1. THE MARINE INSURANCE MARKET 2002 Houston Marine Insurance Seminar September 22, 2002

2. International Union of Marine Insurance  Founded in Berlin in 1874  55 Member Associations  Purpose: To represent, safeguard and develop insurers’ interests in marine and transport insurance  Fosters cooperation and exchanges information with international governmental and non-governmental organizations  IUMI Organization and Annual Conference

3. “The Market” “ The area of economic activity in which buyers and sellers come together and the forces of Supply and Demand affect Prices” - Webster’s Dictionary

4.  Capital  Economic Activity  Reinsurance  Return on Investments  Management Decisions  Intangibles What Factors Drive the Market?

5. The 1992 –2002 Cycle  Peak Years of 1992-1994  Booming World Trade  Robust World Economic Growth  Favorable Investment Environment  Growing Order Book for New Vessels  Falling Insurance Rates

6. U.S. Marine Insurance Results 2001 Highlights  12% growth in Direct Written Premium to $2.34 billion  102% Combined Ratio  Second Consecutive Year of Improvement  Stellar Cargo Results – 86.1% Combined Ratio  Excellent Yacht Results – 15% Growth / 93.4% Combined Ratio  Solid Liability Results – 88.9% Combined Ratio  No Cat’s

7. U.S. Marine Insurance Results 2001 Lowlights  Energy & Offshore 89% Growth / 152.9% Combined Ratio  Ocean Hull Premiums grew 3.5 X’s / 113.1% Combined Ratio  Other Hull / P&I – 116% Combined Ratio  Liabilities – 9% decline in Direct Written Premium / Deteriorating Trend  Marginal ROE

8. U.S. Marine Calendar Year Financials

9. Global Marine Premiums

12. Major Marine Markets 2000  Japan$2,087  United Kingdom$1,766  USA$1,554  France$ 972  Germany$ 964  Norway$ 584  Italy$ 509

13. Global Cargo Premiums

14. Global Hull Premiums

15. Major Marine Markets % Change 20001998-2000  Japan$2,087 -9.2%  United Kingdom$1,766 +3.9%  USA$1,554 +4.7%  France$ 972 -10.2%  Germany$ 964 -24.5%  Norway$ 589 -12.2%  Italy$ 509 -36.2%

16. Where Do We Go From Here?  The 2002-2012 Cycle  Market Consolidation  New Capital  Management Decisions

17. The Blame Game Who’s responsible?  The Underwriter  The Broker/Agent  The Reinsurer  The Customer