THE P/C (RE)INSURANCE VALUE CHAIN IS “IN PLAY” Vincent J. Dowling, Jr. June 10 th 2015 Young Professionals' Global Forum

The P/C (Re)Insurance Value Chain Is “In Play” | 2 THE PENSION FUND “MARTINI” Source: Guy Carpenter Pension Fund Capital Under Management $30 trillion Global property cat limit $341 billion Global retro capital <$30 billion Global insurance sector capital (including life) $2.5 - $3 trillion

The P/C (Re)Insurance Value Chain Is “In Play” | 3 “ALTERNATIVE CAPACITY” GAINS MARKET SHARE Guy Carpenter estimates non- traditional capacity at ~18% of total world wide cat limits. Ultimately, GC predicts alternative capacity could reach $ by Doubles In 5 Years

The P/C (Re)Insurance Value Chain Is “In Play” | 4 PROPERTY CAT PREMIUMS = ~ 10% OF GLOBAL NON-LIFE REINSURANCE Source: Guy Carpenter estimates (as of 3/1/15) $144.9B $12.3B $21.5B $0.8B $84.4B $3.5B $28.3B $1.9B $47.1B $2.0B 2015 Global Cat Market: $341B Limit; $21B Premium ~$25B+ ~$4B+ Florida Remains The Global Cat Market “Peak Zone”

The P/C (Re)Insurance Value Chain Is “In Play” | 5 JUNE 1 ST 2012: PRICE TAKER BECOMES PRICE MAKER = 3 RENEWALS IN FLORIDA Note: “Expected” c. ratio assumes a loss and G&A expenses are held constant base c. ratio considers a 45% loss ratio, 10% commission ratio and 5% G&A. ratio. Source: D&P Analysis Assumes Rates Off 5-10% At Jun-15

The P/C (Re)Insurance Value Chain Is “In Play” | 6 THE P/C (RE)INSURANCE VALUE CHAIN IS IN PLAY Moving Further From The “Customer” = More Pressure On Returns The (Re)Insurance Value Chain

The P/C (Re)Insurance Value Chain Is “In Play” | 7 “Hedge Fund 1.0”“Hedge Fund 2.0” HEDGE FUND REINSURANCE MODELS Where Will The Premium Come From ? $1.2B $1.5B $1.2B $0.5B $1.1B Capital ($,B) (David Einhorn) (Dan Loeb) (Two Sigma) (John Paulson) (Highbridge Capital) $0.8B* (Golub Capital) * Press reports suggested target capital of $750M for Golub Capital and Pine River Re Pine River Re (Pine River Capital) $0.8B* $1.0B (BlackRock) “Content” Is King Model Potential New Sponsors ?