1. Presented by Paul D. Smith Partner – JLT Re
The Hurdles and Challenges of Placing Reinsurance for Russian Aviation Insurers
Presented by
Paul D. Smith
Partner – JLT Re
RAASI XV
Aviation and Space
Insurance Conference

2. JLT Re - Aviation Reinsurance Team
Mark Thurgood Global Aviation Reinsurance
Practice Leader
Paul Smith
Broking
Client Support
Client Services
Chris Peddy
Bill Morritt
Andy Poulton
Consultancy Services
Nigel Baker
Paul Dixon
Technical Support
Gary Morton
Stephanie Grace
Trevor Knights
Claims Support
Grant Sanders
Chris Eaton
Mark Pitts
Mike Grout
Barry Keegan
Francesca Hearfield
Ian Cutting
Steve Watts
Financial Support
Alan Jelley
Michele Smith
Dominic Riley
Jonathan Harris
Colin Dipple
JLT Reinsurance Brokers Limited
One America Square
London EC3N 2JL
Telephone
Facsimile
Website

3. A Selection of JLT Re Clients

4. Agenda Previous Hurdles and Challenges Current Hurdles and Challenges
The Russian Market
Reinsurance
Sanctioned Business
Summary

5. Previous Hurdles and Challenges
Millennium Clauses in 1999 / 2000
Man power resource / intellectual capital
11th September 2001
War policies cancelled
XS AV52 write backs removed from Excess of Loss
Losses Occurring During cover only available
Massive increase in pricing
Markets bankrupt or withdraw
Industry changing event
Hurricane Katrina
US$ 80bn + event
Affected aviation pricing

6. Current Hurdles and Challenges
The Russian Market
Reinsurance
Sanctioned Business

7. The Russian Market A reducing client base, due to:-
The Global Financial Crisis
European legislation
Leasing companies
European minimum limits
Russian Air Code
Retrocessional arrangements with domestic markets

8. Reinsurance
Proportional Treaty
Excess of Loss
Risk Excess

9. Proportional Treaty Hull Quota Share Treaties
Poor hull loss record in Russian Market
Reinsurers reluctant to provide capacity for old Russian hulls
Quality of hull fleet improving
Leasing companies will not accept due to part order
Quota Share means paying away lots of income in an improving hull environment

10. Excess of Loss Reinsurance
Cheaper than proportional – retained income
Reinsurers prefer Excess of Loss as they miss attritional losses
Hull capacity available
Cost of capital

11. The Cost of Capital Defined as:-
“Minimum return that investors expect for providing capital to the Company” OR
‘The rate of return that capital could be expected to earn in an alternative investment of equivalent risk’

12. Risk Excess Hull Risk Excess – capacity
Liability Risk Excess – capacity

13. Sanctioned Business Not a new subject
Recent USA and EU Iranian Sanctions
Reinsurance market reaction

14. Summary There are always new challenges Massive opportunity for all
Profitable business
Consolidation of Airlines and Insurers
Improved airport infrastructure
General Aviation opportunities
Inflation
Competition