1. The material contained in this presentation has been prepared solely for informational purposes by General Re-New England Asset Management, Inc. (“GR-NEAM”), and is not to be distributed outside of the organization to which it is presented. The material is based on sources believed to be reliable and/or from proprietary data developed by GR-NEAM, but we do not represent as to its accuracy or its completeness. This is not an offer to buy or sell any security or financial instrument. Certain assumptions, including tax assumptions, may have been made which have resulted in any returns detailed herein. Past performance results are not necessarily indicative of future performance. Changes to the assumptions, including valuations or cash flows of any instrument, may have a material impact on any results. Please consult with your tax experts before relying on this material. Additional information is available upon request. This document and its contents are proprietary to GR-NEAM. They were prepared for the exclusive use of your company. Neither this document nor its contents are to be given or discussed with anyone other than employees, directors, trustees or auditors of your company without our prior written consent. Presented by Jerry Lynch Life After Stimulus: When Reflation Meets Deleveraging

2. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 2

3. 3 Conclusions Deleveraging Recession Policy Response Global

4. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 4 U.S. Real Economic Growth Fiscal/ Monetary Stimulus Global Forces Secular Cyclical Stimulus

5. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 5 Where Are We Now?

6. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 6 Real GDP Growth

7. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 7 Unemployment Rate vs. Broader Total Unemployed*

8. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 8 Source: www.calculatedriskblog.com New Home Sales and Recessions

9. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 9 U.S. Real Consumer Spending Y/Y % Dec. – 1.7% Source: ISI

10. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 10 Source: Federal Reserve Board, Merrill Lynch Capital Utilization Manufacturing (SIC) SA, % of Capacity

11. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 11 World Industrial Production Source: Big Picture.com

12. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 12 Sources of Remittances by Recipient Regions, 2008 Source: Global Economic Prospects 2006: Economic Implications of Remittances and Migration (World Bank). World Development Indicators 2007 and Global Development Finance 2007

13. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 13 Classic Non-Classic Recession

14. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 14 Classic Recession Characterized by: Inventory cycle 80% of decline in GDP due to de-stocking in manufacturing sector Traditional stimulus almost always works to absorb excess by stimulating demand Lasts 18 months Non-Classic Recession Characterized by: Balance sheet compression Deleveraging Debt elimination Rising saving rates Expansion of government’s balance sheet to offset contraction in private sector 3 years or more

15. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 15 Job Losses in Recent Recessions Source: www.calculatedriskblog.com

16. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 16 Job Losses* in Post WWII Recessions Current Recession Source: www.calculatedriskblog.com

17. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 17 Job Losses in Post WWII Recessions Current Recession Source: www.calculatedriskblog.com

18. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 18 Confidence New Banking System Low Interest Rates Liquidity Leverage

19. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 19 Claims of Banks on East European Countries, as % of GDP Source: Big Picture.com

20. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 20 Leverage Deleveraging Deleveraging is a process not an event. Deleveraging

21. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 21 Components of GDP Consumption 70% + Investment 16% + Net Exports % + Government 15% Source: BLS, GR-NEAM Analytics = GDP 100%

22. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 22 Total U.S. Debt

23. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 23 The Leveraging of America Source: Federal Reserve, via Haver Analytics The New York Times April 4, 2009

24. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 24 Leverage

25. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 25 Consumer Source: NY Times

26. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 26 Consumer

27. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 27 GDP Growth: With and Without Mortgage Equity Withdrawal GDP Growth

28. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 28 Record Wealth Implosion Source: Federal Reserve Board, Merrill Lynch Households & Nonprofit Organizations: New Worth Difference – Year to Year NSA, Bil$

29. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 29 Market Cap

30. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 30 Stimulus

31. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 31 Summary (in billions) Disbursements or Committed Funding Potential Federal Reserve 1,238 4,316 Treasury 332 3,912 Other Agencies 1 2,207 1,571 10,435 (in billions) MEMO: U.S. Nominal GDP, Estimated 2008 $14,500 Billion

32. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 32 Source: www.ritholtz.com GDP in U.S. Dollars

33. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 33 Mean Reverting Process It’s a Non-Classic Recession

34. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 34 PCE as a % of GDP & Population Demographics

35. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 35 Personal Consumption Expenditures (PCE) & Household Debt

36. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 36 Savings Rate Must Rise, And It Will Source: Bureau of Economic Analysis, Merrill Lynch Personal Saving Rate SAAR, %

37. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 37 U.S. Homeownership Rate From 1965-2008 Source: GR-NEAM Analytics

38. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 38 Source: Federal Reserve Board, Merrill Lynch Total Household & Business Credit/GDP: Ratio

39. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 39 Ability of Policymakers to: Recreate Credit Cycle Reinflate Asset Values Ignite a Consumer Led Recovery Conclusion Inhibited by Secular Change in Attitudes Toward: Savings Credit Discretionary Spending Homeownership

40. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 40 New Normal Global Economic Drivers China

41. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 41 Chinese Banks’ New Loans Source: CLSA

42. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 42 Capital Markets

43. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 43 Worst Decade Yet

44. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 44 Growth in Total U.S. Credit Market After-Tax U.S. Corporate Profits

45. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 45 10yr U.S. Corporate A vs. 10yr U.S. Gov’t on the Run Source: GR-NEAM Analytics

46. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 46 Growth Story Currency Foreign Sales Trade Inflation Energy Theme CyclicalSecular Collapse in Demand Deflation Domestic United States $ United States Developing Economies = Restrained Capacity = Higher Inflation = International = ??? = = Source: ISI

47. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 47

48. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 48 Major Foreign Holders of U.S. Treasuries

49. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 49 Foreign Exchange Reserves Source: IMF

50. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 50 Composition of Foreign Exchange Reserves (Allocated) Source: IMF

51. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 51 Dollar Dominated Note: Currencies have not been identified for another $2,536 trillion in foreign-exchange reserves Source: International Monetary Fund What currencies nations of the world keep their reserves in

52. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 52 Source: International Monetary Fund Note: Currencies have not been identified for another $2.67 billion in industrialized countries’ foreign-exchange reserves and another $2.533 trillion in developing countries’ reserves. The Haves & The Have Mores foreign-exchange reserves, in trillions; quarterly data

53. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 53 Total Workforce (LHS) /Total Employed (LHS) vs. Civilian Non-institutional Population (RHS)

54. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 54

55. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 55

56. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 56

57. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 57

58. Proprietary & Confidential. © 2009 General Re–New England Asset Management, Inc. 58 Source: Chinese Central Bank The New York Times April 13, 2009 Cutting Back Quarterly growth in China’s foreign reserves, mainly invested in Treasuries and other American bonds, has slowed significantly China’s quarterly change in foreign reserves