1. Insurance Company Catastrophe Strategy Scott Belden

2. Discussion Outline Management Philosophy Financial Capacity Operating Segments - Personal Lines - Commercial Lines - Specialty/Reinsurance

3. Management Philosophy Is Catastrophe Risk an “opportunity” or “a necessary evil”? What is an acceptable “probability of ruin”? How much tolerance is there for 1 in 100 volatility? What return level is needed for that volatility? How strong is the faith in models?

4. Financial Environment Capital and Surplus Earnings power Other diversifying income sources Other demands on surplus Access to capital Ownership expectations

5. Operating Segments Personal Lines - Standard Homeowners - Specialty Lines Commercial Lines - Small Standard Lines - Mid-Sized - National Schedules Specialty Lines - Excess and Specialty - Reinsurance and Retrocession

6. Personal Lines Standard Homeowners Strategy Considerations –Return requirements versus market price –Regulatory constraints Pricing Non-renewal Coverage breadth –Agency considerations –Account rounding (with Auto) –Geographic spread –Other income sources –Reinsurance dependency Model Usage –Portfolio level

7. Personal Lines Specialty Homeowners Strategy Considerations –Admitted market versus Surplus Lines –Stand alone or packaged coverage –Distribution –Geographic spread –Reinsurance dependency Model Usage –Portfolio level –Possibly individual risk

8. Commercial Lines Small Business Strategy Considerations –Return requirements versus market price –Package policy coverage –Coverage extensions –Agency considerations –Geographic spread –Reinsurance dependency Model Usage –Portfolio level

9. Commercial Lines Middle Market Strategy Considerations –Return requirements versus market price –Coverage breadth BII EQSL –Engineering / Loss Control –Geographic spread –Reinsurance dependency Model Usage –Individual risk –Portfolio level

10. Commercial Lines National Schedule / HPR Strategy Considerations –Return requirements versus market price –Coverage breadth BII EQSL per location versus per occurrence –Engineering / Loss Control –Account geography –Reinsurance dependency Model Usage –Location / Account level –Portfolio level

11. Specialty Commercial Strategy Considerations –Return requirements versus market price –Target niche –Coverage breadth –Distribution –Geographic spread –Reinsurance dependency Model Usage –Individual risk –Portfolio level

12. Reinsurance / Retrocession Strategy Considerations –Return requirements versus market price –Product offerings Pro rata Per risk Catastrophe coverage Retrocession –Data requirements –Zonal aggregate tracking / Geographic spread –Account rounding –Net line versus retro capacity Model Usage –Program level –Portfolio level