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World VisionState of the Market: Property & Casualty session Insurance Roundtable - Virtual17 September 2020

Nick Robson

Global Specialty Head, Credit Specialties

London, United Kingdom

MARSH JLT SPECIALTY 116 September 2020

Global Insurance Pricing Increase for eleventh consecutive quarter

Global Insurance Composite Pricing Change

SOURCE: MARSH GLOBAL ANALYTICS

-3%-3% -3%

-2% -2% -2%

1% 1% 2% 2%2%

3%

6%

8%

11%

14%

19%

Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

*Note: All references to pricing and pricing movements in this report should be considered averages, unless otherwise noted. For ease of reporting, we have rounded all percentages regarding pricing movements to the nearest whole number.

- Q2 rise in pricing was the largest year-over-year increase in the Marsh Global Insurance Market Index since its inception*

- 19% price rise in Q2 2020

Source: Marsh Global Analytics


Global Insurance Pricing Increase across major product categories

• Property: 19%

• Casualty: 7%

• Financial and professional liability: 37%

10%

13%15%

19%

2%3%

5%7%

14%

18%

26%

37%

Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20

Global Composite Insurance Pricing Change – By Coverage Line


Global Property Global Casualty Global FinPro



Global Insurance Pricing Increase in all regions for the seventh consecutive quarter

Composite Insurance Pricing Change – By Region


US UK Cont. Europe Latin America Asia Pacific

6%

10%

14%

18%

12%

14%

21%

31%

4%

7%8%

15%

5%

7%6%

8%

5% 6% 6%

9%

19%

21%

23%

31%

Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20



Size of Country Economic Risk Score Increase by RegionLargest economic risk (2+) / Smallest economic risk (0.0 - 0.4)

Source: Marsh JLT Specialty World Risk Review portal


Impact of the Lockdown on Speculative Grade Default RatesUseful proxy for the risk outlook for a significant proportion of the credit risk insured today

Source: Moody’s Investors Service July 2020 Default Report


Moody’s 1 Year Default Rate Forecasts by Industry Default rate changes between Jan-Jun 2020 have varied significantly by industry

Source: Moody’s Investors Service July 2020 Default Report

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

Utilities: Electric

Sovereign & Public Finance

Banking

Utilities: Oil & Gas

Insurance

Energy: Electricity

Real Estate (REIT)

Forest Products & Paper

Finance

Beverage, Food, & Tobacco

Transportation: Cargo

Transportation: Consumer

Media: Diversified & Production

Chemicals, Plastics, & Rubber

Construction & Building

Media: Broadcasting & Subscription

High Tech Industries

Healthcare & Pharmaceuticals

Telecommunications

Containers, Packaging, & Glass

Capital Equipment

Aerospace & Defense

Environmental Industries

Media: Advertising, Printing & Publishing

Metals & Mining

Consumer goods: non-durable

Energy: Oil & Gas

Retail

Wholesale

Services: Consumer

Services: Business

Consumer goods: durable

Automotive

Hotel, Gaming, & Leisure

Jan July


1YR Bonds Over U.S. Treasury – Spreads by RatingBond spreads have been trading with volatility across all speculative grades at approx 2X the average spreads in the prior year

Source: Moody’s Insights


COVID-19 Announced Losses Versus Top-down Industry Estimates

Source: Guy Carpenter


Lockdown Crisis Loss Estimates$100bn of industry loss for the insurance market in 2020 is realistic



Alternative Capital Growth Versus Property Catastrophe PricingRetro market has seen a rapid growth in the participation of alternative capital



Credit Specialties 2YR GFC Premium, Loss, and Loss Ratio EstimatesPremium income = $19bn in 2008. $27bn in 2019

Source: Marsh Internal Analysis

Services provided by Marsh JLT Specialty, a trading name of JLT Specialty Limited, which is a Lloyd’s Broker, authorised and regulated by the Financial Conduct Authority. JLT is part of Marsh, a Marsh & McLennan

company (“MMC”).

The information contained within this document is strictly confidential and may not be reproduced or disclosed to any third party without prior written approval and nothing herein shall be construed as conferring to you by

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