Underwriting Mega-Projects

2004, XL Environmental, All Rights Reserved2 5-Jul-16 Observations of Mega-Projects Complex transactions with high risk tolerance  Risk and reward: environmental issues not driver  Insurance as financial tool: high self insured retentions  Investor/Stake holder requirements  Ability to self insure of environmental business risks

2004, XL Environmental, All Rights Reserved3 5-Jul-16 Investing in an Insurance Relationship Define Your Needs  Stakeholder requirements  Timeline  Product  Policy Limit and Term  Flexibility Carrier Investment in a Mega-Project  Actual costs  Opportunity costs  Probability for Success

2004, XL Environmental, All Rights Reserved4 5-Jul-16 Carrier’s First Pass – Go/No Go Introducing the project to the carrier  Define objectives of entities seeking insurance  Overview of project including financing, challenges & deal breakers  Highlight your team’s experience: legal advisor, real estate advisor, environmental consultants, your local experience  Relationship with the carrier: define business philosophy and competitive process for insurance.  Determine carrier’s interest

2004, XL Environmental, All Rights Reserved5 5-Jul-16 Evaluation of a Mega-Project Entitlement How does entitlement exposure affect contamination issues? Legal Loss history and potential for loss Contamination issues, site history, regulatory environment and community activism - support or resistance? Financial/ Credit Financial flexibility to manage insured and uninsured risks with project? How can project fall apart and what is the environmental exposure? Time line realistic? Performance/ Development Quality of site base line, remedial plan, integration of development plan and quality of contractors and site developer’s reputation/experience? Reputation What is at stake for buyer and seller in the success of this project?

2004, XL Environmental, All Rights Reserved6 5-Jul-16 Managing Hurdles  Strategy for uninsurable aspects  Available policy term verses project life cycle  Capacity – primary and excess  Known conditions  Flexibility for exit strategy

2004, XL Environmental, All Rights Reserved7 5-Jul-16 Evolving Exposures in Environmental Insurance Do you have any emerging risks?  “New” chemicals  Toxicological research and exposure analysis  Analytical chemistry improvements  Regulatory changes during project  Vapor Intrusion  Natural Resource Damage Assessments

2004, XL Environmental, All Rights Reserved8 5-Jul-16 Claim Management Claim Management Philosophy  Alignment with your business philosophy  Staffing: experience, environmental consultants & caseload  In-house services and outside counsel  Emergency Response – 24 hours  Reservation of rights

2004, XL Environmental, All Rights Reserved9 5-Jul-16 Closing the Transaction  Understands all your exposures and the transaction stakeholders’ needs: buyer, seller, financier,…  Policy wording before closing (avoid surprises)  Flexibility to managed your last minute issues  Commitment to servicing you for the full policy term: your exit strategy, changes and claims

Questions ?