1 Lloyd’s security

2 Financially strong and secure Stable security rating High quality and diverse capital base Chain of Security Standards and supervision

3 Lloyd’s security Financially strong and secure Stong and sustained financial performance Disciplined underwriting Record profit of £1,357 million ($2,605 million) in 2004 £13.7 billion ($26.3 billion) capacity in 2005

4 A diverse, high-quality capital base £bn Capacity Names (unlimited) Names’ conversion capital Other non-insurance industry Other insurance industry Bermudian insurance industry US insurance industry 11% 7% 3% 13% 7% 15% UK insurance industry44%

5 Lloyd’s security Security is paramount Lloyd’s enjoys stable security ratings:  A (Excellent) A M Best, August 2004 “The rating reflects Lloyd’s improving prospective capitalisation, strong operating performance, its global reach and improvements in risk management”  A (Strong) Standard & Poor’s, July 2004 “The rating on Lloyd’s reflects the continuing commitment of capital providers to the Market and the consequent increase in capacity and funds at Lloyd’s for 2004; the maintenance of Lloyd’s strong business position: and likelihood of the continuation in 2004 and 2005 of the strong operating performance seen in 2003.”  A (Strong) Fitch Ratings, September 2004 “The rating reflects Lloyd’s improved capitalisation, the market’s ability to attract and retain capital, improved risk controls and recent strong earnings.”

6 Lloyd’s security Lloyd’s Chain of Security - overview Lloyd’s provides security to policyholders through the four links in the chain:  Syndicate level assets  Members’ funds at Lloyd’s  Members’ other declared assets  Lloyd’s central assets

7 Lloyd’s security Lloyd’s Chain of Security Syndicate level assets Premiums trust funds and overseas regulatory deposits: £21,873m ($41,996m)* Payment of claims takes precedence over distribution of profits *Source: Lloyd’s Annual Report, 2004, figures as at December 31, Exchange rate = £1 : $1.92

8 Lloyd’s security Lloyd’s Chain of Security Members’ funds at Lloyd’s Capital held at Lloyd’s: £9,622m ($18,474m)* Additional funds are held in trust as security for members’ underwriting liabilities *Source: Lloyd’s Annual Report, 2004, figures as at December 31, Exchange rate = £1 : $1.92

9 Lloyd’s security Lloyd’s Chain of Security Members’ other assets Members’ other declared assets: £219m ($420m)* Members’ other resources are also available to meet claims *Source: Lloyd’s Annual Report, 2004, figures as at December 31, Exchange rate = £1 : $1.92

10 Lloyd’s security Lloyd’s Chain of Security Lloyd’s central assets Lloyd’s net central assets: £556m ($1,066m)* The Central Fund is available at the discretion of the Council of Lloyd’s, in the event that a claim cannot be met from the first three links in the chain of security. *Source: Lloyd’s figures as at 31 December, Exchange rate = £1 : $1.92

11 Lloyd’s security US Trust Funds 2004 Lloyd’s American Trust Funds $536m Credit for Reinsurance and Surplus Lines Trust Funds $10,642m Joint Asset Trust Funds $438m Illinois Trust Fund $493m Kentucky Trust Fund $112m *Source: Lloyd’s figures as at 31 December, Exchange rate = £1 : $1.92

12 Lloyd’s security Standards and supervision Lloyd's requires disciplined business planning from all its businesses. Managing Agents are regulated by the FSA and closely monitored by Lloyd’s Lloyd’s demands outstanding risk management capability