Insurance Collective Update Roadshows, 14th & 15th November 2018

Agenda The Power of the Collective Scheme Claims Performance Market overview Local NZ market International market Outcome of 2018 Renewal Modal Valuation Tool This presentation is provided in confidence by Crombie Lockwood (NZ) Limited (Crombie Lockwood). The parent company of Crombie Lockwood is Arthur J. Gallagher and Co (Gallagher).

The Power of the Collective Ability to create a single programme structure enabling: the broadest coverage available loss limit basis maximising insurer capacity access to the full market both locally and internationally the most competitive premium Ensures assets in high seismic zones have access to sufficient levels of cover; unavailable on a stand alone basis in low seismic zones benefit from lower premiums due to the economies of scale of the combined group All assets, whether viewed positively (such as new builds) or negatively (churches pre 1934) by insurers are all fully covered Ability to run a managed self retention pool to deal with low value/high frequency claims outside of insurers in a more cost effective manner providing further cost benefits Access to other collective benefits such as Modal Valuation Tool

Local New Zealand market Limited number of insurers; all internationally owned Capacity restrictions in high seismic zones driving rate increases Severe weather events continuing Poor loss records despite on-going rate increases NZ Insurer “Net Combined” Quarterly Results: Reserve Bank Insurance Income Statement September 2017 December 2017 March 2018 June 2018 103.6% 102.5% 100.2% 100.4%

International Market Historically more stable due to geographical spread of risks Typically higher rates – stability at a cost 2017 results impacted by global events; 3 US hurricanes, Asian floods and Mexico earthquake Lloyds of London 2017 results – GBP3.4billion underwriting loss Recent Lloyds report has rated New Zealand as 2nd only behind Bangladesh, as highest worldwide annual expected loss from natural disasters, as a proportion of GDP 2018 is expected to be declared the worst year in a decade for Worldwide catastrophe losses

How the International market views New Zealand International seismic zones - New Zealand

International Market In previous years post large underwriting losses rates have reduced quickly in following years Lloyds seeking to prevent this cycle happening again More stringent underwriting plans required from all syndicates

Scheme Claims Performance 3 year loss ratio (claims v premium) – 190% 5 year loss ratio (claims v premium) – 130% Major losses: Nov 2015 – fire $1.4M Dec 2015 – arson $0.4M May 2016 – arson $2.3M Feb 2017 – fire $3.4M First year under Concordia 2017/18 – 32% loss ratio

Outcome of 2018 Renewal Despite the pressures in the current market, renewal secured at expiring rates; a result which is unique in the present market conditions We negotiated rating discounts with Concordia, resulting in savings for a number of congregations, for positive features such as monitored alarms sprinkler systems NBS levels above 67% If claims continue to be at a more acceptable level throughout 2018 we will apply pressure to reduce the perils rates for 2019

Modal Valuation Tool Useful cost-efficient alternative to Professional Valuation as a means of calculating an appropriate sum insured to reinstate a similar sized property using modern techniques and building materials. This is a tool that has been commissioned by Presbyterian Bureau Services Trust specifically to assist with the prohibitive cost of regular revaluations. Can be accessed free of charge online at https://pbstmodal.crombie.co.nz A full user guide can be accessed online under the “Guides and Documents” section at http://www.crombielockwood.co.nz/presbyterian/insurance

Modal Valuation Tool

Contacts presbyterianinsurance@crombielockwood.co.nz GARETH KNIGHT  ACII, ANZIIF (SNR ASSOC) CIP, DIPIB SENIOR BROKER | CORPORATE DDI +64 4 801 1047 | M +64 27 405 3549 E gareth.knight@crombielockwood.co.nz STEVE WALSHAM GROUP BROKING MANAGER | CORPORATE DDI +64 9 357 4883 | M +64 27 403 4672 E steve.walsham@crombielockwood.co.nz presbyterianinsurance@crombielockwood.co.nz