Willis Latin American Energy Conference October 2012

Transcription

1 OIL An Introduction Willis Latin American Energy Conference October 2012 Barry Brewer VP Marketing

2 Topics Who is OIL? Membership Underwriting highlights Policy Coverages Limits / Deductibles 8 Business Sectors Limit Structures Atlantic Named Windstorm (ANWS) Rating & Premium Plan OIL vs. Commercial Market

3 Who is OIL? World s Largest Energy Mutual OIL is an Energy Industry Mutual Insurance Company headquartered in Hamilton, Bermuda Formed by 16 major energy companies in 1972 after two incidents in the late 60 s that resulted in inadequate coverage / pricing Today, OIL is a world leader in global energy insurance 54 Shareholders / Policyholders - medium to large public / private world-class energy companies headquartered around the world 46% of membership has been with OIL for over 20 years

4 Who is OIL? World s Largest Energy Mutual by the numbers $300 million broad and stable cornerstone capacity Over $2 trillion in assets insured globally for 54 members $6 billion in assets $3.0 billion in shareholder s equity Over $11 billion in claims paid over 40 years S&P A- rating (stable outlook) Expense ratio = approx. 3-6 % Not dependent upon reinsurance

5 Current OIL Members September 1, Shareholders 46% members more than 20 years Apache Corporation Arkema BASF SE BG Group plc BHP Billiton Petroleum (Americas) Inc. Buckeye Partners, L.P. Canadian Natural Resources Ltd Canadian Oil Sands Limited CEPSA Chevron Corporation Chevron Phillips Chemical Company LLC CITGO Petroleum Corporation ConocoPhillips DONG Energy A/S Drummond Company Inc. DTE Energy Company EDF Group El Paso Energy Transfer Partners, L.P. ENI S.p.a. Galp Energia S.A. Hess Corporation Hovensa LLC Husky Energy Inc. LOOP LLC. Lyondell Chemical Company Marathon Oil Company Marathon Petroleum Corporation MOL Hungarian Oil and Gas Company Murphy Oil Corporation Nexen Inc. Noble Energy, Inc. Nova Chemicals Corporation Occidental Petroleum Corporation OMV Aktiengesellschaft Paramount Resources Phillips 66 Company Puerto Rico Electric Power Authority Repsol YPF, S.A. Royal Vopak N.V. Santos Ltd. Sempra Energy Sinclair Companies (The) Statoil ASA Suncor Energy Inc. Sunoco, Inc. Talisman Energy Inc. Tesoro Petroleum Corporation TOTAL Valero Energy Corporation Westlake Chemical Corporation Williams Companies, Inc. (The) Woodside Petroleum Limited. Yara International ASA

6 OIL Membership by Headquarter Location Globally diversified membership with an increasing interest from non-us companies

7 Membership Criteria Quantitative: Energy Companies that have: At least 50% of either Gross Assets or Annual Gross Revenues derived from Energy Operations A minimum of $1 billion of Gross Assets An investment grade credit rating of at least BBB- (S&P) or Baa3 (Moody s)

8 Net Incurred Losses: By Industry (39 yrs) Aggregate Value = $11.8Bn (untrended) As at December 31,

9 Net Incurred Losses Since 1972* By Geographic Region of Physical Loss As at December 31, 2011 Expressed in billions of U.S. dollars * untrended

10 Risks Insured vs. Excluded

11 What s Covered? Automatic coverage for: Worldwide Coverage for an Energy Company and its Consolidated Subsidiaries / Affiliates A member s interest in a JV or other non-consolidated affiliate (if interest equates to less than 1% of Gross Assets)* Coverage for non-owned assets where a member has a contractual obligation to repair / replace

12 Limits Offered Largest Single Block of Capacity for Global Energy Companies * * Roughly 85% of the members elect the $300M limit. * OIL s $300M limit is a per occurrence limit. No one event can be more than $300M. * OIL s Aggregation Limit is $900M (non-windstorm risks) and $750M for windstorms within the ANWS zone

13 Deductible Options - 8 Business Sectors( ) Minimum OIL Deductible is $10M

14 Limit Allocation Options 8 Business Sectors (Non-Windstorm)

15 Limits Offered Minimum OIL Limit Purchase 60% Coverage from OIL * OIL also allows either a 10%, 20%, 30% or 40% internal quota share via Flat, Retro or a combination

16 Limits Offered Primary

17 Limits Offered Excess

18 Limits Offered External Quota Share US $600M

19 Limits Offered Ventilated Limits $50M Limit $250M Limit

20 Limits Offered Wraparound

21 Windstorm Regions Atlantic Named Windstorm (ANWS) Zone

22 Windstorm Limits - Atlantic Named Windstorm (ANWS)

23 Allocation of Windstorm Losses Multiple events are added together at year s end prior to the allocation to the WS Pools Annual Aggregate Retention and Excess Pools Windstorm losses up to an annual aggregate retention of $300M are mutualized among all members in the Standard Pool. Windstorm losses above the $300M retention are mutualized only among windstorm members in two new pools (onshore & offshore). No losses flow through the Flat Pool

24 Rating & Premium Plan Principles Formula based (no price negotiation) Operates as a 5 year post loss funding facility designed to recoup losses over a 5 year period (20% a year) All losses of the Group are mutualized by all members based on their pool % which is fixed annually Zero sum mechanism (losses will equal premiums over time). Not for profit

25 Repayment Schedule for Losses Incurred The 8 business sector premiums + windstorm premium = Total Annual Premium Contribution *Roughly 80% of member s next year premium is Locked down as loss history and allocation already determined

26 8 Business Sector (Non-Windstorm) Pricing 8-Business Sectors are Defined as: Applies sector and deductible weightings. Gross Assets are adjusted for operational risk (sector weighting) and coverage profile (limit/deductible weighting) to generate Weighted Gross Assets which is used to determine pool % and calculate individual premiums. * Original 5 sectors

27 Annual Premium Calculator Example Premium Calculator Example - 8 Business Sector

28 OIL vs. Commercial Market OIL Features Membership is exclusive to energy companies Members are all shareholders / policyholders and have vested interests Mutualized sharing of losses Easy annual renewal. Premiums are formula and performance based i.e. no underwriting One policy form for all members per the OIL Shareholders Agreement OIL uses gross assets from audited balance sheets while the market uses insured values

29 OIL vs. Commercial Market OIL Advantages Provides hedge against a frequently volatile commercial insurance market One of the broadest policy forms currently available Stability (capacity and terms & conditions) Low expense ratio Shareholder input: influence product capability/evolution and developments Generates long-term benefits for shareholders Networking opportunities

30 Thank You