© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com AVAILABLE AT Climateofuncertainty.com Amazon.com Bill Stewart |Cozen.

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com AVAILABLE AT Climateofuncertainty.com Amazon.com Bill Stewart |Cozen O'Connor 200 Four Falls Corporate Center | Suite 400 | West Conshohocken, PA 19428 P: 610.941.2380 | F: 866.776.8917 | wstewart@cozen.com @cozen.com THE IMPACT OF GLOBAL WARMING ON INSURANCE LAWYERS AND THEIR CLIENTS Board of Marine Underwriters of San Francisco May 6 & 7, 2010

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com How Climate Change Will Effect Insurers 1)Physical Manifestations of a Warmer World 2)Financial Injury (including litigation) Caused By Governmental Legislation 3)Disclosures to Regulatory Bodies 4)New Insurance Products and Markets

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Expectations Agreed Upon By the International Panel on Climate Change –Rise In Temperatures –Increased Storms –Higher Sea Levels –Widespread Increase in Flooding –Aggravated Water Scarcity –Increased Range of Malaria Carrying Mosquitoes –Large Scale Famine –Massive Population Movement –Would Likely Provoke Armed Conflict

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Public Nuisance Litigation Comer v. Murphy Oil, USA, et al. – U.S. District Court for the Southern District of Mississippi California v. General Motors Corp. – U.S. District Court for the Northern District of California Connecticut v. American Electric Company, Inc., – U.S. District Court for the Southern District of New York Native Village of Kivalina v. ExxonMobil Corp. – U.S. District Court for the Northern District of California

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Comer v. Murphy Oil, USA, et al., U.S. District Ct., Southern District Of Mississippi Claims: –Residents and property owners assert public and private nuisance claims against oil, coal and chemical company defendants, alleging defendants contributions to global warming fostered the strengthening of Hurricane Katrina. 5 th Circuit Finding: –On October 16, 2009, the Court of Appeals reversed the Federal District Court, holding plaintiffs claims do not present nonjusticiable political questions –Rehearing En Banc Granted - May 24, 2010

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Connecticut v. American Electric Power Co., U.S. District Ct., Southern District of New York Claims: –Plaintiffs, various states and environmental groups sought to abate the “public nuisance of global warming” alleging defendants contributed to elevated levels of CO 2 beach erosion, droughts, and floods. 2 nd Circuit Finding: –On September 21, 2009 the Court of Appeals reversed the Federal District Court, holding (1) public nuisance claims against greenhouse gas emitters do not present nonjusticiable political questions; and (2) private organizations have standing, upon a showing of injury different in kind from the public at large, to pursue litigation. –Rehearing En Banc Denied – March 5, 2010

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com California v. General Motors Corp., U.S. District Ct., Northern District of California Claims: –State of California sued six automakers alleging their emission of CO 2 and other greenhouse gases from the combustion of fossil fuels, caused millions of dollars of damage to the State. Voluntary Dismissal: –The State voluntarily moved to dismiss it’s appeal, citing to the Obama Administration’s public acknowledgement that greenhouse gases.

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Native Village of Kivalina v. ExxonMobil Corp. Federal District Court Finding: –On September 30, 2009, the Federal District Court dismissed plaintiffs claims against the power companies based upon the attenuated nature of the causal link between the claimed injuries and any particular defendants’ conduct, and on the basis that the regulation of greenhouse gas emissions was an issue best left to the political branches of government. 9 th Circuit –Appeal pending (Briefing Stage)

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Professional Liability Exposure 1)Architects & Engineers 2)Brokers, Lawyers, Fiduciaries & Others 3)Foreseeability Issue

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Coverage Litigation Steadfast Ins. Co. v. AES Corporation Virginia Circuit Court entered judgment in favor of Steadfast Ins. Co. holding that it has no obligation to defend or indemnify AES in Native Village of Kivalina v. ExxonMobil Corp. Status: Appeal Pending before Virginia Supreme Court

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Coverage Issues Presented Under CGL Policies By Public Nuisance Suits Occurrence, Fortuity & Known Loss Trigger & Loss in Progress Pollution Exclusion Allocation Among Policy Periods

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com How Climate Change Will Effect Insurers 1)Physical Manifestations of a Warmer World 2)Financial Injury (including litigation) Caused By Government Legislation

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Important UN Climate Change Conferences Rio de Janeiro (Earth Summit) (1992) The Kyoto Protocol on Climate Change (COP-3) (1997) Bali, Indonesia (COP-13) (2007) Poznan, Poland (COP-14) (2008) Copenhagen, Denmark (COP-15) (2009)

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Cap and Trade Legislation Clean Energy Jobs and American Power Act –“A bill to create clean energy jobs, promote energy independence, reduce global warming pollution, and transition to a clean energy economy.” –Senate – S.1733 (Kerry/Boxer) –Introduced in Senate on September 30, 2009 American Clear Energy and Security Act of 2009 –“A bill setting forth provisions concerning clean energy, energy efficiency, reducing global warming pollution, transitioning to a clean energy economy, and providing for agriculture and forestry related offsets.” –House – H.R. 2454 (Waxman/Markey) –Passed House on June 26, 2009

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Reducing Fossil Fuel Demand Energy Conservation –recycling, carpooling, adjusting thermostat, turning lights off Energy Efficiency –insulation, energy rated appliances, fluorescent light bulbs, smart grid technology

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Existing Regulatory Inaction –Suits to compel government action Public Nuisance –Tort claims Future Professional Liability Shareholder Derivative Actions Regulatory “Cap and Trade” Compliance Coverage Litigation Climate Change Litigation

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com How Climate Change Will Effect Insurers 1)Physical Manifestations of a Warmer World 2)Financial Injury (including litigation) Caused By Government Legislation 3)Disclosures to Regulatory Bodies

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com Climate Change Risk Disclosure Requirement 1)SEC No specific “climate” disclosure requirements 2)National Association of Insurance Commissioners “Climate Risk Disclosure Survey”

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com NAIC Climate Risk Disclosure Requirements 1.Does the company have a plan to assess, reduce or mitigate its emissions in its operations or organizations? If yes, please summarize. 2.Does the company have a climate change policy with respect to risk management and investment management? If yes, please summarize. If no, how do you account for climate change in your risk management? 3.Describe your company’s process for identifying climate change-related risks and assessing the degree that they could affect your business, including financial implications. 4.Summarize the current or anticipated risks that climate change poses to your company. Explain the ways that these risks could affect your business. Include identification of the geographical areas affected by these risks. 5.Has the company considered the impact of climate change on its investment portfolio? Has it altered its investment strategy in response to these considerations? If so, please summarize steps you have taken. 6.Summarize steps the company has taken to encourage policyholders to reduce the losses caused by climate change-influenced events. 7.Discuss steps, if any, the company has taken to engage key constituencies on the topic of climate change. 8.Describe actions your company is taking to manage the risks climate change poses to your business including, in general terms, the use of computer modeling.

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com NAIC Climate Risk Disclosure Requirements 1.Does the company have a plan to assess, reduce or mitigate its emissions in its operations or organizations? If yes, please summarize. 2.Does the company have a climate change policy with respect to risk management and investment management? If yes, please summarize. If no, how do you account for climate change in your risk management? 3.Describe your company’s process for identifying climate change-related risks and assessing the degree that they could affect your business, including financial implications. 4.Summarize the current or anticipated risks that climate change poses to your company. Explain the ways that these risks could affect your business. Include identification of the geographical areas affected by these risks. 5.Has the company considered the impact of climate change on its investment portfolio? Has it altered its investment strategy in response to these considerations? If so, please summarize steps you have taken. 6.Summarize steps the company has taken to encourage policyholders to reduce the losses caused by climate change-influenced events. 7.Discuss steps, if any, the company has taken to engage key constituencies on the topic of climate change. 8.Describe actions your company is taking to manage the risks climate change poses to your business including, in general terms, the use of computer modeling. 3.Describe your company’s process for identifying climate change-related risks and assessing the degree that they could affect your business, including financial implications.

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com NAIC Climate Risk Disclosure Requirements 1.Does the company have a plan to assess, reduce or mitigate its emissions in its operations or organizations? If yes, please summarize. 2.Does the company have a climate change policy with respect to risk management and investment management? If yes, please summarize. If no, how do you account for climate change in your risk management? 3.Describe your company’s process for identifying climate change-related risks and assessing the degree that they could affect your business, including financial implications. 4.Summarize the current or anticipated risks that climate change poses to your company. Explain the ways that these risks could affect your business. Include identification of the geographical areas affected by these risks. 5.Has the company considered the impact of climate change on its investment portfolio? Has it altered its investment strategy in response to these considerations? If so, please summarize steps you have taken. 6.Summarize steps the company has taken to encourage policyholders to reduce the losses caused by climate change-influenced events. 7.Discuss steps, if any, the company has taken to engage key constituencies on the topic of climate change. 8.Describe actions your company is taking to manage the risks climate change poses to your business including, in general terms, the use of computer modeling. 4.Summarize the current or anticipated risks that climate change poses to your company. Explain the ways that these risks could affect your business. Include identification of the geographical areas affected by these risks.

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com How Climate Change Will Effect Insurers 1)Physical Manifestations of a Warmer World 2)Financial Injury (including litigation) Caused By Governmental Legislation 3)Disclosures to Regulatory Bodies 4)New Products and Markets

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com New Products 1)Pay as you go auto 2)Green upgrade 3)Crop insurance and other climate-related micro insurance 4)D & O Extension 5)Carbon captive and storage 6)Growing Renewable Energy Market

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com AVAILABLE AT Climateofuncertainty.com Amazon.com Bill Stewart |Cozen O'Connor 200 Four Falls Corporate Center | Suite 400 | West Conshohocken, PA 19428 P: 610.941.2380 | F: 866.776.8917 | wstewart@cozen.com @cozen.com THE IMPACT OF GLOBAL WARMING ON INSURANCE LAWYERS AND THEIR CLIENTS Board of Marine Underwriters of San Francisco May 6 & 7, 2010

© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com AVAILABLE AT Climateofuncertainty.com Amazon.com Bill Stewart |Cozen.

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© 2009 Cozen O’Connor. All Rights Reserved. 550 Attorneys 24 Offices www.cozen.com AVAILABLE AT Climateofuncertainty.com Amazon.com Bill Stewart |Cozen.

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