1. Technical Rating Models and Airline Risk Differentiators Dan Boultwood 9 th December 2009

2. European Operations Financial markets and world recession – airline crisis Insurers capital cost and return on equity Airline Losses – rating cycle – market capacity Background; Current Climate Page 1 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

3. European Operations Net airline premium income greater than operational costs and claims incurred Attritionals losses (below $10million) / large losses ($10-$250 million) / catastrophe losses (greater than $250million) Technical models aiming to calculate the expected claims for the year Expected claims Vs technical target premium What are Insurers trying to achieve? Page 2 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

4. European Operations Underwriters are for intuitive pricing based upon personal experience Actuaries are for technical premium based upon historical data UnderwritersConfidence in expected loss ratio Actuarial Net result of Premium + Investment Return on equity Operational expenses and loses Actuaries and Underwriters Page 3 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

5. European Operations Each airlines historical loss experience for an expected loss cost The industry loss experience (Global) since 1999 Key metrics assume that the past is a reasonable guide to the future Data adjusted for inflation, loss development, changes in exposure 95% comfort in historical data Experience Rating – I.T. + Actuarial Page 4 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

6. European Operations Selecting base rates Peer grouping Risk profile –Aircraft Type  Make and model, age, registration, seating capacity, values –Operations  Passenger or cargo – domestic or International – passenger mix – load factors –Departures  Route network – charter or scheduled – ACMI –Additional exposures  Maintenance, ground handling, refuelling, catering, other services Exposure Rating - Human Experience Evaluation Page 5 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

7. European Operations Airline Differentiating Risk Factors – Soft Factors Page 6 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

8. European Operations Safety Equipment Page 7 Airline Underwriting – Dan Boultwood & Adam Spicer/11 June 2009

9. European Operations TCAS - Traffic Alert and Collision Avoidance System EGPWS – Enhanced Ground Proximity Warning System FADEC – Full Authority Digital Engine Control ACARS - Aircraft Communication Address Reporting System Wind Shear Altering and Detecting Systems QAR – Quick Access Recorders Safety Equipment Page 8 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

10. European Operations FOQA - Flight Operations Quality Assurance Program / Flight Data Monitoring LOFT - Line Orientated Flight Training EFB - Electronic Flight Bags ALAR -Approach Landing Accident Reduction / Stabilized Approach Monitors LOSA - Line Operated Safety Audit Safety Management Systems Page 9 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

11. European Operations SMS system Human factors Voluntary reporting system Crew Cockpit Resource management Company Safety Awareness / Culture Page 10 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

12. European Operations Regulatory bodies – good and bad IOSA - IATA operational safety audit - benchmark Codeshare partner audits – peer review Audits / Oversight Page 11 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

13. European Operations Technical dispatch reliability – statistics and lies!! Key management personnel experience Major shareholder or financial backers Other Factors Page 12 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

14. European Operations Qualitative Information - Pilots Page 13 Airline Underwriting – Dan Boultwood & Adam Spicer/11 June 2009

15. European Operations Flight Crew and Pilots –Minimum Pilot Requirements –Training provided and frequency –Pilot work force Qualitative Information Page 14 Technical Pricing / Pricing Model – Dan Boultwood/08 Dec 09

16. The content of this presentation is protected under the UK Copyright law and under the relevant international treaties and conventions. Q & A Thank you