The Aon Benfield Aggregatethoughtleadership.aonbenfield.com/Documents/201304_marketanaly… · FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 USD (billions) Aon Benfield 5 Executive

Empower ResultsTM

The Aon Benfield AggregateResults for the full year ended December 31, 2012

About Aon Benfield

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Contents

Global Reinsurer Capital 4 Executive Summary 5

Evolution of the ABA 5 ABA Capital 6

Capital Development 6 Capital Management 8

Premium Income 9 Earnings 12

Underwriting Performance 13 Investment Results 16 Net Income 17 Return on Equity 18

Capital Market Convergence 19 ABA Valuation 20 Financial Strength Ratings 22 Appendix 1: ABA Data 23

The Aon Benfield Aggregate – Results for the Full Year Ended December 31, 2012

4

Global Reinsurer Capital Aon Benfield estimates that global reinsurer capital totaled USD505 billion at

December 31, 2012, an increase of 11% relative to December 31, 2011. This

calculation is a broad measure of capital available for insurers to trade risk with and

includes both traditional and non-traditional forms of reinsurer capital.

Exhibit 1: Global Reinsurer Capital

Source: Company reports, Aon Benfield Analytics

Global reinsurer capital resumed its upward trajectory in 2012, more than recovering the small reduction linked to record catastrophe losses in 2011. The main drivers were the generally solid earnings of ‘traditional’ reinsurers, unrealized investment gains taken directly to equity and a continued flow of new capital entering the industry in support of rated start-ups and the ‘non-traditional’ sector.

410340

400470 455 505

-17% 18%

18%-3% 11%

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FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

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Executive Summary Global reinsurer capital reached a record level of USD505 billion at December 31, 2012, an increase of 11% or USD50 billion since the end of 2011. The main drivers were the generally solid earnings of ‘traditional’ reinsurers, unrealized investment gains taken directly to equity and a continued flow of new capital entering the industry in support of rated start-ups and the ‘non-traditional’ sector.

The reported shareholders’ funds of the 31 companies forming the Aon Benfield Aggregate (ABA) totaled USD313 billion at December 31, 2012, an increase of 12% or USD33 billion since the end of 2011. Net income of USD30 billion, unrealized capital gains of USD16 billion and additional capital of USD4 billion were partially offset by dividends and share buybacks totaling USD16 billion.

The ABA wrote USD192 billion of gross property and casualty (P&C) premiums in 2012, an increase of 6%, of which USD100 billion was classified as reinsurance. Growth was principally derived from price increases in loss-affected lines and territories and higher demand for capital support in the Asia-Pacific region. Retention was virtually unchanged at 85.0% and net premiums written stood at USD163 billion.

The ABA reported P&C underwriting profit of USD11.7 billion in 2012. The combined ratio stood at 92.6%, split 88.9% to reinsurance and 97.1% to insurance. Favorable development of prior year reserves fell by 9% to USD6.8 billion, benefiting the combined ratio by 4.3 percentage points (pp). Reported catastrophe losses totaled USD11.9 billion, adding 7.5pp to the combined ratio, including USD7.9 billion (5.0pp) from Hurricane Sandy.

Pre-tax profit more than doubled to USD35.7 billion, driven primarily by a lower level of insured catastrophe losses and capital gains associated with improving investment markets in the second half of the year. Net income attributable to common shareholders stood at USD29.1 billion, the highest total since the onset of the financial crisis. The return on average common equity stood at 10.1%.

New income streams and operating advantages are starting to flow to leading reinsurers that have engaged with the new capital flowing mainly from pension plans, life insurers, endowments and high net worth individuals. Their roles are mainly in (a) managing bond funds where reinsurers have relationship and familiarity benefits with bond sponsors, (b) sharing quality underwriting performance and access to mature reinsurance and insurance relationships through side cars and other managed vehicles and (c) sponsoring catastrophe bond transactions to lower their weighted average cost of underwriting capital, particularly for peak modeled perils. These activities show the beginnings of a true rotation in how the reinsurance business will be capitalized.

Evolution of the ABA The ABA report is now produced on a half-yearly basis, to allow the inclusion of certain companies that do not report quarterly. The aim is to provide a more representative view of the global P&C reinsurance marketplace. A full list of the 31 constituents can be found in Appendix 1. All are publicly-listed, with the exception of two US subsidiaries of Berkshire Hathaway, namely General Reinsurance Corporation (Gen Re) and National Indemnity Company (NICO).

Alleghany Corporation has replaced Transatlantic Holdings, Inc. as a constituent of the ABA, as a result of the acquisition that became effective on March 6, 2012. Alleghany’s published results only include the contribution of Transatlantic from that date, but for the purposes of the ABA capital calculation (Exhibit 2), Transatlantic’s reported capital has been included in previous year-end totals. Mapfre SA is a new addition to the ABA, while Flagstone Reinsurance Holdings SA has been removed following its acquisition by Validus Holdings Ltd on November 30, 2012. Prior year comparisons have been restated to reflect these changes.


6

ABA Capital The 31 constituents of the ABA reported total shareholders’ funds of USD313 billion

at the end of 2012, an increase of 12% over the course of the year. ABA capital has

grown by 69% since the depths of the financial crisis. The growth in total premiums

(life and non-life) over this period stands at 25%.

Exhibit 2: ABA Shareholders’ Funds

Source: Company reports, Aon Benfield Market Analysis

Capital Development The USD33.1 billion increase in ABA capital in 2012 was driven by USD29.5 billion of net income and USD15.9 billion of unrealized investment gains (including USD10.1 billion from Munich Re and NICO). New capital inflows stood at USD4.2 billion, including a contingent convertible issuance of USD1.1 billion at Swiss Re and common share issuances of USD0.9 billion at QBE and USD0.5 billion at Validus (to finance the Flagstone acquisition). The main offsets were dividend payments of USD11.1 billion and share buybacks of USD5.0 billion.

Exhibit 3: ABA Shareholders’ Funds Development


199 223185

236275 280

313

12% -17% 27%

16%2%

12%

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200

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300

350

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

USD

(bi

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279.64.2

29.5 -11.11.3

15.9 -5.0-1.7 312.7

250

275

300

325

350

FY 2011SHF

Additionalcapital

Netincome

Dividends FX Investmentgains

Sharebuybacks

Other FY 2012SHF

USD

(bill

ions

)

Aon Benfield

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The four largest companies in the study, NICO, Munich Re, Swiss Re and ACE, together accounted for 56% of total ABA capital at the end of 2012.

Exhibit 4: Reported Shareholders’ Funds


Capital growth in 2012 was generally weighted towards the largest players in the industry. NICO, Munich Re, Swiss Re and ACE all reported increases of more than 12%. The reductions at RenaissanceRe and White Mountains were driven by a level of share buy-backs that exceeded net income.

Exhibit 5: Movement in Reported Shareholders’ Funds


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0%10%20%30%40%50%60%70%80%90%

100%110%120%

-10%

-5%

0%

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10%

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25%ABA


8

Capital Management Little change in overall capital management activity was reported by the ABA companies in 2012. Dividends and share buy-backs totaled USD16.1 billion, up from USD15.9 billion in 2011.

Exhibit 6: Capital Returns as % of Opening Shareholders’ Funds


The first quarter of 2013 generally saw final dividends on ordinary shares being maintained or increased. In addition, five ABA constituents announced special dividends (Beazley, Hannover Re, Hiscox, Lancashire and Swiss Re) and five disclosed new share buy-back authorizations (Aspen, Axis, PartnerRe, Validus and XL).

0%

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Dividends

Share buy-backs

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Premium Income Gross property and casualty (P&C) premiums written by the ABA companies grew

by 6% in 2012. The total stood at USD192 billion, of which USD100 billion was

classified as reinsurance. Retention was virtually unchanged at 85.0% and net

premiums written totaled USD163 billion.

Exhibit 7: ABA P&C Gross Premiums Written


The five largest groups, Munich Re, Mapfre, ACE, Swiss Re and QBE, together contributed USD99.2 billion of gross premiums written, or 52% of the ABA total.

Exhibit 8: P&C Gross Premiums Written

*P&C reinsurance segment only


140 148 157 155 158180 192

6% -1% 2%14%

6%

6%

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GPW at NICO grew by 27% or USD1.6 billion, driven by higher volumes ceded by affiliates and Swiss Re (a 20% quota share expired at the end of 2012) and increased underwriting activity in the Asia-Pacific region. The figures reported by the major European reinsurers were flattered by the stronger euro. At constant exchange rates, Munich Re reported a 3% decline in gross premiums written, driven by the termination of large-volume treaties in China. The 17% contraction at Platinum stemmed from a continued desire to reduce catastrophe exposure.

In terms of pure reinsurance premiums, the strongest growth was seen at Allied World (33%), Argo (31%) and Arch (28%).

Exhibit 9: Change in P&C Gross Premiums Written



Exhibit 10 shows the proportion of P&C gross premiums written ceded to reinsurers by the ABA constituents in 2012, noting that the result for Gen Re is influenced by an internal quota share to affiliate NICO. The biggest increases year-on-year were seen at Lancashire, Alterra and Catlin, all driven by increased engagement with third party capital structures.

Exhibit 10: P&C Reinsurance Cession Rates



6.2%

-50%

0%

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100%

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300%ABA

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Exhibit 11 shows the P&C net premiums earned by the ABA constituents in 2012. Between them, the five largest companies, Munich Re, Mapfre, QBE, Swiss Re and ACE, represented 43% of the ABA total.

Exhibit 11: P&C Net Premiums Earned



Net of reinsurance, premium growth was generally weighted towards the larger ABA constituents. Five companies reported reductions, the most notable being Platinum.

Exhibit 12: Change in P&C Net Premiums Earned



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7.2%

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12

Earnings The ABA reported total pre-tax profit of USD35.7 billion for 2012, more than double

the level of the prior year. The increase was driven primarily by a lower level of

insured catastrophe losses and capital gains associated with improving investment

markets in the second half of the year.

Exhibit 13: ABA Pre-Tax Results


All of the ABA constituents reported profits in 2012 (eleven companies reported losses in 2011). Between them, NICO, Swiss Re and Munich Re contributed USD16.8 billion, or 47% of the total pre-tax result.

Exhibit 14: Pre-Tax Results


39.9 40.4

13.8

33.0 33.4

15.6

35.7

-30

-10

10

30

50

70

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

USD

(bi

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Non-life underwriting result

Investment income

Life underwriting result

Other

Pre-tax profit

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13

Underwriting Performance The ABA reported a P&C combined ratio of 92.6% in 2012, equating to an underwriting profit of USD11.7 billion. Net catastrophe losses totaling USD11.9 billion added 7.5 percentage points (pp) to the combined ratio, down from USD29.6 billion and 20.0pp in 2011. This included USD7.9 billion (5.0pp) of Hurricane Sandy losses reported in the fourth quarter. Favorable development of prior year reserves fell by 9% to USD6.8 billion, benefiting the combined ratio by 4.3pp.

The ABA reinsurance segment combined ratio improved from 110.7% in 2011 to 88.9% in 2012. The insurance segment combined ratio stood at 97.1%.

Exhibit 15: ABA Combined Ratio Composition


All but two of the ABA companies reported an underwriting profit in 2012. The result at Argo was driven by losses within the commercial specialty segment. The result at Endurance was primarily driven by US crop and Hurricane Sandy property losses within the insurance segment.

Exhibit 16: Reported Combined Ratios



-0.7% -2.4% -5.0% -4.0% -4.9% -5.0% -4.3%

27.3% 28.4% 28.7% 29.1% 29.8% 29.8% 30.0%

60.8% 60.0% 64.2% 62.6% 60.0% 60.3% 59.4%

0.9% 2.7%

6.6%1.7%

8.8%20.0%

7.5%88.3% 88.6%94.4%

89.4%93.8%

105.1%

92.6%

-10%

10%

30%

50%

70%

90%

110%

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Total catastrophe losses

Attritional loss ratio

Expense ratio

Prior year reserve adjustment

0%

20%

40%

60%

80%

100%

120%Loss ratio Expense ratio ABA


14

On a combined basis, Swiss Re and Munich Re generated USD4.4 billion of underwriting profit in 2012, or 37% of the ABA total.

Exhibit 17: P&C Underwriting Results



Although the general trend is downward, most ABA constituents continue to derive significant support from positive prior year reserve development. The unusual level of release at Platinum was driven by earlier recognition of favorable variances. QBE was the only company to record net additions to reserves.

Exhibit 18: Loss Reserve Adjustment as % of Net Premium Earned



On an accident year basis, ABA underwriting profit stood at USD4.9 billion in 2012, with twelve constituents reporting combined ratios in excess of 100%.

-500

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Exhibit 19: Accident Year Combined Ratios



Exhibit 20 shows the impact of reported catastrophe losses on the combined ratios of individual ABA constituents, isolating the impact of Hurricane Sandy, which was by far the most significant event.

Exhibit 20: Catastrophe Losses as % of P&C Net Premiums Earned



Exhibit 21 shows reported pre-tax catastrophe losses in 2012 as a percentage of opening shareholders’ funds across the ABA constituents.

Exhibit 21: Catastrophe Losses as % of 2011 Year-End Shareholders’ Funds

*Alleghany SHF as at March 31, 2012 to incorporate Transatlantic acquisition


0%

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140%ABA

0%

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25%OtherSandy

0%

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12%

14%OtherSandy


16

Investment Results The total investment return reported by ABA constituents through their income statements rose by 16% to USD42.6 billion, an improved yield of 4.1%, driven by a higher level of capital gains. Despite an increased asset base, ordinary investment income fell by 3% to USD34.5 billion, equating to a reduced yield of 3.4%.

Exhibit 22: ABA Investment Return


Cash and invested assets across the ABA companies grew by 7% to USD1.1 trillion over the course of 2012. Exhibit 23 shows the high-level distribution across various asset classes. Exposure to equities totaled USD130 billion at the end of 2012, of which USD71 billion (55%) was held at NICO.

Exhibit 23: Invested Assets Portfolio


5.7%5.2%

1.8%

4.4%4.6%

3.8%4.1%

4.7%4.3%

3.8% 4.0%3.5% 3.6%

3.4%

0%

2%

4%

6%

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Total Investment Return (incl. Capital Gains/Losses) Underlying Investment Return

826

938

845930

968 9941,066

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1,200

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

USD

(bill

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) Other investments

Funds held by cedants

Cash and cash equivalents

Equity investments

Fixed interest investments

Aon Benfield

17

Net Income The ABA companies reported net income attributable to common shareholders of USD29.1 billion for 2012, more than double the level of the prior year and the highest total since the onset of the financial crisis.

Exhibit 24: ABA Common Net Income


Between them, NICO, Swiss Re, Munich Re and ACE generated common net income of USD16.4 billion, or 56% of the total result.

Exhibit 25: Common Net Income


31.4 31.2

7.0

25.8 26.8

14.1

29.1

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35

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Return on Equity Net income attributable to common shareholders represented 10.1% of average common shareholders’ funds in 2012, taking the seven-year average to 10.8%.

Exhibit 26: ABA Return on Equity


Return on equity across the ABA constituents shows a wide variance. With investment markets providing less support, underwriting performance is becoming an increasingly important driver of overall results.

Exhibit 27: Common Net Income as % of Average Common Equity


17.9% 15.3%

3.6%

12.7%10.8%

5.2%

10.1%

0%

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10%

15%

20%

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

0%

2%

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6%

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16%

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20%ABA

Aon Benfield

19

Capital Market Convergence Hedge funds and pension funds are increasingly attracted to reinsurance as an asset

class because it has performed relatively well in an environment of low interest rates

and has limited correlation with broader capital market movements.

Much of the new capital coming into the reinsurance sector is being channelled to specialist fund managers, who then deploy it into the insurance-linked securities (ILS) sector (catastrophe bonds and industry loss warranties), or other ‘non-traditional’ structures, such as sidecars and collateralized reinsurance, on their investors’ behalf.

Having the capability to attract and deploy third party capital is becoming increasingly important for those ABA companies wishing to grow their footprint in the reinsurance market (without taking on additional peak risk), diversify their income streams (reducing earnings volatility) and actively manage their capital base (improving returns on equity).

For this reason, several ABA constituents have recently appointed senior executives to capital markets roles, with a view to evaluating the potential threats and opportunities posed by these new sources of capital. These include Arch, Argo, Axis, Catlin, Everest Re, PartnerRe and XL.

Heightened convergence activity since the beginning of 2012 has been focused in two main areas. Firstly, nine ABA constituents have raised a combined USD1.8 billion of sidecar capacity, the largest sponsors being Alterra, Catlin, Everest Re, Lancashire, RenaissanceRe and Validus.

Secondly, a number of ABA companies have either set-up their own third party fund management arms (including Hannover Re, Lancashire, Montpelier Re, Munich Re, RenaissanceRe, SCOR and Validus), or formed strategic partnerships with existing independent operations (including Alleghany and Allied World).


20

ABA Valuation The overall market capitalization of the ABA companies has increased by 34% since

the beginning 2012 and now exceeds aggregate book value for the first time since

late 2009.

Exhibit 28: ABA Market Capitalization (indexed to January 1, 2008)

Source: Bloomberg, Aon Benfield Market Analysis

Most ABA constituents saw strong share price recovery in the second half of 2012, a trend which continued into the first quarter of 2013. Movements since the beginning of 2012 are shown in Exhibit 29.

Exhibit 29: Share Price Development (January 1, 2012 – April 5, 2013)


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The price-to-book ratio of the ABA as a whole has shown strong improvement since the beginning of 2012 and now exceeds 1.0x for the first time since late 2009. Exhibit 30: ABA Price-to-Book Ratio (January 1, 2008 – April 5, 2013)


Changes in the price-to-book ratios of the individual ABA constituents since January 1, 2012 are captured in Exhibit 31.

Exhibit 31: Price-to-Book Ratios


0.6

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Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

0.0

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2.0April 5, 2013 January 1, 2012

Average Average


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Financial Strength Ratings Exhibit 32: Financial Strength Ratings

Main Operating Company A.M. Best Standard & Poor’s

ACE Tempest Reinsurance Ltd A+ Stable AA- Stable

Allied World Assurance Company Ltd A Stable A Stable

Alterra Bermuda Ltd A Stable A Stable

Amlin AG A Stable A Stable

Arch Reinsurance Ltd A+ Stable A+ Stable

Argo Re Ltd A Stable Not Rated -

Aspen Bermuda Ltd A Stable A Stable

AXIS Specialty Ltd A Positive A+ Stable

Beazley Insurance Company, Inc A Stable Not Rated -

Catlin Insurance Company Ltd A Stable A Stable

Endurance Specialty Insurance Ltd A Stable A Stable

Everest Reinsurance (Bermuda) Ltd A+ Stable A+ Stable

General Reinsurance Corporation A++ Stable AA+ Negative

Hannover Rückversicherungs AG A+ Stable AA- Stable

Hiscox Insurance Company (Bermuda) Ltd A Stable Not Rated -

Lancashire Insurance Company Ltd A Stable A- Stable

MAPFRE Re, Compania de Reaseguros SA A Negative BBB+ Negative

Montpelier Reinsurance Ltd A Stable A- Stable

Munich Reinsurance Company A+ Stable AA- Stable

National Indemnity Company A++ Stable AA+ Negative

Odyssey Reinsurance Company A Stable A- Positive

Partner Reinsurance Company Ltd A+ Negative A+ Stable

Platinum Underwriters Bermuda Ltd A Stable A- Stable

QBE Re (Europe) Ltd A Stable A+ Negative

Renaissance Reinsurance Ltd A+ Stable AA- Stable

SCOR Global P&C SE A Stable A+ Stable

Sirius International Insurance Corporation A Stable A- Stable

Swiss Reinsurance Company A+ Stable AA- Stable

Transatlantic Reinsurance Company A Stable A+ Stable

Validus Reinsurance Ltd A Stable A Stable

XL Re Ltd A Stable A Positive

Ratings at April 2013 Source: A.M. Best, Standard & Poor’s

Best's Credit Ratings are under continuous review and subject to change and/or affirmation. For the latest Best’s Credit Ratings and Best’s Credit Reports (which include Best’s Credit Ratings), visit the A.M. Best website at http://www.ambest.com. See Guide to Best’s Credit Ratings for explanation of use and charges.

Best's Credit Ratings reproduced herein appear under license from A.M. Best and do not constitute, either expressly or impliedly, an endorsement of (Licensee's publication or service) or its recommendations, formulas, criteria or comparisons to any other ratings, rating scales or rating organizations which are published or referenced herein. A.M. Best is not responsible for transcription errors made in presenting Best's Credit Ratings. Best’s Credit Ratings are proprietary and may not be reproduced or distributed without the express written permission of A.M. Best Company.

A Best’s Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance obligations. It is not a warranty of a company’s financial strength and ability to meet its obligations to policyholders. View our Important Notice: Best's Credit Ratings for a disclaimer notice and complete details at http://www.ambest.com/ratings/notice.

Aon Benfield

23

Appendix 1: ABA Data Exhibit 33: Results for the Full Year Ended December 31, 2012

Company

Reporting

Currency

(millions)

P&C Gross

Premiums

Written

FY 2011

P&C Gross

Premiums

Written

FY 2012 Change

P&C Net

Premiums

Written

FY 2011

P&C Net

Premiums

Written

FY 2012 Change

ACE USD 18,841 19,513 4% 13,459 14,096 5%

Alleghany USD 1,141 4,241 272% 775 3,724 381%

Allied World USD 1,940 2,329 20% 1,534 1,838 20%

Alterra USD 1,901 1,969 4% 1,429 1,317 -8%

Amlin GBP 2,304 2,406 4% 2,013 2,075 3%

Arch USD 3,436 3,869 13% 2,673 3,052 14%

Argo USD 1,545 1,746 13% 1,072 1,245 16%

Aspen USD 2,208 2,583 17% 1,929 2,247 16%

Axis USD 4,096 4,140 1% 3,419 3,337 -2%

Beazley USD 1,713 1,896 11% 1,374 1,543 12%

Catlin USD 4,513 4,972 10% 3,835 3,834 0%

Endurance USD 2,467 2,549 3% 1,980 2,029 3%

Everest Re USD 4,286 4,311 1% 4,109 4,081 -1%

Fairfax USD 6,744 7,398 10% 5,608 6,194 10%

Gen Re USD 1,071 1,118 4% 541 567 5%

Hannover Re EUR 6,826 7,717 13% 6,232 6,961 12%

Hiscox GBP 1,449 1,566 8% 1,174 1,268 8%

Lancashire USD 632 724 15% 565 576 2%

Mapfre EUR 14,473 15,479 7% 12,675 13,577 7%

Montpelier Re USD 726 735 1% 624 616 -1%

Munich Re* EUR 16,557 17,052 3% 15,860 16,402 3%

NICO USD 6,068 7,717 27% 5,499 7,598 38%

PartnerRe USD 3,831 3,910 2% 3,688 3,768 2%

Platinum USD 687 570 -17% 652 565 -13%

QBE USD 18,291 18,434 1% 15,699 16,074 2%

RenaissanceRe USD 1,435 1,552 8% 1,013 1,103 9%

SCOR EUR 3,982 4,650 17% 3,591 4,205 17%

Swiss Re USD 17,181 19,468 13% 13,571 15,117 11%

Validus USD 2,125 2,166 2% 1,835 1,859 1%

White Mountains USD 2,256 2,438 8% 1,978 2,217 12%

XL USD 6,898 7,175 4% 5,433 5,957 10%

ABA USD 180,314 191,557 6% 152,823 162,765 7%


Figures in reporting currencies, but converted to USD (millions) for ABA line



24

Exhibit 33: Results for the Full Year Ended December 31, 2012 (cont’d)

Calendar Year

Company

Loss

Ratio

FY 2011

Loss

Ratio

FY 2012

Expense

Ratio

FY 2011

Expense

Ratio

FY 2012

Combined

Ratio

FY 2011

Combined

Ratio

FY 2012 Change

ACE 66.0% 65.7% 28.7% 28.2% 94.7% 93.9% -0.8pp

Alleghany 57.5% 70.5% 35.9% 23.6% 93.4% 94.1% 0.7pp

Allied World 65.8% 65.1% 30.1% 29.3% 95.9% 94.5% -1.4pp

Alterra 66.5% 68.0% 31.7% 31.5% 98.2% 99.5% 1.3pp

Amlin 77.8% 56.6% 29.8% 32.2% 107.6% 88.8% -18.8pp

Arch 65.6% 63.4% 32.8% 32.0% 98.5% 95.4% -3.1pp

Argo 80.2% 64.5% 39.6% 40.1% 119.8% 104.6% -15.2pp

Aspen 82.4% 59.4% 33.5% 34.9% 115.9% 94.3% -21.6pp

Axis 80.7% 61.4% 31.6% 34.8% 112.3% 96.2% -16.1pp

Beazley 62.0% 53.0% 37.0% 38.0% 99.0% 91.0% -7.9pp

Catlin 70.0% 56.0% 32.6% 34.0% 102.6% 90.0% -12.6pp

Endurance 84.6% 75.5% 28.3% 26.8% 112.9% 102.3% -10.6pp

Everest Re 90.9% 65.9% 27.6% 27.9% 118.5% 93.8% -24.7pp

Fairfax 83.1% 69.2% 31.1% 30.6% 114.2% 99.8% -14.4pp

Gen Re 65.1% 54.8% 29.8% 36.5% 94.9% 91.3% -3.7pp

Hannover Re 78.6% 70.5% 25.7% 25.4% 104.3% 95.8% -8.5pp

Hiscox 61.0% 45.0% 38.5% 40.5% 99.4% 85.4% -14.0pp

Lancashire 31.7% 29.9% 31.9% 34.0% 63.7% 63.9% 0.2pp

Mapfre 69.2% 67.4% 27.7% 28.0% 96.9% 95.5% -1.4pp

Montpelier Re 98.3% 46.4% 32.8% 34.6% 131.1% 81.0% -50.1pp

Munich Re* 83.3% 61.0% 30.4% 30.0% 113.6% 91.0% -22.6pp

NICO 83.3% 63.5% 29.8% 28.8% 113.1% 92.3% -20.8pp

PartnerRe 96.7% 58.5% 28.7% 29.3% 125.4% 87.8% -37.7pp

Platinum 116.8% 32.4% 26.2% 30.1% 143.0% 62.5% -80.5pp

QBE 68.1% 66.0% 28.6% 31.1% 96.8% 97.1% 0.3pp

RenaissanceRe 90.6% 30.4% 28.1% 27.4% 118.6% 57.8% -60.8pp

SCOR 76.6% 65.4% 27.9% 28.7% 104.5% 94.1% -10.4pp

Swiss Re 73.3% 53.1% 31.4% 30.0% 104.7% 83.1% -21.5pp

Validus 69.1% 53.4% 30.3% 33.4% 99.4% 86.8% -12.6pp

White Mountains 61.0% 57.9% 34.8% 36.4% 95.8% 94.3% -1.6pp

XL 76.6% 65.3% 30.9% 30.9% 107.5% 96.3% -11.2pp

ABA 75.3% 62.6% 29.8% 30.0% 105.1% 92.6% -12.5pp



Aon Benfield

25


Accident Year

Company

Prior Year

Reserve

Adjustment

FY 2011

Prior Year

Reserve

Adjustment

FY 2012

Prior Year

Reserve

Adjustment

as % of NPE

FY 2011

Prior Year

Reserve

Adjustment

as % of NPE

FY 2012

Accident

Year

Combined

Ratio

FY 2011

Accident

Year

Combined

Ratio

FY 2012 Change

ACE -556 -479 4.1% 3.5% 98.8% 97.4% -1.4pp

Alleghany -26 -12 3.5% 0.3% 96.8% 94.4% -2.4pp

Allied World -254 -170 17.4% 9.7% 113.3% 104.2% -9.1pp

Alterra -140 -81 9.9% 6.0% 108.0% 105.4% -2.6pp

Amlin -113 -94 5.8% 4.7% 113.4% 93.5% -19.9pp

Arch -285 -222 10.8% 7.5% 109.3% 102.9% -6.3pp

Argo -3 -33 0.3% 2.8% 120.1% 107.4% -12.7pp

Aspen -92 -137 4.9% 6.6% 120.8% 100.9% -19.9pp

Axis -257 -245 7.8% 7.2% 120.0% 103.3% -16.7pp

Beazley -187 -126 13.5% 8.5% 112.4% 99.5% -12.9pp

Catlin -103 -139 2.9% 3.9% 105.5% 93.9% -11.6pp

Endurance -180 -120 9.3% 6.0% 122.2% 108.2% -14.0pp

Everest Re 4 -4 -0.1% 0.1% 118.4% 93.9% -24.5pp

Fairfax -89 -177 1.7% 3.0% 115.9% 102.8% -13.1pp

Gen Re -261 -204 47.1% 36.9% 142.0% 128.2% -13.8pp

Hannover Re -318 -322 5.3% 4.7% 109.6% 100.5% -9.1pp

Hiscox -199 -152 17.4% 12.7% 116.9% 98.1% -18.8pp

Lancashire -155 -27 27.0% 4.7% 90.7% 68.6% -22.1pp

Mapfre n.d. -163 n.d. 1.3% n.a. 96.7% n.a.

Montpelier Re -89 -87 14.3% 14.2% 145.4% 95.2% -50.2pp

Munich Re* -634 -948 4.1% 5.7% 117.8% 96.7% -21.1pp

NICO -214 -176 4.2% 2.5% 117.2% 94.8% -22.4pp

PartnerRe -530 -628 13.8% 17.0% 139.2% 104.8% -34.4pp

Platinum -100 -212 14.5% 37.4% 157.6% 100.0% -57.6pp

QBE 32 309 -0.2% -2.0% 96.6% 95.2% -1.4pp

RenaissanceRe -132 -158 13.9% 14.8% 132.5% 72.6% -59.9pp

SCOR -117 -15 3.4% 0.4% 107.9% 94.4% -13.4pp

Swiss Re -1,329 -1,088 11.0% 7.4% 115.7% 90.6% -25.1pp

Validus -156 -175 8.7% 9.3% 108.0% 96.1% -11.9pp

White Mountains -77 -42 4.0% 2.0% 99.8% 96.3% -3.5pp

XL -285 -316 5.3% 5.5% 112.8% 101.7% -11.1pp

ABA -7,455 -6,793 5.0% 4.3% 110.1% 96.9% -13.2pp





26


Company

Net

Investment

Income

FY 2011

Net

Investment

Income

FY 2012

Capital

Gains/

Losses

FY 2011

Capital

Gains/

Losses

FY 2012

Total

Investment

Return

FY 2011

Total

Investment

Return

FY 2012 Change

ACE 2,242 2,181 5 224 2,247 2,405 7%

Alleghany 109 313 124 155 232 468 101%

Allied World 196 167 10 306 206 474 130%

Alterra 235 219 -41 64 194 283 46%

Amlin 54 42 -16 125 38 167 336%

Arch 338 295 92 256 430 551 28%

Argo 126 119 49 26 176 145 -18%

Aspen 226 205 -34 4 192 209 9%

Axis 362 381 121 127 484 508 5%

Beazley 55 65 -12 17 43 83 92%

Catlin 148 123 100 35 248 158 -36%

Endurance 148 173 28 71 176 245 39%

Everest Re 620 600 7 164 627 765 22%

Fairfax 707 424 691 643 1,398 1,067 -24%

Gen Re 971 564 -31 7 940 570 -39%

Hannover Re 1,237 1,358 147 298 1,384 1,656 20%

Hiscox 47 42 -24 47 23 89 291%

Lancashire 44 41 9 12 52 53 1%

Mapfre 1,681 1,608 234 82 1,914 1,690 -12%

Montpelier Re 69 67 26 82 95 150 58%

Munich Re 7,137 7,776 -381 660 6,756 8,436 25%

NICO 5,456 5,773 222 -235 5,678 5,538 -2%

PartnerRe 623 581 67 493 689 1,075 56%

Platinum 126 100 -18 86 107 186 73%

QBE 762 750 -168 481 594 1,231 107%

RenaissanceRe 81 191 70 164 152 354 134%

SCOR 508 489 118 83 626 572 -9%

Swiss Re 5,469 5,303 55 2,942 5,524 8,245 49%

Validus 112 108 9 35 121 143 18%

White Mountains 185 154 74 118 259 272 5%

XL 1,164 1,071 -188 14 976 1,085 11%

ABA 35,446 34,543 1,364 8,009 36,810 42,552 16%



Aon Benfield

27


Company

Pre-tax

Profit/Loss

FY 2011

Pre-tax

Profit/Loss

FY 2012 Change

Pre-tax

Operating ROE*

FY 2011

Pre-tax

Operating ROE*

FY 2012 Change

ACE 2,042 2,976 46% 8.6% 10.6% 2.0pp

Alleghany 191 719 277% 2.3% 12.1% 9.8pp

Allied World 306 511 67% 9.5% 6.3% -3.2pp

Alterra 56 156 179% 3.4% 3.2% -0.1pp

Amlin -194 264 n.m. -11.3% 9.6% 20.9pp

Arch 426 589 38% 7.4% 6.8% -0.6pp

Argo -62 67 n.m. -7.3% 2.8% 10.0pp

Aspen -147 295 n.m. -3.5% 8.8% 12.3pp

Axis 62 551 795% -1.1% 7.5% 8.6pp

Beazley 63 251 301% 6.9% 20.5% 13.6pp

Catlin 71 339 377% -0.9% 8.9% 9.8pp

Endurance -117 166 n.m. -5.3% 3.6% 8.9pp

Everest Re -234 940 n.m. -3.9% 12.1% 16.0pp

Fairfax -9 657 n.m. -8.2% 0.2% 8.4pp

Gen Re 968 618 -36% 10.8% 6.2% -4.7pp

Hannover Re 742 1,302 75% 11.1% 16.3% 5.2pp

Hiscox 17 218 n.m. 3.3% 12.9% 9.6pp

Lancashire 219 237 8% 16.1% 16.6% 0.5pp

Mapfre 1,637 1,372 -16% 16.0% 13.0% -3.0pp

Montpelier Re -116 228 n.m. -8.9% 9.2% 18.1pp

Munich Re 160 4,077 n.m. 2.3% 13.5% 11.1pp

NICO 5,436 6,049 11% 7.5% 8.4% 0.9pp

PartnerRe -451 1,339 n.m. -7.6% 12.6% 20.2pp

Platinum -227 352 n.m. -11.6% 14.9% 26.5pp

QBE 868 941 8% 9.9% 4.2% -5.7pp

RenaissanceRe -75 748 n.m. -3.2% 13.4% 16.6pp

SCOR 330 526 59% 4.8% 9.6% 4.8pp

Swiss Re 2,875 5,523 92% 9.7% 7.9% -1.8pp

Validus 45 383 752% 1.0% 8.8% 7.8pp

White Mountains 98 263 168% 0.5% 3.2% 2.7pp

XL -421 709 n.m. -2.2% 6.1% 8.3pp

ABA 15,578 35,727 129% 5.1% 9.2% 4.1pp

*Calculated by excluding the impact of net realized and unrealized investment gains/losses


n.m. = not meaningful



28


Company

Common

Net Income

FY 2011

Common

Net Income

FY 2012 Change

Return on

Equity*

FY 2011

Return on

Equity*

FY 2012 Change

ACE 1,540 2,706 76% 6.5% 10.4% 3.9pp

Alleghany 143 702 390% 4.9% 15.1% 10.1pp

Allied World 275 493 80% 8.8% 15.2% 6.4pp

Alterra 65 144 120% 2.3% 5.1% 2.8pp

Amlin -150 248 n.m. -9.5% 17.0% 26.5pp

Arch 410 558 36% 9.7% 12.2% 2.5pp

Argo -82 52 n.m. -5.3% 3.5% 8.8pp

Aspen -133 249 n.m. -4.7% 8.6% 13.2pp

Axis 9 495 n.m. 0.2% 9.7% 9.5pp

Beazley 66 215 226% 6.1% 18.8% 12.7pp

Catlin 38 305 703% 1.4% 10.8% 9.5pp

Endurance -118 130 n.m. -4.9% 5.8% 10.7pp

Everest Re -80 829 n.m. -1.3% 12.9% 14.3pp

Fairfax -6 472 n.m. -0.1% 6.3% 6.3pp

Gen Re 858 433 -50% 9.3% 4.4% -4.9pp

Hannover Re 606 858 42% 12.8% 15.6% 2.8pp

Hiscox 21 208 867% 1.7% 15.8% 14.1pp

Lancashire 212 235 11% 16.2% 17.3% 1.1pp

Mapfre 963 666 -31% 14.2% 9.0% -5.2pp

Montpelier Re -124 214 n.m. -8.2% 14.9% 23.1pp

Munich Re 702 3,195 355% 3.1% 12.7% 9.7pp

NICO 4,837 5,366 11% 7.0% 7.2% 0.2pp

PartnerRe -567 1,073 n.m. -9.3% 18.5% 27.7pp

Platinum -224 327 n.m. -12.5% 18.3% 30.7pp

QBE 704 761 8% 6.8% 7.0% 0.2pp

RenaissanceRe -92 566 n.m. -2.9% 18.4% 21.2pp

SCOR 330 418 27% 7.5% 9.1% 1.5pp

Swiss Re 2,626 4,201 60% 9.6% 13.2% 3.7pp

Validus 22 408 n.m. 0.6% 10.9% 10.3pp

White Mountains 768 207 -73% 19.8% 5.3% -14.5pp

XL -475 651 n.m. -5.0% 6.5% 11.5pp

ABA 14,088 29,122 107% 5.2% 10.1% 4.8pp

*Common net income as a percentage of average common equity


n.m. = not meaningful


Aon Benfield

29


Company

Cash and

Investments

FY 2011

Cash and

Investments

FY 2012 Change

Shareholders’

Funds

FY 2011

Shareholders’

Funds

FY 2012 Change

ACE 56,642 61,333 8% 24,332 27,531 13%

Alleghany 4,912 18,976 286% 2,926 6,404 119%

Allied World 8,123 8,799 8% 3,149 3,326 6%

Alterra 7,816 8,033 3% 2,809 2,840 1%

Amlin 4,224 4,396 4% 1,420 1,491 5%

Arch 12,024 13,127 9% 4,592 5,169 13%

Argo 4,248 4,297 1% 1,463 1,514 3%

Aspen 7,665 8,240 8% 3,156 3,488 11%

Axis 13,550 14,397 6% 5,444 5,780 6%

Beazley 4,011 4,330 8% 1,071 1,212 13%

Catlin 8,388 8,774 5% 3,298 3,512 6%

Endurance 6,283 6,639 6% 2,611 2,711 4%

Everest Re 16,065 16,805 5% 6,071 6,733 11%

Fairfax 24,038 26,125 9% 8,363 8,821 5%

Gen Re 13,495 15,119 12% 9,160 10,693 17%

Hannover Re 41,662 46,565 12% 4,971 6,056 22%

Hiscox 2,880 3,065 6% 1,256 1,378 10%

Lancashire 2,076 2,253 8% 1,327 1,387 5%

Mapfre 37,951 39,764 5% 7,043 7,811 11%

Montpelier Re 3,054 3,320 9% 1,549 1,629 5%

Munich Re 197,332 208,614 6% 23,062 27,181 18%

NICO 112,551 123,205 9% 70,155 78,862 12%

PartnerRe 18,694 18,831 1% 6,468 6,933 7%

Platinum 4,265 4,062 -5% 1,691 1,895 12%

QBE 28,006 31,587 13% 10,386 11,358 9%

RenaissanceRe 6,355 6,595 4% 3,605 3,503 -3%

SCOR 21,354 22,552 6% 4,403 4,803 9%

Swiss Re 182,695 176,894 -3% 29,590 34,002 15%

Validus 6,077 8,156 34% 3,448 4,021 17%

White Mountains 9,355 8,256 -12% 4,088 3,732 -9%

XL 35,549 36,599 3% 9,412 10,510 12%

ABA 993,605 1,065,749 7% 275,491* 312,720 14%

*To allow more consistent comparison, Transatlantic’s reported capital is included in the year-end capital figures shown in Exhibit 2




30

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