1. Property & Casualty Market Update Summer, 2013 Brian White, Vice President bwhite@alliant.com License No.: 0C36861 APTA Risk Management Seminar Cincinnati, OH June 11, 2013

2. 2 Change in Commercial Rate (by Account Size): 1999 through 2013 Source: Council of Insurance Agents and Brokers; Barclays Capital; Insurance Information Institute. Note: CIAB data cited here are based on a survey. Rate changes earned by individual insurers can and do vary, potentially substantially. Percentage Change (%) Trough = 2007:Q3 -13.6% KRW : No Lasting Impact Pricing Turned Negative in Early 2004 Peak = 2001:Q4 +28.5% Pricing turned positive in Q3:2011,

3. 3 Market Comments 2011 Was the Highest Loss Year on Record for Economic Losses Globally Extraordinary accumulation of severe natural catastrophes: Earthquakes, tsunami, floods and tornadoes $105 Billion in Insured Losses Globally. Second only to 2005 (Hurricanes Katrina, Rita, & William) on an inflation adjusted basis FM Global finished 2011 with a combined loss ratio of 121%; their worst year ever No Dividend for 2012 2012 was significantly better, but losses including Superstorm Sandy ($77B) still made it the third largest loss year on record (Bloomberg / Swiss Re – 3/27/13) FM Global declares dividend (effective June 30, 2013) despite large Sandy losses Excess Workers Compensation is particularly challenging 6 real markets, and that number quickly diminishes depending on venue, police or fire exposures, minimum premiums, SIRs, employee concentration and needed limits, etc.

4. Market Comments The market for Pacific Northwest Quake appears to be changing dramatically: FM Global / Affiliated FM significantly reducing available capacity Viable carriers that remain are/will carefully absorb market share Carriers are also re-evaluating their Flood offerings, especially in the Northeast (surprise!), but any insured w/ A&V exposures or otherwise vulnerable to flooding should anticipate continued pressure; Industry Surplus (net assets) is near record levels (and has been for several years now) – supply is plentiful but being strategically deployed where carriers believe they can maximize their profitability; Interest Rates still low – restricting carriers investment portfolio returns, increased underwriting discipline; Merges / Acquisition / Trade Activity within Brokerage Community is healthy – indicator of market expectations? 4

5. What to Expect? 5

6. Budgeting for the Near Term – On Average Modest increases on Liability lines of coverage. (Rail more impacted that bus; especially primary markets, where 5%+ may be more appropriate.) 0 to +10% rate on non cat exposed property. (Flood, Quake, & Wind can be a different story.) +5 to +10% rate or more on Excess Workers Compensation. Expect SIR Pressure depending on loss history, evaluate alternative SIRs for premium / risk reward. Carefully evaluate pooling alternatives, which may present compelling options. Reductions, while rarer in the current market, are not unheard of: Market strategically and strike while the iron is hot; Wildcard: What is Buffet up to? Your agencys market experience will be dependent on your risk characteristics, such as: loss experience, venue, SIRs, modes of transit you operate, growth (?), etc. 6

7. Plan of Action General Suggestions: Partner with well respected brokers/intermediaries Start renewals well in advance Develop relationships with your underwriters Submission quality: Completed applications, consistent underwriting data, accurate historical loss information, complete COPE information (construction, occupancy, protection, exposure), understand contractual relationships, be responsive to carrier inquiries Property Specific Suggestions: Be prepared to provide flood zone determinations or elevation certificates – this data can help to mitigate adverse market reactions to flood exposed property. Flood Emergency Response Plan (FERPP) Effectively communicating how your agency will respond to a Flood can compel underwriters to take a softer approach to specific location related issues. Catastrophe Modeling – discuss need with your trusted advisor. 7

8. Q & A 8