1st View. 1 January Page

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1 1st View 1 January 2012 Page

2 TABLE OF CONTENTS RENEWALS 1 January 2012 Introduction 3 Property Territory and Comments 4 Rates 8 Pricing Trend Graphs 9 Casualty Territory and Comments Rates1 3 Specialties Line of Business and Comments1 4 Rates1 6 U.S. Workers Compensation Comments1 6 Capital Markets Comments1 6 1st View This thrice yearly publication delivers the very first view on current market conditions to our readers. In addition to real-time Event Reports, our clients receive our news brief, The Daily Willis ReView, periodic newsletters, white papers and other reports. Willis Re Global resources, local delivery For over 100 years, Willis Re has proudly served its clients, helping them obtain better value solutions and make better reinsurance decisions. As one of the world s premier global reinsurance brokers, with 40 locations worldwide, Willis Re provides local service with the full backing of an integrated global reinsurance broker. Copyright 2012 Willis Limited / Willis Re Inc. All rights reserved: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, whether electronic, mechanical, photocopying, recording, or otherwise, without the permission of Willis Limited / Willis Re Inc. Some information contained in this report may be compiled from third party sources we consider to be reliable; however, we do not guarantee and are not responsible for the accuracy of such. This report is for general guidance only, is not intended to be relied upon, and action based on or in connection with anything contained herein should not be taken without first obtaining specific advice. The views expressed in this report are not necessarily those of the Willis Group. Willis Limited / Willis Re Inc. accepts no responsibility for the content or quality of any third party websites to which we refer. Willis Limited, a Lloyd s broker is authorized and regulated by the Financial Services Authority. Page

3 Change is in the wind With insured catastrophe losses in excess of $100 billion of which more than 50% will be paid by the reinsurance market, 2011 draws to a close as the second costliest year on record for insured catastrophe losses. Of perhaps greater concern is the reality that the majority of this year s catastrophe claims arose from either unmodeled or inadequately modeled perils or territories. With ever growing emphasis on risk management, the results of 2011 are a sobering reminder for the global insurance industry of the limitations of the current state of our understanding of natural catastrophes. This realization has led some reinsurers to question the benefits of diversification, which is leading to capacity constraints in second and third tier catastrophe exposed territories. In the face of 2011 s challenges, reinsurers are taking stronger actions to control and/or limit their exposure to surprise losses, such as the Thailand Flood, by either demanding far greater transparency of data, or alternatively, by sub limiting their exposures to manageable levels. At the same time, we are seeing the impact of model changes. January 1, 2012 U.S. renewals are moving up in line with increases seen in mid-2011 renewals but with increased differentiation by client and portfolio. The European model changes are starting to underpin the more modest increases being seen in Europe. These increases in the pricing of natural catastrophe risks have been sufficient to attract fresh capital to the industry mostly through specialized, dedicated investment funds, as opposed to capital increases for existing market participants. Fortunately, in this time of economic turmoil, the losses of 2011 appear to be largely an earnings issue and not a capital event for the global reinsurance industry. At the end of the third quarter of 2011, capital levels in the global reinsurance industry are only marginally down from the start of the year. The same is broadly true for insurers whose capital base is as a whole largely unchanged though most are seeking to mitigate the impact in 2012 of a possible repeat of This is evidenced by many buyers maintaining the quantum of reinsurance purchased despite increases in cost. Even with the current pressures, there are no signs of relief in the pace and coalescence of regulatory change, with timetables for Solvency II and other regulatory initiatives unchanged. Despite the reasonable levels of capitalization, the investment income outlook for all reinsurers is increasingly bleak. Returns continue to fall and, surprisingly, these lower returns have still not fed through to the rating of long-tail classes. Outside of a few specific problem areas, rates at January 1, 2012 for long tail-classes have remained unchanged. Some reserve releases are still coming through from earlier underwriting years to help cushion quarterly results, but there is an increasing divergence among reinsurers, as some are increasing reserves for catastrophe losses earlier in the year and a few are posting increases for asbestosrelated claims. The market is increasingly segmented with rate movements being driven by individual loss history and perceived exposure movements and not by an overall blanket increase. While this is a superficially logical approach, it has led to significant differences in rate levels which some buyers have found difficult to assimilate as they struggle to manage the margin between their original pricing and the cost of reinsurance. At the same time rate increases are largely being driven by an immediate earnings challenge and not the classic capital shortage of an historic hard market rating turn. If 2012 underwriting results return to profitability, it is unclear if we will witness a prolonged market hardening. The key to a sustained market hardening is much more likely to lie in the impact of the current economic turmoil in the euro zone and elsewhere and how this works through to diminish the capital bases of reinsurers. Peter C. Hearn Chairman, Willis Re 1 January 2012 Page 3

4 Property territory and comments Asia The losses which may prove to be a turning point in the global reinsurance cycle emanated not from the U.S. hurricane season but from a series of natural disasters throughout the Asia-Pacific region inflicting horrific human casualties as well as enormous economic loss Australian and Thai floods on an unprecedented scale marked the start and end of a year which also witnessed a sequence of devastating earthquakes in New Zealand and the Tohuku disaster in Japan Insured and reinsured losses from New Zealand, Japan and Thailand continued to creep upwards a drip-feed of worsening news that carried on into the beginning of the renewal season The impact of these losses was felt globally, but hit Asia-Pac regional reinsurer markets particularly hard Those who renewed early were fortunate as December wore on the willingness of reinsurers to quote catastrophe excess of loss business had reduced, and the prices attaching to those programs increased; firm orders did not lead to automatic and rapid over-placement as in recent years another sign of hardening reinsurer attitude The impact was not universal China s renewal had barely started as European markets were closing for Christmas, proportional terms and conditions were relatively stable, and catastrophe excess of loss pricing increased modestly. Everywhere else, event limits on proportional treaties were a key battleground as was contingent business interruption coverage (lessons learned in Thailand). Taiwan saw their loss-free catastrophe excess of loss programs being subjected to risk-adjusted increase of 30% +. Regional retrocession programs (virtually all hit by one or more of the above-mentioned cats) were being subjected to the even larger price increases and capacity / coverage restrictions Australia Catastrophe market is hardening following the unprecedented loss activity and model failure (notably New Zealand) in the region A number of reinsurers are exiting the region Reinsurers having strong focus on retention levels of primary companies Minimum top layer of 2% rate on line Model recalibration by reinsurers for secondary perils has impacted pricing Reinsurers will load pricing if the appropriate portfolio controls or management are not in place Caribbean Changes in near term natural catastrophe models pushing up probable maximum losses in some smaller islands Increase in minimum rates on line for earthquake-exposed islands Commission terms on pro rata mainly flat, but pressure from reinsurers on local original rates Market uncertainty encouraged late renewals Central & Eastern Europe No major loss in 2011 Underlying portfolio growth continues Capacity sufficient in most countries with exception of Romanian earthquake where substantial portfolio growth required significant increased capacity Wider coverage by commercial third party natural catastrophe models assisting market understanding of risk China Pro rata treaties renewed largely as expiring but with conditions on Contingent Business Interruption policies to be ceded Some companies with improved treaty results managed to obtain a modest increase in their commissions. Risk excess of loss pricing showed some adjustable rate reductions (based on rapidly growing GNPI) Earthquake exposed Catastrophe excess of loss saw risk adjusted rate increases with more companies now covering the fallback loss from proportional treaties under their catastrophe excess of loss Page 4

5 Europe Multi-territory peak zone catastrophe excess of loss market was stable with only modest risk-adjusted prices in spite of the worst international catastrophe losses on record Adequate capacity available with few exits or new entrants but the market tightened noticeably during December The new RMS V11 model for European Wind produced volatile results, but was released too late to be taken into consideration for the 1st January renewals France Risk excess of loss programs priced on their own merits and track record Catastrophe excess of loss priced either flat (on a risk-adjusted basis) or slightly higher Capacity from European reinsurers stable, down from Bermudan and Lloyd s markets as prices did not meet their expectations Germany Impact of RMS model change V9 vs V11 limited with a few exceptions Impact of international catastrophe losses has had a limited effect in Germany Stronger demand for reinsurers for minimum rate on lines Sanctions clauses being universally applied Changes in reinsurer risk appetite with London losing market share against others Indonesia Italy Introduction of event limits on natural catastrophe exposed pro rata treaties For excess of loss and pro rata, reinsurers requesting more transparency from clients on overseas and contingent business interruption exposures Increase in excess of loss entry points due to minimum retention requirements being enforced by reinsurers Increase in minimum rates on line on top catastrophe layers Large programs hardening of London market for top layers (rate on line <2%) Loss free small programs generally overplaced with reduced risk adjusted prices (-10%) Medium programs flat with issues on top layers as above Latin America No major risk or catastrophe loses in 2011 Event limits on pro rata treaties widespread Pressure to reduce commissions on pro rata treaties largely driven by concerns over original rating levels Supply of overseas reinsurance premium from Brazil being restricted with change in 40% local placement rule now becoming compulsory Middle East Pro rata bouquet have seen commission changes of between 0% and -5% Most treaties now have event / cession limits for losses from natural perils and strikes, riots and civil commotion Reinsurers have started introducing loss corridors in some pro rata treaties due to the frequency of large losses Sanctions clauses and leading reinsurers fees are now a market standard Page 5

6 Nordic Countries Property catastrophe: Cloudburst in central Copenhagen on 2nd July has generated a total insured market loss in the region of DKK 6 billion, making this loss the second biggest natural catastrophe in Denmark s history The loss affected most Danish insurers catastrophe programs, impacting middle to upper layers on some programs Size of the loss is aggravated by the fact that it is an unmodeled peril which was not priced for by reinsurers Loss hit catastrophe programs have seen risk adjusted price increases ranging from 15% to 40%, depending on deductible and loss Despite these increases, there has been a withdrawal of capacity from the Danish catastrophe market by some reinsurers, mainly in the London market and mainly on upper layers Philippines Increase in excess of loss entry points driven by reinsurers Restriction on underlying aggregate growth under excess of loss treaties Restriction on coverage for incidental exposures South Africa Prices for catastrophe programs requiring Lloyd s support have increased substantially Small catastrophe programs pricing is moving in line with risk adjustment percentages Proportional treaty commissions adjusting on individual loss ratios which have been excellent in South Africa Spain Absence of big losses Very low original rates Original results are deteriorating Abundance of reinsurance capacity on risk excess of loss programs Switzerland Renewal pricing was flat All programs were renewing loss free No shortage of capacity in market for Swiss clients Turkey U.K. Euro hardening mitigated underlying TL aggregate growth RMS model change had limited impact on reinsurers attitude Minimum rate on line pressures on top layers Capacity constraints (from retro pressure and/or Pan-European commitments) key pricing driver Early placement by some companies was beneficial as market hardened at later stages of the renewal season Some pro rata commissions reduced on treaties with poor results Stable capacity for catastrophe placements Some new entrants, some withdrawals / reductions Higher prices releases more capacity from biggest reinsurers Existing RMS model accepted for renewal; Version 11 used by some, but adjusted in line with individual portfolios Some ambitious initial quotes tempered by market sentiment Page 6

7 U.S. Nationwide A number of the larger national carriers are retaining more risk to offset pricing increases while de-risking their underlying portfolios Risk adjusted rate changes are broadly in line with those experienced at mid-year 2011 A few reinsurers reducing capacity, however overall market capacity remains adequate U.S. Regional Many reinsurers attempting to underwrite accounts individually and differentiate cedants and regions Regional carriers with significant losses in recent years may be paying materially more on certain layers and /or experience changes in terms and participants January pricing indicates that reinsurers continue to discount RMS V11 model change to varying degrees, however this has resulted in some pressure on Texas and Northeast exposures Increases in top end pricing more noticeable as minimum rates on line come under pressure from model change 2011 Tornado/Hail losses mean that aggregate pricing and attachments are increasing and some markets have withdrawn from this line Vietnam Pro rata event limits imposed, ranging from 1 to 1.5 times treaty capacity Reduction in treaty capacity for selective catastrophe occupancies to 50% of treaty capacity Contingent Business Interruption (CBI) extensions limited to 10% of Business Interruption. Overseas CBI restricted to fire, lightening, explosion, aircraft impact Co-Insurance / facultative inwards reduced from +50% to +30% of treaty capacity Page

8 Rates Territory Pro rata commission Property rates Risk loss free Risk loss hit % change Catastrophe loss free % change Catastrophe loss hit % change Australia N/A +10% to +20% +25% to +50% +15% to +35% +40% to +75% Including NZ: +80% to +150% Canada 0% 0% +3.0% to +5.0% 0% +3% to +5% Caribbean 0% 0% Various +5% to +7% N/A Central & Eastern Europe 0% 0% Various +0% to +5% N/A China -1% to +2% -15% to -5% +5% to +15% 0% to +15% N/A Europe N/A 0% N/A +1% to +4% N/A France N/A 0% to -5% 0% to +5% 0% to +3% N/A Germany 0% 0% Various 0% to +5% N/A Indonesia 0% N/A +5% +10% to +15% N/A Italy N/A -10% +20% 0% N/A Latin America 0% 0% Various +3% to +10% N/A Middle East 0% to -5% 0% +5% +5% +10% to +30% Nordic Countries 0% to -5% 0% +5% to +15% +5% to +10% +25% to +50% Philippines 0% +5% to +10% N/A +5% to +10% N/A South Africa +2% +5% +8% to +15% +8% +25% Spain N/A -5% 0% to +5% N/A N/A Switzerland N/A 0% N/A 0% N/A Taiwan N/A 0% to +5% +5% to +20% +30% or more N/A Turkey 0% to -5% 0% 0% +10% to +20% N/A U.K. N/A 0% 0% to +20% +3% to +5% N/A U.S. Nationwide 0% -5% to 0% Various +2.5% to +10% N/A U.S. Regional -5% to 0% N/A Various -2.5% to +5% Various Vietnam -1% +20% to +25% +30% to +50% +20% to +25% N/A Page 8

9 Property catastrophe pricing trends The charts on these pages display Estimated Year-to-Year Property catastrophe rate movement, using 1990 and 100 as a baseline. Australia Caribbean France Page 9

10 Page 10 U.K United States Nationwide Germany Turkey

11 Casualty territory and comments Australia Excess of loss rates for General Liability, Workers Compensation, Motor and Professional lines are flat There is increased capacity for Australian Casualty business New interest from markets that have paid the large catastrophe losses and are leveraging shares on cedants s Casualty programs for continued capacity on their catastrophe programs Europe / Nordic General Liability / Employers Liability / Professional Liability Capacity remains available for these lines of business Renewal rates flat to marginally up As the season progressed, key lead markets increasingly quoted higher terms with softening resolve Sanctions clauses are the only significant coverage issue France GTPL / Professional Liability No significant change except in Medical Malpractice, where insured limits have been increased by law Prices are stable except for primary loss hit excess of loss layers (+5%) Capacity more than sufficient; helped to keep pressure on the prices In Decennial Liability, in the absence of claims, flat prices have been observed France Motor Great stability in terms of prices; attempts to push prices up failed. In general, rates are flat on growing original premiums with slight increase on unlimited layers (+5%) Larger number of players helps to keep the prices flat Global Professional Liability Professional Liability capacity remains both plentiful and stable, although increased focus from reinsurers on recession and/or Sovereign debt related exposures and underwriting strategies Professional Liability original pricing remains competitive in most segments as cedants seek to rebalance their portfolio away from recession and European sovereign debt-exposed segments and/or territories Directors and Officers loss dynamics perceived to be stable despite broadening of original coverage; concerns over worldwide economy and the potential impact on litigation trends and jurisdictional shifts, neither of which appear to be impacting price or capacity Directors and Officers original pricing continues to decline Reinsurers appear vocal over the introduction of multi-year policies and the potential for un-aggregated policies International General Liability Pricing has mainly been flat-to-small increases (under 10%) The largest leading reinsurers have been addressing some (often academic) issues, leading to friction without obvious gain in any real commercial sense The slow tendency towards annuity-structured compensation has been a concern leading to a minor shrinkage in the market Heavy industrial liability portfolios continue to perform well; some reinsurers are asking themselves whether their pricing of these risks in the past has been over-cautious Italy Motor Higher minimum indemnity limits are pushing up the prices Revised law court indemnity criteria are hardening the reinsurance terms Page 11

12 Spain Motor Abundant excess of loss capacity in the market Original results and reinsurance results still very positive U.K. Motor There have been some notable withdrawals from the market, but capacity continues to be available Programs attaching below 5 million are seeing rate increases in the region of 7.5% For programs with retentions of 5 million or above, continuing concerns regarding the impact of Periodical Payment Orders are pushing rates up by considerably more Portfolios which have seen adverse loss development are seeing significantly higher increases U.S. General Liability Excess of loss generally flat except for accounts with actual loss emergence or deteriorating rate and trend conditions on the original business Pro rata commissions generally unchanged U.S. Transportation Severity in public auto is driving both original and reinsurance rates Downward trend in frequency of losses is flattening U.S. Professional Liability Directors and Officers capacity remains stable with some modest increase from new markets who have observed favorable results except for Financial Institutions Concern remains over the state of the economy and its potential systemic impact on Financial Institutions business which is moderating increases in capacity Directors and Officers original pricing continues to decline; preliminary signs that rate of decline is flattening in Q3 and Q4 Errors and Omissions capacity remains plentiful due the perception of continued profitability and favorable frequency and severity loss trends Errors and Omissions primary pricing continues to experience low single digit decline in rate in most classes of business, although carriers are reporting some flattening in rating in Q4 Reinsurers are generally demonstrating loyalty and offering stability for preferred customers Page 12

13 Rates Territory Pro rata commission Casualty rates XL No loss emergence XL With loss emergence Australia N/A 0% to -5% 0% to +5% Canada -3% to -5% 0% +10% Caribbean Motor 0% 0% Various Europe GL/EL/PL N/A 0% 0% to +5% France Motor N/A 0% to +5%% Various Global Professional Liability 0% to +5% 0% to -10% 0% to -5% Global / International GL/EL/PL N/A 0% to +5% +5% to +10% Indonesia 0% 0% +10% to +15% Italy Motor N/A +5% N/A Spain Motor N/A -5% 0% to +5% U.S. General Liability 0% to +1% -5% to +5% +5% to +15% U.S. Transportation -1% to +1% -5% to +5% +5% to +25% U.S. Professional Liability 0% to +1% 0% to -10% 0% to +10% Page 13

14 Specialties line of business and comments Aerospace Aviation excess of loss pricing has again been subject to pricing reduction in the region of -5% to -7.5% in respect of programs unaffected by recent loss events and where a stable exposure profile is evident A significant degree of concern has been forthcoming from primary XOL markets in respect of the potential exposure from U.S. General Aviation risks following the Reno Air Races loss and the 2010 Dulles Hangar collapse Where primary layers will potentially be loss affected, markets have reacted by looking to increase retentions, specifically in respect of U.S. General Aviation exposures The direct Aviation market has seen ongoing levels of over-capacity leading to a very challenging pricing environment; rating pressure has been prevalent in virtually all sectors of the Aerospace account Despite a move from some proportional treaty clients to increase commissions, there has been considerable resistance from reinsurers, due to the very clear softening of original rates and premiums, particularly on major airline and products business With the majority of General Aviation risk excess placements originating from or largely covering business emanating from the U.S. and with the underlying market continuing to suffer from over competition, reinsurers have been extremely keen to ensure that this product continues to generate a sufficient level of return to support the limits of capacity provided; there has also been an ongoing general review and reassessment of original loss attachments points Aviation Industry Loss Warranty (ILW) pricing has remained unchanged Engineering Stringent remedial action taken by reinsurers to protect their margin on poorly performing proportional treaties Engineering account consolidation in producing true global portfolios Engineering and Construction continues to be impacted by single risk losses rather than by natural peril catastrophe events Property catastrophe losses positively impacting direct Engineering rates in affected territories Smaller excess of loss accounts under pressure, following disparity between maturing in force values from prior underwriting years against a reduced current accounted premium base Increasing focus on catastrophe accumulations and event limits under proportional treaties Healthcare U.S. Underlying losses, in terms of both frequency and severity, continue to remain historically low and stable Accordingly, the U.S. Medical Professional Liability sector continues to post profitable calendar year combined ratios The market share of the Provider Owned segment continues to increase at the expense of the commercial writers The reported Hospital Professional Liability market share of the physician dominated carriers continues to grow In relative and absolute terms, this sector is buying less reinsurance than historically Base pricing continues to fall marginally and this year reinsurance rates are also tending to reduce where reinsurer results have been good. This makes for a double decrease from a reinsurer perspective Marine Reinsurers continuing to offer Physical Damage and Liability cover on combined basis for offshore energy Capacity tight on energy exposed excess loss Pro rata commissions levels reduced due to underlying results Hull and cargo capacity adequate Growing concern over potential cargo losses from Thailand flood but loss amounts still unclear Sanctions remains a heightened issue Page 14

15 Medical Excess U.S. Reinsurers of portfolio excess medical reinsurance accounts are delivering rate increases of between 8% and 12% Non-Marine Retrocession Both traditional and collateralized capacity unchanged if pricing acceptable Limitations on territorial scope with named territories and named perils coverage increasingly required to obtain capacity Take up of RMS V11 patchy with a variety of approaches but underpinning rate increases Some derisking of international retro market as primary writers reduce their international writings Limited ILW trading but upward pricing pressure seen; main trading likely to be post January 1, 2012 Personal Accident / Life Catastrophe Personal Accident capacity continues to be price competitive with significant capacity available on a global basis Coverage for radiation contamination (Radcon) on a non-terrorism basis is limited Political Risk An element of overall uncertainty remains in the market Pipelines and Product Marketing Company (PPMC), a subsidiary of Nigerian National Petroleum Corporation, could yet unsettle the direct market due to the continued delayed payments for refined oil imports Continuing to witness redundancy in original reserves for 2007 and 2008 year of account and in places, settlements lower than first expected Current reinsurers remain able and willing to offer new or increased capacity on buyers programs Witnessing an ongoing desire of buyers to purchase more proportional protections, moving away from excess of loss to manage and reduce their up front fixed costs more effectively Lead reinsurers readily acknowledging the improvements from prior years, however they remain wary over the euro zone and global economic and financial market instability; this in turn impacts on their ability to offer reduced pricing on buyers programs Surety U.S. The Surety industry reported solid results through the third quarter of 2011; the difficult economic environment, however, has the market anticipating an increase in loss frequency in 2012 Primary capacity expanded as a result of underwriter movements and new market entrants Reinsurance pricing continued to decline, reflecting reductions in overall exposures and favorable portfolio performance, while underwriting terms remained consistent with 2011 Reinsurance capacity remains stable and adequate to meet market demand and is available from both existing and new markets Reinsurers seek to align with cedants who demonstrate solid underwriting and management capabilities as the market confronts increased frequency and a challenging construction environment Trade Credit Insurers portfolios continue to perform well 2010 was an exceptionally profitable underwriting year; 2011 to date is on a similar track Despite good results, reinsurers are nervous about the potential impact of the euro zone crisis One or two new markets and other recent entrants still trying to gain market share Some European markets experiencing more difficult conditions and capacity constraints (e.g., Italy) Market leaders programs renewed with increased commissions, but largely over-subscribed Excess of loss prices flat, or slightly down on risk-adjusted basis, with no large losses Page 15

16 Rates U.S. Workers Compensation Pricing for catastrophe programs is stable; capacity is available in all geographic zones Excess of loss single life capacity cost above $2 million attachment points has firmed $1M x $1M layers are seeing rating pressures Symptoms of a hard market are appearing for capacity below $1 million attachment point Increasing severity combined with a lack of investment yield is putting pricing pressure on reinsurers Rates Territory Pro rata commission Specialty rates Risk loss free Risk loss hit Catastrophe loss free Catastrophe loss hit Aerospace 0% -5% to -7.5% +5% to +10% 0% to -5% N/A Engineering Global 0% 0% to +5% +10% to +15% 0% to +5% +10% to +15% Marine excluding Energy 0% to -2% N/A N/A 0% to +5% +15% to +20% Marine including Energy -1% to -2.0% N/A N/A +5 to +10% +15% to +20% Medical Excess 0% +5% to +12% +25% 0% N/A Non-Marine Retro 0 to -5% +5% N/A +10% +25% to +50% Personal Accident / Life Catastrophe 0% 0% to -5% Various 0% to -5% N/A Trade Credit Global +2% to +3% 0% to -5% N/A N/A N/A U.S. Healthcare N/A -5% to -10% 0% N/A N/A Territory United States Workers Compensation rates XL No loss emergence 0% above $1M +5% to +8% below $1M XL With loss emergence +5% to +10%, with greater increases in lower layers Capital Markets 2011 was an active year for insurance mergers & acquisitions as companies addressed the changing regulatory and competitive landscape This trend is expected to continue for coming years as underlying drivers remain unchanged Catastrophe bond issuance in 2011 bounced back particularly strongly in Q4 which has been one of the strongest quarters on record Total catastrophe bond issues in 2011 exceeded USD 4.8 billion covering a wider range of perils and risks as the market matures Investor demand remains strong and a number of recent deals have been scaled up to take advantage of the available capacity Page 16

17 Global and local reinsurance Willis Re employs reinsurance experts worldwide. Drawing on this highly professional resource, and backed by all the expertise of the wider Willis Group, we offer you every solution you look for in a top tier reinsurance advisor, one that has comprehensive capabilities, with on-the-ground presence and local understanding. Whether your operations are global, national or local, Willis Re can help you make better reinsurance decisions, access worldwide markets, negotiate optimum terms and boost your business performance. How can we help? To find out how we can offer you an extra depth of service combined with extra flexibility, simply contact us. Begin by visiting our website at or calling your local office. Willis Re The Willis Building 51 Lime Street London EC3M 7DQ Tel: +44 (0) Fax: +44 (0) Willis Re Inc. One World Financial Center 200 Liberty Street 3rd Floor New York, NY Tel: +1 (212) Media Inquiries Clare Kerrigan Communications and Marketing Director Willis Re The Willis Building 51 Lime Street London EC3M 7DQ Tel: +44 (0) clare.kerrigan@willis.com Page 17