The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond The Reinsurance Market in the Aftermath of September 11 th 2002 Reinsurance Renewals and Beyond

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Agenda 19/11 Impact Renewals Renewals

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Industry Prior to 9/11/01 Poor Results for Most Reinsurers the Past Number of Years Poor Results for Most Reinsurers the Past Number of Years  Average 106% Combined for Last 7 Years Year-End 2000 Saw Losses to Reduce Industry Surplus 4.6% Year-End 2000 Saw Losses to Reduce Industry Surplus 4.6% Through Mid-Year 2001, RAA Reported Average Combined Ratio of 116% Through Mid-Year 2001, RAA Reported Average Combined Ratio of 116%

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Industry Prior to 9/11/01 Market Already Tightening in Most Lines of Business Market Already Tightening in Most Lines of Business Improving Primary and Reinsurance Rate Environment As Well As Cash Flow Improving Primary and Reinsurance Rate Environment As Well As Cash Flow Even With Price Increases, Double Digit ROEs Not Possible Due to Over-Capitalization Even With Price Increases, Double Digit ROEs Not Possible Due to Over-Capitalization Interest Rate Levels Continue to Deteriorate Interest Rate Levels Continue to Deteriorate

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Source: Standard & Poor’s 18/12/2001 Industry Combined Ratio Global Reinsurance Industry Combined Ratio

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Hurricane Andrew +7.2% In the Wake of Hurricane Andrew, Rates Spike up and 8 Years Later Rates Were Only 7 Points Higher Paragon Catastrophe Pricing Index Overall Rate Increases

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond September 11 Insured Loss Estimates Biggest Insured CAT in US and World History ($40B) Biggest Insured CAT in US and World History ($40B)  Hurricane Andrew: $15.5B (1992); $20B (2000) 100+ Insurers Worldwide Have Made Announcements Accounting for About $22B in Insured Losses 100+ Insurers Worldwide Have Made Announcements Accounting for About $22B in Insured Losses Industry Loss Estimates Range From $30B to $70B (Consensus = Low $40Bs) Industry Loss Estimates Range From $30B to $70B (Consensus = Low $40Bs)  First WC Disaster ($3.5B); 8,000 Physically Injured  First Life Disaster ($2.7B); 3,000 Killed  Estimated NYC Economic Losses are $83B SOURCE: Insurance Information Institute (III).

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond September 11 Insured Loss Estimates (cont.) Largest “Clash” Loss in History Largest “Clash” Loss in History  9/11 Attack Simultaneously Produced the Largest Losses in History in the Following Lines  Life  Workers’ Compensation  Aviation  Property Risk Excess  Business Interruption  Property Catastrophe  Liability Such Combinations of Exposure in Different LOBs Were Never Before Contemplated Such Combinations of Exposure in Different LOBs Were Never Before Contemplated  Premiums Did Not Reflect This Risk Insurance Will Pay Biggest Share by Far Insurance Will Pay Biggest Share by Far  Federal Government Promised $21.5B, Excluding Victims Compensation Fund SOURCE: Insurance Information Institute (III).

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond September 11 Industry Loss Estimates ($ Billions) Consensus Insured Losses Estimate: $39.7B SOURCE: III.

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond World: Top 10 Largest Catastrophes (By Insured Loss) $ Billions, in 2000 $ *III Estimate; Includes life, liability and workers compensation losses. Source: Swiss Re, III.

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond New Capital / Capacity Post 9/11 Capital NameRaised Key Supporters Allied World$1.5BAIG, Chubb, GS Capital Partners Assurance Arch Re 1.0BArch Capital Group, Warburg Pincus, Heldman & Friedman Axis Specialty 1.6BMarsh Capital DaVinci Re 0.5BRenaissance Re, State Farm Endurance 1.2BAon, Zurich Specialty Montpelier Re 1.0BWhite Mountain, Benfield Group Olympus Re 0.5BWhite Mountain, Folksamerica $7.3B SOURCE: Goldman, Sachs Bermuda

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond NameCapital Raised NameCapital Raised CGNU$ 1.700B Swiss Re 1.600B Ace Ltd. 1.15B AIG 1.0B Converium.985B XL Capital. 819B XL Capital.60B Chubb.60B St. Paul.575B Wellington.564B All Others 7.281B Fresh Capital$16.874B Bermuda Start-Ups 7.300B Total To Date$24.174B New Capital / Capacity Post 9/11 Others

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond With Most Exceeding $1B of Capitalization, this New Generation is Two to Four Times Larger than those Established in 1992/93 Post Hurricane Andrew With Most Exceeding $1B of Capitalization, this New Generation is Two to Four Times Larger than those Established in 1992/93 Post Hurricane Andrew Not Subject to Upward Float of 9/11 Claims Not Subject to Upward Float of 9/11 Claims Not Subject to Potential Growth in Asbestos Exposures or Other Growing Legal Liabilities Not Subject to Potential Growth in Asbestos Exposures or Other Growing Legal Liabilities “Flight to Quality” Big, Highly-Rated Insurers Benefit “Flight to Quality” Big, Highly-Rated Insurers Benefit New Capital / Capacity Post 9/11 - Advantages

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Reasons Why Market Will Remain Hard Total Capital Raised Less Than What Was Lost From 9/11 Total Capital Raised Less Than What Was Lost From 9/11 Capacity Lost is Greater Than Dollar Losses From Attack Suggest Capacity Lost is Greater Than Dollar Losses From Attack Suggest  More Caution on the Part of Insurers / Reinsurers - Means More Capital Needed Per Dollar of Risk Assumed New Capacity Has for the Most Part Maintained Underwriting and Pricing Discipline New Capacity Has for the Most Part Maintained Underwriting and Pricing Discipline Demand up (We’re More at Risk as a Nation Now) Demand up (We’re More at Risk as a Nation Now) Reserve Shortfalls (e.g., Asbestos, WC) Reserve Shortfalls (e.g., Asbestos, WC) Poor Results in Many Important Lines for Reason Other Than 9/11 Poor Results in Many Important Lines for Reason Other Than 9/11 Poor Investment Results Poor Investment Results Wall Street Pressure Wall Street Pressure SOURCE: III, BB.

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Evolution of Syndicate Capacity - Lloyds

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Agenda 19/11 Impact Renewals Renewals

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Reinsurers Focused on Exposures Never Before Contemplated Reinsurers Focused on Exposures Never Before Contemplated Reinsurers Required to Return to Underwriting Profitability – Underwrite to Double Digit ROEs Reinsurers Required to Return to Underwriting Profitability – Underwrite to Double Digit ROEs Across the Board Pricing Increases and Coverage Restrictions Across the Board Pricing Increases and Coverage Restrictions Changes / Improvements Benefiting Reinsurers not as Significant as Anticipated / Desired due to New Capacity / Capital Changes / Improvements Benefiting Reinsurers not as Significant as Anticipated / Desired due to New Capacity / Capital 2002 Renewals - General

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Terrorism Terrorism  Definitions Vary – Typically Include Nuclear, Biological and Chemical (NBC)  Increased use of “Cyber” Exclusions  Excluded Virtually Across the Board on Large Commercial Business  Coverage Available at Least on a Limited Basis on Most Personal Lines  Availability on Workers Compensation is Difficult in General but Varies by Perceived Exposure, Layer and Reinsurer – More Difficult with Greater Limitations as Coverage Exceeds $1Million 2002 Renewals – Coverage Restrictions

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Less Coverage/More Restrictions on ECO/XPL Less Coverage/More Restrictions on ECO/XPL Increased Requirements for Meaningful Retentions by Cedant Increased Requirements for Meaningful Retentions by Cedant Reinstatement Restrictions / Limitations Reinstatement Restrictions / Limitations Preference to Provide Excess Reinsurance vs. Pro Rata Reinsurance Preference to Provide Excess Reinsurance vs. Pro Rata Reinsurance “Program” Business not in Favor “Program” Business not in Favor Mold Exclusions / Limitations in Many Regions Mold Exclusions / Limitations in Many Regions Increased Use of Loss Ratio Caps, Loss Corridors, Occurrence Caps, Etc… Increased Use of Loss Ratio Caps, Loss Corridors, Occurrence Caps, Etc… 2002 Renewals – Coverage Restrictions (cont.)

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Difficult to Generalize Difficult to Generalize  Nationwide Programs Seeing More Significant Increases than Super Regional and Regionals  Quality and Availability of Historical Underwriting and Pricing Data Can Have a Meaningful Impact  Commercial Lines Hit Harder than Personal Lines  Adequate Capacity Generally Available at the Right Price  Workers Compensation “Carve Out” Market Virtually Gone 2002 Renewals - Pricing

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Casualty Casualty  Adequate, Meaningful Data and Reasonable Ceded Experience – 15-25% Increases  Lower Ceding Commissions and Increased Awareness of Primary “Costs” Along with Margins 15-30% Higher on all Pro Rata Business Property Catastrophe Property Catastrophe  Pricing up 10-25% on Loss Free Business  Historically Good Cedant / Reinsurer Relationships were Beneficial to Cedant  New Capacity Definitely Helped Keep Increases in Check 2002 Renewals - Pricing

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Property – Per Risk Property – Per Risk  Treaty Experience Drove Renewal Pricing  Higher, Capacity Layers Saw Largest “Market” Increases due to Historically Low Cost Workers Compensation Workers Compensation  Excess of Loss Favored Over Pro Rata  Layers Within First $1Million Increased from 20-30%  Lack of “Carve Out” Market Drove Pricing Up in Layers Above $1Million by Significant Multiples up to 50% and More  Maximum Any One Life (MAOL) Limits Restrictions to $2-5 Million from as much as $10 Million 2002 Renewals – Pricing (cont.)

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Non-Traditional (Financial) Transactions Non-Traditional (Financial) Transactions  Increased Exploration and Use of These Products  Pricing Up Somewhat due to Lower Investment Yields and Higher ROE Requirements Surety Surety  Very Tight Market in Wake of Enron Loss 2002 Renewals – Pricing (cont.)

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Agenda 19/11 Impact Renewals Renewals

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Warren Buffet, Chairman, Berkshire Hathaway “…Consequently, any period of strong pricing will almost certainly end within a year…” Merrill Lynch, P&C Weekly Review, 11/13/01 “…Our current view is that the improvement in insurance and reinsurance market conditions will last between one and two years…” 2003 Renewals - How Long With The Current Hard Market Last? Contrasting Views: Contrasting Views:

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Key Factor is Performance of Property / Casualty Stocks Over the Next Year Key Factor is Performance of Property / Casualty Stocks Over the Next Year Considerations: Considerations:  Market Was Hardening Prior to 9/11  Total New Capital Will Not Fully Replace the Capital That Was Lost During the WTC  Total Lost Capacity is Higher Than Dollar Amount of Losses  Many Insurers / Reinsurers Withdrawing Capacity to a Greater Extent Than Their WTC Loss Would Dictate  New Capital / Capacity Will Shorten the Life of the Current Cycle 2003 Renewals - How Long With The Current Hard Market Last?

The information contained in this document is strictly proprietary and confidential Reinsurance Renewals and Beyond Continuation of Focus on Meaningful, In-depth Underwriting, Pricing Data Continuation of Focus on Meaningful, In-depth Underwriting, Pricing Data Availability of Actuarial Analysis Increasingly Required/Beneficial Availability of Actuarial Analysis Increasingly Required/Beneficial New Opportunities for Modeling Workers Compensation Catastrophe Accumulations and Terrorism Exposures in General New Opportunities for Modeling Workers Compensation Catastrophe Accumulations and Terrorism Exposures in General Nontraditional and Alternative Risk Transfer (ART) Mechanisms May Become More Common to Address Pricing and Coverage Issues Nontraditional and Alternative Risk Transfer (ART) Mechanisms May Become More Common to Address Pricing and Coverage Issues Approach the Market as Early as Possible to “Beat the Rush” and Have More Time to Evaluate Options Approach the Market as Early as Possible to “Beat the Rush” and Have More Time to Evaluate Options 2003 Renewals -