1. «Developing an Effective Model of a Transparent Reinsurance Company in Russia» OJSC «Profile Re» 2008

2. Main factors for choosing Reinsurance Company. (by significance) 1 Reliability 6 Publicity 11 Individual management 2 Stability 7 Accessibility of information about company 12 Permanent tendency to development 3 Efficiency 8 Partners references 13 Competitors references 4 Timely fulfillment of obligations 9 Amicability 5 Competent Underwriting Policy 10 Positive Image

3. Partners have right for access to following information: Financial state of Reinsurer (Data from quarterly report incl. information concerning liquid assets) Assets - one of the main factors which determine financial stability of the company. Liquid assets (assets dynamics, structure of assets portfolio) Cash assets Short term financial investments (stocks) Debtor’s loans Working assets StocksFixed assets

4. World Economic Crisis influence on major European Reinsurers Swiss Re 2007 IV q.2008 I q.2008 II q.2008 III q. Written off assets to the sum of 1,2 billion CHF Net profit decreased by 53% to 624 mln. CHF Written off Assets to the sum of 2,2 billion CHF Muniсh Re Net Profit Decreased by 12% to 589 mln. EU Decreased by 48% to 600 mln. EU Forecast for 2008 3-3,4 billion EU Over 2 billion EU «Munich Re sees opportunities to push through double-digit price increases … The world’s biggest reinsurer is targeting price increases that were “clearly in the double-digit percentages” for the risk cover it provided to insurers in 2009.“From now on it’s a hard market. The soft market is behind us.”

5. Partners have right for access to following information: Business process. Transparent business processes means a lot equally with accessibility of data of financial statements. Fast quotation Responsiveness of decision Timeliness of loss payment Main requirements to Reinsurer usually made by Cedents:

6. Method of “Average solitary risk” The method was worked out for assessment of reinsurance XL treaties in economic instability enviroment. It is based on “exposure” method of calculation the value of the contract and adapted to analysis of risk portfolio with insufficient “depth” of statistical data.

7. History of the Method: Applied in practice since 2003 Author of the method: Evgeniy V. Stanchenko (General Manager of “Profile Re” Reinsurance Company)

8. Obstacles for application of existing methods of appraisal in economical and political instability environment: Lack of long-term statistical data High rate of inflation Instable and often incomparable statistics of premium and losses Absence of big losses paid

9. Advantage of the Method – minimum information required for the calculation Brief information about the ceding company; Underwriting policy of the ceding company; Risk profile for the minimal period of 3 years; Net written premium forecast.

10. Practice of use (XL treaty reinsurance) : Basis of the treaty: Loss occurred during the period/ Risk attached during the period Limit of the treaty Net written premium forecast Risk profile

11. Risk profile: Sum insured, USD Number of policies Total Sum Insured, USD Written premium, USD Number of losses paid Total sum of losses paid, USD Total sum of losses reported but not settled yet, USD Less than 300 0001200240 000 000,00912 000,00728 000,00 - 300 000 - 499 999550220 000 000,00770 000,00324 000,0010 000,00 500 000 - 749 999220137 500 000,00453 750,00337 500,003 000,00 750 000 - 999 99910591 875 000,00275 625,00117 500,00 - 1 000 000 - 1 499 9993847 500 000,00118 750,000 - - 1 500 000 - 1 999 9991831 500 000,0063 000,000 - - 2 000 000 - 2 499 9991533 750 000,0060 750,000 - - 2 500 000 - 2 999 9991233 000 000,0066 000,000 - - 3 000 000 and more1248 000 000,0096 000,000 -3 200 000 ИТОГО2170883 125 000,002 815 875,00141070003 213 000

12. Calculation of base value Sum insured, USD Number of policies Total Sum Insured, USD Average sum insured for one risk, USD Average excess for one risk, USD Reinsurance rate for excess, % Total reinsurance premium for excess, USD Less than 300 0001200240 000 000,00200 000,000-- 300 000 - 499 999550220 000 000,00400 000,000-- 500 000 - 749 999220137 500 000,00625 000,00125 000,000,10%27 500,00 750 000 - 999 99910591 875 000,00875 000,00375 000,000,10%39 375,00 1 000 000 - 1 499 9993847 500 000,001 250 000,00750 000,000,11%31 350,00 1 500 000 - 1 999 9991831 500 000,001 750 000,001 250 000,000,12%27 000,00 2 000 000 - 2 499 9991533 750 000,002 250 000,001 750 000,000,13%34 125,00 2 500 000 - 2 999 9991233 000 000,002 750 000,002 250 000,000,13%35 100,00 3 000 000 and more1248 000 000,004 000 000,002 500 000,000,14%42 000,00 ИТОГО2170883 125 000,00 236 450,00

13. Practice of use (calculation of rate): Index used: Bonus/Malus for loss history Bonus/Malus for neglects in information Reduction for liability limit (number of reinstatements) The result is final premium rate.

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