What Really Keeps Insurance CEOs Awake at Night? Trends, Challenges & Opportunities Ole Miss Insurance Symposium Oxford, MS March 19, 2015 Download at

What Really Keeps Insurance CEOs Awake at Night?

Trends, Challenges & Opportunities

Ole Miss Insurance SymposiumOxford, MS

March 19, 2015Download at www.iii.org/presentations

Robert P. Hartwig, Ph.D., CPCU, President & EconomistInsurance Information Institute 110 William Street New York, NY 10038

Tel: 212.346.5520 Cell: 917.453.1885 [email protected] www.iii.org

2

PROFITABILITY

Consistent Profitability Is the Top Concern of All CEOs

2

P/C Industry Net Income After Taxes1991–2014E 2005 ROE*= 9.6% 2006 ROE = 12.7% 2007 ROE = 10.9% 2008 ROE = 0.1% 2009 ROE = 5.0% 2010 ROE = 6.6% 2011 ROAS1 = 3.5% 2012 ROAS1 = 5.9% 2013 ROAS1 = 10.3% 2014 ROAS1 = 7.6%

• ROE figures are GAAP; 1Return on avg. surplus. Excluding Mortgage & Financial Guaranty insurers yields a 7.7% ROAS through 2014:Q2, 9.8% ROAS in 2013, 6.2% ROAS in 2012, 4.7% ROAS for 2011, 7.6% for 2010 and 7.4% for 2009.

Sources: A.M. Best, ISO; Insurance Information Institute

$1

4,1

78

$5

,84

0

$1

9,3

16

$1

0,8

70

$2

0,5

98

$2

4,4

04 $3

6,8

19

$3

0,7

73

$2

1,8

65

$3

,04

6

$3

0,0

29

$6

2,4

96

$3

,04

3

$3

5,2

04

$1

9,4

56 $

33

,52

2

$6

3,7

84

$5

0,2

03

$3

8,5

01

$2

0,5

59

$4

4,1

55

$6

5,7

77

-$6,970

$2

8,6

72

-$10,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

14E

Net income rose strongly (+81.9%) in 2013 vs. 2012 on lower cats, capital gains

$ Millions

4

Billions

Life/Annuity Industry Profits, 2001-2013

$31.

6

-$52

.3

$21.

5

$28.

1

$14.

4

$40.

9

$43.

2

$37.

0

$36.

6

$32.

5

$25.

9

$3.6$1

1.0

($75)

($50)

($25)

$0

$25

$50

$75

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Sources: NAIC, via SNL Financial; Insurance Information Institute.

The Life/Annuity industry has produced steady (if unspectacular) profits,except for years in which the industry’s investment results produced

significant realized capital losses.

-5%

0%

5%

10%

15%

20%

25%

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

F1

6F

Profitability Peaks & Troughs in the P/C Insurance Industry, 1975 – 2016F

*Profitability = P/C insurer ROEs. 2011-14 figures are estimates based on ROAS data. Note: Data for 2008-2014 exclude mortgage and financial guaranty insurers.Source: Insurance Information Institute; NAIC, ISO, A.M. Best, Conning

1977:19.0%1987:17.3%

1997:11.6% 2006:12.7%

1984: 1.8% 1992: 4.5% 2001: -1.2%

10 Years

10 Years

9 Years

History suggests next ROE peak will be in 2016-2017, but that seems unlikely

ROE

1975: 2.4%

2013 10.4%

2014E 7.6%

2015F=6.5%

2016F=6.3%

8

ROE: Property/Casualty Insurance by Major Event, 1987–2014E

* Excludes Mortgage & Financial Guarantee in 2008 – 2014. 2014 figure is through Q3:2014. Sources: ISO, Fortune; Insurance Information Institute.

-5%

0%

5%

10%

15%

20%

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14*

P/C Profitability Is Both by Cyclicality and Ordinary Volatility

Hugo

Andrew

Northridge

Lowest CAT Losses in 15 Years

Sept. 11

Katrina, Rita, Wilma

4 Hurricanes

Financial Crisis*

(Percent)

Record Tornado Losses

Sandy

Low CATs

Modestly higher CATs

-5%

0%

5%

10%

15%

20%

25%

50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12

14E

*Profitability = P/C insurer ROEs. 2011-14 figures are estimates based on ROAS data. Note: Data for 2008-2014 exclude mortgage and financial guaranty insurers. 2014 figure is through Q3.Source: Insurance Information Institute; NAIC, ISO, A.M. Best.

1977:19.0%

1987:17.3%

1997:11.6%

2006:12.7%

1984: 1.8%

1992: 4.5%2001: -1.2%

ROE

1975: 2.4%

2013 10.4%

2014:H1 7.6%

Back to the Future: Profitability Peaks & Troughs in the P/C Insurance Industry, 1950 – 2014*

1969: 3.9%

1965: 2.2%1957: 1.8%

1972:13.7%

1966-67: 5.5%1959:6.8%

1950:8.0%

1950-70: ROEs were lower in this period. Low interest rates,

low inflation, “Bureau” rate regulation all played a role

1970-90: Peak ROEs were much higher in this period while troughs

were comparable. High interest rates, rapid inflation, economic

volatility all played roles

1990-2010s: Déjà vu. Excluding mega-

CATs, this period is very similar to the 1950-1970 period

10

Return on Net Worth (RNW) All Lines:2004-2013 Average

25

.6

18

.4

13

.4

13

.2

9.2

8.9

7.9

7.8

7.1

7.1

6.6

4.9

-1.0

-5

0

5

10

15

20

25

30

Fire

Inla

nd Mar

ine

All O

ther

Med

ical

Pro

f Lia

bility

Comm

Auto

Tota

l

Comm

erci

al MP

All Lin

es

Oth

er L

iabili

ty

Work

ers

Comp

PP Auto

Tota

l

Homeow

ners

MP

Farmow

ners

MP

Allied L

ines

Source: NAIC; Insurance Information Institute.

Commercial lines have tended to be more profitable than

personal lines over the past decade

11

RNW All Lines by State, 2004-2013 Average:Highest 25 States

20

.5

18

.4

14

.6

14

.3

13

.4

13

.3

12

.3

12

.1

12

.0

12

.0

11

.7

11

.4

11

.1

11

.1

10

.9

10

.8

10

.7

10

.7

10

.5

10

.5

10

.3

9.9

9.8

9.8

9.6

9.5

02468

1012141618202224

HI AK VT ME WY ND VA ID NH UT WA SC MA NC OH DC CA OR RI WV CT IA NE SD MT MD

The most profitable states over the past decade are

widely distributed geographically, though none

are in the Gulf region


Profitability Benchmark: All P/C

US: 7.9%

12

9.2

8.6

8.4

8.3

8.2

8.2

8.1

8.0

7.9

7.7

7.7

7.5

7.4

6.8

6.6

6.4

6.1

5.7

5.3

5.2

5.0

4.3

2.5

1.9

-6.9

-9.3

-14-12-10

-8-6-4-202468

10

NM FL TX WI KS MN CO PA US AR IL IN AZ MO KY TN NV NJ GA NY DE MI AL OK MS LA

RNW All Lines by State, 2004-2013 Average: Lowest 25 States


Some of the least profitable states over the past decade were hit hard

by catastrophes

14

Profitability in Mississippi’s P/C Insurance Markets

Analysis by Line and Nearby State Comparisons

15

RNW All Lines: MS vs. U.S., 2004-2013

Sources: NAIC.

-180%

-160%

-140%

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

04 05 06 07 08 09 10 11 12 13

US All Lines MS All Lines

P/C Insurer profitability in MS is below that of the US

overall over the past decadeUS: 7.9%MS: -6.9%

(Percent)

Katrina

16

RNW PP Auto: MS vs. U.S., 2004-2013

Sources: NAIC.

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

04 05 06 07 08 09 10 11 12 13

US PP Auto MS PP Auto

Average 2004-2013US: 7.1%MS: 4.5%

Katrina

19

RNW Homeowners: MS vs. U.S.,2004-2013

Sources: NAIC.

-400%

-350%

-300%

-250%

-200%

-150%

-100%

-50%

0%

50%

04 05 06 07 08 09 10 11 12 13

US HO MS HO

(Percent)

Average 2004-2013US: 6.6%

MS: -25.8%Katrina

20

RNW Workers Comp: MS vs. U.S.,2004-2013

Sources: NAIC.

0%

2%

4%

6%

8%

10%

12%

14%

04 05 06 07 08 09 10 11 12 13

US WComp MS Wcomp

(Percent)

Average 2004-2013US: 7.1%MS: 7.3%

All Lines: 10-Year Average RNW MS & Nearby States

7.9%

5.3%

2.5%

-6.9%

-9.3%

8.6%

6.4%

-15% -10% -5% 0% 5% 10%

Louisiana

Mississippi

Alabama

Georgia

Tennessee

U.S.

Florida

Source: NAIC, Insurance Information Institute

2004-2013

Mississippi All Lines profitability is below the

US and the regional average

Homeowners: 10-Year Average RNW MS & Nearby States

-0.4%

-10.2%

-13.1%

-19.6%

-25.8%

6.6%

-8.2%

-30% -20% -10% 0% 10%

Mississippi

Louisiana

Alabama

Tennessee

Georgia

Florida

U.S.

Source: NAIC, Insurance Information Institute

2004-2013

Mississippi Homeowners profitability is below the US average and below the regional average

27

Top Ten Most Expensive And Least Expensive States For Homeowners Insurance, 2012 (1)

Rank Most

expensive statesHO average

premium RankLeast

expensive statesHO average premium

1 Florida $2,084 1 Idaho $538

2 Louisiana 1,742 2 Oregon 567

3 Texas 1,661 3 Utah 580

4 Oklahoma 1,501 4 Wisconsin 631

5 Mississippi 1,314 5 Washington 648

6 Alabama 1,248 6 Nevada 674

7 Rhode Island 1,233 7 Delaware 678

8 Kansas 1,213 8 Arizona 691

9 Connecticut 1,160 9 Ohio 721

10 New York 1,158 10 Maine 741

(1) Includes policies written by Citizens Property Insurance Corp. (Florida) and Citizens Property Insurance Corp. (Louisiana), Alabama Insurance Underwriting Association, Mississippi Windstorm Underwriting Association, North Carolina Joint Underwriting Association and South Carolina Wind and Hail Underwriting Association. Other southeastern states have wind pools in operation and their data may not be included in this chart. Based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. Provides “all risks” coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.

(2) The Texas Department of Insurance developed home insurance policy forms that are similar but not identical to the standard forms. In addition, due to the Texas Windstorm Association (which writes wind-only policies) classifying HO-1, 2 and 5 premiums as HO-3, the average premium for homeowners insurance is artificially high.

Note: Average premium=Premiums/exposure per house years. A house year is equal to 365 days of insured coverage for a single dwelling. The NAIC does not rank state average expenditures and does not endorse any conclusions drawn from this data.Source: ©2014 National Association of Insurance Commissioners (NAIC). Reprinted with permission. Further reprint or distribution strictly prohibited without written permission of NAIC.

Mississippi ranked as the 5th most expensive state for homeowners insurance in 2012, with an average expenditure of $1,314.

29

GROWTH

Growth (Preferably Profitable) Is a Top Priority of Most CEOs

Growth in Many Insurance Lines Is Volatile and Cyclical

29

30

-5%

0%

5%

10%

15%

20%

25%

71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1415

F14

F

Net Premium Growth: Annual Change, 1971—2016F

(Percent)1975-78 1984-87 2000-03

*Actual figure based on data through Q3 2014.Shaded areas denote “hard market” periodsSources: A.M. Best (historical and forecast), ISO, Insurance Information Institute.

Net Written Premiums Fell 0.7% in 2007 (First Decline

Since 1943) by 2.0% in 2008, and 4.2% in 2009, the First 3-Year Decline Since 1930-33.

2015-16F: 4.0%

2014E: 3.9%*

2013: 4.6%

2012: +4.3%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Note: Data through 1934 are based on stock companies only. Data include state funds beginning in 1998.Source: A.M. Best; Insurance Information Institute.

Economic Shocks, Inflation:

1976: 22.0%

Tort Crisis1985/86: 22.2%

Post-9/112002:15.3%

Twin Recessions; Interest Rate

Hikes1987: 3.7% Great

Recession:2010: -4.9%

ROE

2014E 4.0%

NPW Premium Growth: Peaks & Troughs in the P/C Insurance Industry, 1926 – 2014E

Great Depression1932: -15.9% max drop

Post WW II Peak:1947: 26.2%

Start of WW II1941: 15.8%

1950-70: Extended period of stability in growth and

profitability. Low interest rates, low inflation, “Bureau”

rate regulation all played a role

1970-90: Peak premium growth was much higher in this period while troughs were comparable. Rapid inflation, economic

volatility, high interest rates, tort environment all played roles

1988-2000: Period of

inter-cycle stability

2010-20XX? Post-

recession period of

stable growth?

33

All Lines DWP Growth: MS vs. U.S., 2004-2013

Source: SNL Financial.

7.5%

2.3% 3.

4%

0.5%

-2.1

%

-3.3

%

0.0%

3.7% 4.

6% 5.5%

5.2%

4.1%

11.1

%

1.4%

-0.9

%

-2.0

%

-1.1

%

3.2% 4.

1% 5.4%

-15%

-10%

-5%

0%

5%

10%

15%

04 05 06 07 08 09 10 11 12 13

US DWP: All Lines MS DWP All Lines

(Percent)

Average 2004-2013US: 2.2%MS: 3.0%

34

Personal Lines DWP Growth: MS vs. U.S., 2004-2013


5.2

%

2.0

%

2.6

%

1.2

%

-0.1

%

1.1

% 2.5

%

2.2

% 4.2

%

5.1

%7.9

%

3.2

%

6.8

%

2.9

%

1.8

%

0.0

%

1.2

%

1.9

% 4.3

%

5.2

%

-10%

-5%

0%

5%

10%

15%

20%

04 05 06 07 08 09 10 11 12 13

US DWP: Personal Lines MS DWP: Personal Lines

(Percent)

Average 2004-2013US: 2.6%MS: 3.5%

35

Comm. Lines DWP Growth: MS vs. U.S., 2004-2013


9.7

%

3.2

%

4.9

%

-0.3

%

-3.8

%

-7.3

% -2.5

%

5.1

%

5.1

%

6.1

%

2.5

% 5.3

%

16

.3%

-0.1

%

-3.7

%

-4.0

%

-3.8

%

5.1

%

3.6

%

5.8

%

-20%

-10%

0%

10%

20%

30%

04 05 06 07 08 09 10 11 12 13

US DWP: Comm. Lines MS DWP: Comm.

(Percent)

Average 2004-2013US: 2.0%MS: 2.7%

38

Direct Premiums Written: Total P/CPercent Change by State, 2007-2013

74

.6

36

.9

31

.9

27

.4

25

.2

24

.9

22

.5

22

.2

16

.6

15

.9

15

.7

14

.5

14

.5

14

.3

12

.6

11

.9

11

.8

11

.2

10

.5

10

.3

9.9

9.8

9.3

9.1

9.0

8.6

0

10

20

30

40

50

60

70

80

ND

SD

OK

NE

KS IA VT

TX

WY

TN

MN

AR

AK IN WI

CO MI

KY

OH NJ

LA

SC VA

AL

MO

NM

Pe

ce

nt

ch

an

ge

(%

)

Sources: SNL Financial LC.; Insurance Information Institute.

Top 25 StatesNorth Dakota was the country’s growth leader over the past 6 years with premiums written

expanding by 74.6%, fueled by the state’s energy boom

Growth Benchmarks: Total P/C

US: 7.9%

39

Direct Premiums Written: Total P/CPercent Change by State, 2007-2013

8.5

8.2

7.9

7.8

7.6

7.3

7.0

6.9

6.2

5.9

5.6

5.3

4.2

4.1

3.5

1.6

1.0

0.4

-0.7

-1.7

-1.9

-4.1

-5.7

-6.7

-12

.6

-15

.3

-20

-15

-10

-5

0

5

10

MS

CT

US

NC

GA

NY

MD

MA

UT

WA

PA IL RI

NH ID MT

ME

OR

CA

FL

DC AZ

WV HI

NV

DE

Pe

ce

nt

ch

an

ge

(%

)

Bottom 25 States

Sources: SNL Financial LC.; Insurance Information Institute.

Growth was negative in 7 states and DC between

2007 and 2013

Going Global

48

Insurance Industry Growth Is Fastest Outside the U.S. and Other

Mature Markets

48

50

Distribution of Nonlife Premium: Industrialized vs. Emerging Markets, 2013

Sources: Swiss Re sigma No.4/2013; Insurance Information Institute research.

Emerging market’s share of nonlife premiums increased to 19.5% in 2013, up from 17.3% in 2012 and 14.3% in 2009. The share of premiums written in the $2 trillion global nonlife market remains much larger (80.5%) but continues to shrink.

The financial crisis and sluggish recovery in the major insurance markets will accelerate the expansion of the emerging market sector

Premium Growth Facts

19.5%80.5%

Industrialized Economies

$1, 653.0

Emerging Markets$399.8

2013, $Billions

Developing markets now account for about 40% of global GDP but just under 20% of nonlife premiums

(4.0)

(2.0)

0.0

2.0

4.0

6.0

8.0

10.0

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

F1

5F

Advanced economies Emerging and developing economies World

Source: International Monetary Fund, World Economic Outlook , October 2014; Insurance Information Institute.

Emerging economy growth rates are

expected to ease to 4.4% in 2014 and 5.0% in 2015

GDP Growth: Advanced & Emerging Economies vs. World, 1970-2015F

Advanced economies are expected to grow at a modest pace of 1.8% in

2014 and to 2.3% in 2015.

World output is forecast to grow by 3.3% in 2014 and 3.8% in 2015. The world economy shrank by 0.6% in

2009 amid the global financial crisis

GDP Growth (%)

52

Non-Life Insurance: Global Real (Inflation Adjusted) Premium Growth, 2013

Source: Swiss Re, sigma, No. 3/2014.

Market Life Non-Life Total

Advanced -0.2 1.1 0.3

Emerging 6.4 8.3 7.4

World 0.7 2.3 1.4

Real growth in non-life insurance

premiums was faster in China and most of SE Asia than the US

54

COMPETITION & DISTRIBUTION

Insurance Is a Fiercely Competitive Business and Seems Likely Only

to IntensifyDistribution Trends Continue to

Evolve Rapidly54

Advertising Expenditures by P/C Insurance Industry, 1999-2013

$1.736 $1.737 $1.803 $1.708

$3.426

$4.102$4.354

$4.103

$5.079

$5.883$6.088 $6.175

$2.975

$2.111$1.882

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

$5.5

$6.0

$6.5

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Source: Insurance Information Institute from consolidated P/C Annual Statement data, Insurance Expense Exhibit (Part I).

$ Billions P/C ad spend hit an all time record high of $6.175 billion in 2013, up 1.5% over 2012.

The pace of growth has slowed from 15.8% in 2011

and 23.8% in 2010

P/C ad spending has more than tripled since 2002

(up 256% from 2002-2013)

58

Personal Lines Distribution Channels, Direct vs. Independent Agents

Source: Insurance Information Institute; based on data from Conning and A.M. Best.

0%

10%

20%

30%

40%

50%

60%

70%

80%

72 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Direct Independent Agents

Independent agents have lost significant personal lines market share since the early 1970s. Although the trend has slowed, it may be

accelerating again.

59

Commercial P/C Distribution Channels, Direct vs. Independent Agents

Source: Insurance Information Institute; based on data from Conning and A.M. Best.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

72 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Direct Independent Agents

Independent agents have seen only modest erosion in commercial lines market share in

recent decades

60

Direct Writers’ Market Share Has More Than Doubled Since 2000.

Growth in Select Major Pvt. Passenger Auto Direct Writers’ Market Share*

*Includes GEICO, Progressive Direct, Esurance and 21st Century.Sources: SNL Financial; Insurance Information Institute.

(% of Total PPA Market)

62

Growth Rates: Major PPA Direct Writers vs. All Private Passenger Auto Writers

Direct Writers Have Grown Faster Than The Private Passenger Market for Twelve Consecutive Years.

(% Growth Vs. Prior Year)Growth Has Picked Up

With the Economic Recovery.

*Includes GEICO, Progressive Direct, Esurance and 21st Century.Sources: SNL Financial; Insurance Information Institute.

: Should Insurers Be Concerned?

63

Google Compare launched in California on March 5 and sent ripples through PPA

market

64

INDUSTRY DISRUPTORS

Technology, Society and the Economy Are All

Changing at a Rapid PaceThoughts on the Future

64

70

Autonomous/Driverless Vehicles

70

Rapid Technological Innovations in Motor Vehicle Engineering Are

Likely to Transform Auto Insurance and Product Liability Markets

71

Likely Impacts of Successful, Incremental Autonomous Vehicle Technologies Proven Collision Avoidance Technologies Will Likely Become

Standard as Major Manufacturers, Google Set 2020-2025 Timeframes for Fully Autonomous

Auto Accident Frequency Will Fall, Possibly Substantially as Share of Cars with New Technology Grows (~20-yrs.)

Collision, BI, PIP claims should fall

Less litigation (due to fewer claims and “black box” technologies)

Historical Analogies to Aviation and Marine Insurance

Both saw technology radically reduce claim frequency

Potential “Leapfrog” Technology Over Usage-Based Insurance (UBI) Technologies Currently Available

Insurance Price Will Be a Major Factor in Adoption Rate

90% would consider an autonomous car if premium is 80% lower*

*CarInsurance.com survey http://www.carinsurance.com/Articles/autonomous-cars-ready.aspx, Nov. 2013.

http://www.carinsurance.com/Articles/autonomous-cars-ready.aspx

Impact of Forward Collision Warning With and Without Auto Brake

72Source: Highway Loss Data Institute and Insurance Institute for Highway Safety presentation by Matthew Moore, Measuring Crash Avoidance System Effectiveness with Insurance Data,” January 30, 2013; Insurance Information Institute.

Property Damage

Liability Claim Frequency by Manufacturer

Collision Claim

Frequency by Manufacturer

Forward collision warning systems have a material

impact on PD liability claim frequency, especially when paired with auto braking

Collision frequency

falls as well

Enhanced Vehicle and Road Safety Have Made Driving Much Safer

73

Crash deaths are down 40% since the

early 1970s

Source: National Highway Transportation Safety Administration as cited in Insurance Institute for Highway Safety presentation by Adrian Lund, Ph.D., Drivers and Driver Assistance Systems: How Well Do They Match?’, June 18, 2013; Insurance Information Institute.

Fatal crash rates have fallen by 85% over the past 60 years. They could fall 80% form

current levels over the next 20-30 years

Motor Vehicle Crash Deaths and Crash Death Rate, 1950-2012

74

Additional Disruptors

“Peak Auto”

Peak vehicle ownership per person/household likely already reached

Less interest in auto ownership among youth

Preference of youth to live in urban areas, use public transit

The “Sharing Economy”: Vehicles & Homes On Demand

Vehicles on Demand: Fewer vehicles likely need in the future as the technologies of driverless vehicles and ride sharing (e.g., Uber, Lyft)

Dwellings on Demand: Airbnb

75

Additional Disruptors (continued)

Disintermediation

For commodity products, the power resides with whoever has contact with the customer

Fear that tech firms such as Google or Apple or a major retailer such as Walmart or Amazon could disintermediate agency forces (or insurers themselves if regulatory environment were to permit)

Big Data

Ushering a new era of advanced/predictive analytics which will presumably improve underwriting a pricing

Could drive down pricing but also open up new risks to underwrite

76

Additional Disruptors (continued)

The Digital Economy

Increasing share of GDP is intangible

Insuring of “bits and bytes” and associated liability risks is in its infancy compared to “brinks and mortar” products

Reduced Relevancy of Insurance

Many consumers, given the option, will forego the purchase of insurance (p/c and life/retirement)

Mispreception of risk, cost, product complexity, moral hazard due to government subsidies, etc., are all factors

Consumer perceptions need to adjusted

77

Net Written Premium/GDP

Sources: Insurance Information Institute calculation using data from A.M. Best, Bureau of Economic Analysis.

0%

1%

1%

2%

2%

3%

3%

4%

4%

5%

19

50

19

55

19

60

19

65

19

70

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

NWP/GDP

10 Year Moving Average

Short-Term, Underwriting Cycle Drives NWP/GDP, but structural changes in the economy reduce

penetration rate over the long run

1999-00 Soft Market

Peaked with 1986 Hard

MarketLast Hard

Market

Financial Crisis

(NWP/Nominal GDP)

78

UNDERWRITING PERFORMANCE

78

Underwriting Performance is More Important than Ever in a Low

Interest Rate Environment

79

P/C Insurance Industry Combined Ratio, 2001–2014:Q3*

* Excludes Mortgage & Financial Guaranty insurers 2008--2014. Including M&FG, 2008=105.1, 2009=100.7, 2010=102.4, 2011=108.1; 2012:=103.2; 2013: = 96.1; 2014:9M = 97.7. Sources: A.M. Best, ISO.

95.7

99.3100.8

106.3

102.4

96.797.9

101.0

92.6

100.898.4

100.1

107.5

115.8

90

100

110

120

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

As Recently as 2001, Insurers Paid Out

Nearly $1.16 for Every $1 in Earned

PremiumsRelatively Low CAT Losses, Reserve Releases

Heavy Use of Reinsurance Lowered Net

Losses

Relatively Low CAT Losses, Reserve Releases

Avg. CAT Losses,

More Reserve Releases

Higher CAT

Losses, Shrinking Reserve

Releases, Toll of Soft

Market

Cyclical Deterioration

Sandy Impacts

Lower CAT

Losses

Best Combined

Ratio Since 1949 (87.6)

A 100 Combined Ratio Isn’t What ItOnce Was: Investment Impact on ROEs

Combined Ratio / ROE

* 2008 -2014 figures are return on average surplus and exclude mortgage and financial guaranty insurers. 2014:9M combined ratio including M&FG insurers is 97.7; 2013 = 96.1; 2012 =103.2, 2011 = 108.1, ROAS = 3.5%. Source: Insurance Information Institute from A.M. Best and ISO Verisk Analytics data.

97.5

100.6 100.1 100.8

92.7

101.299.5

101.0

96.797.9

102.4

106.5

95.7

14.3%

15.9%

12.7%

10.9%

7.4% 7.9%

4.7%6.2%

7.4%

9.6%8.8%

4.3%

9.8%

80

85

90

95

100

105

110

1978 1979 2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014:Q30%

3%

6%

9%

12%

15%

18%

Combined Ratio ROE*

Combined Ratios Must Be Lower in Today’s DepressedInvestment Environment to Generate Risk Appropriate ROEs

A combined ratio of about 100 generates an ROE of ~7.0% in 2012/13, ~7.5% ROE in 2009/10,

10% in 2005 and 16% in 1979

Lower CATs helped ROEs

in 2013

Private Passenger Auto Combined Ratio: 1993–2016F

10

1.7

10

1.3

10

1.3

10

1.0

10

9.5

10

7.9

10

4.2

98

.4

94

.3

95

.1

95

.5 98

.3 10

0.2

10

1.3

10

1.0

10

2.0

10

2.1

10

1.6

10

2.2

10

1.0

10

0.8

99

.5 10

1.1

10

3.5

80

85

90

95

100

105

110

115

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14E15F16F

Private Passenger Auto Accounts for 37% of Industry Premiums and Remains the Profit Juggernaut of the P/C Insurance Industry

81Sources: A.M. Best (1990-2013); Insurance Information Institute (2014F – 2015F).

Homeowners Insurance Combined Ratio: 1990–2015F

11

3.0

11

7.7

15

8.4

11

3.6

10

1.0 10

9.4

10

8.2

11

1.4 1

21

.7

10

9.3

98

.2

94

.4 10

0.3

89

.0 95

.6

11

6.6

10

5.8

10

6.9

12

2.3

10

4.1

94

.0

97

.5

99

.5

11

8.4

11

2.7 12

1.7

80

90

100

110

120

130

140

150

160

170

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14E 15F

1

Homeowners Performance in 2011/12 Impacted by Large Cat Losses. Extreme Regional Variation Can Be Expected Due to

Local Catastrophe Loss Activity

82

Hurricane Ike

Hurricane Sandy

Record tornado activity

Hurricane Andrew

Sources: A.M. Best (1990-2014F);Conning (2015F); Insurance Information Institute.

10

9.4

11

0.2

11

8.8

10

9.5 1

12

.5

11

0.2

10

7.6

10

4.1

10

9.7

11

0.2

10

2.5 1

05

.4

91

.1

93

.6

10

4.2

98

.9

10

2.4

10

7.9

10

3.4

98

.3 99

.9

98

.9

10

2.0

11

1.1

11

2.3

12

2.3

90

95

100

105

110

115

120

125

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

F

14

F

15

F

Co

mm

erc

ial L

ine

s C

om

bin

ed

Ra

tio

*2007-2012 figures exclude mortgage and financial guaranty segments.Source: A.M. Best (1990-2014F); Conning (2015F) Insurance Information Institute.

Commercial Lines Combined Ratio, 1990-2015F*

Commercial lines underwriting

performance is expected to improve as

improvement in pricing environment persists

83

Workers Compensation Combined Ratio: 1994–2014E

102.

0

97.0 10

0.0

101.

0

112.

6

108.

6

105.

1

102.

7

98.5

103.

5

104.

5 110.

6 115.

0

115.

0

108.

0

101.

0

96.0

121.

7

107.

0

115.

3

118.

2

80

85

90

95

100

105

110

115

120

125

130

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14F

Workers Comp Results Began to Improve in 2012. Underwriting Results Deteriorated Markedly from 2007-

2010/11 and Were the Worst They Had Been in a Decade. Sources: A.M. Best (1994-2009); NCCI (2010-2014F) and are for private carriers only; Insurance Information Institute. 87

WC results have improved markedly

since 2011

U.S. Health Care Expenditures,1965–2022F

65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$42.

0$4

6.3

$51.

8$5

8.8

$66.

2$7

4.9

$83.

2$9

3.1

$103

.4$1

17.2

$133

.6$1

53.0

$174

.0$1

95.5

$221

.7$2

55.8

$296

.7$3

34.7

$369

.0$4

06.5

$444

.6$4

76.9

$519

.1$5

81.7

$647

.5$7

24.3

$791

.5$8

57.9

$921

.5$9

72.7

$1,0

27.4

$1,0

81.8

$1,1

42.6

$1,2

08.9

$1,2

86.5

$1,3

77.2

$1,4

93.3

$1,6

38.0

$1,7

75.4

$1,9

01.6

$2,0

30.5

$2,1

63.3

$2,2

98.3

$2,4

06.6

$2,5

01.2

$2,6

00.0

$2,7

00.7

$2,8

06.6

$2,9

14.7

$3,0

93.2

$3,2

73.4

$3,4

58.3

$3,6

60.4

$3,8

89.1

$4,1

42.4

$4,4

16.2

$4,7

02.0

$5,0

08.8

U.S. health care expenditures have been on a relentless climb for most of the past half century, far outstripping population growth,

inflation of GDP growth

88

From 1965 through 2013, US health care expenditures had

increased by 69 fold. Population growth over the same period increased by a factor of just 1.6. By 2022, health spending will have

increased 119 fold.

$ Billions

Sources: Centers for Medicare & Medicaid Services, Office of the Actuary at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html accessed 3/14/14; Insurance Information Institute.

http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html


0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

National Health Care Expenditures as a Share of GDP, 1965 – 2022F*

Sources: Centers for Medicare & Medicaid Services, Office of the Actuary at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html accessed 3/14/14; Insurance Information Institute.

1965 5.8%

Health care expenditures as a share of GDP rose from 5.8% in 1965 to 18.0% in 2013 and are expected to

reach 19.9% of GDP by 2022

% of GDP

2022 19.9%

1980: 9.2%

1990: 12.5%

2000: 13.8%

2010: 17.9%

Since 2009, heath expenditures as a %

of GDP have flattened out at about 18%--the

question is why and will it last?



INVESTMENTS: THE NEW REALITY

92

Investment Performance is a Key Driver of Profitability

Depressed Yields Will Necessarily Influence Underwriting & Pricing

92

Property/Casualty Insurance Industry Investment Income: 2000–20141

$38.9$37.1 $36.7

$38.7

$54.6

$51.2

$47.1 $47.6$49.2

$48.0 $47.4$45.7

$39.6

$49.5

$52.3

$30

$40

$50

$60

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14*

Due to persistently low interest rates,investment income fell in 2012, 2013 and 2014.

1 Investment gains consist primarily of interest and stock dividends. *2014 figure is estimated based on annualized data through Q3.Sources: ISO; Insurance Information Institute.

($ Billions) Investment earnings are still below their 2007 pre-crisis peak

95

U.S. Treasury Security Yields:A Long Downward Trend, 1990–2015*

*Monthly, constant maturity, nominal rates, through Feb. 2015.Sources: Federal Reserve Bank at http://www.federalreserve.gov/releases/h15/data.htm. National Bureau of Economic Research (recession dates); Insurance Information Institute.

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Recession2-Yr Yield10-Yr Yield

Yields on 10-Year U.S. Treasury Notes have been essentially below 5% for a full decade.

Since roughly 80% of P/C bond/cash investments are in 10-year or shorter durations, most P/C insurer portfolios will have low-yielding bonds for years to come.

U.S. Treasury yields plunged to historic lows in 2013. Longer-

term yields rebounded then sank fell again.

95

http://www.federalreserve.gov/releases/h15/data.htm

http://www.federalreserve.gov/releases/h15/data.htm

Book Yield on Property/Casualty Insurance Invested Assets, 2007–2016F

4.42

4.19

3.95

3.71

3.283.20

3.13

3.74

3.523.38

3.0

3.2

3.4

3.6

3.8

4.0

4.2

4.4

4.6

07 08 09 10 11 12 13 14E 15F 16F

The yield on invested assets continues to decline as returns on maturing bonds generally still exceed new money yields. The end of the Fed’s QE program in Oct. 2014 should allow some increase

in longer maturities while short term interest rate increases are unlikely until mid-to-late 2015

Sources: Conning.

(Percent)

Book yield in 2014 is down 114 BP from pre-crisis levels

104

PRICING TRENDS

Pricing Needs to Keep Up with Underlying Frequency and Severity Trends and Offset

Declining Investment Income

104

105

Monthly Change in Auto Insurance Prices, 1991–2015*

*Percentage change from same month in prior year; through January 2015; seasonally adjustedNote: Recessions indicated by gray shaded columns.Sources: US Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institutes.

-2%

0%

2%

4%

6%

8%

10%

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '14

Cyclical peaks in PP Auto tend to occur roughly every 10 years (early

1990s, early 2000s and likely the early 2010s)

“Hard” markets tend to occur

during recessionary

periods

Pricing peak occurred in late

2010 at 5.3%, falling to 2.8% by Mar. 2012

The Jan. 2015 reading of 5.0% is

up from 3.4%a year earlier

106

Average Expenditures on Auto Insurance

$651$668

$691$705

$726

$786

$830$842

$831$816

$795$789 $787 $792 $798$815

$835$856

$877

$690$685$703

$600

$650

$700

$750

$800

$850

$900

$950

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13E

14E

15F

Countrywide Auto Insurance Expenditures decreased by 6.5% from 2004 through 2009, rising gradually since the with annual increases

in the 2.0% to 2.5% range* Insurance Information Institute Estimates/Forecasts

Source: NAIC, Insurance Information Institute estimate for 2013-2015 based on CPI and other data.

The average expenditure on auto insurance remained below 2004 until 2013

107

Average Commercial Rate Change,All Lines, (1Q:2004–4Q:2014)

-3.2

%-5

.9%

-7.0

%-9

.4%

-9.7

%-8

.2%

-4.6

% -2.7

%-3

.0%

-5.3

%-9

.6%

-11

.3%

-11

.8%

-13

.3%

-12

.0%

-13

.5%

-12

.9%

-11

.0%

-6.4

%-5

.1%

-4.9

%-5

.8%

-5.6

%-5

.3%

-6.4

%-5

.2%

-5.4

% -2.9

%

2.7

% 4.4

%4

.3%

3.9

%5

.0%

5.2

%4

.3%

3.4

%2

.1%

1.5

%-0

.5%

0.1

%-0

.7%

-0.1

%0

.9%

-0.1

%

-16%

-11%

-6%

-1%

4%

9%

1Q

04

2Q

04

3Q

04

4Q

04

1Q

05

2Q

05

3Q

05

4Q

05

1Q

06

2Q

06

3Q

06

4Q

06

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

Note: CIAB data cited here are based on a survey. Rate changes earned by individual insurers can and do vary, potentially substantially.

Source: Council of Insurance Agents & Brokers; Insurance Information Institute

KRW Effect

Pricing as of Q4:2014 had turned (slightly) negative for only the 2nd time in 3 years

(Percent)

Q2 2011 marked the last of 30th

consecutive quarter of price declines

112

CATASTROPHE LOSSES

2014 Experiencing Below Average CAT Activity Following a Welcome Respite in

2013 from Very High CAT Losses in 2011/12

112

113

$1

2.8

$1

1.1

$3

.8

$1

4.5

$1

1.7

$6

.2

$3

5.2

$7

.7

$1

6.5

$3

4.2

$7

4.5

$1

0.7

$7

.6

$2

9.6

$1

1.6

$1

4.6

$3

4.1

$3

5.5

$1

2.9

$1

5.3

$1

4.2

$4

.9 $8

.1

$3

8.3

$8

.9

$2

6.8

$0

$10

$20

$30

$40

$50

$60

$70

$80

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

U.S. Insured Catastrophe Losses

*Through 12/31/14.Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01 ($25.9B 2011 dollars). Includes only business and personal property claims, business interruption and auto claims. Non-prop/BI losses = $12.2B ($15.6B in 2011 dollars.) Sources: Property Claims Service/ISO; Insurance Information Institute.

2013 Was a Welcome Respite from 2012, the 3rd Costliest Year for Insured Disaster Losses in US

History. Longer-term Trend is for more—not fewer—Costly Events

2012 was the 3rd most expensive year ever for

insured CAT losses

$15.3 billion in insured CAT

losses estimated for 2014

($ Billions, $ 2013)

113

117

Inflation Adjusted U.S. Catastrophe Losses by Cause of Loss, 1994–20131

0.1%

1.4%

3.8%4.8%

6.4%

6.4%

36.0%

41.1%

1. Catastrophes are defined as events causing direct insured losses to property of $25 million or more in 2013 dollars.2. Excludes snow.3. Does not include NFIP flood losses4. Includes wildland fires5. Includes civil disorders, water damage, utility disruptions and non-property losses such as those covered by workers compensation.Source: ISO’s Property Claim Services Unit.

Hurricanes & Tropical Storms, $159.1

Fires (4), $5.5

Events Involving Tornadoes (2), $139.3

Winter Storms, $24.7

Terrorism, $24.8

Geological Events, $18.4

Wind/Hail/Flood (3), $14.6

Other (5), $0.2

Wind losses are by far cause the most catastrophe losses,

even if hurricanes/TS are excluded.

Tornado share of CAT losses is

rising

Insured cat losses from 1993-2012

totaled $386.7B, an average of $19.3B per year or $1.6B

per month

118

Top 16 Most Costly Disastersin U.S. History

(Insured Losses, 2013 Dollars, $ Billions)

$7.9 $8.8 $9.3 $11.2$13.6

$19.0$24.2 $24.9$25.9

$49.4

$7.6$7.2$6.8$5.7$5.6$4.5

$0

$10

$20

$30

$40

$50

$60

Irene (2011) Jeanne(2004)

Frances(2004)

Rita (2005)

Tornadoes/T-Storms

(2011)

Tornadoes/T-Storms

(2011)

Hugo (1989)

Ivan (2004)

Charley(2004)

Wilma(2005)

Ike (2008)

Sandy*(2012)

Northridge(1994)

9/11 Attack(2001)

Andrew(1992)

Katrina(2005)

Superstorm Sandy in 2012 was the last

mega-CAT to hit the US

Includes Tuscaloosa, AL,

tornado

Includes Joplin, MO, tornado

12 of the 16 Most Expensive Events in US History Have

Occurred Over the Past Decade

Sources: PCS; Insurance Information Institute inflation adjustments to 2013 dollars using the CPI.

121

Federal Disasters Declarations by State, 1953 – 2014: Highest 25 States*

88

80

75

69

67

60

58

57

56

56

55

53

53

53

51

51

51

50

50

49

47

47

45

43

40

0

10

20

30

40

50

60

70

80

90

100

TX CA OK NY FL LA AL KY AR MO IA IL MS TN WV MN NE KS PA WA OH VA ND SD ME

Dis

as

ter

De

cla

rati

on

s

Over the past 60 years, MIssissippi has had the 13th highest number of Federal

Disaster Declarations

*Through December 31, 2014. Includes Puerto Rico and the District of Columbia.Source: FEMA: http://www.fema.gov/news/disaster_totals_annual.fema; Insurance Information Institute.

http://www.fema.gov/news/disaster_totals_annual.fema

CYBER RISK & CYBER INSURANCE

125

Cyber Risk is a Rapidly Emerging Exposure for Businesses Large and

Small in Every IndustryRapidly Increasing Interest from

Businesses, Media & Public Policymakers125

Data Breaches 2005-2014, by Number of Breaches and Records Exposed# Data Breaches/Millions of Records Exposed

* 2014 figures as of Jan. 12, 2014 from the ITRC.Source: Identity Theft Resource Center.

157

321

446

656

498

419447

619

783

662

85.687.9

17.322.9

35.7

19.1

66.9

222.5

16.2

127.7

100

200

300

400

500

600

700

800

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

20

40

60

80

100

120

140

160

180

200

220

# Data Breaches # Records Exposed (Millions)

The Total Number of Data Breaches Rose 28% While the Number of Records Exposed Was Relatively Flat (-2.6%)

Millions

126

Data/Privacy Breach:Many Potential Costs Can Be Insured

Source: Zurich Insurance; Insurance Information Institute

Forensic costs to discover

cause

128

Source: Insurance Information Institute research.

The Three Basic Elements of Cyber Coverage: Prevention, Transfer, Response

Loss Prevention

Post-Breach Response(Insurable)

Loss Transfer (Insurance)

Cyber risk management today involves three essential components, each designed

to reduce, mitigate or avoid loss. An increasing number of cyber risk products

offered by insurers today provide all three.

129

130

I.I.I. Released its Second Cyber Report in 2014: Cyber Risk: The Growing Threat

I.I.I.’s 2nd report on cyber risk released June 2014

Provides information on cyber threats and insurance market solutions

Global cyber risk overview

Quantification of threats by type and industry

Cyber security and cost of attacks

Cyber terrorism

Cyber liability

Insurance market for cyber risk

3rd Report in Q2 2015

CAPITAL/CAPACITY

131

Capital Accumulation Has Multiple Impacts

131

132

Policyholder Surplus, 2006:Q4–2014:Q3

Sources: ISO, A.M .Best.

($ Billions)$4

87.1

$496

.6

$512

.8

$521

.8

$478

.5

$455

.6

$437

.1 $463

.0 $490

.8 $511

.5 $540

.7

$530

.5

$544

.8

$559

.2

$559

.1

$538

.6

$550

.3

$567

.8

$583

.5

$586

.9 $607

.7

$614

.0

$624

.4 $653

.3

$671

.6

$673

.9

$662

.0

$570

.7

$566

.5

$505

.0

$515

.6

$517

.9

$400

$450

$500

$550

$600

$650

$700

06:Q

4

07:Q

1

07:Q

2

07:Q

3

07:Q

4

08:Q

1

08:Q

2

08:Q

3

08:Q

4

09:Q

1

09:Q

2

09:Q

3

09:Q

4

10:Q

1

10:Q

2

10:Q

3

10:Q

4

11:Q

1

11:Q

2

11:Q

3

11:Q

4

12:Q

1

12:Q

2

12:Q

3

12:Q

4

13:Q

1

13:Q

2

13:Q

3

13:Q

4

14:Q

1

14:Q

2

14:Q

3

2007:Q3Pre-Crisis Peak

Surplus as of 9/30/14 stood at a record high $673.9B

2010:Q1 data includes $22.5B of paid-in capital from a holding company parent for one insurer’s investment in a non-insurance business .

The industry now has $1 of surplus for every $0.73 of NPW,close to the strongest claims-paying status in its history.

Drop due to near-record 2011 CAT losses

The P/C insurance industry entered 2015in very strong financial condition.

137

Alternative Capital

137

New Investors Continue to Change the Reinsurance Landscape

First I.I.I. White Paper on Issue Will Be Released March 2015

Global Reinsurance Capital (Traditional and Alternative), 2006 - 2014

2014 data is as of June 30, 2014.Source: Aon Benfield Analytics; Insurance Information Institute.

Total reinsurance capital reached a record $570B in 2013, up 68% from

2008.

But alternative capacity has grown 210% since 2008, to $50B. It has more than doubled in the past three years.

Alternative Capital as a Percentage of Traditional Global Reinsurance Capital

2014 data is as of June 30, 2014.Source: Aon Benfield Analytics; Insurance Information Institute.

Alternative Capital’s Share of Global Reinsurance Capital Has More Than Doubled Since 2010.

Catastrophe Bond Issuance and Outstanding: 1997-2014

141

Risk Capital Amount ($ Millions)

2014 Has Seen the Largest Cat Bond Ever - $1.5 Billion (Florida Citizens). Bond Issuance Set a Record.

Source: Guy Carpenter.

Reinsurance Pricing: Change in Rate on Line for Cat Business

2014 reflects change through June 30 from prior year end. 2015 is for January 1 renewals..Source: Guy Carpenter; Insurance Information Institute.

Catastrophe Prices Fell 11 Percent on January 1 Renewals, Driven by Emergence of New Capital, Mild Catastrophe Losses.

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-20%

-10%

0%

10%

20%

30%

40%

14% 14%

-11%

-6%

76%

-9%

-16%

10%

-12%

-3%

7%

-7%

-17%

-11%

(Change from Previous Year)

Japan, NZ Quakes, US Tornadoes.

2001-02: WTC Losses, Falling

Stock, Bond Prices Dry Up Capital.

2006: Higher Rates After Record Hurri-

canes.

76%Alternative

Capital, Low Levels of

Catastrophe Drive Rates

Down.

THE ECONOMY

155

Strength of the Economy Will Influence Growth Across Most Lines

155

156

US Real GDP Growth*

* Estimates/Forecasts from Blue Chip Economic Indicators.Source: US Department of Commerce, Blue Economic Indicators 2/15; Insurance Information Institute.

2.7%

1.8%

-1.8

%1.

3%-3

.7%

-5.3

%-0

.3%

5.0%

2.3%

2.2% 2.6%

2.4%

0.1%

2.5%

1.3%

4.1%

2.0%

1.3%

3.1%

0.4%

2.7%

1.8%

3.5%

-2.1

%4.

6% 5.0%

2.2% 2.7%

2.9%

3.0%

2.9%

2.8%

2.8%

2.8%

2.7%

-8.9%

4.5%

1.4%

4.1%

1.1% 1.

8% 2.5% 3.

6%3.

1%

-9%

-7%

-5%

-3%

-1%

1%

3%

5%

7%

2

00

0

2

00

1

2

00

2

2

00

3

2

00

4

2

00

5

2

00

6

2

00

7

08

:1Q

08

:2Q

08

:3Q

08

:4Q

09

:1Q

09

:2Q

09

:3Q

09

:4Q

10

:1Q

10

:2Q

10

:3Q

10

:4Q

11

:1Q

11

:2Q

11

:3Q

11

:4Q

12

:1Q

12

:2Q

12

:3Q

12

:4Q

13

:1Q

13

:2Q

13

:3Q

13

:4Q

14

:1Q

14

:2Q

14

:3Q

14

:4Q

15

:1Q

15

:2Q

15

:3Q

15

:4Q

16

:1Q

16

:2Q

16

:3Q

16

:4Q

Demand for Insurance Should Increase in 2015 as GDP Growth Accelerates Modestly and Gradually Benefits the Economy Broadly

Real GDP Growth (%)

Recession began in in June

2009

The Q4:2008 decline was the steepest since the Q1:1982 drop of 6.8%

Q1 2014 GDP data were hit hard by this

year’s “Polar Vortex” and harsh

winter

160

Percent Change in Real GDP by State, 2013

Sources: US Bureau of Economic Analysis; Insurance Information Institute.

http://www.bea.gov/newsreleases/regional/gdp_state/gsp_newsrelease.htm



162

16.9

16.5

16.1

13.2

10.4

11.6

12.7

14.4

15.5 16

.4 16.9

17.1

16.9

16.8

16.9

16.8

16.9

16.617

.117.5

17.8

17.4

9

10

11

12

13

14

15

16

17

18

19

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15F 16F 17F 18F 19F 20F

(Millions of Units)

Auto/Light Truck Sales, 1999-2020F

Source: U.S. Department of Commerce; Blue Chip Economic Indicators (2/15 and 10/14); Insurance Information Institute.

New auto/light truck sales fell to the lowest level since the late 1960s. Forecast for 2014-15 is

still below 1999-2007 average of 17 million units, but a robust recovery is well underway.

Job growth and improved credit market conditions will boost auto sales in

2014 and beyond

Truck purchases by contractors are

especially strong

Yearly car/light truck sales will likely continue at current levels, in part replacing cars that were held onto in 2008-12. New vehicles will generate more physical damage insurance coverage but will be more expensive to

repair. PP Auto premium might grow by 5% - 6%.

Sales have returned to pre-

crisis levels

163

(Millions of Units)

New Private Housing Starts, 1990-2020F

1.4

81

.47 1

.62

1.6

41

.57

1.6

0 1.7

1 1.8

5 1.9

6 2.0

71

.80

1.3

60

.91

0.5

50

.59

0.6

1 0.7

8 0.9

21

.01 1

.16 1.3

0 1.4

21

.46

1.4

81

.50

1.3

51.4

61

.29

1.2

0

1.0

11.1

9

0.3

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15F16F17F18F19F20F

Source: U.S. Department of Commerce; Blue Chip Economic Indicators (2/15 and 10/14); Insurance Information Institute.

Insurers Are Continue to See Meaningful Exposure Growth in the Wake of the “Great Recession” Associated with Home Construction: Construction Risk

Exposure, Surety, Commercial Auto; Potent Driver of Workers Comp Exposure

New home starts plunged 72% from 2005-2009; A net

annual decline of 1.49 million units, lowest since records began

in 1959

Job growth, low inventories of existing homes, low mortgage rates and demographics should continue to stimulate new home construction

for several more years

171

12 Industries for the Next 10 Years: Insurance Solutions Needed

Export-Oriented Industries

Health Sciences

Health Care

Energy (Traditional)

Alternative Energy

Petrochemical

Agriculture

Natural Resources

Technology (incl. Biotechnology)

Light Manufacturing

Insourced Manufacturing

Many industries are

poised for growth, though

insurers’ ability to

capitalize on these

industries varies widely

Shipping (Rail, Marine, Trucking, Pipelines)

173

Value of New Private Construction: Residential & Nonresidential, 2003-2014*

Billions of Dollars

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

03 04 05 06 07 08 09 10 11 12 13 14*

Non ResidentialResidential

Private Construction Activity Is Moving in a Positive Direction though Remains Well Below Pre-Crisis Peak; Residential Dominates

$298.1

$15.0

$613.7

New Construction peaks at $911.8. in 2006

Trough in 2010 at $500.6B,

after plunging 55.1% ($411.2B)

2014: Value of new pvt. construction hits $698.6B as of Nov. 2014, up 40%

from the 2010 trough but still 23% below 2006 peak

173

$261.8

$238.8

$349.6

$349.0

*2014 figure is a seasonally adjusted annual rate as of December.Sources: US Department of Commerce http://www.census.gov/construction/c30/c30index.html ; Insurance Information Institute.

http://www.census.gov/construction/c30/c30index.html

178

$314.9$304.0

$286.4 $279.0 $271.4$281.1

$216.1 $220.2$234.2

$255.4

$289.1$308.7

$0

$50

$100

$150

$200

$250

$300

$350

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

($ Billions)

Government Construction Spending Peaked in 2009, Helped by Stimulus Spending, but Contracted As State/Local Governments Grappled with

Deficits and Federal Sequestration

Value of New Federal, State and Local Government Construction: 2003-2014*

*2014 figure is a seasonally adjusted annual rate as of December; http://www.census.gov/construction/c30/historical_data.html Sources: US Department of Commerce; Insurance Information Institute.

Construction across all levels of government

peaked at $314.9B in 2009

Austerity Reigns

Govt. construction MAY be turning a corner; still down

$33.8B or 10.7% since 2009 peak

http://www.census.gov/construction/c30/historical_data.html

http://www.census.gov/construction/c30/historical_data.html

180

Construction Employment,Jan. 2010—December 2014*

*Seasonally adjusted.Sources: US Bureau of Labor Statistics at http://data.bls.gov; Insurance Information Institute.

5,58

15,

522

5,54

25,

554

5,52

75,

512

5,49

75,

519

5,49

95,

501

5,49

75,

468

5,43

55,

478

5,48

55,

497

5,52

45,

530

5,54

75,

546

5,58

35,

576

5,57

75,

612

5,62

95,

644

5,64

05,

636

5,61

55,

622

5,62

75,

630

5,63

35,

649

5,67

35,

711

5,73

5 5,78

35,

799

5,79

25,

791

5,80

15,

804

5,80

55,

822

5,83

05,

849

5,87

6 5,92

75,

927

5,96

46,

000

6,00

96,

017

6,04

76,

064

6,08

26,

098

6,11

8 6,16

6

5,400

5,500

5,600

5,700

5,800

5,900

6,000

6,100

6,200

6,300

Jan-

10Fe

b-10

Mar

-10

Apr

-10

May

-10

Jun-

10Ju

l-10

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11Fe

b-11

Mar

-11

Apr

-11

May

-11

Jun-

11Ju

l-11

Aug

-11

Sep

-11

Oct

-11

Nov

-11

Dec

-11

Jan-

122/

30/2

Mar

-12

Apr

-12

May

-12

Jun-

12Ju

l-12

Aug

-12

Sep

-12

Oct

-12

Nov

-12

Dec

-12

Jan-

13Fe

b-13

Mar

-13

Apr

-13

May

-13

Jun-

13Ju

l-13

Aug

-13

Sep

-12

Oct

-13

Nov

-13

Dec

-13

Jan-

14Fe

b-14

Mar

-14

Apr

-14

May

-14

Jun-

14Ju

l-14

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Construction employment is +731,000 above

Jan. 2011 (+13.4%) trough

(Thousands)

Construction and manufacturing employment constitute 1/3 of all WC payroll exposure.

http://data.bls.gov/

183

$200,000

$300,000

$400,000

$500,000

Dollar Value* of Manufacturers’ Shipments Monthly, Jan. 1992—November 2014

* Seasonally adjusted; Data published Jan. 6, 2015.Source: U.S. Census Bureau, Full Report on Manufacturers’ Shipments, Inventories, and Orders, http://www.census.gov/manufacturing/m3/

Monthly shipments in Nov. 2014 exceeded the pre-crisis (July 2008) peak but has declined in recent months. Manufacturing is energy-intensive and growth leads to

gains in many commercial exposures: WC, Commercial Auto, Marine, Property, and various Liability Coverages.

$ Millions

183

The value of Manufacturing Shipments in Nov. 2014 was

$495.7B—down slightly since the July 2014 record high of $508.1B

http://www.census.gov/manufacturing/m3/

ENERGY SECTOR: OIL & GAS INDUSTRY FUTURE IS BRIGHT

BUT VOLATILE

190

US Is Becoming an Energy Powerhouse but Fall in Prices

Will Have Negative Impact

190

5.19 5.08 5.00 5.35 5.47 5.656.49

7.44

8.679.31 9.53

5.09

0

2

4

6

8

10

12

U.S. Crude Oil Production, 2005-2016P

Source: Energy Information Administration, Short-Term Energy Outlook (January 15, 2015) , Insurance Information Institute.

Millions of Barrels per Day

Crude oil production in the U.S. is expected to increase by 90.6% from 2008 through 2016—and could overtake

Saudi Arabia as the world’s largest oil producer

20.2 19.9 20.0 19.518.9 19.4

20.221.1

21.622.4

24.0

25.3 25.6

20.6

10

12

14

16

18

20

22

24

26

28

00 01 02 03 04 05 06 07 08 09 10 11 12 13

U.S. Natural Gas Production, 2000-2013

Source: Energy Information Administration, Short-Term Energy Outlook (April 8, 2014) , Insurance Information Institute.

Trillions of Cubic Ft. per Year

The U.S. is already the world’s largest natural gas producer—

recently overtaking Russia. This is a potent driver of commercial

insurance exposures

193

Employment in Oil & Gas Extraction,Jan. 2010—Dec. 2014*

*Seasonally adjustedSources: US Bureau of Labor Statistics at http://data.bls.gov; Insurance Information Institute.

Feb

-10

Apr

-10

Jun-

10

Aug

-10

Oct

-10

Dec

-10

Feb

-11

Apr

-11

Jun-

11

Aug

-11

Oct

-11

Dec

-11

Feb

-12

Apr

-12

Jun-

12

Aug

-12

Oct

-12

Dec

-12

Feb

-13

Apr

-13

Jun-

13

Aug

-13

Oct

-13

Dec

-13

Feb

-14

Apr

-14

Jun-

14

Aug

-14

Oct

-14

Dec

-14

150

160

170

180

190

200

210

220

156.

615

6.9

157.

515

8.7

158.

215

8.3

159.

716

0.1

161.

216

1.4

160.

816

2.8

164.

416

6.8

169.

217

0.1

171.

117

2.6

173.

917

6.4

177.

917

8.6

180.

418

1.4

182.

418

4.9

185.

218

6.2

187.

818

8.6

189.

018

9.2

189.

019

0.6

192.

419

3.2

194.

819

4.2

194.

919

5.7

196.

019

7.5

198.

719

9.7

200.

620

3.1

204.

320

5.3

207.

820

7.5

207.

921

0.1

211.

321

2.2

212.

221

3.1

215.

121

5.7

216.

1

Oil and gas extraction employment is up 37.7% since Jan. 2010 as the energy sector

booms. (Previous boom in 1979-81, employment peak at

267,000 in March 1982.)

(000)

Highest employment in this sector since July 1986.

http://data.bls.gov/

194

Labor Market Trends

Massive Job Losses Sapped the Economy and Commercial/Personal

Lines Exposure, But Trend Has Greatly Improved

194

195

Unemployment and Underemployment Rates: Still Too High, But Falling

2

4

6

8

10

12

14

16

18

Jan00

Jan01

Jan02

Jan03

Jan04

Jan05

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14

Jan15

"Headline" Unemployment Rate U-3

Unemployment + Underemployment RateU-6

“Headline” unemployment

was 5.5% in Feb. 2015. 4.5% to

5.5% is “normal.”

Source: US Bureau of Labor Statistics; Insurance Information Institute.

January 2000 through February 2015, Seasonally Adjusted (%)

Stubbornly high unemployment and underemployment constrain overall economic growth, but the job market is now clearly improving.

195

U-6 went from 8.0% in March

2007 to 17.5% in October 2009; Stood at 11.0% in Feb. 2015.8% to 10% is

“normal.”

196

US Unemployment Rate Forecast4

.5%

4.5

%4

.6%

4.8

%4

.9% 5.4

% 6.1

%6

.9%

8.1

%9

.3%

9.6

% 10

.0%

9.7

%9

.6%

9.6

%

8.9

%9

.1%

9.1

%8

.7%

8.3

%8

.2%

8.0

%7

.8%

7.7

%7

.6%

7.3

%7

.0%

6.6

%6

.2%

6.1

%5

.7%

5.6

%5

.4%

5.3

%5

.2%

5.2

%5

.1%

5.0

%5

.0%

9.6

%

4%

5%

6%

7%

8%

9%

10%

11%

07

:Q1

07

:Q2

07

:Q3

07

:Q4

08

:Q1

08

:Q2

08

:Q3

08

:Q4

09

:Q1

09

:Q2

09

:Q3

09

:Q4

10

:Q1

10

:Q2

10

:Q3

10

:Q4

11

:Q1

11

:Q2

11

:Q3

11

:Q4

12

:Q1

12

:Q2

12

:Q3

12

:Q4

13

:Q1

13

:Q2

13

:Q3

13

:Q4

14

:Q1

14

:Q2

14

:Q3

14

:Q4

15

:Q1

15

:Q2

15

:Q3

15

:Q4

16

:Q1

16

:Q2

16

:Q3

16

:Q4

Rising unemployment eroded payrolls

and WC’s exposure base.

Unemployment peaked at 10% in late 2009.

* = actual; = forecastsSources: US Bureau of Labor Statistics; Blue Chip Economic Indicators (2/15 edition); Insurance Information Institute.

2007:Q1 to 2016:Q4F*

Unemployment forecasts have been revised modestly

downwards. Optimistic scenarios put the

unemployment as low as 5.0% by Q4 of 2015.

Jobless figures have been revised

downwards for 2015/16

23

15

21

70

52

12

65

73

-71

32 6

4 81

55

3-1

15

-10

6-2

21

-21

5-2

06

-26

1-2

58

-42

2-4

86

-77

6 -69

3-8

21

-69

8-8

10

-80

1-2

94

-42

6-2

72

-23

2 -14

1-2

71

-15

-23

22

0-3

8

19

29

4 11

01

20

11

71

07

19

91

49

94

72

22

32

31 3

20

16

61

86 21

91

25

26

81

77

19

12

22

36

42

28

24

61

02

13

17

51

72

13

61

59

25

52

11

21

52

19 26

31

64

18

82

22

20

11

70

18

01

53

24

72

72

86

18

31

75 22

33

13

23

8 27

22

43

20

92

35

21

84

14

31

92

37 28

8

11

3

(1,000)

(800)

(600)

(400)

(200)

0

200

400

600

Jan-

07F

eb-0

7M

ar-0

7A

pr-0

7M

ay-0

7Ju

n-07

Jul-0

7A

ug-0

7S

ep-0

7O

ct-0

7N

ov-0

7D

ec-0

7Ja

n-08

Feb

-08

Mar

-08

Apr

-08

May

-08

Jun-

08Ju

l-08

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09F

eb-0

9M

ar-0

9A

pr-0

9M

ay-0

9Ju

n-09

Jul-0

9A

ug-0

9S

ep-0

9O

ct-0

9N

ov-0

9D

ec-0

9Ja

n-10

Feb

-10

Mar

-10

Apr

-10

May

-10

Jun-

10Ju

l-10

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11F

eb-1

1M

ar-1

1A

pr-1

1M

ay-1

1Ju

n-11

Jul-1

1A

ug-1

1S

ep-1

1O

ct-1

1N

ov-1

1D

ec-1

1Ja

n-12

Feb

-12

Mar

-12

Apr

-12

May

-12

Jun-

12Ju

l-12

Aug

-12

Sep

-12

Oct

-12

Nov

-12

Dec

-12

Jan-

13F

eb-1

3M

ar-1

3A

pr-1

3M

ay-1

3Ju

n-13

Jul-1

3A

ug-1

3S

ep-1

3O

ct-1

3N

ov-1

3D

ec-1

3Ja

n-14

Feb

-14

Mar

-14

Apr

-14

May

-14

Jun-

14Ju

l-14

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Jan-

15F

eb-1

5

Monthly Change in Private Employment

January 2007 through Feb. 2015 (Thousands, Seasonally Adjusted)

Private Employers Added 11.38 million Jobs Since Jan. 2010 After Having Shed 5.01 Million Jobs in 2009 and 3.76 Million in 2008 (State and Local Governments Have Shed Hundreds of Thousands of Jobs)

Source: US Bureau of Labor Statistics: http://www.bls.gov/ces/home.htm; Insurance Information Institute

Monthly losses in Dec. 08–Mar.

09 were the largest in the

post-WW II period

288,000 private sector jobs were

created in Feb. In March 2014, the last of the private jobs lost in the Great Recession were

recovered

197

Jobs Created2014: 3.042 Mill2013: 2.368 Mill2012: 2.294 Mill2011: 2.400 Mill2010: 1.277 Mill

3,042,000 jobs were created

in 2014

http://www.bls.gov/ces/home.htm

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$25

$30

$35

$40

$45

$50Wage & Salary DisbursementsWC NPW

199

Payroll Base* WC NWP

Payroll vs. Workers Comp Net Written Premiums, 1990-2014P

*Private employment; Shaded areas indicate recessions. WC premiums for 2014 are I.I.I. estimates..Sources: NBER (recessions); Federal Reserve Bank of St. Louis at http://research.stlouisfed.org/fred2/series/WASCUR ; NCCI; I.I.I.

Continued Payroll Growth and Rate Gains Suggest WC NWP Will Grow Again in 2015

7/90-3/91 3/01-11/0112/07-6/09

$Billions $Billions

WC premium volume dropped two years before

the recession began

WC net premiums written were down $14B or 29.3% to

$33.8B in 2010 after peaking at $47.8B

in 2005

http://research.stlouisfed.org/fred2/series/WASCUR

227

ATTRACTING TALENT

Most CEOs Say that Attracting and Retaining Talent is a Concern and

a ChallengeInsurance Industry

Employment Trends227

228

Insurance Industry Employment Trends

From 1998 through 2013, total industry employment has stayed

in a narrow band of 2.3-2.4 million; in 2014 it rose above that

band

229

Overview of Insurance Sector Employment Changes*

*Data are through January 2015 and are preliminary (i.e., subject to later revision); seasonally adjusted.

Insurance SubsectorDecember

2014Employment

January 2015Employment Change

CARRIERS

P-C Direct 524,400 525,600 +1,200

Life Direct 350,100 353,400 +3,300

Health/Medical Direct 505,300 506,800 +1,500

Title & Other Direct 76,200 76,600 +400

Reinsurers 24,900 24,900 +0

OTHERS

Agents/Brokers 725,400 729,000 +3,600

3rd-Party Administration 175,600 177,800 +2,200

Claims Adjusters 51,800 51,100 -700

230

U.S. Employment in the DirectP/C Insurance Industry: 1990–2015*

*As of January 2015; not seasonally adjusted; Does not including agents & brokers.Note: Recessions indicated by gray shaded columns.Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.

Thousands

460

480

500

520

540

560

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Sometimes the BLS reclassifies employment within industries.

When this happens, the change is spread evenly over a 12-month period (in this case March 2010-

March 2011.

231

U.S. Employment in the DirectLife Insurance Industry: 1990–2015*


Thousands

300

325

350

375

400

425

450

475

500

525

550

575

600

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Every 4-5 years BLS reconciles its data with census data; sometimes this

reclassifies employment within industries. This drop, spread over

March 2004-March 2005, moved some people to the Health/Medical Expense

sector.

232

U.S. Employment in the Direct Health-Medical Insurance Industry: 1990–2015*


Thousands

175

200

225

250

275

300

325

350

375

400

425

450

475

500

525

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

233

U.S. Employment in the Reinsurance Industry: 1990–2015*

Thousands

24

28

32

36

40

44

48

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15


234

U.S. Employment in Insurance Agencies & Brokerages: 1990–2015*

Thousands

500

525

550

575

600

625

650

675

700

725

750

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

*As of January 2015; not seasonally adjusted. Includes all types of insurance.Note: Recessions indicated by gray shaded columns.Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.

235

U.S. Employment in Insurance Claims Adjusting: 1990–2015*

Thousands

40

45

50

55

60

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

*As of January, 2015; not seasonally adjusted.Note: Recessions indicated by gray shaded columns.Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.

236

U.S. Employment in Third-Party Administration of Insurance Funds: 1990–2015*

Thousands

95

100105

110

115

120125

130

135140

145

150155

160

165

170175

180

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

*As of January 2015; not seasonally adjusted. Includes all types of insurance.Note: Recessions indicated by gray shaded columns.Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.

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Thank you for your timeand your attention!

Twitter: twitter.com/bob_hartwigDownload at www.iii.org/presentations

Insurance Information Institute Online:

237

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Documents

What Really Keeps Insurance CEOs Awake at Night? Trends, Challenges & Opportunities Ole Miss Insurance Symposium Oxford, MS March 19, 2015 Download at