The Aon Benfield Aggregate - Reinsurance Thought Leadership

The Aon Benfield Aggregate Results for the six months ended June 30, 2013

Empower Results®

Contents Global Reinsurer Capital

3

Executive Summary

4

ABA Capital

5

Capital Development

5

Capital Management

7

Premium Income

8

Earnings 12 Underwriting Performance

13

Investment Results

15

Net Income

16

Return on Equity

17

ABA Business Model Evolution

19

Who Are The New Investors?

19

How Is New Money Being Deployed?

19

Implications for ‘Traditional’ Reinsurers

19

ABA Reaction

19

Convergence in Action

20

ABA Valuation

21

Financial Strength Ratings

23

Appendix 1: ABA Data

24

About Aon Benfield Aon Benfield, a division of Aon plc, is the world’s leading reinsurance intermediary and full-service capital advisor. We empower our clients to better understand, manage and transfer risk through innovative solutions and personalized access to all forms of global reinsurance capital across treaty, facultative and capital markets. As a trusted advocate, we deliver local reach to the world’s markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial and rating agency advisory. Through our professionals’ expertise and experience, we advise clients in making optimal capital choices that will empower results and improve operational effectiveness for their business. With more than 80 offices in 50 countries, our worldwide client base has access to the broadest portfolio of integrated capital solutions and services. To learn how Aon Benfield helps empower results, please visit aonbenfield.com.

Aon Benfield

Global Reinsurer Capital Aon Benfield estimates that global reinsurer capital totaled USD510 billion at June 30, 2013, an increase of 1% relative to December 31, 2012. This calculation is a broad measure of capital available for insurers to trade risk with and includes both traditional and non-traditional forms of reinsurer capital. Exhibit 1: Global Reinsurer Capital 600

USD (billions)

500

18% -17%

400

1%

11%

-3%

18%

300 200

410

340

400

470

455

FY 2010

FY 2011

505

510

FY 2012

1H 2013

100 0 FY 2007

FY 2008

FY 2009

Source: Company reports, Aon Benfield Analytics

Major insurers and reinsurers generally maintained their solid operating performance in the first half of 2013, aided by tentative economic recovery in the US, continued growth in emerging markets and below average insured catastrophe losses. However, the support to capital positions was muted by the unwinding of unrealized investment gains that have accumulated on bond portfolios since the onset of the financial crisis. Interest rates began to climb in May and June ahead of expected tapering of the Federal Reserve’s quantitative easing program and yields have continued to rise into the second half. The impact on reported industry capital has been mitigated by the growing involvement of capital market investors in the reinsurance sector through non-equity participations, a trend presenting a growing challenge to ‘traditional’ reinsurer business models.

A NOTE OF CAUTION ON THE VAGARIES OF INSURANCE ACCOUNTING The first half of 2013 has highlighted the extent to which accounting choices can influence reported results. There have always been inconsistencies in the methodology applied to the calculation of combined ratios and returns on equity, two of the staple metrics for analyzing company performance. However, the real issue in this period was the accounting treatment of unrealized losses on bond portfolios relating to rising interest rates in May and June. Companies that classify a high proportion of their fixed-income securities as ‘held for trading’ saw a significant impact in the investment results reported through income statements, with consequent effects upon pre- and post-tax earnings and return on equity. In cases where the majority of bonds are held as ‘available for sale’, most of the impact was recorded below the line (in other comprehensive income) and taken directly to equity. As a consequence, direct comparison of company results can be misleading.

3

The Aon Benfield Aggregate – Results for the six months ended June 30, 2013

Executive Summary Overview

The first half of 2013 featured generally stable reinsurance demand and pricing, below average insured catastrophe losses, generally benign attritional loss experience and continued low interest rates. Bond yields rose in May and June ahead of expected tapering of the Federal Reserve’s quantitative easing program and, as a result, the unrealized gains that have accumulated on bond portfolios since the financial crisis have begun to unwind. This is negative for book values in the short-term, but positive for earnings in the longer-term. New income streams and operating advantages are starting to flow to leading reinsurers that have engaged with the new capital flowing mainly from pension plans, life insurers, endowments and high net worth individuals. Their roles are mainly in (a) sponsoring catastrophe bond transactions to lower their weighted average cost of underwriting capital, particularly for peak modeled perils (b) sharing quality underwriting performance and access to mature reinsurance and insurance relationships through sidecars and other managed vehicles and (c) managing bond funds where reinsurers have relationship and familiarity benefits with bond sponsors. These activities show the beginnings of a true rotation in how the reinsurance business will be capitalized. Key Findings

Aon Benfield estimates that global reinsurer capital rose by 1% to USD510 billion over the six months ending June 30, 2013, the generally solid earnings of major insurers and reinsurers and a continuing influx of new funds from capital markets investors being partially offset by unrealized losses on bond portfolios. The shareholders’ funds of the 31 companies forming the Aon Benfield Aggregate (ABA) totaled USD313 billion, a reduction of 1% or USD4 billion since the end of 2012. The primary drivers were net income of USD16 billion offset by dividends and share buybacks totaling USD15 billion and unrealized investment losses of USD4 billion. Gross property and casualty (P&C) premiums written by the ABA rose by 5% to USD109 billion, split 45% to direct insurance and 55% to reinsurance. The main engine of organic growth was the US market, driven by improving economic conditions and higher pricing in certain primary insurance lines. Relative to the prior year, the ABA reported a 26% increase in P&C underwriting profit to USD8.9 billion, higher catastrophe losses being offset by more favorable prior year reserve development. The combined ratio improved by 1.7 points to 89.0%. Annualized pre-tax operating returns (excluding all realized and unrealized gains and losses) relative to average total equity stood at 11.4%. Adjusting net income to include all unrealized movements reported through other comprehensive income, the return on average common equity stood at 7.8%. Evolution of the ABA

Aon Benfield Aggregate (ABA) reports are produced on a half-yearly basis and cover the reported results of 31 major reinsurers worldwide, with the aim of identifying trends in the non-life reinsurance marketplace. All of the constituents are publicly-listed, with the exception of two US subsidiaries of Berkshire Hathaway, namely General Reinsurance Corporation (Gen Re) and National Indemnity Company (NICO). From 2013, Markel replaces Alterra as a constituent of the ABA, following its acquisition on May 1, 2013. Markel’s published results include Alterra’s contribution from that date only, but for the purposes of the ABA capital calculation (Exhibit 2), Alterra’s reported capital has been included in previous year-end totals.

4

Aon Benfield

ABA Capital The reported shareholders’ funds of the 31 ABA companies totaled USD313 billion at June 30, 2013, a reduction of 1% since the end of 2012. Bond valuations were impacted by rising interest rates in May and June, denting reported earnings and resulting in significant unrealized losses taken directly to equity. Exhibit 2: ABA Shareholders’ Funds 350 300

-1%

12%

2% 15%

USD (billions)

250

12%

29%

-17%

200 150 100

242

226

201

278

283

FY 2010

FY 2011

317

313

FY 2012

1H 2013

187

50 0 FY 2006

FY 2007

FY 2008

FY 2009

Source: Company reports, Aon Benfield Market Analysis

Capital Development Exhibit 3 shows the principal components of the change in ABA shareholders’ funds over the six months ending June 30, 2013. Improved underwriting performance relative to the prior year drove a 6% increase in reported net income, but this was out-weighed by the effects of more active capital management, adverse exchange rate movements and higher interest rates. NICO benefitted from USD6.1 billion of unrealized gains on its large equity holdings. The remainder of the ABA reported unrealized losses of USD10.0 billion, driven by the impact of rising yields on bond valuations. Excluding NICO, the reduction in ABA capital stood at 4%. Exhibit 3: ABA Shareholders’ Funds Development 350 16.2

USD (billions)

325

-10.9 -3.2

1.5

-3.9 -4.0

317.1

-0.2

312.5

Other

1H 2013 SHF

300

275

250 FY 2012 SHF

Additional capital

Net income

Dividends

Foreign Investment exchange losses

Share buybacks


5


Exhibit 4 shows the reported shareholders’ funds of the ABA constituents at June 30, 2013. At USD87 billion, NICO alone represented 28% of ABA capital. The top four aggregated to USD177 billion or 57% of the total. Exhibit 4: Reported Shareholders’ Funds by ABA Constituent 90

USD (billions)

80 40 70 60 30 50 40 20 30 20 10 0 0


Exhibit 5 shows the movements in the reported shareholders’ funds of the ABA constituents over the six months ending June 30, 2013. Two-thirds of the companies reported reductions, driven by a combination of active capital management and unrealized losses on bond portfolios. Hiscox, Lancashire, Swiss Re and Validus all paid special dividends in the period. The effect of unrealized losses was most significant at Munich Re (USD2.8 billion), Swiss Re (USD2.7 billion), ACE (USD1.3 billion), XL (USD0.8 billion) and Hannover Re (USD0.5 billion). Markel reported a substantial increase in shareholders’ funds to USD6.3 billion, driven by the Alterra acquisition. Exhibit 5: Movements in Reported Shareholders’ Funds 70% 60% 50% 25% 40% 20% 30% 15% 20% 10% 10% 5% 0% 0% -10% -5% -20% -10% -15%


6

ABA

Aon Benfield

Capital Management Relative to the first half of 2012, dividends and share buybacks increased by 32% to USD14.9 billion, equivalent to 4.8% of opening shareholders’ funds. Dividend payments rose by 20% to USD10.9 billion, the most significant in capital terms being at Lancashire (16%), Hiscox (14%), Gen Re (10%), Beazley (9%) and Swiss Re (8%). Share buybacks rose by 81% to USD4.0 billion, the most active purchasers being Platinum (12%), PartnerRe (11%), Validus (9%), Axis (8%) and Montpelier Re (7%). Exhibit 6: Dividends and Share Buybacks as % of Opening Shareholders’ Funds 20%

Dividends Share buy-backs

15%

10%

5%

0%


7


Premium Income Gross property and casualty (P&C) premiums written by the ABA totaled USD109 billion in the first six months of 2013, an increase of 5% relative to the same period in the prior year. This was split 45% to direct insurance and 55% to reinsurance. Exhibit 7: ABA P&C Gross Premiums Written 200

Full Year 192

181

Half Year

USD (billions)

150 5%

7% 100

103

97

109

50

0 2011

2012

2013


The main engine of organic growth was the US market, driven by improving economic conditions and higher pricing in certain primary insurance lines. The other main contributory factors were acquisition effects and continuing exposure growth in emerging markets. Exhibit 8: P&C Gross Premiums Written by ABA Constituent 16 14

P&C Insurance P&C Reinsurance

USD (billions)

12 10 8 6 4 2 0


The distribution of P&C gross premiums written across the 31 ABA constituents is shown in Exhibit 8. For the purposes of this chart only, Munich Re’s primary P&C insurance business (ERGO) is included. The splits between insurance and reinsurance are shown for illustrative purposes only, based on company disclosure that is not entirely consistent.

8

Aon Benfield

Exhibit 9: Changes in P&C Gross Premiums Written 50% ABA 40% 30% 20% 10% 0% -10% -20%

*P&C reinsurance segment only Source: Company reports, Aon Benfield Market Analysis

Exhibit 9 shows year-on-year movements in P&C gross premiums written across the ABA. Strong growth at Markel, Alleghany and Validus was partly acquisition-related: Alterra, Transatlantic and Flagstone were consolidated from May 1, 2013, March 6, 2012 and November 30, 2012, respectively. Excluding a large quota share contract in Florida, Everest Re reported growth of 12% (US insurance and reinsurance). At the other end of the spectrum, Lancashire reported an 18% reduction in gross premiums written, driven by its exit from property direct and facultative and most retrocession business. The 15% reduction at NICO reflected the termination of a 20% quota share across most of Swiss Re’s P&C book (which represented 50% of net premiums earned in the first half of 2012), offset by non-specified growth elsewhere. Exhibit 10: Changes in P&C Reinsurance Gross Premiums Written 50% 40% 30% 20% 10% 0% -10% -20% -30%

*On a constant currency basis Source: Company reports, Aon Benfield Market Analysis

9


Exhibit 10 shows year-on-year movements in gross P&C reinsurance premiums written across the ABA, based on segmental disclosure. Six companies reported growth in excess of 15%, the top three results being influenced by the aforementioned acquisitions. Validus reported underlying growth of 21%, driven by new proportional crop treaties and property business written through the AlphaCat division. Allied World reported growth of 28%, driven by US property cat (through its partnership with Aeolus), crop and general casualty. Exhibit 11: Ceded Reinsurance as a % of P&C Gross Premiums Written 50% ABA 40% 30% 20% 10% 0%


Net P&C insurance and reinsurance premiums written by the ABA rose by 7% to USD91.6 billion in the first half of 2013, an overall retention ratio of 84.2%, compared with 83.1% in the comparative period of the prior year. The result was skewed by the termination of the 20% quota share between Swiss Re and NICO at the end of 2012. More than half of the ABA companies actually reported increased reinsurance cession rates, contributory factors being increased use of third party capital and opportunistic purchases of additional catastrophe protection. It should be noted that Gen Re operates with an internal quota share to NICO. Exhibit 12: P&C Net Premiums Earned by ABA Constituent 12 10

USD (billions)

8 6 4 2 0


10

Aon Benfield

Net P&C insurance and reinsurance premiums earned by the ABA rose by 6% to USD81.1 billion in the first half of 2013, the five largest constituents representing 51% of the total. The distribution is shown in Exhibit 12. Exhibit 13: Changes in P&C Net Premiums Earned 50% ABA 40% 30% 20% 10% 0% -10% -20%


Exhibit 13 shows year-on-year movements in P&C net premiums earned across the ABA. The reported outcomes for Swiss Re, RenaissanceRe and Beazley benefitted from increased premium retention, relative to the prior year.

11


Earnings Operating performance remained solid in the first half of 2013, driven by higher premium leverage, below average insured natural catastrophe losses and increased prior year reserve releases. Bond valuations were reduced by rising interest rates in May and June, with only part of the impact reported through income statements. Exhibit 14: ABA Pre-Tax Profit 30 18.9

18.9

USD (billions)

20 Capital gains/losses Non-life underwriting result

10 2.8

Investment income Life underwriting result

0

Other -10

-20

Pre-tax profit

1H 2011

1H 2012

1H 2013


Pre-tax profit reported through ABA income statements was unchanged at USD18.9 billion in the first half of 2013. P&C underwriting profit rose by 26% to USD8.9 billion, including an increased contribution of USD3.7 billion from prior year reserve releases. Ordinary investment income was stable and remained the main driver of the result. Capital gains more than halved to USD0.5 billion, but this outcome is misleading, as the majority of the unrealized losses on bond portfolios were taken directly to equity. Exhibit 15: Pre-Tax Profit by ABA Constituent 3.5 3.0

USD (billions)

2.5 2.0 1.5 1.0 0.5 0.0 -0.5


12

Aon Benfield

Exhibit 15 shows the distribution of reported pre-tax profits across the 31 ABA constituents. The impact of rising interest rates varied depending on investment classification choices and direct result comparison can therefore be misleading. The combined results of NICO, Swiss Re, Munich Re and ACE rose by 15% to USD10.5 billion, representing 56% of the total. Fairfax, one of the few companies taking all investment valuation changes through the income statement, reported an overall deficit, despite improved underwriting performance, driven by USD0.7 billion of unrealized losses.

Underwriting Performance The ABA combined ratio improved by 1.7 percentage points in the first half of 2013, reflecting higher premium leverage, lower attritional loss activity and increased prior year reserve releases. Worldwide insured natural catastrophe losses totaled USD20 billion, down 20% relative to both 2012 and the 10 year average (Source: Impact Forecasting). However, net catastrophe losses disclosed by the ABA rose by 55% to USD4.2 billion, reflecting higher cessions to the reinsurance market, particularly in the case of the floods in Central Europe. Exhibit 16: ABA Combined Ratio Composition 120% 100%

115.1%

29.4%

80% 60%

59.4%

90.7% 3.5%

89.0% 5.1%

59.4%

57.9%

Total catastrophe losses Attritional loss ratio Expense ratio

40%

Prior year reserve adjustment 20%

30.2%

30.8%

30.5%

-4.0%

-3.0%

-4.5%

1H 2011

1H 2012

1H 2013

0% -20%


Exhibit 17 shows the distribution of reported combined ratios across the 31 ABA constituents in the first half of 2013. All companies were profitable on a calendar year basis. Markel’s underwriting result includes USD62 million of expenses relating to the Alterra acquisition, which added almost 5 points to the combined ratio. Exhibit 17: Reported Combined Ratios 120%

Loss ratio

Expense ratio

ABA

100% 80% 60% 40% 20% 0%


13


Exhibit 18 shows reported P&C underwriting results by ABA constituent. Swiss Re, NICO, Munich Re and ACE between them contributed 42% of the total profit. Exhibit 18: P&C Underwriting Results 1,200

USD (millions)

1,000

800

600

400

200

0


Exhibit 19 shows prior year reserve releases as a percentage of net premiums earned by ABA constituent. QBE was the only company to report adverse development overall, driven by casualty lines in Argentina and Italy and program business in run-off in the US. Between them, Aspen, Lancashire, Munich Re, Swiss Re and Validus added USD181 million to Costa Concordia reserves during the period. Exhibit 19: Loss Reserve Adjustments as % of Net Premium Earned 40% ABA 35% 30% 25% 20% 15% 10% 5% 0% -5%

*P&C reinsurance segment only **No disclosure Source: Company reports, Aon Benfield Market Analysis

14

Aon Benfield

Exhibit 20 shows reported accident year combined ratios by ABA constituent (i.e. discounting prior year movements). Five ABA companies were unprofitable on this basis. Exhibit 20: Accident Year Combined Ratios 140% ABA 120% 100% 80% 60% 40% 20% 0%


Investment Results Ordinary investment income was unchanged at USD18.2 billion in the first half of 2013. The consequences of the low interest rate environment of recent years can clearly be seen in the declining yields on average cash and investments displayed in Exhibit 21. Realized and unrealized gains taken through ABA income statements more than halved to USD0.5 billion. Many companies also took substantial post-tax unrealized losses directly to equity at June 30, 2013. Exhibit 21: ABA Investment Return 6%

Total Investment Return (incl. Capital Gains/Losses) Underlying Investment Return 4.0%

4% 3.8%

3.8%

3.5%

3.6%

3.4%

1H 2012

1H 2013

2%

0% 1H 2011 Source: Company reports, Aon Benfield Market Analysis

15


Net Income The ABA companies reported net income attributable to common shareholders of USD16.0 billion for the first half of 2013, an increase of 6% relative to the same period in the prior year. Exhibit 22: ABA Net Income 20

USD (billions)

16

12

8

15.1

16.0

1H 2012

1H 2013

4 2.5 0 1H 2011 Source: Company reports, Aon Benfield Market Analysis

Exhibit 23 shows the distribution of net income attributable to common shareholders by ABA constituent. The combined results of NICO, Swiss Re, Munich Re and ACE rose by 26% to USD9.0 billion, representing 56% of the total. The impact of rising interest rates varied depending on investment classification choices and direct result comparison can therefore be misleading. Exhibit 23: Net Income by ABA Constituent 3.5 3.0

USD (billions)

2.5 2.0 1.5 1.0 0.5 0.0 -0.5


16

Aon Benfield

Return on Equity Analysis of returns on equity in the first half of 2013 is compromised by the partial inclusion of investment valuation movements in ABA income statements. For the sake of consistency, Exhibit 24 shows annualized pretax operating returns, excluding all realized and unrealized gains and losses, relative to average total equity. Exhibit 24: ABA Pre-Tax Operating Income as % of Average Total Equity 20%

15% 12.0%

11.4%

10%

5% 1.1% 0% 1H 2011

1H 2012

1H 2013


Exhibit 25 shows pre-tax operating returns by ABA constituent. Exhibit 25: Pre-Tax Operating Income as % of Average Total Equity 30% ABA 25% 20% 15% 10% 5% 0%


17


An alternative view is to look at net income adjusted to include all unrealized losses included in other comprehensive income relative to average common equity. On this basis, the ABA generated a return of 7.8% in the first half of 2013, reducing to 2.6% excluding NICO. Exhibit 26: ABA Adjusted Net Income as % of Average Common Equity 20% 16.9%

Adjusted Net Income ROE Adjusted Net Income ROE ex NICO

15% 16.0% 10% 7.8% 5% 1.9%

2.6%

0.8%

0% 1H 2011

1H 2012

1H 2013


Exhibit 27 shows adjusted net income returns by ABA constituent. Exhibit 27: Adjusted Net Income as % of Average Common Equity 25% ABA 20% 15% 10% 5% 0% -5% -10%


18

Aon Benfield

ABA Business Model Evolution A structural shift in the way capital is raised and deployed to mitigate insurance risk is in progress. The pool of potential investors is broadening and new money is flowing towards structures offering access to quality business at relatively low cost. These changes are forcing the ABA companies to re-evaluate their business models. Who Are The New Investors? Reinsurance as an asset class has performed relatively well in an environment of low interest rates and is viewed as having limited correlation with broader capital market movements. These attributes have broadened the pool of potential investors to pension funds, high net worth individuals and sovereign wealth funds, who typically will:   

only enter the sector after extensive due diligence invest a small percentage of the substantial assets at their disposal as a diversifying strategy seek lower, more stable returns over longer timeframes than has historically been the case

How Is New Money Being Deployed? Much of the new capital is being channelled to specialist fund managers, who then deploy it into the insurancelinked securities (ILS) sector via products such as catastrophe bonds and industry loss warranties, or other ‘nontraditional’ structures, such as sidecars and collateralized reinsurance, on their investors’ behalf. The current focus is property catastrophe and retrocession business, particularly in the US market where exposures tend to be best understood, although diversification into other lines and territories is underway.

Implications for ‘Traditional’ Reinsurers Earnings were already under pressure from below average premium gearing and low interest rates. Now new vehicles operating at a lower cost of capital are making in-roads into higher-margin areas that remain a key driver of profits. These dynamics are forcing many ABA constituents to rethink their business models in the pursuit of differentiation and relevance in the market. In the catastrophe reinsurance space, this increasingly means being able to offer bigger line sizes, a full product suite including collateralized limits and enhanced claims service. Companies that are successful in attracting and deploying third party capital will potentially be able to advance their client offering, reduce earnings volatility through fee income, lower their own risk transfer costs and manage their capital base more effectively.

ABA Reaction Cost structures and client offerings are currently under review. Over time, it is expected that less reinsurance business will be written on rated balance sheets and more through ‘satellite’ structures backed by third party capital. RenaissanceRe has operated this model for many years and other ABA companies are now pursuing similar strategies. Capital market involvement that may previously have been limited to secondary investment in catastrophe bonds or simple quota share ‘sidecar’ structures is now morphing into full-on engagement. Several ABA companies are already involved in the management of third party funds, including Amlin (Leadenhall), Montpelier Re (Blue Water), SCOR (Atropos) and Validus (AlphaCat). New capital markets divisions were established by Aspen, Axis, Lancashire, Montpelier Re, Sirius and XL in 2013, while Hannover Re (Leine) and RenaissanceRe (Medici) recently opened existing internal funds to third parties. An alternative route, pursued by Alleghany/Transatlantic (Pillar), Allied World (Aeolus) and Hiscox (Third Point Re), is to invest in strategic partnerships with established independent specialist fund managers.

19


Convergence in Action More than USD1 billion of capital has been injected into ABA sidecar vehicles in 2013, including eight new structures. Investors favor these reloadable joint ventures, as they have lower regulatory and operational entry barriers than new start-ups and a built-in exit strategy. These transactions included several Bermuda sponsors that have tapped the market multiple times, including Alterra (New Point V), Lancashire (Saltire I), Hiscox (Kiskadee Re), RenaissanceRe (Upsilon Re II) and Validus (AlphatCat Re). However, there were also new sponsors, such as ACE (Altair Re), Argo (Harambee Re), Everest Re (Mt. Logan Re) and PartnerRe (Lorenz Re). Many ABA constituents have been able to take advantage of the newly available capacity from the capital markets to drive down their own risk transfer costs. Retrocession costs have reduced and several companies have purchased additional protection, with consequent impact on disclosed modeled exposures. Several ABA constituents also executed on new catastrophe bond transactions, including new sponsor Axis. Exhibit 28: Recent Examples of Convergence in Action Company ACE

Altair Re formed with $95m of third party capital to provide collateralized capacity for ACE Tempest Re (Apr 2013)

Alleghany

Partnerships with Ares Management (July 2013) and Pillar Capital (Dec 2012) Partnership with Aeolus Capital (Dec 2012)

Allied World Amlin Arch Argo

Longstanding partnership with Leadenhall Capital (May 2008); Tramline Re II Ltd cat bond (Jun 2013); Tramline Re Ltd cat bond (Dec 2011); Special Purpose Syndicate 6106 (since 2009) Reported casualty reinsurance initiative with Highbridge Capital (Jul 2013); Larry Richardson (ex-RenRe) appointed SVP Capital Markets (Mar 2012) Property insurance and reinsurance sidecar Harambee Re (Jan 2013); Mark Gibson (ex-BNP) appointed Director of Alternative Risk Capital (Jun 2012); Loma Re 2 cat bond (Dec 2011); Loma Re 1 cat bond (Jun 2011)

Aspen

Aspen Capital Markets formed under Brian Tobben (Apr 2013); ILW partnership with Cartesian Capital (Jun 2009-Jul 2013)

Axis

Northshore Re cat bond (Aug 2013); Ben Rubin (ex-BoAML) appointed EVP Capital Markets (Jun 2013); Axis Re Weather & Commodity Markets initiative (Jun 2013)

Beazley Catlin

Special Purpose Syndicate 6107 (since 2010) Considering offering third party capital management (Aug 2013); Special Purpose Syndicates 2088, 6111 & 6112 (from 2012)

Endurance

Jerome Faure (ex-ILS Capital) appointed CEO Global Reinsurance (Feb 2013)

Everest Re

Sidecar Mt Logan Re launched under Rick Pagnani with $50m of seed capital to provide collateralized capacity to the worldwide property cat market (Jan 2013); purchased ILW retro to reduce Florida PML (Jun 2013)

Fairfax Hannover Re Hiscox Lancashire

No public disclosure Opened internal ILS fund to third parties via Leine Investment (Jan 2013); multiple sidecar and cat bond sponsor Michael Jedraszak appointed Director of ILS (Jul 2013); Kiskadee Re formed to write collateralized reinsurance (Apr 2013); partnership with Third Point (Oct 2012), Special Purpose Syndicate 6104 (since 2008) Darren Redhead (ex-DE Shaw) appointed to head Kinesis Capital Management (Mar 2013); collateralized worldwide aggregate cover through Saltire (Nov 2012); collateralized property retro through Accordion sidecar (Jul 2012)

Mapfre

No public disclosure

Markel

Collateralized retro via Alterra’s New Point sidecar series - $247m of capital at Dec 2012 (Markel $75m, Stone Point $75m)

Montpelier Re Munich Re PartnerRe Platinum

Launched Blue Capital with $50m of seed capital (Oct 2012); total partnership capital exceeded $200m at June 30; writes collateralized reinsurance via Blue Water Re Has operated an internal ILS fund for 6+ years; openly discussed establishing a third party fund (Sep 2012); multiple structurer and sponsor of cat bonds Lorenz Re formed with $75m of third party capital to provide additional capacity to PartnerRe on a diversified portfolio of cat treaties over a multi-year period (Mar 2013); has operated an internal ILS fund for several years Purchased $50m of non-traditional cat cover in 2Q; has ceded $75m of premium and reserves to Third Point Re since Oct 2012

QBE RenaissanceRe SCOR Swiss Re Validus White Mountains XL

No public disclosure Mona Lisa Re cat bond (Jul 2013); internal ILS fund Medici opened to third parties (Jun 2013); multiple sidecar sponsor (Top Layer/DaVinci/Upsilon/Timicuan) Launched ILS fund Atropos with $100m of seed capital (Aug 2011); multiple cat bond sponsor (Atlas Re series) No immediate plans to open internal ILS fund to third parties (Nov 2012); Sector Re sidecar series; multiple cat bond structurer and sponsor ILS activities are coordinated by AlphaCat Managers; collateralized property cat and retro is written via the AlphaCat Re sidecar series; provided $50m of seed capital to PaCRe, a joint venture with Paulson & Co writing top layer cat business (Apr 2012) Sirius Capital Markets headed by Michael Halsband (ex-Deutsche Bank) and Deanne Nixon (May 2013) XL and Stone Point will commit $135m of seed capital to establish a Bermuda-based ILS manager (Jul 2013); Craig Wenzel (exDeutsche Bank) appointed SVP Capital Markets (Dec 2012)


20

Aon Benfield

ABA Valuation The overall market capitalization of the ABA companies has increased by 10% since the beginning 2013. The trailing price-to-book ratio has improved from 0.9x to 1.0x over the same period. Exhibit 29: ABA Market Capitalization (indexed to January 1, 2008) 120 110 100 90 80 70 60 50 40 Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Note: Excluding Berkshire Hathaway Source: Bloomberg, Aon Benfield Market Analysis

Most ABA constituents have experienced rising share prices in 2013. Movements since the beginning of the year are shown in Exhibit 30. Exhibit 30: Share Price Development (January 1, 2013 – August 28, 2013) 50% 40% 30% 20% 10% 0% -10%

Source: Bloomberg, Aon Benfield Market Analysis

21


The trailing price-to-book ratio of the ABA as a whole improved from 0.9x at December 31, 2012 to 1.0x at June 30, 2013. Development since the onset of the financial crisis is shown in Exhibit 30. Exhibit 31: ABA Trailing Price-to-Book Ratio (January 1, 2008 – August 28, 2013) 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Note: Excluding Berkshire Hathaway Source: Bloomberg, Aon Benfield Market Analysis

Changes in the trailing price-to-book ratios of the individual ABA constituents since the beginning of 2013 are shown in Exhibit 32. Exhibit 32: Trailing Price-to-Book Ratios by ABA Constituent 2.0

1.0

0.0

Source: Bloomberg, Aon Benfield Market Analysis

22

August 28, 2013

January 1, 2013

Average

Average

Aon Benfield

Financial Strength Ratings Exhibit 33: Financial Strength Ratings Main Operating Company

A.M. Best

Standard & Poor’s

ACE Tempest Reinsurance Ltd

A+

Positive

AA-

Positive

Allied World Assurance Company Ltd

A

Stable

A

Stable

Alterra Bermuda Ltd

A

Stable

A

Stable

Amlin AG

A

Stable

A

Stable

Arch Reinsurance Ltd

A+

Stable

A+

Stable

Argo Re Ltd

A

Stable

Not Rated

-

Aspen Bermuda Ltd

A

Stable

A

Stable

AXIS Specialty Ltd

A

Positive

A+

Stable

Beazley Insurance Company, Inc

A

Stable

Not Rated

-

Catlin Insurance Company Ltd

A

Stable

A

Stable

Endurance Specialty Insurance Ltd

A

Stable

A

Stable

Everest Reinsurance (Bermuda) Ltd

A+

Stable

A+

Stable

General Reinsurance Corporation

A++

Stable

AA+

Negative

Hannover Rückversicherungs SE

A+

Stable

AA-

Stable

Hiscox Insurance Company (Bermuda) Ltd

A

Stable

Not Rated

-

Lancashire Insurance Company Ltd

A

Stable

A-

Stable

MAPFRE Re, Compania de Reaseguros SA

A

Negative

BBB+

Negative

Montpelier Reinsurance Ltd

A

Stable

A-

Stable

Munich Reinsurance Company

A+

Stable

AA-

Stable

National Indemnity Company

A++

Stable

AA+

Negative

Odyssey Reinsurance Company

A

Stable

A-

Stable

Partner Reinsurance Company Ltd

A+

Stable

A+

Stable

Platinum Underwriters Bermuda Ltd

A

Stable

A-

Stable

QBE Re (Europe) Ltd

A

Stable

A+

Stable

Renaissance Reinsurance Ltd

A+

Stable

AA-

Stable

SCOR Global P&C SE

A

Stable

A+

Stable

Sirius International Insurance Corporation

A

Stable

A-

Stable

Swiss Reinsurance Company

A+

Stable

AA-

Stable

Transatlantic Reinsurance Company

A

Stable

A+

Stable

Validus Reinsurance Ltd

A

Stable

A

Stable

A

Stable

A

Positive

XL Re Ltd Ratings at August 2013

Source: A.M. Best, Standard & Poor’s

Best's Credit Ratings are under continuous review and subject to change and/or affirmation. For the latest Best’s Credit Ratings and Best’s Credit Reports (which include Best’s Credit Ratings), visit the A.M. Best website at http://www.ambest.com. See Guide to Best’s Credit Ratings for explanation of use and charges. Best's Credit Ratings reproduced herein appear under license from A.M. Best and do not constitute, either expressly or impliedly, an endorsement of (Licensee's publication or service) or its recommendations, formulas, criteria or comparisons to any other ratings, rating scales or rating organizations which are published or referenced herein. A.M. Best is not responsible for transcription errors made in presenting Best's Credit Ratings. Best’s Credit Ratings are proprietary and may not be reproduced or distributed without the express written permission of A.M. Best Company. A Best’s Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance obligations. It is not a warranty of a company’s financial strength and ability to meet its obligations to policyholders. View our Important Notice: Best's Credit Ratings for a disclaimer notice and complete details at http://www.ambest.com/ratings/notice.

23


Appendix 1: ABA Data Exhibit 34: Results for the six months ended June 30, 2013

Reporting Company

P&C Gross

P&C Gross

P&C Net

P&C Net

Premiums

Premiums

Premiums

Premiums

Currency

Written

Written

Written

Written

(millions)

1H 2012

1H 2013

Change

1H 2012

1H 2013

Change

ACE

USD

9,415

9,953

6%

6,728

7,200

7%

Alleghany

USD

1,909

2,589

36%

1,658

2,253

36%

Allied World

USD

1,328

1,602

21%

1,084

1,276

18%

Amlin

GBP

1,815

1,839

1%

1,489

1,525

2%

Arch

USD

2,118

2,204

4%

1,684

1,763

5%

Argo

USD

871

980

13%

603

669

11%

Aspen

USD

1,449

1,461

1%

1,215

1,210

0%

Axis

USD

2,540

2,966

17%

2,169

2,564

18%

Beazley

USD

1,013

1,067

5%

651

758

16%

Catlin

USD

3,010

3,299

10%

2,258

2,437

8%

Endurance

USD

1,666

1,750

5%

1,327

1,374

3%

Everest Re

USD

1,956

2,441

25%

1,872

2,362

26%

Fairfax

USD

3,647

3,597

-1%

3,087

3,036

-2%

Gen Re

USD

511

485

-5%

259

244

-6%

Hannover Re

EUR

4,080

4,097

0%

3,680

3,696

0%

Hiscox

GBP

906

1,018

12%

702

770

10%

Lancashire

USD

515

424

-18%

366

308

-16%

Mapfre

EUR

8,192

8,665

6%

6,586

6,568

0%

Markel

USD

1,296

1,844

42%

1,148

1,590

39%

Montpelier Re

USD

513

504

-2%

431

424

-2%

Munich Re*

EUR

8,397

8,533

2%

7,989

8,107

1%

NICO

USD

4,180

3,572

-15%

4,166

3,358

-19%

PartnerRe

USD

2,308

2,607

13%

2,189

2,463

13%

Platinum

USD

285

283

-1%

285

281

-1%

QBE

USD

9,223

9,446

2%

7,509

7,767

3%

RenaissanceRe

USD

1,331

1,339

1%

920

996

8%

SCOR

EUR

2,255

2,378

5%

2,004

2,069

3%

Swiss Re

USD

11,421

11,538

1%

8,879

10,847

22%

Validus

USD

1,464

1,807

23%

1,238

1,498

21%

White Mountains

USD

1,369

1,261

-8%

1,171

1,057

-10%

XL

USD

4,080

4,349

7%

3,311

3,502

6%

ABA

USD

103,455

108,871

5%

85,947

91,624

7%

*P&C reinsurance segment only Figures in reporting currencies, but converted to USD (millions) for ABA line Source: Company reports, Aon Benfield Market Analysis

24

Aon Benfield

Exhibit 34: Results for the six months ended June 30, 2013 (cont’d) Calendar Year Loss

Loss

Expense

Expense

Combined

Ratio

Ratio

Ratio

Ratio

Ratio

Ratio

1H 2012

1H 2013

1H 2012

1H 2013

1H 2012

1H 2013

Change

ACE

58.3%

58.0%

30.6%

30.1%

88.9%

88.1%

-0.9pp

Alleghany

59.8%

56.8%

22.2%

31.0%

82.0%

87.9%

5.9pp

Allied World

56.0%

54.6%

29.2%

29.3%

85.2%

84.0%

-1.2pp

Amlin

52.8%

53.1%

31.2%

31.9%

84.0%

85.0%

1.0pp

Arch

56.5%

54.1%

32.2%

31.9%

88.7%

86.0%

-2.6pp

Argo

61.7%

58.4%

41.2%

40.4%

102.9%

98.8%

-4.0pp

Aspen

54.1%

57.1%

36.3%

36.6%

90.4%

93.7%

3.3pp

Axis

57.7%

59.4%

35.9%

33.3%

93.6%

92.7%

-0.9pp

Beazley

54.0%

52.0%

37.0%

37.0%

91.0%

89.0%

-2.0pp

Catlin

51.5%

54.6%

34.7%

34.3%

86.3%

88.9%

2.7pp

Endurance

65.4%

60.0%

28.9%

30.2%

94.3%

90.2%

-4.1pp

Everest Re

59.5%

58.2%

29.5%

26.0%

89.0%

84.2%

-4.8pp

Fairfax

66.6%

62.3%

31.6%

31.8%

98.2%

94.1%

-4.1pp

Gen Re

38.3%

53.9%

30.3%

41.0%

68.5%

94.9%

26.3pp

Hannover Re

71.1%

68.6%

25.8%

25.8%

96.8%

94.4%

-2.4pp

Hiscox

41.0%

37.5%

40.7%

37.2%

81.7%

74.7%

-6.9pp

Lancashire

31.7%

23.5%

35.5%

35.3%

67.2%

58.8%

-8.3pp

Mapfre

67.4%

67.2%

28.2%

27.9%

95.6%

95.1%

-0.5pp

Markel

48.9%

54.1%

44.5%

43.9%

93.3%

98.0%

4.6pp

Montpelier Re

32.9%

32.6%

34.2%

32.9%

67.2%

65.5%

-1.6pp

Munich Re*

66.0%

62.8%

29.8%

29.6%

95.8%

92.4%

-3.4pp

NICO

52.4%

42.9%

32.3%

25.4%

84.7%

68.3%

-16.4pp

PartnerRe

57.0%

61.4%

30.7%

28.6%

87.8%

90.0%

2.2pp

Platinum

51.6%

28.4%

30.5%

32.2%

82.1%

60.6%

-21.5pp

QBE

61.5%

59.4%

31.4%

33.3%

92.9%

92.8%

-0.1pp

RenaissanceRe

12.4%

23.3%

25.5%

25.9%

38.0%

49.2%

11.2pp

SCOR

64.9%

64.5%

28.9%

29.8%

93.8%

94.3%

0.5pp

Swiss Re

54.9%

55.8%

30.4%

29.9%

85.3%

85.7%

0.4pp

Validus

42.9%

38.0%

32.8%

31.7%

75.7%

69.7%

-6.0pp

White Mountains

50.9%

52.3%

36.7%

34.0%

87.7%

86.3%

-1.4pp

XL

60.9%

60.3%

32.1%

30.5%

93.0%

90.8%

-2.3pp

ABA

60.0%

58.5%

30.8%

30.5%

90.7%

89.0%

-1.7pp

Company

Combined


25


Exhibit 34: Results for the six months ended June 30, 2013 (cont’d) Accident Year Prior Year

Accident

Prior Year

Prior Year

Reserve

Reserve

Year

Year

Reserve

Reserve

Adjustment

Adjustment

Combined

Combined

Adjustment

Adjustment

as % of NPE

as % of NPE

Ratio

Ratio

1H 2012

1H 2013

1H 2012

1H 2013

1H 2012

1H 2013

Change

-206

-198

3.3%

3.0%

92.2%

91.0%

-1.2pp

-1

-134

0.0%

6.2%

82.0%

94.1%

12.1pp

Allied World

-81

-92

9.8%

9.5%

95.0%

93.5%

-1.5pp

Amlin

-53

-61

5.4%

5.8%

89.4%

90.8%

1.4pp

Arch

-117

-124

8.3%

8.2%

97.0%

94.2%

-2.7pp

Argo

-7

-17

1.3%

2.7%

104.2%

101.6%

-2.6pp

Aspen

-66

-54

6.5%

5.1%

96.9%

98.8%

1.8pp

-120

-97

7.1%

5.3%

100.6%

98.0%

-2.6pp

Beazley

-48

-61

6.8%

8.0%

97.8%

97.0%

-0.8pp

Catlin

-30

-56

1.8%

2.9%

88.0%

91.8%

3.8pp

Endurance

-37

-114

3.9%

11.8%

98.2%

102.0%

3.8pp

Everest Re

0

-1

0.0%

0.0%

89.0%

84.3%

-4.7pp

Fairfax

-50

-142

1.9%

4.9%

100.1%

99.0%

-1.0pp

Gen Re

-94

-70

35.3%

25.5%

103.9%

120.3%

16.5pp

Hannover Re

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

-116

-74

20.5%

11.7%

102.1%

86.4%

-15.7pp

Lancashire

-44

-7

14.9%

2.8%

82.1%

61.7%

-20.4pp

Mapfre

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

Markel

-191

-204

18.3%

15.1%

111.6%

113.1%

1.5pp

-45

-66

14.8%

22.1%

82.0%

87.7%

5.7pp

0

-250

0.0%

3.1%

95.8%

95.5%

-0.3pp

-48

-652

1.5%

20.8%

86.2%

89.1%

2.9pp

PartnerRe

-279

-310

16.5%

16.3%

104.3%

106.3%

2.0pp

Platinum

-51

-99

18.0%

36.6%

100.1%

97.2%

-2.9pp

QBE

117

178

-1.6%

-2.4%

91.3%

90.3%

-1.0pp

-101

-64

19.4%

11.4%

57.3%

60.6%

3.3pp

28

-31

-1.4%

1.5%

92.4%

95.7%

3.4pp

Swiss Re

-302

-445

4.3%

5.6%

89.6%

91.3%

1.6pp

Validus

-68

-107

7.6%

9.9%

83.2%

79.6%

-3.6pp

White Mountains

-11

-14

1.1%

1.4%

88.8%

87.7%

-1.1pp

-182

-150

6.6%

5.1%

99.6%

95.8%

-3.8pp

-2,292

-3,677

3.0%

4.5%

93.7%

93.5%

-0.2pp

Company ACE Alleghany

Axis

Hiscox

Montpelier Re Munich Re* NICO

RenaissanceRe SCOR

XL ABA

Prior Year

*P&C reinsurance segment only Figures in reporting currencies, but converted to USD (millions) for ABA line Source: Company reports, Aon Benfield Market Analysis

26

Accident

Aon Benfield

Exhibit 34: Results for the six months ended June 30, 2013 (cont’d) Net

Net

Capital

Capital

Total

Total

Investment

Investment

Gains/

Gains/

Investment

Investment

Income

Income

Losses

Losses

Return

Return

1H 2012

1H 2013

1H 2012

1H 2013

1H 2012

1H 2013

Change

1,081

1,065

-134

310

947

1,375

45%

144

219

105

37

249

256

3%

Allied World

90

71

142

-36

232

35

-85%

Amlin

25

24

57

41

82

65

-21%

Arch

181

159

76

68

257

227

-12%

Argo

61

53

10

21

72

74

3%

Aspen

105

94

10

9

116

103

-11%

Axis

190

192

45

61

235

253

7%

Beazley

28

29

8

-29

36

0

-99%

Catlin

59

54

24

-45

83

9

-89%

Endurance

89

82

20

15

108

97

-11%

Everest Re

302

295

82

161

384

455

19%

Fairfax

236

258

76

-476

312

-218

n.m.

Gen Re

386

512

11

40

396

552

39%

Hannover Re

651

650

59

39

709

689

-3%

Hiscox

21

21

21

1

43

22

-49%

Lancashire

19

23

5

12

24

35

45%

Mapfre

780

768

33

41

812

809

0%

Markel

143

143

20

29

164

172

5%

35

33

46

-62

81

-29

n.m.

Munich Re

3,825

3,545

225

18

4,050

3,563

-12%

NICO

2,899

2,967

-448

-20

2,451

2,946

20%

PartnerRe

300

248

231

-276

531

-28

n.m.

Platinum

55

36

45

23

100

59

-40%

394

330

292

29

686

359

-48%

95

80

75

-55

171

25

-85%

248

216

34

-7

282

209

-26%

3,427

3,733

-173

516

3,254

4,249

31%

Validus

53

55

-19

-143

34

-88

n.m.

White Mountains

82

57

51

38

133

95

-28%

550

558

8

77

559

635

14%

18,219

18,215

1,186

487

19,404

18,702

-4%

Company ACE Alleghany

Montpelier Re

QBE RenaissanceRe SCOR Swiss Re

XL ABA

Figures in reporting currencies, but converted to USD (millions) for ABA line Source: Company reports, Aon Benfield Market Analysis

27


Exhibit 34: Results for the six months ended June 30, 2013 (cont’d) Pre-tax

Pre-tax

Pre-tax

Pre-tax

Profit/Loss

Profit/Loss

Operating ROE*

Operating ROE*

1H 2012

1H 2013

Change

1H 2012

1H 2013

Change

1,559

2,081

33%

13.5%

12.9%

-0.6pp

Alleghany

756

400

-47%

28.3%

11.3%

-17.0pp

Allied World

327

158

-52%

11.5%

11.6%

0.1pp

Amlin

184

160

-13%

17.4%

15.2%

-2.2pp

Arch

387

443

15%

12.9%

14.4%

1.5pp

Argo

53

80

51%

5.8%

8.0%

2.2pp

Aspen

175

139

-21%

10.0%

7.7%

-2.2pp

Axis

330

401

21%

10.2%

12.0%

1.8pp

Beazley

113

82

-27%

19.2%

18.8%

-0.4pp

Catlin

231

145

-37%

12.4%

10.9%

-1.5pp

Endurance

156

165

6%

10.2%

11.0%

0.8pp

Everest Re

582

792

36%

16.0%

18.9%

2.9pp

Fairfax

108

-195

n.m.

0.7%

6.4%

5.7pp

Gen Re

479

568

19%

9.9%

10.2%

0.2pp

Hannover Re

547

608

11%

16.7%

17.6%

0.9pp

Hiscox

126

181

44%

16.2%

26.1%

9.9pp

Lancashire

107

137

28%

14.9%

18.9%

4.0pp

Mapfre

824

866

5%

16.2%

16.2%

0.0pp

Markel

194

163

-16%

9.6%

5.2%

-4.5pp

Montpelier Re

176

73

-58%

16.4%

16.4%

0.0pp

Munich Re

1,917

1,808

-6%

13.9%

13.5%

-0.4pp

NICO

3,025

3,445

14%

9.5%

8.3%

-1.2pp

PartnerRe

649

23

-96%

12.7%

9.0%

-3.7pp

Platinum

129

146

13%

9.8%

13.5%

3.6pp

QBE

914

585

-36%

11.3%

9.8%

-1.5pp

RenaissanceRe

448

284

-37%

16.5%

15.2%

-1.4pp

SCOR

260

237

-9%

10.0%

10.2%

0.2pp

2,065

2,600

26%

13.9%

13.0%

-0.9pp

Validus

240

183

-24%

14.1%

15.2%

1.1pp

White Mountains

178

155

-13%

5.7%

5.6%

-0.1pp

XL

452

671

48%

8.1%

10.3%

2.2pp

18,925

18,875

0%

12.0%

11.4%

-0.6pp

Company ACE

Swiss Re

ABA

*Calculated by excluding the impact of net realized and unrealized investment gains/losses reported through income statements Figures in reporting currencies, but converted to USD (millions) for ABA line n.m. = not meaningful Source: Company reports, Aon Benfield Market Analysis

28

Aon Benfield

Exhibit 34: Results for the six months ended June 30, 2013 (cont’d) Common

Common

Return on

Net Income

Net Income

Equity*

Equity*

1H 2012

1H 2013

Change

1H 2012

1H 2013

Change

1,301

1,844

42%

10.4%

13.5%

3.1pp

Alleghany

669

310

-54%

29.1%

9.6%

-19.5pp

Allied World

315

157

-50%

19.6%

9.4%

-10.2pp

Amlin

169

140

-17%

23.2%

17.8%

-5.4pp

Arch

360

422

17%

16.1%

17.3%

1.3pp

Argo

44

64

48%

5.9%

8.6%

2.7pp

Aspen

149

115

-23%

10.4%

8.1%

-2.3pp

Axis

290

375

29%

11.4%

14.7%

3.3pp

Beazley

100

72

-28%

18.2%

12.2%

-6.0pp

Catlin

184

118

-36%

13.3%

8.1%

-5.2pp

Endurance

139

145

5%

11.3%

12.6%

1.3pp

Everest Re

519

660

27%

16.6%

19.8%

3.1pp

Fairfax

63

-27

n.m.

1.7%

-0.7%

-2.4pp

Gen Re

397

539

36%

8.4%

10.4%

1.9pp

Hannover Re

405

408

1%

15.5%

14.0%

-1.5pp

Hiscox

125

158

27%

19.4%

23.0%

3.6pp

Lancashire

104

134

29%

15.1%

20.2%

5.1pp

Mapfre

434

456

5%

12.2%

11.6%

-0.6pp

Markel

147

117

-21%

8.3%

4.6%

-3.8pp

Montpelier Re

169

65

-62%

23.5%

8.9%

-14.6pp

Munich Re

1,588

1,501

-5%

13.2%

11.4%

-1.8pp

NICO

2,545

3,029

19%

7.0%

7.3%

0.3pp

PartnerRe

505

20

-96%

17.8%

0.7%

-17.1pp

Platinum

121

136

13%

14.2%

15.0%

0.8pp

QBE

760

477

-37%

13.9%

8.5%

-5.4pp

RenaissanceRe

344

217

-37%

21.7%

13.9%

-7.8pp

SCOR

206

189

-8%

9.2%

8.0%

-1.2pp

1,224

2,166

77%

8.1%

13.5%

5.4pp

Validus

292

254

-13%

16.9%

13.3%

-3.6pp

White Mountains

120

147

22%

6.1%

7.9%

1.8pp

XL

398

623

57%

8.3%

12.2%

4.0pp

15,138

15,996

6%

10.8%

10.4%

-0.4pp

Company ACE

Swiss Re

ABA

Return on

*Common net income as a percentage of average common equity Figures in reporting currencies, but converted to USD (millions) for ABA line n.m. = not meaningful Source: Company reports, Aon Benfield Market Analysis

29


Exhibit 34: Results for the six months ended June 30, 2013 (cont’d) Cash and

Cash and

Shareholders’

Investments

Investments

Funds

Funds

FY 2012

1H 2013

Change

FY 2012

1H 2013

Change

ACE

61,333

60,821

-1%

27,531

27,295

-1%

Alleghany

18,976

18,783

-1%

6,404

6,498

1%

Allied World

8,799

9,032

3%

3,326

3,373

1%

Amlin

4,396

4,462

1%

1,497

1,650

10%

Arch

13,127

13,427

2%

5,169

5,234

1%

Argo

4,297

4,087

-5%

1,514

1,491

-2%

Aspen

8,240

8,017

-3%

3,488

3,235

-7%

14,397

14,388

0%

5,780

5,562

-4%

Beazley

4,330

4,202

-3%

1,205

1,158

-4%

Catlin

8,774

8,529

-3%

3,512

3,491

-1%

Endurance

6,639

6,515

-2%

2,711

2,736

1%

Everest Re

16,805

16,267

-3%

6,733

6,623

-2%

Fairfax

26,125

24,883

-5%

8,821

8,486

-4%

Gen Re

15,119

14,439

-4%

10,693

10,115

-5%

Hannover Re

46,565

46,391

0%

6,032

5,595

-7%

Hiscox

3,073

3,183

4%

1,365

1,390

2%

Lancashire

2,253

2,090

-7%

1,387

1,266

-9%

Mapfre

39,402

40,530

3%

7,810

7,868

1%

Markel

9,333

16,584

78%

3,889

6,321

63%

Montpelier Re

3,320

3,248

-2%

1,629

1,570

-4%

Munich Re

208,614

204,198

-2%

27,181

25,405

-7%

NICO

124,064

136,233

10%

79,409

86,604

9%

PartnerRe

18,831

17,856

-5%

6,933

6,367

-8%

Platinum

4,062

3,727

-8%

1,895

1,747

-8%

31,587

29,969

-5%

11,358

11,163

-2%

6,595

6,374

-3%

3,503

3,568

2%

22,552

21,985

-3%

4,800

4,696

-2%

176,894

168,667

-5%

34,002

30,110

-11%

Validus

8,156

7,871

-3%

4,021

3,618

-10%

White Mountains

8,256

7,724

-6%

3,732

3,689

-1%

36,599

35,216

-4%

10,510

9,893

-6%

1,067,444

1,057,928

-1%

314,264*

312,514

-1%

Company

Axis

QBE RenaissanceRe SCOR Swiss Re

XL ABA

Shareholders’

*To allow more consistent comparison, Transatlantic and Alterra’s reported capital is included in the year-end capital figures shown in Exhibit 2 and 3 Figures in reporting currencies, but converted to USD (millions) for ABA line Source: Company reports, Aon Benfield Market Analysis

30

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