1. Industry Overview: Check-Up, Check-Mate, Or Check-Out? MODERATOR: Paul F. McKeon, MBA, Senior Vice President, Transatlantic Reinsurance Company PANELISTS: Ross Bertossi, CPCU, President, ACE Medical Risk Bonnie Boone, Senior Vice President & Practice Leader, Alliant Healthcare Solutions, Alliant Insurance Services, Inc. Nicholas Gralton, Managing Director, North American Casualty-London, Guy Carpenter John H. Mize, FCAS, MAAA, Principal, Tillinghast Business of Towers Perrin Stan Starnes, Chairman & Chief Executive Officer, ProAssurance Corporation

2. P/C Insurance Industry Combined Ratio, 2001-2009E *Includes Mortgage & Financial Guarantee insurers. Sources: A.M. Best; Insurance Information Institute Best combined ratio since 1949 (87.6) As recently as 2001, insurers paid out nearly $1.16 for every $1 in earned premiums 2 115.8 107.5 100.1 98.4 100.8 92.6 101 103.3 101.2 95.7 90 100 110 120 200120022003200420052006200720082008*2009F

3. P/C Net Income After Taxes 1991-2009F ($ Millions)* *ROE figures are GAAP; 1 Return on avg. surplus. 2008 numbers are annualized based on 9-mos. Actual of $4.066 billion. Sources: A.M. Best, ISO, Insurance Information Institute 2001 ROE = -1.2% 2002 ROE = 2.2% 2003 ROE = 8.9% 2004 ROE = 9.4% 2005 ROE= 9.4% 2006 ROE = 12.2% 2007 ROAS 1 = 12.3% 2008 ROAS = 1.1%* Insurer profits peaked in 2006 3 $14,178 $5,840 $19,316 $10,870 $20,598 $24,404 $36,819 $30,773 $21,865 $3,046 $30,029 $61,940 $5,421 -$6,970 $65,777 $44,155 $20,559 $38,501 -$10,000 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 919293 949596979899000102 0304 050607 08F

4. Year-to-Year Change in Net Written Premium, 2000-2009F* *2008 figure is 9-month actual result from ISO. Source: A.M. Best (historical and forecast), Insurance Information Institute P/C insurers are experiencing their slowest growth rates since 1930-33 4 5.0% 8.4% 15.3% 10.0% 3.9% 0.5% 4.2% -1.0% -0.4% 0.9% 2000200120022003200420052006 2007 2008F2009F

5. Policyholder Surplus, 2006 – 2008 (Est.) Source: Insurance Information Institute; ISO (historical); Towers Perrin (Oct. 21) estimates for Q4 2008. Q4 assumes no major investment market recovery before year-end 2008. Declines Since 2007:Q3 Peak Q4E: -$84B (-16.1%) Capacity peaked at $521.8 as of 9/30/07 5 $ Billions $487.1 $496.6 $512.8 $521.8 $478.5 $438.0 $505.0 $515.6 $517.9 $380 $400 $420 $440 $460 $480 $500 $520 $540 06:Q407:Q107:Q207:Q307:Q408:Q108:Q208:Q308:Q4

6. Cumulative Rate Decreases A Small Sample -80% -70% -60% -50% -40% -30% -20% -10% 0% 20042005200620072008 ABCD 4 separate multi-facility healthcare systems Policy Year Average Rate Change

7. Rate Decrease and Syndication -16% -37% -32% -40% -43% 3.5 4.0 4.3 4.5 4.8 -50% -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% 20042005200620072008 1 2 3 4 5 6 7 8 Policy Year # Carriers Average Rate Change

8. ROE vs. Equity Cost of Capital: US P/C Insurance:1991-2008:Q3 *Excludes mortgage and financial guarantee insurers Source: The Geneva Association, Insurance Information Institute -13.2 pts -9.7 pts 8 -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 9192939495 9697 9899000102030405060708* ROECost of Capital The cost of capital is the rate of return insurers need to attract and retain capital to the business

9. 1975: 2.4% 1977:19.0% 1987:17.3% 1997:11.6% 2006:12.2% 1984: 1.8% 1992: 4.5% 2001: -1.2% Note: 2009 figure is actual 9-month result Sources: ISO; Insurance Information Institute P/C Insurance Industry ROEs, 1975 – 2010F* 9 -5% 0% 5% 10% 15% 20% 25% 75767778798081 82 83848586878889909192939495969798 99 000102030405 0607 08F

10. What affects the financial crisis has on Healthcare clients? Issues that Health Care providers are concerned with: Expenses are reduced, however, all of our clients have stressed that their Patient Safety efforts will not be comprised. Medicare and Medicaid reimbursement and bad debt Balance sheet and asset issues - no more investment income Difficulty in acquiring capital or credit Bond issues to support capital growth There are less elective surgeries More strain on Emergency Rooms as the public losses their jobs - the strain of the uninsured. Construction Operations have been halted Personnel shortages as a result of lay-offs

11. From a risk transfer perspective here are some of the issues that can be addressed to combat the financial crisis: Make sure all of the carriers are AM Best rated. Also, provide S&P and Moody’s information to your clients. Arrange meetings to develop a strategy. How much risk can they assume? Will they need to reduce limits? If they have a captive, discuss the financials of the captive. When the market begins to turn or stabilize insured's/clients will be concerned about the stability of carriers. One way to address this is to syndicate your placements. Don’t put all of your eggs in one basket, with regards to limits of liability. Combat the financial crisis from a risk transfer perspective