Asia the New West GRM 010 April 29

Asia, the New West GRM 010 April 29, 2014 Recording of this session via any media type is strictly prohibited. Page 1

§ Claude F. Gallello Managing Director – Willis International/New York Global Network Practice Leader responsible for sales & servicing of crossborder retail accounts in 130 countries. § Reginald Peacock Asia Pacific Head of Customer, Distribution & Marketing – Zurich Insurance Company/Hong Kong An Asia market veteran, leading Zurich's Broker and Customer relationship management in Asia Pacific since the establishment of the Zurich Global Corporate business in Asia. Pac in 2007. § Suresh Krishnan Executive Vice President & Global Accounts Division Leader – ACE Group/New York Responsible for managing ACE’s large multinational Latin America & Asia Pacific clients with complex insurance programs Recording of this session via any media type is strictly prohibited. Page 2

What to Expect At the end of this session, you will: • Know what the key Asian insurers, current market conditions and local policy issues are. • Understand what the key regulatory and compliance issues in Asia are. • Know how and when to utilize the local markets in support of a global program. Recording of this session via any media type is strictly prohibited. Page 3

Asia Overview Claude Gallello Global Network Practice Leader & Managing Director Willis International Recording of this session via any media type is strictly prohibited. Page 4

ASIA 30% of the Earth’s Land Area 60% of the Earth’s Human Population Area 44, 579, 000 km 2 (17, 212, 000 sq mi) Population 14. 2 billion Countries 48 Recording of this session via any media type is strictly prohibited. Page 5

CURRENT MARKET CONDITIONS ● ● ● Protected Marketplaces Markets and regulations differ across Territories Significant levels of underwriting autonomy Accelerating Inflation levels a threat to insurance profitability Big capacity in all classes in Asia – recovered quickly after the Cat losses in 2011 Not very litigious…Yet! ● Market growth in all classes but predominantly P&C Market ● All major players represented (Ins / RE) • Ace • AIG • Allianz • Zurich are some of the Global players ● Recording of this session via any media type is strictly prohibited. Page 6

SINGAPORE A well-established business hub for SE Asia ● Big Reinsurance presence – 28 Reinsurers - US $2. 6 bn ● Growth of Lloyds Asia Platform (18 Syndicates) – staff 200 people ● 62 Captive insurance companies ● GWP US $10. 4 bn (Singapore and regional risks – direct markets) ● Total insurers – 168 ● Property capacity – US$ 3. 5 bn ● Liability capacity – US$ 700 m A US $5 bn Property Risk (Full Value) 100 % was recently placed Recording of this session via any media type is strictly prohibited. Page 7

Willis Perspective on Current Markets Lead Markets Property & Business Interruption ACE, AIG, Generali, MSIG, QBE, RSA, Zurich Current Trends • • Market is hardening (5% plus increases), much higher if claims experience has been poor • Alternative placement structures ? • Self Insured Retention ACE, AIG, ASIA, MSIG, QBE, RSA, Zurich Financial Lines/ D&O ACE, AIG, Allianz, Chubb, MSIG, Zurich Continuously softening market driven by over capacity and competition in the Region Casualty ACE, AIG, Chubb, Liberty, QBE, RSA, XL, Zurich Market is currently stable, awards are typically increasing so limits are under review Construction 8 Reductions in premium Improved Terms and Conditions Multi Year Placements Low Claims bonus provisions Continuously softening market driven by over capacity and competition in the Region Workers’ Compensation ACE, AIG, Catlin, Munich Re, SCOR, RSA, Zurich Opportunities Market is stable, reductions available for proven Contractors Reductions in premium Improved Terms and Conditions 18 Months Placements Combined Policies for Crime and PI • • Premium reductions if warranted Improved Terms and Conditions Multi Year Placements Low Claims bonus provisions • Reductions in premium • Improved Terms and Conditions • CAR plus first year PAR / BI available Recording of this session via any media type is strictly prohibited. Page 8

Underwriter View – International Programs & Structural Issues Reg Peacock Head of Customer, Distribution & Marketing Zurich – Global Corporate in Asia Pacific Recording of this session via any media type is strictly prohibited. Page 9

Asia Pac remains leading Region for FDI Intelligence Report 2013 • China & India are the two Regional leaders in that order • Indonesia & Australia are the most consistent, stable & growing Markets Zurich’s Received portfolio reflects following leagues: 1. Absolute Nos: • • • China Japan & India Australia 2. 3 Year % Growth: • • • India Singapore & Hong Kong Malaysia & Indonesia Recording of this session via any media type is strictly prohibited. Page 10

1. Contract Certainty • • CHINA Good standard of Local Policies registered. Exported Wording is allowed – ostensibly. It is subject to translation and CIRC Approval and can take up to 6 months for a decision. Same applies for extensions 2. Non-Admitted / Reinsurance Restrictions • • Non-Admitted is not permitted Maximum cession of 80% 3. Tax • Insurance Premium Tax of 6. 5% or 6. 9519% Comments • • Tax and regulatory implications are serious, but limited application to date Claims process on domestic programmes Recording of this session via any media type is strictly prohibited. Page 11

AUSTRALIA 1. Contract Certainty • • Good standard of Local Policies registered. Exported Wording is allowed, but significant regulatory challenges so not preferred. 2. Non-Admitted • Non-Admitted is allowed for Corporations 3. Tax • Yes, and payable on non-admitted (OOT Tax) Comments: • Tax compliance on OOT needs proper structuring, payment and audit trail by your carrier Recording of this session via any media type is strictly prohibited. Page 12

1. Contract Certainty • • INDONESIA Good standard of Local Policies registered. Exported Wording is extremely challenging. It is subject to translation and Regulator Approval and can take up to 12 months for a decision 2. Non-Admitted Reinsurance Restrictions • Not allowed, but with some exceptions which – in turn – will impact Risk Engineering and Loss Adjustment. 3. Tax • No direct premium tax, but there is stamp duty and reinsurance tax Comments • • New tariff and invigorated regulator. Transfer pricing scrutiny can be a factor. Recording of this session via any media type is strictly prohibited. Page 13

Lessons Learned and Trends Identified Suresh Krishnan Global Accounts Leader Asia Pacific—Latin America ACE Group Recording of this session via any media type is strictly prohibited. Page 14

Trends Identified • “Redefinition”risk—intention v. interpretation? • Insurance Contract Certainty—Is course of conduct (behavior) consistent with terms of policy? • Compliance—Regulatory and Tax Consequences? Consider this REPORT when underwriting cross border insurance -------------------------------------------------- • R eputation—brand risk/headline exposure • E xecution—role of insured, broker, insurer • P lacement—need for local policy/excess policy—where? • O perations—policy obligations, claims adjustment and payment, local certification —Accurate Documentation? • R egulation—insured, broker, insurer • T ax—premium tax, income tax Recording of this session via any media type is strictly prohibited. Page 15

Lessons Learned Lesson—Identify where claim is best paid and not paid • Claims: Where do you want your claim paid? Property– 2011 Thai Floods CBI--2011 Japan Tsunami Lesson—Cover gaps in local policies even if locally compliant • Local Regulation: Use of local DIC-DIL Environmental— 2013 China Lesson—Insuring personal liability will be the key decision point for D&O • Asking the right questions for D&O indemnification D&O— 2013 India Lesson—Non-insurance contracts influence what is or is not covered • Contract Certainty: More than the insurance policy Policy Interpretation— 2014 USA Lesson—Beyond Property and Liability Insurance • Local Performance: Travel Accidental Death and Dismemberment local policies Business Travel Accident— 2014 Malaysia--China ----------------------------------------------------Point—Decision making team in multinational programs: International Broker, Risk Manager, Treasurer, Tax, Compliance, International Insurer Recording of this session via any media type is strictly prohibited. Page 16

Questions? Recording of this session via any media type is strictly prohibited. Page 17

Contact Information *** Claude F. Gallello TEL: +1 -212 -915 -7745 EMAIL: claude. gallello@willis. com *** Reg Peacock TEL: +852 -2 -977 -0650 EMAIL: reg. peacock@zurich. com *** Suresh Krishnan TEL: +1 -212 -209 -2291 EMAIL: suresh. krishnan@acegroup. com Recording of this session via any media type is strictly prohibited. Page 18