1. Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only PPP in Baltic States Mitigating Project Risks by Insurance Mark Courtneidge November 2006

2. Presenter Mark Courtneidge BA(Hons), FCII, AIRM - Director 29 years in insurance industry, 12 at Aon Is responsible for the risk and insurance aspects of numerous projects in the UK and overseas –Project Allenby and Connaught –UK Immigration and Prison Services –A130 –A55 Much of Mark’s vast experience has been gained within in house risk management

3. Aon London PPP Experience UK –Approx 350 projects –All sectors –Concessionaires/Authority/Financiers Overseas –South Africa –Japan –Poland –Holland –USA

4. Aon Worldwide Primary Activities –Risk Indentification & Analysis –Risk Transfer & Management –Insurance Solutions –Claims & Loss Solutions Corporate Numbers –120 countries –550 offices –46,000 FTEs –9,8 Bln USD revenue (‘05)

5. Aon in The Baltics States PPP Contacts Aon Estonia Erko Toomet  +372 699 6226  erko_toomet@aon.ee Aon Latvia Ivars Kiecis  +371 789 2551  ivars_kiecis@aon.lv Aon Lithuania Andrius Masteika  +3705 252 6099  andrius_masteika@aon.lt

6. The Players in PPP Authority Equity/Partners Special Purpose Vehicle (SPV) Banks Construction Sub-contractor Facilities Management Service Provider Designers/ Engineers Sub/Trade contractors Sub-contractor

7. Insurance as a Risk Management Tool Identify Risk Quantify Risk Manage Risk: –Avoid –Control –Transfer: Insurance

8. Why Insure in PPP SPV balance sheet/cash flow protection Bank’s comfort and protection of their loan Authority’s comfort that SPV can continue to operate in event of “defined” losses Debate on PPP is risk transfer - Insurance provides this

9. Core Insurances Construction Phase Contract Works Construction Plant Existing Assets Marine Transit (Cargo) Advanced Loss of Profits (works and cargo) Third Party Liability Professional Indemnity Employers Liability Motor

10. Core Insurances Operation Phase Material Damage Business Interruption Third Party Liability Employers Liability Motor

11. Other Insurances Environmental Impairment (Gradual) Latent Defects (New Assets) Directors & Officers Liability Crime Archaeological Finds Keyman

12. Insurance Programme Design Conformity with agreed requirements of –Concessionaire (SPV) –Authority –Financiers –Sub contractors Broad Coverage Insurer Security Competitive Premiums Longevity of Programme

13. PPP Contract/Loan Agreement Insurance Structure Insurance Administration –To effect insurance –What if insurance is not available –Special Requirements of Authority &/or Banks Details of Minimum Insurance Requirements –Construction Phase –Operational Phase

14. Special Requirements of Authorities &/or Banks Non-vitiation Subrogation waivers Cross liability clauses Loss payee requirements Notification of changes Minimum cancellation periods Joint Named Insured Acceptable Insurers Security Brokers Letter of Undertaking Third Party Claims Handling Rights Right not to reinstate

15. Things To Watch Out For Involving Insurance advisers too late Unclear risk allocation and insurance requirements Unrealistic insurance advice Have all risks been fully considered and priced –eg. “As new” values on existing structures Construction to Operation Gap Are Changes catered for

16. Aon PPP Services Concessions Risk Analysis Advice on Contractual Risk Management Risk and Insurance Negotiations Design Insurance Programme Place and Service Insurance Programme

17. Aon PPP Services Financiers & Authorities Risk Analysis Advice on Contractual Risk Management Advice on Insurance Requirements Risk and Insurance Negotiations Audit Insurance Programme Ongoing Monitoring

18. Aon Approach Teamwork –Non adversarial –Experienced –Focused, project specific Philosophy –Proactive –Practical Worksteps –In depth knowledge of Project –In depth knowledge of Players –Risk matrix –Contract advice and negotiation

19. A130 Two separate phases Construction plus 5 years minimum period Cross class programme Single Insurer Panel all classes Works DSU TPL Operational MD/BI/TPL EL Crime

20. HET Specialist/unique vehicles War zones risk –Vehicles –Drivers Consequential loss on vehicles

21. Aspire GBP 1 billion existing assets GBP 1 billion new/refurbishment values 11 year construction Multiple sites Project PI

22. South Tees Major existing assets Major new build Multiple handovers Multiple decants Latent defects Major variation order

23. Contact Should you require any further detailed information pertaining to any points in this presentation, please contact Aon’s offices in the Baltic Countries, and/or: Mark Courtneidge Natural Resources & Construction, London Tel: 44 207 086 4311 Mob: 44 7899668030 Email: mark.courtneidge@aon.co.ukmark.courtneidge@aon.co.uk Jaap Veenenbos Risk Consulting CEE Tel: 31 104487954 Mob: 31655798912 Email: Jaap_Veenenbos@aon.nlJaap_Veenenbos@aon.nl