Insurance Market Update May 26 & 27 Insurance Market Update Simon Delchar - MARSH Global Markets Lisa Hansford-Smith - MARSH

Simon Delchar Managing Director Global Markets Marsh

State of the World-wide Property Market 01 January 2005 Renewal Season - London Market Catastrophe Perils Despite loss activity in the USA, Asia & Europe, property rates have continued to fall in 2005 by an average of 10% Fire Perils Plenty of capacity & pricing variance, heavily influenced by individual territory results. Rates continuing to fall for accounts with no major loss activity by an average of 15%. Greater reductions available if market longevity not crucial Deductibles Stable, but can look to reduce with good loss record & information. Generally, not sufficient credit given for increased retentions. Capacity No shortage of capacity. Global market capacity in excess of USD 7 billion for fire; less for natural catastrophe depending on location. Marsh

State of the World-wide Property Market 12 months to the present date Natural Disasters Losses April 2004 - Oklahoma Hailstorms USD75-100,000,000 May/June 2004 - US Midwest Tornadoes USD500,000,000 June 2004 - Colorado Hailstorms USD625,000,000 June 2004 - Texas Severe Weather USD175,000,000 June 2004 - Asian Typhoon Mindulle USD100,000,000 July 2004 - Japan Floods USD190,000,000 August 2004 - Asian Typhoon Rananim USD2,000,000,000 (direct economic losses) August 2004 - Caribbean/Florida Hurricane Charley USD7,600,000,000 August 2004 - Asian Typhoon Chaba USD950,000,000 August 2004 - Asian Typhoon Aere USD269,800,000 (direct economic losses) August/September 2004 - Caribbean/Florida Hurricane Frances USD4,700,000,000 August/September 2004 - Asian Typhoon Songda USD3,000,000,000 September 2004 - Caribbean/Florida Hurricane Ivan USD11,700,000,000 September 2004 - Caribbean/Florida Hurricane Jeanne USD4,500,000,000 September 2004 - Asian Typhoon Meari USD215,000,000 October 2004 - Asian Typhoon Ma-On USD195,000,000 October 2004 - Asian Typhoon Tokage USD1,100,000,000 October 2004 - Japan Earthquake USD450,000,000 December 2004 - Indian Ocean Earthquake & Tsunami USD2.5 - 4,000,000,000 Marsh

Property Placements - Key issues Intangible Property (data) Crucial for exposure to be evaluated and separate products/risk transfer effected if required. Contingent Business Interruption Suppliers and Customers Interdependency Catastrophe Limits Asia - existing operations and growth opportunities Loss Mitigation Marsh

The Key to Success: Strategic Planning Quality, relevance & depth of information Timing Benchmarking can help validate limits, retentions and pricing Rating tools ensure a feel for market pricing- don’t let the market dictate the pricing! PML’s - One common standard A clear placement plan - Target key markets with appetite and understanding of Technology industry exposures - Geographic diversity of market to create competition Pro-active relationship with your insurance/reinsurance panel - Mid -Term Strategic Review Meetings - Visits to key locations Marsh

Market reform Best terms Split terms/ Composite pricing Potential pitfalls: - Who is the leader? - Multiple agreement parties for wordings, claims and amendments - Could lead to: delay of policy issuance inconsistency of coverage appointment of multiple experts perceived breach or trust Marsh

Conclusion Rate reductions are continuing and no sign of upturn Information= differentiation Relationships are important for most clients and underwriters Marsh

Lisa Hansford-Smith FINPRO Marsh

State of the D&O Marketplace Companies are now tending towards purchasing Side A or Side A&B only and reducing Side C cover. We are seeing softening premiums across all industry groups (with the exception of Pharma). Issues such as poor financials, governance, outstanding claims are still of concern to underwriters. We are continuing to see increasing levels of capacity – approximately USD 400 million. Exclusions – some of the hard market exclusions are being removed such as failure to maintain insurance. Marsh

State of the E&O Marketplace There are several strong Technology lead Errors & Omission markets - HISCOX, AIG, Beazley, Chubb. Premiums -5% to 10%. Loss Experience Uncertainty of what the next high tech issue may bring – i.e. privacy claims. Capacity Good levels of capacity available (approx 250 million dollars). Marsh

The State of the E&O Market What underwriters are not writing from an E&O perspective!! Single project cover Single project cover is very difficult to obtain and in most cases not cost effective. Patent cover In some cases all IPR cover. Where are underwriters being cautious Security liability cover Cyber and Virus cover Marsh

State of the Marketplace Tech D&O and E&O Strategies Underwriter Information/Face to Face Meetings Start renewals early and ensure that all information is present in submission form. Explain/introduce CFO/CIO/GC (if possible) to demonstrate coordination, control & process In terms of E&O coverage: Milestone management Meet with contract managers (this is for the E&O coverage) How does the company handle dissatisfied customers (how soon does it move beyond the project manager to a more senior level manager?) Marsh