1 The Credit Crisis: Getting Perspective October 2, 2008

Agenda – Getting Perspective Industry Overview Securities Class Action Filings Underwriting Challenges Market Environment Client Concerns Closing Comments

Overview: Getting Perspective Financial Services Overview $2B - $3B marketplace Inherent Systemic Risk 4 th Industry Event Estimated damages from current crisis $6B - $10B (1Q/2008)

4 Number of Securities Class Action Filings

SCA Filings: Getting Perspective Securities Class Action Filings Total SCAs up 41% YTD vs. ‘07 Traditional SCAs up 25% 118 Sub-prime/Credit related suits 18 Auction Rate Securities (ARS) 18 ERISA/401k Lawsuits

Challenges: Getting Perspective Underwriting Challenges Market tends to be reactive – years before truth comes out Limited and outdated information Aggregation still a problem Difficult market to navigate – “catching falling knives” Plaintiffs taking “two bites” at the apple

Marketplace: Getting Perspective Market Environment Sixth year of softening market Pricing back to ’02 levels Side A – inverse relationship between price and risk Economic conditions affecting many sectors Still new capacity entering the market Carriers purchasing less reinsurance

Impact on Clients: Getting Perspective FDIC seizures Conservatorship Insolvencies Consolidation Stock price drops Balancing Rate Increases versus Internal Cost Cutting Co-insurance Captive participation Cut back on insurance spending

Clients Concerns: Getting Perspective Rate increases Retention increases Restrictions to coverage New Exclusionary language Specific Litigation Exclusions Broad interrelated language Reduced capacity Acquisition/Termination criteria in policies Continuity of coverage Replacing carriers – mid term or at renewals cycle Runoff Rates

Clients Concerns: Getting Perspective Impact on carriers solvency and ratings – AIG, XL, Liberty Maintaining carrier relationships Continuity Claims handling and paying ability Employee retention at carriers New capacity Freedom Specialty Iron shore Catlin Valiant

CLOSING COMMENTS