WHITE PAPER

Advisen’s Bermuda Roundtable 2014

1 April | Advisen Ltd.

In association with:

In perpetual motion…Bermuda’s insurance market is 30 years old and is still innovating in its product offering, business processes and regulatory aspects of the insurance landscape.Advisen gathered an august group of the islands leading insurance executives to discuss the burning issues facing Bermuda today and to cast a predictive eye over where the market is going and why insurance clients might continue to access the Island for cover. We hope you enjoy the read…

About Advisen: Advisen generates, integrates, analyses and communicates unbiased, real-time insights for the global community of commercial insurance professionals. As a single source solution, Advisen helps the insurance industry to more productively drive critical decisions about pricing, loss experience, underwriting, marketing, transacting or purchasing commercial insurance. Advisen enlightens, solves and streamlines challenges for its clients through its three divisions. Advisen’s data, analytics and news services are game-changers for more than 150,000 professionals. Visit us at www.advisen.com or contact support@advisen.com to learn more.

About Web Connectivity: Web Connectivity is the leading provider of ACORD Messaging Gateways and Message Management Tools in the Global (Re)Insurance markets, with Ruschlikon implementations in the Bermuda, US, London, Europe and Bahrain.Web Connectivity delivers tangible business benefits to both Brokers and Insurers, delivering faster settlement of Premium (on average 30 day improvements) and Claims, whilst reducing unallocated cash between trading parties to zero.Web Connectivity achieve these benefits through secure, timely electronic communication of Accounting & Settlement data and documents, facilitating straight through processing. Contact James Willison, managing director.

About BermudaBDA: Bermuda Business Development Agency’s (BDA) aims to ensure that business development efforts, across multiple financial sectors, have a common strategic direction. The BDA has launched a number of industry focus groups which are used as a means to cultivate innovation, explore new opportunities and regions, and generate strategic initiatives which will raise international awareness and attract new business to Bermuda.

ROUNDTABLEPARTICIPANTS

Forbes Geekie Senior Vice President

Endurance Specialty Insurance Ltd.

Professional Lines Practice Leader

John BoylanExecutive Vice President and Chief Underwriting Officer for Excess Liability InsuranceMarkel Global

Patrick TannockManaging Director, Member of the Leadership Council of theXL Group, President of XL Insurance (Bermuda) Ltd.

Christopher Reeves Managing Director, Marsh IncPresident and COO, Bowring Marsh (Bermuda) Ltd.

Joe RegoPresidentAon Bermuda

Nigel MortimerManaging Director, International Specialty Insurance Business

Argo Group

Kirsten Beasley Chief Operations OfficerAllied World Assurance Company, Bermuda

WHITE PAPER

Advisen’s Bermuda Roundtable 2014

2 April | Advisen Ltd.

In association with:

Advisen: The Bermuda insurance market is 30 years old. It has changed a lot in that time - what will Bermuda look like in another 30 years?

PATRICK TANNOCK: Anyone who thinks that they can predict the future is a poor student of history! Bermuda has had a great track record of responding to the opportunities and challenges that come from change.As long as Bermuda continues to have an internationally credible, enlightened regulatory environment and an infrastructure that is globally cost competitive - with low barriers to entry for fresh financial and high quality intellectual capital - Bermuda will remain relevant in the global market.

NIGEL MORTIMER: Part of Bermuda’s success has been its geographic location - a short flight from many major hubs in the worlds biggest insurance market but distanced enough to take a global view on risk and all its specialized exposure. There is a huge concentration of insurance talent colliding with each other seven days a week, in the board room and at the under 12’s football game on a Saturday afternoon. That has helped drive innovation and the multiplier effect that occurs when technical expertise meets strong client relationships.

JOE REGO: I expect to continue to see Bermuda as a leading source of risk transfer capacity for catastrophe exposures. As technology advances and exposure data becomes more sophisticated, Bermuda is well positioned to leverage its efficient regulatory system, technical underwriting expertise and concentration of capital and capacity to be a leading market for traditional and emerging risk areas.

FORBES GEEKIE: The Bermuda market is a full-range global professional lines market in terms of client base, product scope and underwriter experience. Our products cover the global operations and activities of our clients, while the knowledge and experience of our underwriting teams is unique and paramount to the Bermuda offering.

These skills combined with our global vantage point allow us an unparalleled perspective on the risk-based issues and market dynamics directly affecting our clients.With these elements remaining in place, Bermuda will retain and potentially expand its important place in the global insurance market over the next 30 years.

JOHN BOYLAN: Bermuda should be a market that has spread from its early product offerings.There are more markets, more capacity, greater risk bearing appetite and capability. And crucially, Bermuda is a trusted claims payer. It is a globally recognized market for the world’s toughest & heaviest exposed risk managed accounts. This should position it to move further in terms of product offering.

Advisen: Bermuda has some impressiveinsurance customer retention levels, what keeps them coming back? KIRSTEN BEASLEY: The concentration of both financial and intellectual capital and our competitive regulatory environment have created a market that offers both stability and innovation to our clients.

WHITE PAPER

Advisen’s Bermuda Roundtable 2014

3 April | Advisen Ltd.

In association with:

Clients can come to Bermuda for two days and meet with multiple markets for a wide-variety of coverage, a task made easier by our proximity to the US and Europe.

CHRIS REEVES: A continuing focus upon personal contact with key decision makers fosters the stability of programs over an extended period of time and builds trust on complex transactions, which aids with claims resolution if the need arises.

JOHN BOYLAN: Customers come to Bermuda because the market is accessible, with large blocks of capacity that has appetite for the toughest of exposures. Carriers are large and well-rated.However, put simply, Bermuda is a capacity market – a good one but somewhat restricted in terms of its overall product offering. To remain leading-edge, Bermuda probably needs to break out of the homogeneity in its offerings and how business tends to be conducted.

PATRICK TANNOCK: The relationships that have been established with our customers are authentic and the value proposition for the Bermuda market is compelling. Where else on the planet can a client buy a billion dollars of high quality capacity from highly rated carriers within 24 hours without getting into a taxi cab?

FORBES GEEKIE: Bermuda forms an integral part of the insurance purchasing behavior of Fortune 1000 global firms. Many of these firms seek diversification of carriers and markets

within their purchased programs. Bermuda, London and New York

represent the hubs of this diversification.

NIGEL MORTIMER: Many of the Fortune 1000 were initial investors in 1985/6 and they are still here today. It’s the people and their expertise they come back for.The market’s performance in a crisis is crucial and not just in a weather related event, the market had commanding positions on many of the companies impacted by the Deepwater Horizon catastrophe and the financial crisis and those experiences build trust.

Advisen: What emphasis is put on business processing in Bermuda? Should insurance buyers focus on the back office as well as the front office capabilities of carriers andbrokers?

PATRICK TANNOCK: Bermuda is very much part of the global village and we must continue to ensure that our infrastructure is internationally cost competitive. Historically client focus has been on the front end and it will remain that way as long as the ability to execute in real time on contract certainty is not compromised and the markets continue to deliver on claims payments. I don’t believe that the insurance buyers will focus on back office capabilities.

KIRSTEN BEASLEY: Our buyers do focus on back office capabilities. We are absolutely accountable to our broker partners and clients alike for timely and accurate policy issuance, premium processing and document production (quotes, binders etc). We look to streamline this process without sacrificing the necessary checks and balances. Paperless initiatives have been implemented and significant investment in document management and policy issuance tools have been made with a view to providing the service that is expected by our partners.

WHITE PAPER

Advisen’s Bermuda Roundtable 2014

4 April | Advisen Ltd.

In association with:

CHRIS REEVES: While negotiations on complex and nuanced transactions do take time, customers rightly expect speed and accuracy of documentation/processing following such negotiations to ensure that the documentation evidences the agreed transaction. To meet these demands, the carriers operating within the Bermuda market are increasingly able to offer policies at inception or shortly thereafter.

FORBES GEEKIE: Undoubtedly every client should focus on the claims handling and payment culture of their

insurance carriers. If there is one benefit

of the recent global financial crisis it is that our claims processes and payment abilities

are no longer questionable!

Timely and accurate production of policy

documentation is also vital. We are committed to producing our

excess follow form policy within 5 days of receiving the primary document. We take our responsibilities in this area very seriously with each underwriter being held individually responsible for meeting our high service standards.

NIGEL MORTIMER: I’ve witnessed process times and quality improve dramatically in the 11 years I have been on the island but there is still room for improvement and various initiatives are afoot. The major focus should be on creating efficiencies that are passed on to customers and not chewed up in internal bureaucracy. Clients deserve an industry that can transfer their risk at less frictional expense.

JOE REGO: The answer to this will likely differ by company and business focus, but from a broker perspective the high severity, low frequency nature of our insurance business allows us to process transactions very efficiently and meet client deliverables in a timely manner.

Advisen: Has the globalization of Bermuda-headquartered insurance companies diluted your product offering?

KIRSTEN BEASLEY: Diluted? No. And this is a function of the fact that a large number of Bermuda companies have distinct appetites for their different geographic platforms. In fact, as we have expanded globally, Allied World’s service and product offering have grown – wage and hour, accountable care organization liability and primary EPL are just some examples of expanded appetites or new products that have been developed in the last 24 months. Our far-reaching geographic spread allows us to tap into a broader base of expertise that has served to enhance and deepen our product knowledge and thus our service and appetite.

CHRIS REEVES: I don’t see that the build out of insurers’ global footprints has diluted their offerings, from the product perspective at least. However, the risk appetite of carriers operating within the Bermuda market has refined in the past decade, such that the majority of insurance transactions now in Bermuda tend to be high value/low volume and focus on the world’s largest corporations, which generally have a high exposure to US risk.

WHITE PAPER

Advisen’s Bermuda Roundtable 2014

5 April | Advisen Ltd.

In association with:

Insurance premiums for these customers within the Bermuda insurance market are usually in excess of $3 billion, with several hundred professionals continuing to operate daily in this space.

JOHN BOYLAN: No it has not. There remains a residual sense that markets like Bermuda generate maximum value only at a certain stage in a company’s development – i.e. as a start up. This is not so. No doubt many companies outgrow Bermuda as they strive for global diversification. But this has not served to dilute local business offerings. Expertise and scale remain on the island.

NIGEL MORTIMER: I think it’s made it more financially diverse and thus able to endure systemic catastrophes like never before. If a second asbestosis-type loss had hit in the 1990’s XL and perhaps ACE might never have survived. Globalization and the acquisition of disparate geographic risk make the market more durable.

PATRICK TANNOCK: The only impact of expanding our presence globally has been to ensure that there is clarity as to where to access capacity. Bermuda is the best-situated domicile to provide low frequency high severity type products as the infra-structure and regulatory environment allows better efficiencies that can provide value to our clients in the form of unique customer focused solutions and high quality cost efficient capacity.

Advisen: Bermuda has a reputation for innovation. Is this being upheld and if so, what are the new areas of risk you areproviding solutions for?

CHRIS REEVES: Bermuda’s reputation for innovation most certainly still stands. Two recent examples of innovation include the Bermuda market offering coverage for the Wage and Hour exposures generated under the Fair Labor Standards Act, either as a stand-alone policy or in combination with a traditional EPL policy. Secondly, the Bermuda market has been instrumental in offering drop down Difference in Conditions coverage for the regulatory fines and penalties associated with cyber liability.

JOHN BOYLAN: I’d say Bermuda is innovative in the sense of risk bearing appetite, but not so much in the sense of bringing new products to market. As I said before, the local market tends to be a homogenous one – offering broadly similar products. The one exception might be Professional Liability – where products such as EPLI and Wage and Hour have been pioneered. We should look to extend into areas such as levered excess placements (follow form occurrence/low rate per mille/construction business).

KIRSTEN BEASLEY: As well as offering a Wage and Hour EPLI policy, we have developed Uni-Wrap, which addresses all the coverage complexities that stem from covering punitive damages, which are insurable in some US jurisdictions but not others. Innovation can also extend to risk management services - our Healthcare team is currently working on a risk management white paper for children’s hospitals.

FORBES GEEKIE: The Professional Lines product suite is mature but expansive. However, new product development remains at the front of our efforts, through listening to the needs our clients and brokers.

WHITE PAPER

Advisen’s Bermuda Roundtable 2014

6 April | Advisen Ltd.

In association with:

NIGEL MORTIMER: Because of Bermuda’s unique tri-platform position of having hugely successful reinsurance and captive industries as well as its insurance industry I see the opportunity for clients to connect sideways with additional capital as a major mutual advantage. I’m excited about Bermuda’s close connection with the energy industry in particular and I’m sure there are many new projects we could be working on in that space.

JOE REGO: Bermuda’s well-established reputation for product innovation and enhancement continues through developments including cyber liability, Wage and Hour coverage, medical professional liability, political risk and credit enhancement.

PATRICK TANNOCK: The rate of change continues to exponentially accelerate whether you measure in terms of computing power, contracting product cycles or the speed of emerging risk issues. The challenge and the opportunity are to keep up with the rate of change.

Advisen: Bermuda is proud of its regulatory framework, considering the Bermuda Monetary Authority ahead of most peers. Is this true and does this provide tangible benefits to insurance customers?

JOHN BOYLAN: Bermuda is a great place to establish a business – its quick, barriers to entry are low, sound business infrastructure exists, and it has a generally well-educated workforce. Also, it regulates a business that is more fundamental to the success of the overall economy than would be the case in any other jurisdiction.The overall stability and positive work environment emanating from the BMA feeds through to overall market stability which can only benefit clients.

JOE REGO: The BMA is a credible and effective regulatory body that understands the sophisticated nature of the (re)insurance business transacted on the Island and of the parties involved and tailors it’s regulatory role and responsibilities accordingly. This absolutely provides tangible benefits to insurance customers in terms of allowing capital, capacity and insurance products to be deployed quickly in response to evolving client needs and demands.