (Seattle, WA) Tim Aman, Managing Director, Guy Carpenter (Miami, FL)

3 Perspective Numbers Education Roles Perspective Competitive Environment Financials Regulation Data

4 Numbers Source:

5 Numbers Insurance premium – Europe$1,241 billion – North America$1,222 billion Life insurance premium – Europe$ 759 billion – North America$ 552 billion Non-Life insurance premium – Europe$ 482 billion – North America$ 670 billion Source:

6 Numbers Source:

7 Education Europe – In general, university education in actuarial science – Some countries require graduate studies and/or additional examinations – Combined Life / Non-Life curriculum North America – Examination system – Separate Life (SOA) and Non-Life (CAS) societies

8 Roles How many actuaries are working in P/C actuarial roles? – Europe  Research focus  Non-actuarial positions – North America  Applied (pricing, reserving) focus

9 Perspective Insurance Insurance business mixEuropeUS / Can  Property 24% 27%  Motor 38% 41%  Liability 10% 14%  WC 0% 11%  A&H 17% 2%  Other 11% 5% Source: Axco

10 Perspective Reinsurance Reinsurance business mix 1 EuropeUS / Can  Property 46% 34%  Motor 21% 8%  Liability & WC 20% 35%  Other 3% 23% Reinsurance type 2  Proportional 70% 50%  Non-Proportional 30% 50% P & C Reinsurance Demand 3 $ 51 b$ 65 b Source: 1 Axco, 2 Estimated, 3 A M Best Co

11 Perspective CY Combined Ratios of major non-life markets Source: Swiss Re Economic Research $ Consulting

12 Perspective Market Concentration Insurers – Europe30% market share for top four – North America18% market share for top four Market share for top ten non-life insurers Sources: Canadian Insurance, A M Best, Swiss Re Economic Research & Consulting

13 Perspective Market Concentration Reinsurers – Europe> 40% market share for top two – North America< 20% market share for top two Source: Estimated

14 Competitive Environment Europe – Open insurance rating – Market price “communication” between competitors  Insurance  Reinsurance North America – Insurance rate regulation varies by state – Insurance rating bureaus – Strict antitrust regulation – Open reinsurance rating

15 Financials Europe – International Accounting Standards – “Embedded value” reporting – Calendar Year Quota Share treaties – Solvency focus North America – GAAP accounting – More working-layer XL treaties – Earnings stability focus

16 Regulation Europe – Pan-European regulation – Solvency II – Market-value liabilities North America – State regulation – Appointed actuary – Statutory liabilities

17 Data Europe – Little industry data – Reinsurer data access North America – Data filing requirements – Industry statistical databases – Industry trend factors, increased limits factors, loss costs