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Captive Reinsurance

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Captive Reinsurance

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    1. Captive Reinsurance Jonathan Gale Underwriting Director, Catlin Bermuda

    2. Catlin Group Financial Highlights

    3. Catlin Bermuda at a Glance 2003 2004 GWP $258m $442m PHS $590m $893m Combined Ratio 72% 82% Bests Rating A (Excellent) with Stable Outlook 4 Principle Classes of Business - Property treaty reinsurance - Casualty treaty reinsurance and insurance - Structured risk insurance and reinsurance - Political Risk and Terrorism Insurance 32 staff including 7 underwriters and 2 actuaries

    4. Target Cedant and Classes Mono Line/ Mono State (with variations on a theme) Quality data and track record but we do look at start up companies Targeting small to mid-size companies/ mutuals/ RRGs /captives Classes: Medical malpractice Physicians multi and single specialty/ Hospitals Auto liability General Casualty Nursing homes not for profit and non publicly traded for profits Dentists Ancillary Healthcare e.g. Chiropractors/ Psychologists/ Nurses Etc. Written on an excess of loss basis structured over 3 years on a cancelable basis ( 2 way)

    5. Casualty Reinsurance Pricing Approach Collaborative effort between actuaries and underwriters focusing on quantitative and qualitative Modeled loss distributions per account we quantify the downside (as well as the upside) of each transaction Risk adjusted Pricing Matrix looks at relative riskiness between treaty type; attachment point and state Strength of Underlying rates and managements historic attitude to pricing Quality of Company Management/ Board/ Historic trading attitude to reinsurance Quality of data and transparency Quality of advisors i.e. Outside actuaries and Reinsurance Brokers

    6. Casualty Reinsurance - Products Risk excess of loss Swing Plan or Flat rated Look for alignment of interests Maximum recoverable Multi year commitment with annual cancellation either way Excess Cession Provides increased limit capacity per risk

    7. Casualty Reinsurance - Products Clash Flat rated with limited reinstatements Protects against an accumulation of retentions from one event Includes bad faith cover Structured Risk Risk Transfer only Retention management programmes Focused on hard to place casualty e.g. Medical Malpractice; Petrochemical; Trucking liability $25m capacity per transaction

    8. Medical Malpractice Portfolio

    9. Catlin Bermuda Contact Details Catlin Insurance Company Ltd Cumberland House 6th Floor 1 Victoria St Hamilton Bermuda Tel : 1 441 296 0060 Fax : 1 441 296 6016 Jonathan Gale Underwriting Director 1 441 278 1654 Nick Pascall Casualty Underwriter 1 441 278 1655 Carol Paiva Casualty Underwriter 1 441 278 1656 Mark van Zanden Structured Risk 1 441 278 1685 Misha Novakovic Structured Risk 1 441 278 1671

    10. Captive Reinsurance Louis Garipy VP Underwriting & Actuary, ACE Financial Solutions International

    11. Current Status Non-Traditional Market NYAG / SEC / Others Revision of Accounting Standards and their Application Demand

    12. What is Non-Traditional? Solution Catastrophic or Frequency Exclusions or Sublimits Replace or Enhance Relationship Multi-year Profit Sharing Mechanism Efficient Limit Cost

    13. Types of Products

    14. Prospective Motivation for Buying Non-Traditional Traditional market: too expensive or no capacity Stable pricing over multiple years / reduce cost uncertainties Group multiple exposures into one program Share in favorable claims experience Traditional market imposes increased retention Difficult coverages Position traditional risk transfer in a true catastrophic position Allows captive to assume additional risks over time

    15. Prospective Characteristics Multi-year guaranteed capacity at pre-agreed pricing Risk and profit sharing mechanisms Net cost (substantially less than traditional cover) if low losses Ability to include difficult exposures / reduce excluded items Ability to cancel at anniversary date Flexibility (change mid-term) Aggregate limits covering multiple lines of business Efficient amount of limit purchased Immediate credit for good Risk Management

    16. Retrospective Motivation for Buying Non-Traditional M&A activity Market Share increased Release Security New Domicile Perception of company by financial markets More Strategic Underwriting Reserving difficulties Cancellation of treaties

    17. ACE Financial Solutions International Contact Details ACE Global Headquarters 17 Woodbourne Avenue Hamilton, HM 08 Bermuda Telephone: (441) 295-5200 Simon Burton President (441) 299-9258 Kathleen Reardon Vice-President (441) 298-9553 Louis Garipy Vice-President (441) 298-9435 Heejae Cho Assistant Vice-President (441) 298-9415 Susan Marra Assistant Vice-President (441) 298-9501

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