Experian is a registered trademark of Experian Information Solutions, Inc. © © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination CAS Predictive Modeling Seminar Predictive Modeling for a Commercial Insurance Company with Little or No Data Scott Bronstein October 5, 2004

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Discussion points Data available for predictive modeling Data available for predictive modeling Models in use Models in use Sample results Sample results Summary Summary

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Modeling guidelines with minimal data Know your target population Know your target population Tap into business data - even minimal amount of business performance data can be predictive Tap into business data - even minimal amount of business performance data can be predictive Use consumer data as appropriate Use consumer data as appropriate Segment the population Segment the population Validate at logical intervals - can recalibrate if necessary Validate at logical intervals - can recalibrate if necessary

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Publicly held <1% Privately held 7% Partnerships15% Sole proprietorships 77% 190 million consumers Source: Statistical Abstract of the United States Twenty-two million businesses Composition of U.S. businesses

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Experian Business Information Solutions Integrated Information Solutions National Business Database National Business Credit Database Business Public Record Database National Consumer Credit Database No other company houses these assets under a single roof

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Firmographics Experian Business Credit Database Experian Standard & Poors PublicrecordPublicrecord Banking,insurance,leasingBanking,insurance,leasing TradepaymentTradepayment Marketing database CollectionsCollections Credit Database Sources

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination National Yellow Pages National Business Database National Credit Database Data Vendors TeleverifiedDataTeleverifiedData Marketing Database DBA/FBN (new business) DBA/FBN Business White Pages

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Scores Offer Solutions Across Customer Lifecycle Score portfolio to: Help process renewal Help process renewal Identify cross-sell and up-sell opportunities Identify cross-sell and up-sell opportunities Adjust credit limits Adjust credit limits Maximizing Score portfolio to: Monitor application policies Monitor application policies Track ongoing customer risk Track ongoing customer risk Prioritize / expedite collections Prioritize / expedite collections Determine gross measures of portfolio risk Determine gross measures of portfolio risk Managing Score portfolio for targeted pre-qualified & cross-sell efforts Score portfolio for targeted pre-qualified & cross-sell efforts Select pre-qualified names from BIS marketing list Select pre-qualified names from BIS marketing list Targeting Process new applications using internet, online software or CPU access. Process new applications using internet, online software or CPU access. Bulk portfolio purchases Bulk portfolio purchases Acquiring

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Intelliscore overview Used primarily in small business lending, commercial card, leasing, telecommunications, and business services Used primarily in small business lending, commercial card, leasing, telecommunications, and business services Commercial Intelliscore Commercial Intelliscore  Utilizes credit, business demographics, public record and legal information  Utilizes commercial credit, business demographics, public record and legal information Small Business Intelliscore Small Business Intelliscore  Utilizes credit, business demographics, public record and legal information  Utilizes commercial and consumer credit, business demographics, public record and legal information

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Intelliscore models are segmented scoring systems Businesses within a modeling sample are clustered or segmented by common characteristics such as Businesses within a modeling sample are clustered or segmented by common characteristics such as  Size of business  Credit history  Data type availability When predictors behave differently between clusters, the file should be segmented so the clusters can be modeled independently to capture subtle nuances in payment behavior When predictors behave differently between clusters, the file should be segmented so the clusters can be modeled independently to capture subtle nuances in payment behavior

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Model Segment 1 score Model Model Segment 2 score Model Segment 3 score Transformation Uniform score Model segment integration Scoring system integrates model segments into one uniform score Each Intelliscore model solution consists of several modeled segments each with its own set of variables and raw score Each Intelliscore model solution consists of several modeled segments each with its own set of variables and raw score

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Commercial credit and business demographic information for up to fifteen elements Credit score and percentile Action Score factors Commercial Intelliscore Report Key features

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Commercial Intelliscore 18% to 60% lift in predictiveness

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Small Business Intelliscore 12% to 35% lift in predictiveness

© © Experian Information Solutions, Inc Confidential and proprietary - not for dissemination Summary Wide array of business data is available Wide array of business data is available Familiarity with how to use the data is critical Familiarity with how to use the data is critical Small business is broadly defined and data availability will vary Small business is broadly defined and data availability will vary Segment the population Segment the population Commercial risk scores are predictive across several industries - and probably others Commercial risk scores are predictive across several industries - and probably others