a Everything You Ever Wanted to Know About Reinsurance and Retention a AgencyONE – 2013 Underwriter Workshop and Producer Conference William E. Moore, Chief Underwriter, Managing Director, Swiss Re Carlo Fusco, Chief Underwriter, MetLife

AgencyONE / April 17, 2013 a How are we alike? How do we differ? What do reinsurers do other than say no? Broker/Direct Writer/Reinsurer 2

AgencyONE / April 17, 2013 a More business Good mortality Happy clients Sound relationships Product innovation Underwriting tools Protection gap – middle market Manuals, guidelines and medical research What Do Reinsurers Think About? 3

AgencyONE / April 17, 2013 a 4 Life Insurance Ownership is at a 50-year Low Source: LIMRA

AgencyONE / April 17, 2013 a 5 Declining Cession Rates for Reinsurers Reinsurance Market: cessions and share

AgencyONE / April 17, 2013 a 6 " If the only tool you have is a hammer, you tend to see every problem as a nail." - Abraham Maslow, 'Maslow's Hammer'

AgencyONE / April 17, 2013 a "It is not the job of the underwriter to make an uncompetitive product competitive." Mortality Expectations 7

AgencyONE / April 17, 2013 a What do they need? What will they buy? Can we build it as partners? The End Consumer – "Our collective client" 8

AgencyONE / April 17, 2013 a More term plans? No Lifecycle products? Yes Elderly specific products – Life/critical illness/LTC Mutuality of interest Elderly preferred criteria Do young people want a "death benefit?" Or "income replacement?" Product Innovation 9

AgencyONE / April 17, 2013 a 10 Overview of Predictive Models Insurance laboratory models – All use traditional insurance exam and lab test results to create a score, by repackaging traditional UW data into a "black box." Personal health risk models – Use individual detailed health and risk factor data to assess disease risk and life expectancy. Financial services models – Use personal data for market segmentation (income based), and therefore, potentially, propensity to buy. Models exist for identity verification and cross- selling in P&C markets (using a company's internal data). Non-traditional mortality risk assessment models – Use public records, marketing data, consumer data sources, and proprietary identity confirmation algorithms to link disparate data items to assess health and lifestyle. – So far, limited industry pilots, promising, but inconclusive results

AgencyONE / April 17, 2013 a Accelerated underwriting Affinity groups Anti-selection Work site and payroll deduct – Pre tax payment of life insurance premiums? The Great Middle Market/ The Protection Gap 11

AgencyONE / April 17, 2013 a Retention Automatic pools Facultative Reinsurers Retrocessionaires Facultative Obligatory Capacity in the Market 12

AgencyONE / April 17, 2013 a Rules vs. guidelines Guess work vs. research Reinsurers vs. direct writers Underwriting Manuals 13

AgencyONE / April 17, 2013 a 14 Changing Medical Conditions Obesity HIV Infection

AgencyONE / April 17, 2013 a Meta-analysis JAMA 2013 Overweight (BMI >25 but <30) – Reduced mortality as compared to "normal" weight "Grade 1" obesity (BMI > 30 but <35) – Mortality hazard no different from "normal" weight ( 6' 0" 250# = BMI 35) 15 Obesity and Mortality – 2013

AgencyONE / April 17, 2013 a Trends in Annual Rates of Death due to the 9 Leading Causes among Persons 25−44 Years Old, United States, 1987−2009

AgencyONE / April 17, 2013 a Numbers 50,000,000 'Hits' since debut Feb 2004 to December ,581,057'Hits' in the last 12 months > 10,000Keywords in Life Guide's Index > 4,000Registered, Active Life Guide users > 2,400Sections in the new Life Guide > 2,000Total sections updated since 2004 (11 updates) > 1,700Number of archived historical pages > 180Insurers accessing Life Guide (US, Canada, and Caribbean) > 100Sections updated in September Estimated percentage use in the industry 20Risk calculators in Life Guide 1Life Guide's rank in industry surveys 17 NA Life Guide by the Numbers As of December 2012

AgencyONE / April 17, 2013 a Most popular "hits" Build and blood pressure Diabetes Liver Enzymes Renal function Mood disorders Sleep apnea CAD 18 Life Guide Top 20 Impairment Hits 12 months, 9/ /2012

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AgencyONE / April 17, 2013 a Legal notice ©2013 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re. Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation. 20