TYING TOGETHER BASE RE- USE AND BROWNFIELD REDEVELOPMENT INSURANCE PRODUCTS Presented by: Richard O. Wagner November 14, 2006

 Provide overview of PLL – Pollution Legal Liability  Provide overview of CCC – Clean-Up Cost Cap  Provide overview of EPP – Environmental Protection Program  Specific insurance related issues concerning Former Military Facilities  Questions/Answers Presentation Objectives:

POLLUTION LEGAL LIABILITY

Environmental insurance for fixed facilities: can cover liabilities for Bodily Injury, Property Damage or Clean-Up Costs arising from Pollution Conditions.  Coverage is Claims Made and Reported  On or under scheduled insured properties  Migrating from scheduled insured properties  Sudden / Accidental and Gradual coverage  Pre-existing and/or New Pollution Conditions- continuity date distinguishes pre-existing from new  Disposal of waste at scheduled non owned locations  Transportation  Defense Eroding Pollution Legal Liability

CLEAN-UP COST CAP

 First Party coverage for remedial cost overruns.  Actual contamination greater than estimated for the agreed Remedial Plan.  Offsite clean-up costs adjacent to the site that are part of the Remedial Plan.  Offsite clean-up costs migrating from the covered site that are part of the Remedial Plan.  Change orders of the Remedial Plan by governmental authorities that are required during the policy term.  Option for newly found contamination. Covers Remediation Cost Overruns for : Clean-Up Cost Cap

COINSCOINS Cost Overrun Coverage Self-Insured Retention Limit of Liability AIG E’s Expected Costs Clean-Up Cost Cap

 First Party and Third Party Liability Coverage  Ideal for sites that have both clean up and potential liability issues both before and after the proposed clean up  Addresses Re-opener issues  “Wrap Up” coverage for known clean up issues PLL/CCC Combined

ENVIRONMENTAL PROTECTION PROGRAMS

EPP Cost Cap Policies Traditional Cost Cap InsuranceCost Cap EPP Program $25 mil SIR $25 mil Cost Overrun Paid out by insured All Costs Paid by EPP from first dollar : Expected Loss Pick + Cost Overruns $50 mil aggregate limit EPP Advantages include: 1)Longer Terms than available in traditional market 2)Greater Limits than available in traditional market 3)Third party review of clean up costs from first dollar 4)More efficient use of client’s capital – EPP absorbs the timing risk associated with the time value of money

 LRA assumes the liabilities for environmental conditions.  LRA contracts with a contractor to perform clean-up or provide a guaranteed fixed price liability assumption.  Can insure LRA to protect against clean-up cost overruns, third party liabilities and re-openers.  Can insure contractor or liability assumption group to wrap guaranteed fixed cost contract. Typical Military Base Transaction

 Military Retained Conditions  Level of Characterization  Perchlorate  Intended End Use  UXO-ME  Asbestos in Soil  Chloradine Special Considerations

Insurance underwritten by member companies of American International Group, Inc. The description herein is a summary only. It does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for complete details of coverage and exclusions. Coverage may not be available in all states. Issuance of coverage is subject to underwriting.