Aon Benfield Canadian Rendezvous Dominic Christian Executive Chairman, Aon Benfield International October 2013
What has changed since 1987 Then Now Space Travel Men on the moon Private Space Travel Car Travel Flying Self driving Energy Running out Shalegas Navigation Maps GPS Information Yellow pages Internet Life Expectancy 74 81 Income level per capita $16k $52k Pensions & Healthcare Company provided Personal responsibility Money Big Bang Quantitative easing 2
Canada, then and now and... 1987 2013 Population 26 mn 35 mn GDP $ 430 bn $ 1,825 bn Unemployment 8.80% 7.10% Canada 10% 2.8% 10 year govt. bonds US 8% 2.5% Exchange rate CAD-USD 0.85 0.99 0.44 0.63 CAD-GBP Inflation Canada 4.4% 0.9% US 1.5% 1.5% D&O, E&O new; Trend in mega-liability BP, TEPCO $50B+ asbestos a fine events? events insulator P&C premium $ 11 bn $ 53 bn 3
Impact of macro changes to risk world Rebalancing Economic Mix Risk Mix EUROPEAN EXAMPLE EUROPEAN EXAMPLE AVERAGE RATE CHANGE EUR bn 60 84 37 55 100%= 2.2 50 Property 4x 48 40 57 63 30 G7 GDP E7 GDP 0.6 20 General 52 Liability 43 37 10 0 Knowledge- based Other 2007 Scenario 1997 2000 2010 2020 2030 industries 2020 Source: World Bank, PwC Source: McKinsey Source: McKinsey Percentage of gross Employment growth GDP domestic premium CAGR, PPP ($ trillion) written % last decade Aon Benfield | Proprietary&Confidential 4
2014 – ten key themes 1. Insurer price to book values and long term interest rates / bond yields 2. Excess capital strategies 3. Broader implications for insurance accounting reform 4. Unraveling of central bank balance sheets/actions and inflation 5. Risk capital and solvency development in life insurance 6. The insurability of water based (flood) perils - public to private… 7. Stimulating non-life reinsurance demand 8. The future of intermediated distribution 9. The metabolic rate in which catastrophe xl reinsurance is digested 10. Product commoditization in non-life lines Aon Benfield | Proprietary&Confidential 5
Largest reinsurance brokers & ILS managers USD Bn Reinsurance Brokers - 2012 ILS Managers Total Nat Cat Issuance – 2010 Onward Aon Benfield* 1.51 Deal % of % of Rank Investment bank Notional Guy Carp* 1.08 count notional deals Total 1. Aon Benfield Securities 8.2 30 44.1% 47.0% Willis Re* 0.68 2010 to 2013 2. Swiss Re 5.7 24 31.4% 29.3% Towers Watson 0.21 3. Goldman Sachs 5.6 22 31.2% 27.2% JLT 0.20 Annual Nat Cat Issuance – 2013 Year-to-Date Cooper Gay 0.18 Deal Rank Investment bank Notional count % of notional % of deals Miller 0.06 1. Aon Benfield Securities 2.1 10 42.6% 47.6% 2. Guy Carpenter 1.8 7 35.8% 33.3% 0.05 BMS Group 3. Goldman Sachs 1.3 5 26.0% 23.8% UIB 0.05 4. Swiss Re 1.3 5 26.8% 23.8% 5. Deutsche Bank 0.9 3 18.9% 14.3% Lockton 0.02 6. Munich Re 0.9 3 18.1% 14.3% 7. Willis 0.2 1 3.7% 4.8% Top 3 $ 3.3 bn 81% 7. BNP Paribas 0.1 1 2.5% 4.8% Top 10 $ 4.0 bn 100% * 2012 results updated for top 3 brokers which constitutes ~80% of the industry Aon Benfield | Proprietary&Confidential 6
Client challenges to answer and articulating value better Product Policy Investment Marketing & Pricing & Development Administr Claims Mgmt. & Distribution Underwriting & Market Selection ation Reinsurance Leadership questions: •Are my •How can I win •Am I pricing •Are my •Are we paying •Am I taking products the risks costs under the right too much differentiated? distribution correctly? control? amount on risk? game? claims? •How strong is •Am I •Are my core •Am I my value •What channel leveraging systems •Are we paying transferring proposition? partners company and claims in an risk should I knowledge functions efficient, low efficiently? •Am I playing select? and data? robust? cost, in profitable •Is my expedient markets? •Is my value •Am I investment manner? proposition underwriting portfolio •How is the clear to efficiently? optimally market customers structured ? changing? and distributors? Understanding how we build value for clients Having a view on the worth of what we deliver Helping clients understand the value we deliver Good feelings and right solutions Aon Benfield | Proprietary&Confidential 7
Confidence in the future 8
Mayors of Toronto and London 1987 Arthur C. Eggleton 2013 Robert Ford 1998 Mel Lastman 2013 Boris Johnson
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