Lloyd’s Strategy April 2010

© Lloyd’s2 Lloyd’s vision Key Characteristics A subscription market backed by mutual security A broker market; brokers are Lloyd’s distribution arm and are critical to its ongoing success A London-based business Diversity across all aspects of the market Role of the Corporation To undertake the overall risk and performance management of the market To maintain and develop the attractiveness of the market “ To be the market of choice for insurance and reinsurance buyers and sellers to access and trade specialist property and casualty risks.”

© Lloyd’s3 Challenges in Lloyd’s competitive environment Maintaining underwriting discipline Maintain London’s position as the leading centre for specialist (re)insurance Maintain access to business in the face of a changing distribution landscape Maintain the attractiveness of Lloyd’s compared to other specialist insurance centres Protect Lloyd’s capital, licences, brand and ratings

© Lloyd’s4 The market's strategic priorities for the plan period Maintain and develop the attractiveness of Lloyd’s Maintain and promote the competitiveness of London as a financial services centre Continue to improve the efficiency of business flows and placement, accounting and claims handling Protect Lloyd’s capital and licensing advantages against an evolving regulatory landscape Resolute focus on underwriting discipline and risk management Continued application of performance management framework Ensure high quality risk management developed and embedded at individual and aggregate levels

© Lloyd’s5 Corporation priorities for 2010 Performance Management Solvency IIThe Exchange Claims Transformation Access to Business

© Lloyd’s6 Trends and issues in the global insurance industry Geographical balance The Lloyd’s market portfolio is heavily focused on North America and the UK, with limited penetration in the large developed Continental European insurance markets or smaller insurance markets in developing economies Market portfolio mix Lloyd’s market has seen a gradual shift towards more catastrophe exposed business, particularly in the US Distribution Continued structural changes within the broker market Concentration of business with three largest brokers

© Lloyd’s7 Lloyd’s response to these global insurance trends and issues Geographical balance Established markets: London-based model using broker distribution and making use of coverholders to access ‘smaller’ specialist business Developing markets: existing trading centres remain but preferred model elsewhere is as a London-based (re)insurer Market portfolio mix Market participants believe opportunities exist with small/medium specialist risks Support the business development activities of managing agents, promote Lloyd’s in local markets, secure regulatory access where required, streamline and simplify access to Lloyd’s Distribution Work closely with all distribution partners Areas of focus: Development of the coverholder channel Strengthening the Lloyd’s distribution chain process and operational efficiencies Broker relationship management

© Lloyd’s8 Strengths of the Lloyd’s market Performance and risk management Access to business Capital efficiency and chain of security Ratings Brand Diversity Subscription market Market cohesion

© Lloyd’s9 Lloyd’s response: maintaining and promoting Lloyd’s strengths Future activity in these areas will be focused on maintaining these strengths not on any major new strategic initiatives Two major streams of activity already underway, enhance Lloyd’s strengths, and continue to be a high priority Solvency II Performance management

© Lloyd’s10 Investment for the future: Operating Environment Future state of the Lloyd’s operating environment An operating environment in which data is “entered once and used forever”; with common ACORD standards It will be as easy to do business with Lloyd’s as with any other insurance market This will be delivered through four major initiatives: The Exchange Lloyd’s Information and Reporting Project Claims Transformation Future Processing Model Response over the plan period

© Lloyd’s11 People are the market’s main assets Work will continue to develop skills and talent across Lloyd’s market in partnership with key market bodies (LMA, LIIBA) Investment for the future: Talent management and development

© Lloyd’s12 Operating at Lloyd’s provides market participants with access to a range of Corporation services e.g. tax and regulatory reporting, central settlement A lot will be demanded of market participants over the plan period e.g. market reform initiatives, Solvency II The Corporation will support businesses through this transition period wherever possible Changing marketplace

© Lloyd’s13 Visit lloyds.com/strategy for more informationlloyds.com/strategy

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