State of The Casualty Market SARIMS Presentation November 4, 2010 Derek Robinson, BCOMM, CRM Vice President, Regional Marketing Manager

1 State of the Primary Casualty Market  Insured's with good credit ratings, effective risk management programs and favorable loss experience are averaging flat to -5% rate reductions  In general, retentions have not retreated, however with the soft market coupled with an excellent loss record, clients should constantly review options for decreased loss retention levels  General Liability –Rates on risks with good loss experience are decreasing but significant exposure decreases may reduce the ability to further cut rate.  Financial responsibility (fronting) –Very competitive particularly in competitive bidding situations  Workers’ Compensation (US) –Expect to see rate decreases ranging from flat to -5% as a result of competition and favorable statutory changes  Risk transfer rates above client loss retentions for WC, GL and Auto continue to decrease through the third quarter

2 Casualty Lines Average Year Over Year Rate Change (through 9/30/10) State of the Primary Casualty Market

3 State of the Umbrella/Excess Market Pricing  Beginning in 2009, rate reductions between -5% to -10% were replaced with rate reductions in the range of -2% to -4% remaining in that range through the 3rd quarter of –Markets have historically been aggressive to close out the 4 th quarter on new business growth  Excess capacity carriers are strictly adhering to minimum premiums  Overall lead and excess layer pricing continues to be competitive but is certainly stabilizing  In 2011, most Insured's will see further premium reductions either due to reduced exposures or rate reductions

4 State of the Umbrella/Excess Market Capacity  Excess capacity has grown significantly in 2008/2009/2010  Currently, there is approximately $2 billion of total available capacity

5 State of the Umbrella/Excess Market Umbrella/Excess Liability Average Year Over Year Rate Change (through 9/30/10)

Global Risk Insight Platform (GRIP)  To further illustrate the discussion with fact based review, I have included some screen shots from Aon’s Proprietary GRIP system –It provides real-time trade information broken down by line, industry and geography.

GRIP Slides

8 State of the Casualty Market ─ Summary CategoryRest of 2010Comment Pricing Soft market conditions expected to continue with flat- to-low single digit rate decreases for low-to-medium hazard Insured's; increases will be pursued by carriers for more difficult classes where limited competition exists Limits Most Insured's expected to maintain excess casualty limits purchased Deductibles/ Retentions Most Insured's expected to maintain deductibles/retentions Coverage Reasonable coverage enhancements expected to be available; underwriter scrutiny around emerging risks will continue Capacity No significant increase in capacity (currently at record levels)

State of The Casualty Market SARIMS Presentation November 4, 2010 Derek Robinson, BCOMM, CRM Vice President, Regional Marketing Manager