1. JUN 8 – 10, 2015 www.bermudacaptive.bm Title Slide JUN 8 – 10, 2015 www.bermudacaptive.bm Getting Employee Benefits and Pension Programs into your Captive

2. Microsoft Update – Benefits Captive Molly Seaburg, Senior Risk Manager, Microsoft Corporation

3. The Microsoft IBC Program Fronted by Generali and Maxis (Maxis is a Met Life and Axa global partnership) Limits are set locally and individually in accordance with local regulations/requirements Coverage parameters set in consultation with local management Territory – Worldwide excluding the USA Separate US programs in place via VT branch Life, Disability, Accident, Medical and all other purchased Employee Benefit programs Local benefit policies are placed with a local insurer who is part of the captive network The local insurer will provide administrative services only (ASO). The Microsoft captive assumes 100% the risk of the risk where possible (similar to self-insurance) The local insurer will pay all claims covered under the local policies Annual renewal rates will be set by Orcas (Microsoft’s captive) Captive Network (Fronting Insurer) Captive Network (Fronting Insurer) Microsoft Captive (Orcas) (insurance company 100% owned by Microsoft) Microsoft Captive (Orcas) (insurance company 100% owned by Microsoft) Subsidiary Country X Subsidiary Country Y Subsidiary Country Z Local Insurer Country X Local Insurer Country Y Local Insurer Country Z Reinsurance Treaties Local Policies International Reinsurance Treaty Employees do not see captive arrangement About 70 other companies worldwide currently use international benefits captives including 3M, DHL, Nestle, Alcoa, Dow Chemical, Shell, Coca-Cola, and GM

4. Stakeholders & Roles Microsoft Captive Risk Management & Captive Consultant Global Benefits & Intl Comp and Benefits Subsidiary HR and GHRO Underwriting and investment, manage captive insurer network relationship Subsidiary GPG Benefit design, migration and renewal SMEs to subsidiaries Implement and manage local insurer relationship Support HR and local insurer relationship, drive contract compliance Fronting & Local Insurers Policy issue, benefit enrollment, maintain & manage benefit records, assess & pay claims

5. 5 IBC Project Overview The project is jointly sponsored by Global Benefits and Risk Management We have implemented a captive arrangement for certain international benefits to achieve greater cost efficiencies & flexibility. The project includes: –Moving all insured Life, Disability and Accident policies into the captive where legally permissible –Encouraging movement of insured medical policies to the captive –Retirement plans will not be considered for the captive This was a multi-year project; CY11-CY14 5 Year 1 CY 2011 Year 2 CY 2012 CY 2012 Years 3 - 4 CY 2013 – CY 2014 H1 Global Implementation Plan Generali existing pool converted to full captive arrangement Evaluate potential need for additional fronting insurer Non-pooled countries’ Life, Accident and Disability policies moved to captive arrangement Non-Generali pooled Life, Accident and Disability policies moved to captive arrangement Include medical policies as applicable

6. 6 Why Implement a Captive? Local Subsidiary: Cost savings of 5%-20% for local subs on international benefits spend by removing insurer risk charges and profits and reducing the need for brokers Greater flexibility in underwriting and removing policy exclusions and restrictions Increased leverage with local provider Corporate: Improved governance by improving visibility and centralized control of benefit pricing and plan design Diversification of the risk of our existing captives and supports corporate initiative to move toward captive-centric framework * = admin charge includes any insurer profit as well.

7. Why take on EB “Risk” Reduce structural cost at the business unit level To monitor the costs charged to the Parent Company units by local fronting insurers, consultants and brokers Risk of catastrophic loss –Captive reinsurance can manage and cap the cost via reinsurance No change in benefit offering for employees Instant cost savings by eliminating; –Profit Margins –Risk Charges –Commissions –Other Charges Eliminate need for stop loss coverage –Manage risk in captive with underwriting assistance

8. Countries in Captive as at Q1 2015 Number of countries to date – 75 –53 Individual Countries covered –22 Countries covered in group plans * Transitioned countries highlighted in Green Microsoft local subsidiariesin over 100 Countries Worldwide Microsoft local subsidiaries in over 100 Countries Worldwide

9. Microsoft Captive Results to Date 2014 Total Annual Premium (By Line of Cover) 2014 Total Financial Efficiencies/Savings (By Line of Cover) Based on the program experience for 2014 of a Total Annual premium $42,651,976 Total of 86 countries included at 2014 (including regional plans) Total new savings for 2014 of $830,382 and recurring efficiencies of $4,843,492 Since 2011 Granite/Orcas has maintained savings/efficiencies of 10%-13% of total annual premium

10. Reduce the Cost of Our Insured Plans –Unit HR and Unit Finance Responsible for Risk/Claim Management Educate employees Introduce co-pays/deductibles Analyze cover provided; –Is it market practice? –Can it be amended? –Analyze the big cost drivers (i.e. special clinics) –Who can help in the loss reduction program Utilize local insurer and bring pressure to bear on them to assist in claim management Share experiences and good practice between business units Data Analysis –Drill down into claim data Analyze trends –Local –Regional –Global –Demographic split –Gender issues Find root causes –Using this data Amend cover to influence/nudge employee behavior Implement wellness programs focusing on key local issues What Next?

11. Outlying medical plans Nokia business units Future migrations Encourage “customer survey” locally. Ensure appropriate broker activity and commission/fee levels. Local brokers do not need to undertake an annual competitive market review or negotiate with captive insurers Value for money Reviewing opportunities for the captive to support Wellness activities Supporting our culture benefits Use captive to aid in Data Privacy management Ensuring local procurement support Supporting data privacy and contracting requirements Looking Forward