1 January 2014 Renewals A Buyer’s Market : The Non-Life 2014 Renewal 23rd January 2014

Matthew Day – GC Business Intelligence Ben Grimwade – GC Benelux & Property Solutions Group

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Evolution of dedicated reinsurance sector capital – 2012 to YE2013

1 28 January 2014

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Pension fund capital and allocations into reinsurance

And…

Hedge Funds, Sovereign Wealth Funds,

Family Offices, Etc.

28 January 2014 2

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Significant insured losses – 2011 to YE 2013 Multiple Dynamics

3 28 January 2014

Tohoku Earthquake approx. $35bn

Hurricane Sandy approx. $25bn

Eastern European Flood approx. $4bn

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Significant insured losses – 2011 to YE 2013 Multiple Dynamics

4 28 January 2014

2011 2012 2013

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Gap between economic and insured losses – 1980 to 2013

5 28 January 2014

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Insurance Penetration by Region Opportunities exist to use the industry capital

6 28 January 2014

Lack of (Re)Insurance Supply leads to Government intervention: Terror, Flood, Nat Cat Pools

Lack of Primary Insurance Demand: Motor, Household, Medical

Global Average

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Guy Carpenter Global Prop-Cat Reinsurance Rate-on-Line Index

7 28 January 2014

Winter storm Daria + Typhoon Mirielle ($15 bn)

Hurricane Andrew ($26 bn)

Northridge ($22 bn)

9/11 ($24 bn)

Liability crisis (at least $46 bn – reinsurance sector only)

Katrina, Rita, Wilma ($99 bn)

Credit crunch (at least $15 bn)

Ike ($22 bn)

Chile, Xynthia, Deepwater, etc

($30 bn)

Tohoku, Christchurch,

Thailand, etc (at least $120 bn)

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Regional Prop-Cat Reinsurance RoL Index – 1990 to 2014

8 28 January 2014

De-linkage occurring

US Driving Rates

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European property catastrophe – typical rate-on-line changes

9 28 January 2014

2013 Pricing Consensus

2014 “Loss-Free” Pricing

2014 “Loss-affected” Pricing

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Property Cat Dutch Market - Main Themes

• Benign loss activity

• Capacity more than adequate

• Limited impact of Capital and ‘alternative markets’

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Benign loss activity Netherlands Rate on Line / Loss on Line Evolution

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%

Rate

on

Lin

e

Loss on Line

2012

2013

2014

GUY CARPENTER 12 28 January 2014

Benign loss activity Rate on Line compared to Loss on Line

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%

Rate

on

Lin

e

Loss on Line

UK

NORDICS

FRANCE

BELUX

GERMANY

NETHERLANDS

Source: Guy Carpenter 2014

GUY CARPENTER 13 28 January 2014

Capacity more than adequate Firm Order Compared to Average Quote

-7.1% -6.0% -6.2%

-10.4%

-6.8%

-8.8%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

UK NORDICS FRANCE BELUX GERMANY NETHERLANDS

Least Competitive

Average

Most Competitive

Source: Guy Carpenter 2014

GUY CARPENTER 14 28 January 2014

Capacity more than adequate Excess capacity by region

• Limited impact of Capital and ‘alternative markets’

NL Cat still attractive to reinsurers

– Stable client relationships

– Lack of losses

– Single peril

27%

14% 19%

25% 30%

44%

0%

10%

20%

30%

40%

50%

60%

UK NORDICS FRANCE BELUX GERMANY NETHERLANDSSource: Guy Carpenter 2014

GUY CARPENTER 15 28 January 2014

Property Risk & TPL

• Property Risk

– 2013 a relatively poor year for NL fire losses impacting reinsurers.

– Continued overcapacity in the market, Zurich market still challenging

‘traditional’ reinsurers for new business

– Softening pricing and more so on loss free programmes

• Liability

– Trend in 2014 renewal stable to slight reductions, general consistent

panel but plenty of new entrants looking to grow

– MTPL - Continuing trend of no major increases in large losses following

5th directive

– GTPL - Cancellation of Fire non-recourse agreement

GUY CARPENTER 16 28 January 2014

Marine & Energy European renewal

• Despite the MOL Comfort claim being well publicised, the loss was well

spread in Europe and had little impact on reinsurance programme pricing

for 2014

• Against the backdrop of a low level of 2013 marine claims affecting the

European marine market, renewals saw general reductions ranging

between 2.5% - 10%

• Capacity remains very buoyant for small to medium sized programmes.

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