1. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Copyright (c) 2006 Standard & Poor’s, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. Analysis of Insurers and Reinsurers Solvency* African reinsurance forum Casablanca, october 5th 2010 Lotfi Elbarhdadi, Director* [English translation of original French document]

2. 2. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Outline of our criteria for financial strength analysis Liquidity Competitive position Management & Strategy Industry risk Investments Financial flexibility Solvency Profitability Enterprise Risk Management

3. 3. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Analysis of solvency in the rating process

4. 4. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Solvency Model Solvency is one of the eight categories of analysis Standard & Poor’s Risk Based Capital Model is the entry point in the analysis of Solvency –Last update: june 7th 2010 –Model based on risk factors –Compares our measures of available Capital (« Total Adjusted Capital » - TAC) with the target Capital for a given category of rating (« Diversified Target Capital ») An analysis of the reinsurance programme gives a visibility of the profit of non proportional reinsurance. An analysis of the reserves enables to form an opinion on whether the technical reserves are deficient or in surplus

5. 5. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Risk Based Capital Model, from model to opinion The result of the model does not directly determine the rating of financial strength A qualitative analysis allows us to complete our opinion The level of capital for BBB category is generaly higher than the regulatory capital requirements Our opinion on solvency can be different from the rated companies’ own opinion on their solvency The analysis of the entreprise risk management (ERM) aims to complete our analysis of solvency

6. 6. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Brief Outline of Standard & Poor’s Risk Based Capital Model

7. 7. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 TAC – S&P measure of available capital Reported Capital, adjusted for certain items that affect the company’s capital Examples of ajustements –More/ Less latent values on investments –Dividends reported and not yet accrued –Goodwill /other intangible assets –Minority Interest –Eligible subordinated debt –Non-life reserve surplus/Reserve discounts –Investment in related companies –Profit commission reserves –Unrealized gains on life portfolio

8. 8. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Target Capital Calculation Determined by category of rating, with a Value At Risk (VAR) approach at 1 year –Level of confidence: 97.2% for 'BBB',category 99.4% for 'A‘ category, 99.7% for 'AA‘ category, 99.9% for 'AAA‘ category Approach based on charges by risk derived from statistic series model –Credit & recoverable risks (liabilities, reinsurance, others) –Market risk (Stocks, liabilities, real estate, ALM) –Concentration risk –Non-Life premium risk (by category of insured risk) –Non-Life reserve risk –Catastrophe risk –Life insurance related risks (Mortality, longevity, reserves) Cautiously taking into account the explicit profit of diversification

9. 9. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Examples of risk charges – Market risk Charges according to Market value/ Fair value Stock risk –Charges specific to unlisted stocks –Depends on the countries of investments, grouped by categories  Target Capital ‘BBB’: charge varies between 27% and 55% Real Estate risk –Specific charges for utilized real estate –Charge by country  Target Capital ‘BBB’: charge varies between 8% and 18% Liability risk –Depends on the country of the liability (life), on the duration of assets and on the mismatch between the duration of assets/ liabilities (Life & Non-life)

10. 10. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Examples of Risk charges- Credit Risks Bonds credit risks –Charges laid out by category of bonds and duration  Target Capital ‘BBB’ and duration between1 and 5 years: example of charges 0.24% (AAA), 0.530% (A), 1.9% (BBB), 22.8% (B) Reinsurers recoverable risks –Charges laid out by category of reinsurers rating  Target capital ‘BBB’ : Example of charges: 0.82% (AAA), 1.699% (A), 4.9% (BBB), 34.15% (B)

11. 11. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Point on the treatment of reinsurance in the model ItemHandling 1.Acceptance (other than catastrophe risks)  separation proportional/non- proportional reinsurance 2.Ceded Reinsurance (other than catastrophe risks)  As a deduction of gross premium 3.premium received for coverage of catastrophe risks  70% deducted from catastrophe risk charge 4.Debt due by reinsurers  Charge for recoverable risks (net of collateral)  Concentration risk charge 5.Portion of the catastrophe claim due by reinsurers  Reduces gross charge

12. 12. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Non-life premium and reserve risk Charges according to premium and claim reserves net of reinsurance Laid out by line of business, with charges specific to non- proportional reinsurance.

13. 13. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Non-Life premium risks– Examples of risk charges

14. 14. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Non-Life premium risks– Examples of risk charges

15. 15. CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. August 2005 Copyright © 2010 by Standard & Poor’s Financial Services LLC (S&P), a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P’s opinions and analyses do not address the suitability of any security. S&P does not act as a fiduciary or an investment advisor. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non–public information received in connection with each analytical process. S&P may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. STANDARD & POOR’S and S&P are registered trademarks of Standard & Poor’s Financial Services LLC.