July 17, 2006 International Insurance Society Frank Nutter Reinsurance Association of America A U.S....

July 17, 2006

International Insurance Society

Frank Nutter

Reinsurance Association of America

A U.S. Perspective on the Global Reinsurance Market

Source: Swiss Re

Premiums ceded by primary insurers (US$’bn)

Gross Premium ceded by region of ceding insurer

Global Reinsurance Premium by Country of Group Domicile in 2004

Total Global Net Reinsurance Premiums : USD 166,899.2 (Mil.$)

Rest of World9%

Bermuda9%

U.K.8%

France3%

Ireland2%

U.S.21%

Germany27%

Japan7%

Switzerland14%

Source: S&P’s Global Reinsurance Highlights 2005 Edition

$62.0B$62.0B$62.0B$62.0B

Cross Border Premiums

US to Offshore$62.0B

To affiliates $38.8B

To non-affiliates $23.2B

$14.3B$14.3B$14.3B$14.3B

Offshore to US$14.3B

US to Offshore$62.0B

Cross Border Premiums

Cross Border Premiums

Top 25 P&C Reinsurance

Groups(Based on 2004

premiums)

1. MUNICH RE GERMANY2. SWISS RE SWITZERLAND3. BERKSHIRE HATHAWAY RE U.S.4. HANNOVER RE GERMANY5. GE INSURANCE SOLUTIONS U.S.6. LLOYD’S U.K.7. ALLIANZ RE GERMANY8. EVEREST RE BERMUDA9. XL RE BERMUDA10. PARTNER RE BERMUDA11. TRANSATLANTIC HOLDINGS INC. U.S.12. CONVERIUM SWITZERLAND13. TOKIO MARINE NICHIDO FIRE INS. JAPAN14. SCOR FRANCE15. ODYSSEY RE U.S.16. SOMPO JAPAN INS. INC. JAPAN17. MITSUI SUMITOMO INS. CO. LTD. JAPAN18. CAISSE CENTRALE DE REASSURANCE FRANCE19. KOREAN RE KOREA20. PLATINUM UNDERWRITERS HOLDINGS LTD. BERMUDA21. ACE TEMPEST RE BERMUDA22. AIOI INSURANCE CO. LTD. JAPAN23. RENAISSANCERE HOLDINGS LTD. BERMUDA24. ALEA GROUP HOLDINGS(BERMUDA) BERMUDA25. TOA RE CO. LTD. JAPAN

Top 10 Global Reinsurance Groups in 2004

Total Global Net Reinsurance Premiums : USD 166,899.2 (Mil.$)

Rest of Market36%

Partner Re2%

Everest Re3%

Swiss Re15%

Berkshire Hathaway Re

6%GE Ins Solutions

5%Hannover Re

6%

Lloyd's5%

XL Re2%

Allianz Re3%

Munich17%

Source: S&P’s Global Reinsurance Highlights 2005 Edition

Number of U.S. Professional Reinsurers Reporting to the RAA

Announced Insurer Capital Raising*

$1,500

$43

$869$688

$300$448

$759

$300

$100

$612

$126$285

$620

$131$212

$500 $550$406 $474

$2,800

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$ M

illi

ons

As of June 8, 20 insurers have raised $12.1 billion in new capital; 12 Start-ups

raised $7.6 billion more and SPRV’s/Sidecars raised $3.6 billion for a total of $23.3B.

Existing companies

will continue to

find it relatively

easy to raise cash.

($ Millions, as of June 8, 2006)

*Existing (re)insurers. Announced amounts may differ from sums actually raised.Sources: Morgan Stanley, Lehman Brothers, Company Reports; Insurance Information Institute.

Announced Capital Raising by Insurance Start-Ups

$448

$1,300

$1,000

$530

$1,000

$500

$1,000

$500

$300

$150$220

$1,000

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$ M

illio

ns

As of June 8, new Bermuda Start-ups have raised $7.6B.

($ Millions, as of June 8, 2006)

Announced Capital Raising by Special Purpose Reinsurance Vehicles/Sidecars

$900

$550 $525

$370$315 $300

$250$200

$145$91

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$ M

illio

ns

As of June 8, SPRV’s/Sidecars

have raised $3.6B.

($ Millions, as of June 8, 2006)

Berkshire Hathaway

Transatlantic Holdings, Inc.

Odyssey Re

100% of US Reinsurers by market share have

EU domestic companies

Top 25 Worldwide P&C Reinsurer GoupsCross Ownership Common

84% of EU Reinsurersby market share have

US domestic companies

Munich Re

Hannover Re

Allianz Re

SCOR

Lloyds*

AXA*

*No Sub

100% of US Reinsurers by market share have

EU domestic companies

Top 25 Worldwide P&C Reinsurer GoupsCross Ownership Common

Top 25 Worldwide P&C Reinsurer GoupsCross Ownership Common

89% of non-US[EU/Asia/Bermuda/Swiss]

Reinsurers by market sharehave US domestic companies*

84% of EU Reinsurersby market share have

US domestic companies

Munich ReSwiss ReHannover ReAllianz ReEverest ReXL RePartner ReConveriumTokio Marine Nichido Fire Ins. SCORSompo Japan Ins. Inc.Mitsui Sumitomo Ins. Platinum Underwriters Holdings Ltd.Ace Tempest ReAioi Insurance Co. Ltd.Alea Group Holdings(Bermuda) Toa Re Co. Ltd.

*Based on 2004 data

100% of US Reinsurers by market share have

EU domestic companies

Reporting reinsurers’ total capital available

Reason for P/C Insolvencies(218 Insolvencies, 1993-2002)

Unidentified17%

Impaired Affiliate3%

Overstated Assets2%

Change in Business3%

CAT Losses3%

Reinsurer Failure0%

Rapid Growth10%

Discounted Ops8%

Alleged Fraud3%

Deficient Loss Reserves

51%

Source: A.M. Best, Insurance Information Institute

Reserve deficiencies account for

more than half of all p/c insurers

insolvencies

Reinsurance Regulation in the U.S. and Mutual Recognition

• The current regulatory system has served U.S. buyers well

• New initiatives deserve considerationEU Re DirectiveSovency II

• The Goal: sound solvency regulation and healthy competition

• Mutual Recognition Road Map International accounting standardsStandards for regulationReconciliation within the U.S. system