Developments in the Indian Weather Market Marcel Stäheli WRMA Annual Meeting Miami, 9 - 11 May 2007

Who are we? Specialities E&CM (Environmental and Commodity Markets) 13 Members (NY, Zurich & Mumbai) Agricultural Insurance 16 Members (worldwide) Weather and energy Emissions ELPRO (contingent power price option) Crops Glasshouses Forestry, plantations Livestock Bloodstock Aquaculture Focus on parametric insurance Focus on indemnity based insurance Able to combine traditional reinsurance with modern methods of capital markets.

Indian Agricultural Production highly dependent upon Monsoon Rainfall Historical Kharif Rainfall and Crop Production Irrigation only 40% of cultivated area accessed by irrigation system only 20% effectively irrigated 80% depend upon rainfall Agro Sector India sustains 16% of the world’s population on 2.4% of land resource Agriculture contributes 24% of the Indian GDP Livelihood support to two-thirds of the population Year 2003: 49% dip in July rainfall – Kharif output fell by 19%, and Agri GDP by 3.1% leading to drop in overall GDP growth * * Source: Innovative Financial Services for Rural India – Ulrich Hess, July 2003

Insured Crops Covered Crops Weather Perils Field Crops Soybean, paddy, cumin, coriander, fenugreek, wheat etc. Horticulture Crops Oranges, grapes, apples, peach etc. Deficit / excess rainfall High relative humidity (RH) Excessively high and low temperatures Prolonged dry spell Combination of above

Indian Weather Market UNTIL TODAY over 539,000* Indian farmers have taken weather insurance MARKET PLAYERS - 8 P&C direct insurers - Currently active: 1) Agricultural Insurance Corporation of India Ltd. 2) ICICI Lombard General Insurance Company Ltd. 3) IFFCO Tokyo General Insurance Co. Ltd. - Banks expected to join after regulator signed-off on weather derivatives END USERS - Farmers - Wind farms - Corporates engaged in contract farming - Hydro power projects - Tea/coffee plantations - Salt production - Sugar producers - Bio-diesel plantations DISTRIBUTIONS - Banks - Micro finance institutions CHANNELS - Insurance agents - Kiosk - Brokers - NGO’s - Co-operatives - Self help groups * Swiss Re Estimate

Crop Calendar and Rainfall Pattern 11-24Jun 25Jun-15Jul 16Jul-26Aug 27Aug-7Oct 8Oct-11Nov Presowing Seedling Vegetative Reproductive Maturity 2 weeks 3 weeks 6 weeks 40-60mm 50-70mm 170-190mm 180-200mm 40mm Water requirement Stages Time Output 50mm 60mm 180mm 190mm 5.5 weeks Rainfall required

Deviation in Rainfall and Impact on Yield 50mm 60mm 190mm 40mm Loss in yield 90mm 40-60mm 50-70mm 170-190mm 180-200mm Water requirement Stages Time 11-24Jun 25Jun-15Jul 16Jul-26Aug 27Aug-7Oct 8Oct-11Nov Presowing Seedling Vegetative Reproductive Maturity 2 weeks 3 weeks 6 weeks 5.5 weeks Output 180mm 70mm Rainfall required Actual Rainfall recorded

Loss Payment through Weather Insurance 40-60mm 50-70mm 170-190mm 180-200mm 40mm Water requirement Stages Time 11-24Jun 25Jun-15Jul 16Jul-26Aug 27Aug-7Oct 8Oct-11Nov Presowing Seedling Vegetative Reproductive Maturity 2 weeks 3 weeks 6 weeks 5.5 weeks 50mm 60mm Rainfall required Actual Rainfall recorded 180mm 70mm Output Loss payment 190mm 90mm Retention Strike Payout: (Strike – actual rainfall) * Notional, e.g. INR 20 / mm

Example of Closed Weather Programme – Term Sheet (1/2)

Example of Closed Weather Programme – Term Sheet (2/2)

Swiss Re Initiatives in the Indian Weather Market First deal in 2004 with Basix (microfinance institution) for Castor and Groundnut crop in Mehbubnagar, Andhra Pradesh against deficit rainfall covering 1,500 farmers since then 36 fac R/I contracts closed; reinsured 272,590 policies Estimated market growth 2006 to 2007 by ~200% Offers a viable alternative to the traditional crop insurance market and has the potential to extend beyond the agriculture sector up into the corporate end-user market Currently working on solutions for agro input providers, wind farms, tea plantations, hydro power projects, sugar & salt production, various crops and vegetables, contract farming etc

Contact Information Swiss Reinsurance Company Mythenquai 50/60 CH-8022 Zurich Marcel Stäheli Director Head Weather and Energy Underwriting Phone +41 (0)43 285 4370 E-mail M_Staeheli@swissre.com