1. Lloyd’s of London Performance & Prospects, Strengths & Weaknesses Doug Morton - Lloyd’s Chief Analyst

2. Outline of Presentation äLloyd’s Security - It’s not the Syndicate Stupid! äLloyd’s Performance - Volatile? ä3 Year Accounting - Why? äAnnual Accounting - Why? äRegulation & Future controls

3. Lloyd’s Chain of Security

4. Member’s Premiums Trust Funds äPremiums received äIncome from u/w activities ä Claims ä Reinsurance premiums ä Underwriting Expenses ä Overseas Regulatory Deposits

5. Member’s Funds at Lloyd’s äLloyd’s Deposit äSpecial Reserve Fund äPersonal Reserve Fund ä Letters of Credit ä Bank Guarantees ä Cash/Equities/Bonds ä RBC Methodology ä Min. 40% Capital Ratio

6. Member’s Other Personal Wealth äDeclared wealth - Funds at Lloyd’s and funds held externally äUndeclared wealth - unlimited liability exposes this for certain members

7. Other Corporation Assets äLast resort - physical and financial assets of the Corporation of Lloyd’s

8. Aggregate Market Resources As at 31/12/2000

9. Lloyd’s - Volatile But Good

10. 3 Year Accounting - Why? Old, odd but curiously effective!

11. Global Forecasts 1995-1999

12. Hindsight = 20/20 Vision! How long does it take to evaluate an underwriting year?

13. Lloyd’s vs US P/C Companies (Combined Ratios)

14. Annual Accounting - Why? äIndustry comparisons äExisting widespread usage at Lloyd’s äIntroduced as supplementary reporting

15. Quartile Performance 1998 Results After Personal Expenses

16. Regulatory Response äIdentification of under-performers äCapital loading & de-registration äRefinement of RBC methodology äHands-on management of Market

17. Quartile Distribution Property Damage - 1998 Account

18. Managing Lloyd’s äOverall aim - reduce volatility, raise standards äRaise Market ratings - AM Best and S&P äReturn to consistent out-performance

19. Lloyd’s of London Performance & Prospects, Strengths & Weaknesses Doug Morton - Lloyd’s Chief Analyst