Coastal Residual Market Risk Management Discussion NAIC South East Zone Meeting April 22, 2010

Coastal Residual Market Risk Management Discussion

NAIC South East Zone Meeting

April 22, 2010

George W. deMenocal CPCU, ARe | Executiv e Managing Director Aon Benfield 1600 Summer Street, 6th Floor, Stamford, CT 06905 t: +1 203.326.4379 | m: +1 203.994.5546 e: [email protected] | w: aonbenfield.com

Proprietary & Confidential 2

Agenda

Section 1 Residual Markets Multi-State Reinsurance Program

Section 2 Federal Backstop and Subsidization of Residual Market Risks

Section 3 Capital Markets Updates


Section 1: Residual Markets Multi-State Reinsurance Program


“Could a multi-state joint reinsurance catastrophe program for residual markets save money, provide

pricing stability, and offer long term durable capital to reduce volatility?”


Standard Deviation (Std Dev) reflects uncertainties around expected (treaty) loss

Std Dev is a typical measure for risk and a key component to reinsurance pricing

Risk pooling reduces Std Dev due to diversification – portfolio effect• Std Dev of a group is less than the sum of std dev from the individual components, if the components are not perfectly correlated

A preliminary empirical analysis based on 5 selected coastal pool exposures indicates a 45% reduction in the group Std Dev

Assuming reinsurers will charge the group the highest margin as a % to SD from the individual pools (73% in this hypothetical example), the overall savings in reinsurance premium would be approximately 14%

Theoretical Economic Benefit of A Joint Program - Portfolio Effect

A B C D E F

Reinsurance Limit Purchase

Reinsurance Premiums

Expected Treaty Loss

Std Dev of Expected Treaty Loss

Reinsurance Margin

Reinsurance Margin as a % of

Std Dev

Pool 1 200 12 4 24 8 33%

Pool 2 400 72 28 91 44 48%

Pool 3 600 84 24 102 60 59%

Pool 4 850 68 12 77 56 73%Pool 5 1,500 135 45 225 90 40%

SUM 3,550 371 113 519 258 N/A

GROUP 3,550 321 113 287 208 73%

Savings - 50 - 233 50 N/A% Reduction due to grouping

0% 14% 0% 45% 19% N/A

Hypothetical Examples - Sample Coastal Poolsin $millions


Correlation Between Wind Pools and Industry

All modeled losses are from an average AIR CATRADER v10.5 and RMS RiskLink v8.0 modeling results. Correlation for wind pools is computed relative to total reinsurer’s portfolio estimated using attachment point off 5-year return period and exhaustion point of 250-year return period. Catastrophe insurer losses based on market share approach using 2007 AMB premium data and 2008 AIR/RMS industry loss curves. For insurers, correlation is based on the insurer’s cat losses relative to AIR/RMS industry loss curves. Wind pool premium is direct written premium as of 12/31/08. Insurer premium is 2007 AMB cat-exposed direct written premium.

0%

20%

40%

60%

80%

100%

10 100 1,000 10,000 100,000

Cat-Exposed Premium ($mil, log scale)

Co

rrel

atio

n t

o In

du

stry

Cat

Lo

ss

Large Insurers

Wind Pools

FL

LASC

TX

NYAL

RI

VA GA

NJ

MA, NC

MS

Sample Combined Pool


Historic Losses Differ by Pool

Deterministic reinsurance premium perspective = Reinsurance premiums as if based only on actual losses

Actual reinsurance premium perspective = Actual premiums paid in most recent year

A B C D E F G=B

Reinsurance Limit Purchased

Reinsurance Premiums Paid

Expected Treaty Loss

Std Dev of Expected

Treaty Loss

Avg Annual Historical Losses (in last 10 years)

Deterministic (Based on Historic

Losses)

Actual (Reinsurance

Premium Paid)

Pool 1 200 12 4 24 4 7 12

Pool 2 400 72 28 91 131 234 72

Pool 3 600 84 24 102 65 116 84

Pool 4 850 68 12 77 3 5 68 Pool 5 1,500 135 45 225 5 9 135

Reinsurance Premium Analysisin $millions

Hypothetical Examples

Reinsurance Premiums


Conceptual Structure

For illustration purposes, wind pools from five states are considered

Concept:

Create a program that provides individual tower for each of the subscribing pools

• Individual limit• Individual retention


Illustrative Reinsurance Purchases

TIV

3.3B 3.3B3.2B 3.2B3.0B 3.0B2.8B 2.8B2.6B 2.6B2.5B 2.5B2.3B 2.3B2.0B 2.0B1.8B 1.8B1.7B 1.7B1.6B 1.6B1.5B 1.37B 1.5B1.3B 1.3B1.2B 1.2B1.1B 1.1B1.0B 1.0B.9B .9B.8B .8B

.7B 600M .7B

.6B .6B

.5B 500M .5B

.4B .4B 335M .4B

.3B .3B

.2B .2B

.1B .1B

$0 after Hurricane Ike $46.5m as of 7/31/08Not drawn to perfect scale

Retention (0.8B)

Assessments

65.133% of 600M xs $1.2B

Ca

pit

al

Ma

rke

t:

$2

00

mSCWHUA

Statewide Property Policyholders Surcharges

AssessmentsAssessments

54.395% of 750M

NCIUA/NCJUA

56.789% of 750M xs 2.55B

(Regular) Assessments 50% of 40M xs 20M

85% of 140M xs 60M

100% of 400M xs 200m

100% of 432M xs 10M

100% of 450M xs 917M

100% of 175M xs 442M

100% of 300M xs 617M

Assessments

Statewide Property Policyholder Surcharges

Retention (20M) Retention/Assessment (10M)

235M xs 100M (in three layers of 50M, 85M and 100M each)

Retention (10M)

95% of 100M xs 100M

Retention/Assessment (100M)

MWUA

(Regular) Assessments

AIUA

95% of 300M xs 200M

(Regular) Assessments

Statewide Property Policyholder Surcharges

LA Citizens

NCIUA/NCJUA SCWHUA MWUA AIUA LA Citizens CombinedTIV (as of 2009) $84,100 $17,200 $6,400 $2,000 $27,500 $137,200

Most Recent Renewal Date 5/1/09 6/1/09 3/1/09 6/1/09 6/1/09 N/A

(Most Recent) Placed Limit $1,480 $925 $539 $235 $400 $3,579

Attachment Point $1,200 $10 $20 $100 $100 N/A

Attachment Return Period* 1-in-20 1-in-4 1-in-8 1-in-40 1-in-10 N/A

Exhaustion Point $3,300 $1,370 $600 $335 $500 N/A

Exhaustion Return Period* 1-in-78 1-in-190 1-in-111 1-in-130 1-in-36 N/A

* Estimated by Aon Benfield Analytics, based on blended hurricane modeled results with near term frequency

** Numbers shown in this exhibit are for informational purposes only and should not be relied upon for legal, regulatory or any other purposes

in $millions


Potential Challenges of a Multi-State Reinsurance Program for Residual Markets

Administrative

Program Design

Market Related


Administrative Issues

Legal authorization for participating state pools to cooperate

Formation of a joint decision making entity - Governance

Partial year transition for some pools to reach a common treaty effective date

Data management: Need to centralize pools’ exposure information for catastrophe modeling & data clarity

Effect of individual state’s regulatory and legislative changes on overall purchasing group

Complexity in marketing reinsurance program

More….


Program Design IssuesCombined tower vs. Individual towers

• Should each pool’s coverage be affected by prior claims from other pools?

Execution risks

Determine the limit and retention of individual towers

Effect of the differences in pools’ mechanisms on program design and cost allocation• Assessment mechanism and recoupment provisions• Tax status• Underwriting and Claims Handling• Depopulation efforts• Mitigation efforts

Fair Cost and Recovery Allocation


Reinsurance Cost AllocationAllocation of Reinsurance Recovery in an actual event

• Typically in proportion to loss in an event• Must be by explicit agreement in this case

Reinsurance Premium Allocation alternatives• In proportion to modeled recovery• In proportion to modeled volatility• In proportion to reinsurer marginal capital requirements• In proportion to reinsurer expenses• Combination of above• Client preference or direction

Allocated reinsurance premiums are provided by Aon Benfield to clients for use in rate filings• Support in rate hearings as necessary

Allocation of reinsurance premium among members of a multi-company ceding organization• By formula• By contract• By size of residual market • By recent experience• By underwriting, data, flood susceptibility and other potential differentiators• Subject to review by a governing body


Program Design Issues - Allocations

A B

Reinsurance Limit Purchased

Current Reinsurance

Premiums

Based on Modeled Output

% ChangeBased on Historic

Losses (Deterministic)

% ChangeBased on

Market Pricing% Change

Pool 1 200 12 14 15% 6 -49% 10 -14%

Pool 2 400 72 63 -12% 202 181% 62 -14%

Pool 3 600 84 65 -23% 100 19% 73 -14%

Pool 4 850 68 44 -36% 5 -93% 59 -14%Pool 5 1,500 135 136 0% 8 -94% 117 -14%

SUM 3,550 371 321 321 321

GROUP 3,550 321

Savings - 50 % Reduction due to grouping

0% 14%

Sample Option 3

Hypothetical Examples - Allocation Options of the Reinsurance Premiumsin millions

Sample Option 1 Sample Option 2


Market Related Issues

State pools’ appetite, especially from pools with favorable pricing from their current programs

Continuity of participating pools’ appetite, especially after a large event

Reinsurance and Capital Markets receptivity and appetite

Reinsurance and Capital Markets long term pricing stability

Underwriting and risk management


“Can residual markets purchase combined reinsurance tower

protection?”

Recap

Need to consider: • Economic benefits • Potential administrative issues• Potential program design issues• Potential market related issues


Section 2: Federal Backstop and Subsidization of Residual Market Risks


Federal Legislations in Natural Catastrophe InsuranceCurrent Proposals in the 111th Congress

Homeowners Defense Act of 2009 (H.R. 2555/S. 505)

1. Establish a National Catastrophe Risk Consortium

2. Allow for federal guarantee for debt issues by eligible state programs

(COGA: Catastrophe Obligation Guarantee Act)

3. Establish a federal reinsurance program for eligible state programs

4. Establish a mitigation grant program

Catastrophe Savings Accounts Act of 2009 (S.1484)

• A provision for individual catastrophe savings account

Policyholder Disaster Protection Act of 2009 (H.R. 998/S. 1486)

• A provision for tax-free accumulation of P&C insurers reserve to pay catastrophe losses

Commission on Catastrophe Disaster Risk and Insurance Act of 2009 (H.R. 998/S. 1487)

• Establish a bipartisan commission to examine the condition of the P&C insurance and reinsurance markets and make recommendation on legislative changes that will improve the financial health and competitiveness of such markets


Subsidization Scenarios

Member P&C Insurers

Statewide Policyholders

Statewide Taxpayers

via Surplus, Purchase of Reinsurance, and/or Bond issuance supported by plan policyholders

Non-Recoupable Assessments

Recoupable Assessments via

Premium Surcharges

via general state revenue to fund

residual market deficit

From Residual Market Policyholders

Subsidization


0%

20%

40%

60%

80%

100%

% of 1-in-250 PML Funded by SubsidiesProvided by Member Insurers and Statewide Policyholders

Member Insurers 14% 0% 73% 17% 0% 58% 11% 46% 45% 40% 30% 21%

Statewide Policyholders/Taxpayers 64% 78% 0% 48% 62% 0% 40% 0% 0% 0% 0% 0%

TX LA NY NC FL AL MS MA GA RI VA SC

Coastal Residual Market Loss FundingSubsidization Analysis - % Loss Transferred

The rest is funded by residual markets’

policyholders


Property Insurance Catastrophe FundingAccess to Capital Scenarios

Funding Source

Pre-Event Cost

Post-Event Cost

Cost Frequency Security

ReinsuranceReinsurance

Premium 0 Every YearContract with Reinsurers

Post Event 30 Year Bond 0

Debt Service

Probability of loss x 30

Statutory Enforcement

Access to Capital Scenarios


COGA vs. Reinsurance – Rate Scenarios

Assumptions: Reinsurance costs - 6% ROL and a 2% AALBonding - 30 years term with 6% interestGuarantee Fee - 0.5% of bonding principle

Annual Est. Premium Reinsurance vs. Post Event Bonding

500

1,000

1,500

2,000

1 2 3 4 5 6 7 8 9 10

Year

An

nu

al

Pre

miu

m f

or

Sin

gle

Po

lic

y

Reinsurance (regardless of event occurrence)

Post Event Bonding - 2 Events

Loss Event

Loss Event


Section 3: Capital Market Updates


• $3.4 billion issuance in 2009• $1.6 billion issuance in Q4/2009 alone• Majority of Q4/2009 deals oversubscribed and closed at or below the bottom of the range• Issuance spreads have tightened significantly since reaching a peak in the first half of 2009

• 2010 pipeline is strong• $650 million issuance in Q1/2010

• Foundation Re III: US Hurricane PCS Index Cat Bond• Successor X: US HU, EU W, CA EQ, JP EQ (Comb. IL/ML)• Merna Re II: US EQ Indemnity Bond

• Approximately 7 – 9 deals expected in the next 4 months• Majority of anticipated deals expected to cover U.S. peak perils• Expectation of larger issuances and lower interest spreads compared to 2009 deals

Secondary market pricing significantly tightened since Summer 2009 by ~30%-40% for US perils • Aggressive buyers and limited new issuance pushed prices up (spreads down) throughout Q1 2010 due to

recent investor inflows• Within the last 2 weeks we have seen a number of dedicated ILS investors selling 2009 bonds

• Making room for new issues• Locking in profit

• Investor appetite continues to remain robust• Maturities have outstripped the level of new issuance • New capital inflows to the sector• Investors are anxious that there will not be enough issuance to put their cash to work

Market Summary


PCS Index transactions are highlighted

2009/10 Cat Bond Activity


Catastrophe Linked Maturities

In 2009, catastrophe bond maturities freed up $3.5 billion of capital, much of which was been re-deployed in the sector through both primary and secondary markets

Catastrophe Bond Maturities

$105m $100m$60m $200m

$250m

$75m$1059m

$500m

$600m

$180m$100m $120m

$225m

$234m

$150m

$150m

$292m

$150m

$150m

Feb-2010 Mar-2010 Apr-2010 May-2010 Jun-2010 Jul-2010 Aug-2010 Sep-2010 Oct-2010 Nov-2010 Dec-2010 Jan-2011 Feb-2011

Blue Coast Ltd./Allianz Risk Transfer

Foundation Re Ltd. Class D/

Hartford

Med Quake - Class A, B/Swiss Re

Successor II Series IV F/Swiss Re

Longpoint Re - Class A/Travelers Fremantle - A, B, C/

Brit Insurance

Willow Re/Allstate Nelson Re/

Glacier Re Merna - A, B, C/State Farm

Residential Re 2007 - Class 1, 2, 3, 4, 5/

USAA

February 2010 through July 2010Maturities / Potential Renewals: $3,049mm

$600m

Foundation Re II Ltd. Class A/Hartford

Successor X- S1, U1, X1/Swiss ReAtlas Re IV/

SCOR

Newton Re/Catlin (Lloyd's)

Successor II Series C-III, E-III/

Swiss ReCarillon Ltd. -

Class E-II/Munich Re

Green Valley/Groupama

Newton Re /Catlin

(Lloyd's)

Redwood XI/Swiss Re

(CEA)


Summary Statistics of 2009/10 Deals

• 80% of 2009/10 total issuance volume covers US exposures

• 17 of the 21 cat bonds cover US perils

• 9 transactions have PCS index trigger mechanics

• 5 transactions have indemnity triggers

• Investors expect more detailed modeling data output

• Exposures and risk analysis results by sector, line of business and peril

• Greater number of points on the loss exceedance curve or full modeled event loss output (event loss table)

• Total insured values at postcode or county level

Trigger StructuresSector Mix by Size

PCS Index49%

Parametric8%

Parametric Index13%

Mod. Loss7%

Indemnity23%

0.5% - 1.0%19%

1.0% - 1.5%19%

1.5% - 2.0%25%

2.0% - 2.5%18%

2.5% - 3.0%3%

3.0% - 3.5%2%

3.5% - 4.0%3%

> 4.0%11%

Expected Loss Bands

US HU36%

US Q11%

US MP34%

EU W11%

ROW8%


Indicative Spread By Sector

Expected Loss

US Multi-Peril US Hurricane US Quake Europe Wind Rest of World

0.0% 4.0% - 4.5% 4.0% - 4.8% 3.5% - 4.0% 3.5% - 4.0% 3.0% - 3.5%

0.5% 4.5% - 5.4% 4.9% - 5.6% 4.0% - 4.5% 4.0% - 4.5% 3.3% - 3.8%

1.0% 5.4% - 6.1% 5.6% - 6.4% 4.6% - 5.4% 4.5% - 5.3% 3.8% - 4.3%

1.5% 7.0% - 7.8% 6.9% - 7.7% 5.3% - 6.1% 5.3% - 6.0% 4.3% - 4.8%

2.0% 8.4% - 9.2% 8.0% - 8.8% 5.9% - 6.7% 5.8% - 6.5% 5.0% - 5.8%

2.5% 9.7% - 10.5% 8.9% - 9.7% 6.7% - 7.4% 6.5% - 7.3% 5.8% - 6.5%

3.0% 10.9% - 11.6% 9.8% - 10.6% 7.5% - 8.3% 7.3% - 8.0% 6.5% - 7.3%

Source: Data from Aon Benfield Indicative RLS Prices dated 2/19/2010


Estimated Cat Bonds by Sector June 30, 2010

US Multi-Peril US Hurricane US Quake Europe Wind Rest of World Total

Cat Bonds on Risk at January 19, 2010

$5,148 $3,308 $497 $1,588 $1,270 $11,811

Maturities to June 30, 2010

1,140 500 - - 100* 1,740

Potential Issuance to June 30, 2010

1,650 400 350 - - 2,400

Estimated Cat Bonds on Risk at June 30, 2010

$5,658 $3,208 $897 $1,588 $1,170 $12,471

% Contribution to Total Cat Bonds on Risk

45% 26% 7% 13% 9% 100%

* $100M MedQuake A and B


Insurance Linked SecuritiesLong Term Advantages

Total U.S. Financial assets on order of $40 - $60 trillion

Worst simulated U. S. property insurance events are less than $1 trillion

Cat risk should be attractive to investors due to non-correlation with most financial risk

Due to non-correlation, necessary risk load portion of rates can come down as size of assuming pool of capital increases in relation to amount of risk transferred.

Is government backstop actually needed?


AB Securities27%

Other73%

2009

AB Securities23%

Other77%

AB Securities

16%

Other84%

ILS Market Share

2009

2008

2007

Catastrophe Bonds on RiskILS Issuance

Note: Proprietary deals have been excluded

ILS DealsNumber of Deals

% of Notional

% of Deals

Goldman Sachs 1,180.0 6 40.8% 40.0%Aon Benfield Securities 713.0 4 24.7% 26.7%Lehman Brothers 500.0 2 17.3% 13.3%Swiss Re Capital Markets 314.0 2 10.9% 13.3%Banc of America Securities 265.4 1 9.2% 6.7%Citi 200.0 1 6.9% 6.7%UBS 104.0 1 3.6% 6.7%

2008

Notional ($MM)


% of Notional

% of Deals

Goldman Sachs 2,886.5 10 29.6% 23.3%Swiss Re Capital Markets 2,355.9 10 24.1% 23.3%Aon Benfield Securities 2,191.1 7 22.4% 16.3%Merrill Lynch 2,082.6 4 21.3% 9.3%Citi 1,430.6 2 14.7% 4.7%Morgan Stanley 1,242.3 4 12.7% 9.3%Lehman Brothers 700.0 2 7.2% 4.7%BNP Paribas 600.0 1 6.1% 2.3%JP Morgan 225.0 1 2.3% 2.3%ABN AMRO 200.0 1 2.0% 2.3%

2007

Notional ($MM)


% of Notional

% of Deals

Goldman Sachs 1,920.0 8 52.4% 38.1%BNP Paribas 1,495.5 6 40.8% 28.6%Aon Benfield Securities 1,480.9 10 40.4% 47.6%Swiss Re Capital Markets 1,375.0 6 37.5% 28.6%GC Securities 760.4 3 20.7% 14.3%Deutsche Bank 810.0 3 22.1% 14.3%Munich Re Capital Markets 225.0 1 6.1% 4.8%Citi 150.0 1 4.1% 4.8%JP Morgan 70.1 1 1.9% 4.8%

2009

Notional ($MM)


Selected ILS Transactions

Lead Placement AgentVariable Rate Notes

Eurus II Ltd.

July 2009

$60,400,000

Timicuan Re II Ltd.

Joint Lead Manager

June 2009

€150,000,000

Variable Rate Notes

Joint Lead Manager

November 2009

$225,000,000

Lakeside Re II Ltd.

Variable Rate Notes

Co-Bookrunner

Co-Structuring Agent

December 2009

€75,000,000

Atlas VI Capital Limited

Variable Rate Notes

Joint Lead Manager

December 2009

$175,000,000

Montana Re Ltd.

Sorema SA

Co-Bookrunner


Variable Rate Notes

Co-Bookrunner


$180,000,000

Variable Rate Notes

$250,000,000 $60,000,000

April 2009 June 2008

Variable Rate Notes

May 2009

Variable Rate Notes

Co-Manager

April 2009

$250,000,000

Caelus Re LimitedResidential Re 2009

LimitedSuccessor II Ltd. Blue Fin Ltd.

Co-Manager

Sorema SA

ZENKYOREN

May 2008

Variable Rate Notes

Lead Manager

$300,000,000

Muteki Ltd.

Sorema SA

Oglesby Re

$260,000,000

MUSI

December 2007

$100,000,000

Variable Rate Notes


December 2007 December 2007

Lead Arranger

Newton Re Limited

$95,000,000

Lead Manager Co-Bookrunner

New Point Limited - Renewal

$225,000,000

Variable Rate Notes Variable Rate Notes

Co-Bookrunner

July 2007

Sole Structuring Agent

June 2007

Parametric Cat Swap

October 2007

Placement Agent

$133,000,000

Globe Re Ltd. MIDORI Ltd.

$1,180,600,000 $310,500,000

Starbound Re II Ltd.Merna

Reinsurance Ltd.

May 2008

Placement AgentPlacement Agent

Common Shares

Sorema SA

Variable Rate Notes

Lead Manager

Lakeside Re Ltd.

December 2006

$185,000,000

Triomphe Re Ltd.

Placement Agent

$190,000,000 $250,000,000

New Point Limited

Common Shares

December 2006 December 2006

Placement Agent

Sorema SA

August 2006

Cascadia II Limited

June 2006

Variable Rate Notes

Lead Manager

VASCO Re 2006 Ltd.

Floating Rate Notes Floating Rate Notes

$100,000,000

Helix 04 LimitedSirocco Holdings

Limited

Co-Manager Lead Manager

$50,000,000 $75,000,000 $100,000,000

May 2006June 2006 May 2006 June 2004

$300,000,000

Calabash Re Ltd.

$125,000,000

Petrel Re Holdings Limited

$310,500,000

Starbound Re Ltd.

Placement AgentFloating Rate Notes

Lead Manager

June 2006

Financial Advisor Financial Advisor

Sorema SA

December 2001

Equity Interest

Placement Agent

January 2002

DaVinci Re Holdings Ltd.

August 2003

Floating Rate Notes

Co-Manager

Formosa Re

$100,000,000

Floating Rate Notes

Lead Manager

$33,000,000

St. Agatha Re

$25,000,000

Sorema SA

Variable Rate Notes

June 2001

Juno Re

Lead Arranger Lead Manager

Earthquake Securitization

Lead Manager

Variable Rate Notes

April 2001

$100,000,000

Halyard ReBV

Floating Rate Notes

Lead Manager

$50,000,000

Nehi, Inc

$17,000,000 $80,000,000 $161,856,000 $100,000,000

Floating Rate Notes

Joint Lead ManagerLead Manager

Trinom Ltd. Domestic Inc.

June 1999November 1999February 2000April 2001 March 1999

Namazu Re

¥55,000,000,000

Floating Rate Notes Preference Shares

Joint Lead Manager

Sorema SA

Floating Rate Notes

Lead Manager

Cat XL

$80,000,000

Co-Manager

June 1998

$80,000,000

Pacific ReXL Re

July 1998

Sorema SA


Boutique Investment Bank

Aon Benfield Securities

Largest insurance-only focused investment bank, specializing in providing innovative strategic and capital solutions to property & casualty insurance companies

• Founder and pioneer of the ILS markets• Established to provide our clients with access to alternative forms of capital• Fully integrated within Aon Benfield

A leader and primary innovator in structuring, underwriting and placing cat bonds• Pacific Re – embedded frequency option• Domestic, NeHi – first and only onshore securitizations• Lakeside Re – indemnity structure with comfort warranty• Merna Re – largest cat bond, investment grade structure• Blue Fin Series 2 Class A – puttable note structure• Eurus II – first repo collateral structure

Team of experienced professionals• Backgrounds in investment banking, institutional sales and trading, accounting, actuarial, compliance, legal

and tax

Placed one of the first deals ever done in the market – Pacific Re, 1998

Placed the largest indemnity deal ever done in the market – Merna Re, 2007

Placed more than 35 cat bonds/swaps since 1998

Leading Underwriter of Cat Bonds

Documents

Coastal Residual Market Risk Management Discussion NAIC South East Zone Meeting April 22, 2010