1. World Cat Environment vs. Technical Sustainability of Turkish Reinsurance Cessions September 24 rd 2013 International Istanbul Insurance Conference

2. 2 Agenda 1SCOR Introduction 22013 Cat Events, so far… 3Urban Flooding, next worry 4Lessons Learnt from Recent Earthquakes 5Cat Models 6Turkish Market Perspectives

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7. 7 2. 2013 Events, so far  Central Europe Flood: 13bn€ Economical, 3bn€ Insured  Alberta Flood: 1.3bn€ Insured Loss  Summer Hailstorm: 3bn€ insured loss  Mexico Hurricane/Flood: 0.7-1bn€  Non-modeled perils in non-peak regions 7 Central Europe Flood Alberta Flood Germany Hailstorms Ingrid + Manuel Hurricane in Mexico

8. 8 3. Urban Flood, the next worry… 1 Hour 1 Day 1 Month Copenhagen Flood in 2011: 100mm of rain over a 100km2 during 100 minutes in an urban center = 0.8bn€ Insured Loss

9. 9 2010 Unknown Fault 2011 Liquefaction 4. Lessons Learnt from Recent Earthquakes Chile 2010 Tsunami 2011 Aftershock Aftershocks Aftershock Tsunami, …Attenuation New Zeland Japan 2011Italy 2012

10. 10 5. Cat Models, strenghts and limits Cat Models capture reasonably well: 1.Main earthquake 2.Damages due to shake 3.Property coverages BUT provision/consideration around particularity related to: 1.Source: Aftershock, unknown fault 2.Pathway: Tsunami, Liquefaction 3.Receptor: Fire Following Earthquake 4.Consequences: Post Loss Amplification, Business Interruption/Contingent Business Interruption « Cat Model is a simplification of reality however it provide a useful framework to assess risks »

11. 11 6. Turkish Market Perspectives, Non Proportional Reinsurance Average CatXL RoL for Turkey: 3% For comparison: California: 7% Japan: 9-10% (after 2011) Italy: 3%

12. 12 7. Turkish Market Perspectives, Proportional Reinsurance  A global look to « bouquet » performances (average of 10 programmes of the Top 15 Turkish companies) shows technical profitability concerns  A non-sustainable gross technical margin of 11.4% exposed to Cat…not including cost of capital, cat allocation, general expenses !  Weight of the EQ premium vs. the rest of the bouquet premium  Regulated EQ premium subsidizing all the branches  11,4% result shall compare to a potential 400% L/R in case of an EQ event

13. 13 Conclusions  EQ Model and recent events show that a modelling framework is required to assess earthquake risks  Caution should be taken on « non » straight model features  Urban risk like flooding is the next worry  Sustainable profitability of the reinsurance cessions is questionnable in Turkey, in a cat-exposed environment

14. Thank you for your attention, any questions ? 14