Re Executive Group Report on the Third Quarter and Nine Months, 2012. Our : solid underwriting and fast responses, the whole world over. MAKE YOUR WORLD GO 2012, plc companies. All rights reserved. I MAKE YOUR WORLD GO 1
XL: Beyond Re Reason. Intuition. Experience. The kind that you only get from over 200 years in the business. And that s just our leadership team. Ready for anything As well as knowing what s already happened, we re tuned into what s next. Scanning the horizon for new trends. Always watching out for new threats. Reach and reputation Across the world, you ll find the same XL qualities: underwriting excellence, sharp reactions and transparent pricing. The best individual talent worldwide, working together as a team. Reinforced Real financial strength. Which means real security for you. Reliable A broad international mix with a consistent global approach. So wherever you are, and whatever the market conditions, you ll always get the highest quality products and services. Refined We use specialists for different product lines and different geographical areas. Recommended and respected Altogether, it s why we re ranked as one of the world s top reinsurers*. And it s why most of the world s 500 leading insurance companies choose us to help make their world go. Our vision Make your world go. That s what we promise our clients. This means giving them the most inventive and intelligent answers, dependable, clear underwriting and excellent service. By doing this, we ll also give our shareholders the best possible returns. And together, we ll all move the world forward. Executive Group * Based on A.M. Best s September 2012 report of Top 50 Global Groups ranked by GPW in 2012 2
A leading global reinsurer Executive Group America Latin America Bermuda Europe/Asia Pacific Offices Offices Offices Offices Headquartered in Stamford, CT Buenos Aires, Argentina; Bogotá, Colombia; and Sao Pãulo, Brazil Hamilton, Bermuda Dublin, Le Mans, Paris, London and Zurich Branch offices in Atlanta, GA, Chicago, IL, Hartford, CT, New York, NY, Walnut Creek, CA, and Toronto, Canada Coverage Includes Property, Casualty, Accident and Health, Marine and Property Facultative Market Coverage is provided to insurance companies domiciled in the US and Canada Coverage Provides traditional Treaty on a proportional and non-proportional basis for all major classes of business, including Surety, General Liability, Motor, Property, Engineering, Marine and Aviation Market Bogotá covers the local market, plus Peru, Venezuela, Ecuador, Mexico, Puerto Rico, Dominican Republic and Central America Coverage A broad range of risks, including US and International Property Catastrophe and Specialty risks solely on a treaty basis Market Property Catastrophe coverage is provided to insurance companies domiciled in the United States, Canada, United Kingdom, Japan, Australia, New Zealand and the Caribbean Coverage International Property, Casualty, Marine & Energy, Aviation, Aerospace, Property Retrocession, Property Facultative and Specialty coverages Market Underwrites business originating from Europe, the Middle East, Africa, Asia and Australasia Buenos Aires is responsible for Argentina, Chile, Uruguay, Bolivia and Paraguay Sao Pãulo handles the Brazilian market 3
A Message from our Chief Executive Third Quarter 2012 As the year draws to an end and the January renewal period approaches, it will be interesting to see if the industry s perception of risks and views on pricing changes particularly in light of the impact of increased weather-related activities such as the drought in the U.S. Midwest and Sandy, which recently devastated the Northeastern region of the U.S. While it is too early to tell exactly what impact Sandy will have on the reinsurance industry and individual clients, our instinct is that the industry loss will be at the top end of the published ranges i.e., $20 billion or above. A loss of this magnitude, from a storm that was classified as a post-tropical cyclone as it came ashore, is remarkable. It really highlights the concentration of values in the region and underscores the importance of having the right (re)insurance coverage. Based on conversations at various industry conferences that we attended during the past few months, prior to Sandy, the industry expectation was for a reasonably smooth renewal season in the Property catastrophe space with the generally benign hurricane season potentially putting some downward pressure on U.S. pricing. Given the impact of Sandy, there are now some questions as to how the rest of the year will develop. The catastrophe market typically responds very quickly to major market events. Whether or not events like Sandy will become as frequent as some are predicting, there is no doubt that the recent impact of these storms have become greater and more consistent, and industry pricing must reflect this trend globally. Also, while there has been some general improvement in the pricing environment in terms of long tail business, there is still much room for improvement before the market rate can be considered adequate. There is not expected to be a great deal of change in the industry s competitive landscape in the near future, but we believe that our disciplined underwriting, reliable analytics and high quality service have and will continue to differentiate us. After all, these core strengths once again led our operations to produce very good results for the third quarter, including a combined ratio of 86% that resulted in an underwriting profit of more than $67 million. This brochure provides details of our results and contact information for the various members of our talented team involved in making this happen. Of course, XL s achievements would not be possible without the loyalty and support of trusted brokers and valued ceding partners. We value your support and look forward to our discussions with you throughout the renewal season. Executive Group James H. Veghte Executive Vice President & Chief Executive, s Operations 4
Executive Group James H. Veghte Executive Vice President & Chief Executive s Operations John P. Welch President & Chief Executive Officer XL America Inc. Charles Cooper President & Chief Underwriting Officer XL Re Ltd David Watson President & Chief Executive Officer XL Re Europe Limited / Asia Pacific Executive Group Philippe Rochaix President & Chief Operating Officer XL Re Latin America Ltd Derrick Irby Executive Vice President & Chief Financial Officer s Operations Jean-Marc Wassen Chief Actuarial Officer s Operations 5
Financial Highlights Nine months ended September 30, 2012 Gross premiums written:... $1.9 billion Net premiums earned:... $1.3 billion Loss ratio:... 50.7% Combined ratio:... 80.5% Gross Premium Written by Region Nine months ended September 30, 2012 Gross Premiums Written by Product Group Nine months ended September 30, 2012 Executive Group 4.1% Asia Pacific 27.4% Bermuda 34.3% Europe 8.4% Latin America 25.8% North America 10.9% Casualty Professional 15.2% Casualty Other 8.0% Marine & Energy, Aviation & Satellite 4.9% Other 27.6% Property CAT 33.4% Property Other 6
Key Results At and for the three months ended September 30, 2012 Solid third quarter underwriting results included a combined ratio of 86.0%. This resulted in an underwriting profit of more than $67.4 million for the quarter. Excluding prior year development and the impact of natural catastrophe losses, the combined ratio for the quarter was 88.0% compared to 80.0% for the prior year quarter. The results were impacted by $26 million in crop losses due to severe drought conditions in the US. Gross premiums written for the quarter were $417.5 million, down by 32.6% compared to the prior year quarter mainly from North America Property primarily due to the Heartland Crop program, which was renewed as reinsurance rather than as primary business. Net premiums earned increased by 11.7% to $482.9 million for the quarter compared to the prior year quarter. During the quarter, XL s segment continued to demonstrate its expertise and deep talent pool, by: Appointing Senior Vice President Tim Fisher as the new Canadian Branch Manager Promoting two Bermuda-based senior underwriters, Mark Berry and Paul Simons, to the positions of Senior Vice President & Managing Director, International Property & Specialty and Senior Vice President, Head of U.S. Property Treaty, respectively Participating in major industry conferences and events, including Monte Carlo Rendezvous Executive Group 7
Financial Highlights For the Year Ended December 31, 2011 : Financial Ratings Ratings accurate as of February 25, 2011 : Financial Highlights Year ended December 31, 2011 A (Stable) A (Stable) A.M. Best Standard & Poor s Gross Premiums Written: $2.1 billion Net Premiums Earned $1.7 billion Loss Ratio: 67.8% Combined Ratio: 97.8% Gross Premiums Written by Region Year ended December 31, 2011 Gross Premiums Written by Product Group Year ended December 31, 2011 Executive Group 3.2% Asia Pacific 21.7% Bermuda 28.9% Europe 9.3% Latin America 36.9% North America 10.5% Casualty Professional 14.1% Casualty Other 7.5% Marine & Energy, Aviation & Satellite 4.7% Other 22.3% Property CAT 40.9% Property Other 8
Regional Contacts XL Re Ltd Bermuda Charles Cooper Managing Director XL Leadership Council President & Chief Underwriting Officer Direct +1 441 294 7518 Fax +1 441 296 9936 Mobile +1 441 524 7518 charles.cooper@xlgroup.com Derrick Irby Executive Vice President & Chief Financial Officer s Operations Direct +1 441 294 7382 Mobile + 1 441 524 7382 derrick.irby@xlgroup.com Paul Simons Senior Vice President, Head of US Property Treaty (BDA) Direct +1 441 294 7617 Mobile +1 441 524 7617 paul.simons@xlgroup.com Mark Berry Managing Director XL Leadership Council Senior Vice President, International Property & Specialty (BDA) Direct +1 441 294 7141 Mobile +1 441 524 7141 mark.berry@xlgroup.com Tristan Abend Vice President, International Property Treaty Underwriter (BDA) Direct +1 441 294 7146 Fax + 1 441 292 0876 Mobile +1 441 524 7146 tristan.abend@xlgroup.com Executive Group Megan Kempe Underwriter Direct +1 441 294 7516 megan.kempe@xlgroup.com Lindsay Botelho Associate Underwriter Direct +1 441 294 7603 lindsay.botelho@xlgroup.com Heejae Cho Underwriting Analyst Direct +1 441 294 7647 Mobile +1 441 524 7647 heejae.cho@xlgroup.com 9
Argentina Maipu No.942 21st Floor (C1006 ACN) Buenos Aires Tel: +54 11 4510 0700 Bermuda O Hara House One Bermudiana Road Hamilton HM08 Tel: +1 441 292 1358 Brazil Rua Dr. Renato Paes de Barros 1017-8º Andar 04530-001, São Paulo Tel: +55 11 3513 9200 Singapore 30 Cecil Street #16-02 Prudential Tower Singapore 049712 Tel: +65 6412 8000 Switzerland Mythenquai 10 P.O. Box 3052 8022 Zurich Tel: +41 43 555 40 00 United Kingdom XL House 70 Gracechurch Street London EC3V OXL Tel: +44 207 933 7000 plc, through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. plc s reinsurance companies are among the world s leading reinsurers. They offer products that include aerospace, property, casualty, marine and specialty. The world s top insurers choose us to help move their businesses forward. To learn more, visit xlgroup.com/ reinsurance. Canada 100 Yonge Street Suite 1702 Toronto, Ontario M5C 2W1 Tel: +1 416 598 1084 Colombia Carrera 7a No. 114-33 Oficina 802 Edificio ScotiaBank Bogotá, Colombia Tel: +571 5 93 80 20 France 2 boulevard Marie et Alexandre Oyon CS 11908 72019 Le Mans Cedex 2 Tel: +33 (0)2 43 39 73 00 50 rue Taitbout 75320 Paris Cedex 09 Tel: +33 (0)1 55 50 09 99 Ireland 1 Upper Hatch Street 4th Floor, Dublin 2 Tel: +353 1 400 55 00 United States 115 Perimeter Center Place Suite 545 Atlanta, GA 30346 Tel: +1 770 677 4200 190 South LaSalle Street Suite 600 Chicago, IL 60603 Tel: +1 312 876 7200 100 Constitution Plaza 15th Floor Hartford, CT 06103 Tel: +1 860 293 6200 1540 Broadway, 25th Floor New York, NY 10036 Tel: +1 888 622 7370 / +1 212 915 6177 1990 North California Blvd. Suite 740 Walnut Creek, CA 94596 Tel: +1 925 974 8200 Seaview House 70 Seaview Avenue Stamford, CT 06902-6040 Tel: +1 203 964 5200 This summary does not constitute an offer, solicitation or advertisement in any jurisdiction, nor is it intended as a description of any products or services of any of the Company s operating subsidiaries. Executive Group is the global brand used by plc s reinsurance companies. is a trademark of plc companies. 10