1. Navigating risks for global food security Juerg Trueb, Head of Environmental and Commodity Markets Palm Beach Strategic Forum, 7-8 April 2014 Navigating risks for global food security Juerg Trueb, Head of Environmental and Commodity Markets Palm Beach Strategic Forum, 7-8 April 2014

2. Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014 2 Are we ready to face the food security challenge; or how can business help?  900 million people suffer hunger, 98% thereof in Asia and Sub-Saharan Africa  1 in 8 people in emerging markets suffer from hunger/malnutrition  74% increase in global food prices since 2005 has made food unaffordable for many  15% of US households suffered from food insecurity in 2010; food insecurity is a not just an emerging market issue  60% increase in world agricultural production by 2050 needed demand (population growth, shift of diet) 2

3. Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014 3 Increase productivity through shift from subsistence to commercial farming 3 Industry effort: New Vision of Agriculture  Population growth  Changing food preferences  Government policies (e.g. biofuel) Demand-side drivers  Loss and waste of food  Urbanization  Trade and government policies (e.g. subsidies, trade restrictions)  Natural resource constraints (water, land)  Climate change, natural disasters  Commodity prices Supply-side factors  Increase productivity Insurance sector:  Risk management as a pre-requisite for access to production credits 3

4. Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014 2009 Argentina – Drought – Soybeans – 35% Crop Shortfall 2010 Russia – Drought – Grains – 40% Crop Shortfall 2010 Australia –Floods (E), Drought (W) – Grains – 40% Crop Shortfall 2011 Mexico – Drought – Corn – 30~40% Crop Shortfall 2012 USA – Drought (MW) – Corn, Soybeans – 20% Crop Shortfall 2012 Brazil – Drought (N.E.) – Corn, Cotton, Sugar Cane ~40% Crop Shortfall Impact of climate change on agricultural production - Recent examples of weather impact 4  20% of sown area destroyed; 40% production (relative to 2009) lost; USD 1.4 billion direct losses; corporate farmers defaulted on production loans; Medvedev extended USD 1.3 billion in credit  Russia banned grain exports triggering export restrictions elsewhere  Grain handlers (domestic & international) stopped operations; importers faced force majeure; processors ran at reduced capacities  Record food prices in 2010/2011 adding millions to the ~870 million already starving from hunger 4

5. Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014 Worldwide agricultural insurance premiums USA & Canada USD 10,7 bn (55,0%) Latin America US$ 0.87 bn (4,0%) Europe USD 3,9 bn (20,1%) Asia US$ 3,8 bn (19,5%) Africa USD 0.09 bn (0,5%) Australia & NZ US$ 0.2 bn (0,9%) Low insurance penetration in low/middle income countries with large agricultural production (BRICS 1) and emerging markets) 1) Brazil, Russia, India, China, South Africa 5

6. Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014 6 Client and product focus (marked red) Governments Banks Insurers Insurable Interest Financial Institutions: Credit risk protection Reinsurance Governments: Fiscal balance Social balance Input supplier Distributor Farmer > 10'000 ha Storage/Trader Food Processor Exporter Credit repayment Product added value 1) Production guarantee Quality guarantee Revenue guarantee (volume & price) Credit repayment Product added value Revenue guarantee (throughput & margin) Quality guarantee Revenue guarantee (throughput & crushing margin) Raw material cost (volume & price) Quality guarantee 1) By bundling insurance with goods and services of input providers Client universe 6

7. Palm Beach Strategic Forum | Juerg Trueb | 7-8 April 2014 7

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