THE SPANISH MODEL FOR AGRICULTURAL CATASTROPHE RISK MANAGEMENT

1. THE SPANISH MODEL FOR AGRICULTURAL CATASTROPHE RISK MANAGEMENT December 8 - 9, 2005, Istanbul

2. ESPAÑA

3. INSURANCE AGROSEGURO PRIVATE PUBLIC C.C.S. REINSURANCE PLAYERS IN THE SPANISH SYSTEM OF AGRICULTURAL INSURANCE

4. MULTI-PERIL CROP INSURANCE SYSTEM (M.C.I.) V E R S U S NATIONAL BUDGET

5. SYSTEM ADVANTAGES (I) FOR THE STATE:- Cost is known in advance -Yearly endowment to subsidize premiums - Instrument for agricultural policy planning FOR THE FARMER: - Charged for only a part of the price - Capacity to decide what to insure and what not to

6. SYSTEM ADVANTAGES (II) FOR THE INSURER: Contribution to this insurance line, which is also backed by reinsurance systems, that allows losses to be kept at an acceptable level for the private insurance companies

7. FINANCING SYSTEM (IN EUROS)

8. I N S T I T U T I O N S AGRICULTURE MINISTRY ENESA INSURED FARMERS AGROSEGURO C.C.S. INTERNATIONAL REINSURANCE STATE

9. M. AGRICULTURE – ENESA – FUNCTIONS: DRAWS UP THE ANNUAL PLAN AND SIGNS AN AGREEMENT FOR ITS IMPLEMENTATION WITH AGROSEGURO PROPOSES TO MINISTRY OF AGRICULTURE, FISHERIES AND FOOD: EXCLUSION CONDITIONS, YIELDS, PRICES... PROPOSES, TOGETHER WITH DGSFP, THE CENTRAL- GOVERNMENT SUBSIDIES ON PREMIUMS COLLABORATES WITH AUTONOMOUS REGIONS ON AGRICULTURAL INSURANCE ISSUES OTHERS: SPREADING, EQUITY ARBITRATION, OFFICIAL ADJUSTMENT RULES...

10. ENESA. Subsidy on premiums Agricultural policy planning instrument Annual Plan: sets the percentages by Joint Order from Ministries of Economy and Finance and M.A.F.F. The budget for subsidies is limited The insurance policy is considered as the request for the subsidy By tiers: Base; Collective contracting; Additional (all three are mutually compatible) The policy-holder pays: insurance cost - subsidies

11. ENESA SUBSIDY ON ANNUAL PLAN 2006 239,87 million Euros 1 Million Euros = € 1,000,000.00

12. ENESA: General Committee details President of ENESA: Chairperson General Manager of ENESA: Vice-chairperson M.A.P.A.: 2 members CC.AA.: 4 members (rotating) D.G.S.F.P. y C.C.S. Ministry of Economy and Finance Public Prosecutor (without vote) Agricultural Unions: COAG - ASAJA UPA - CCAE Guests: maximum three (optional) Agroseguro: 1 member Secretary

13. I N S T I T U T I O N S AGRICUL. MINISTRY ENESA INSURED FARMERS

14. INSURED FARMERS INSURANCE POLICY INDIVIDUAL or COLLECTIVE DIFFERENT RATES OF SUBSIDIES

15. INSURABLE AND INSURED AREAS (hectares)

16. INSURABLE AND INSURED LIVESTOCK

17. INSURANCE OBJECT EXPECTED REAL PRODUCTION THE OUTPUT THAT THE FARMER WOULD HAVE OBTAINED IF THE EVENT COVERED BY THE INSURANCE WOULD HAVE NOT HAPPENED

18. PRICES FOR INSURANCE PURPOSES: -- Set by ENESA -- Data collected by ENESA from Autonomous Regions -- Principle of caution (Agricultural claims: costs of harvesting and transport are deducted)

19. POLICIES AND CLAIMS I N S U R E D F A R M E R S (*) Forescast 30 november 2005

20. TYPES OF INSURED RISKS

21. M.C.I. INSURED PRODUCE Agricultural Cereals and pulses Wheat, corn, sorghum, rice... Sugars (Cane, beet),Textiles (Cotton, flax...) Oleaginous (Sunflowers, soya, rapeseeds), Tobacco, hops... Industrial Market garden produce and flowers Citrus and fruits Orange, apple, avocado, banana... Olive, grapes and nuts Others Livestock, fishfarming and beekeeping Cattle, sheep, goats and fish (gilthead bream, sea-bass, turbot) Forests

22. M.C.I. INSURED RISKS Hail + fire Frost Drought Agricultural High temperatures and dry air Wind and rain Plages and diseases Flood Others: Pixat (peel desease), siroco, Withering… Livestock Beekeeping Accidents and diseases Others Fishfarming Gales, red tides, oil spill Others Forests Fire

23. I N S T I T U T I O N S AGRICUL. MINISTRY ENESA INSURED FARMERS AGROSEGURO

24. TO TAKE RISKS AND MAKE MANAGEMENT COSTS CHEAPER, THERE DOES EXIST A POOL OF INSURES: AGROSEGURO S.A.

25. Agroseguro LTD. COMPANY THAT ON BEHALF OF THE INSURANCE COMPANIES (SHARE HOLDERS) MANAGES AGRICULTURAL INSURANCE IN SPAIN

26. Coinsurance Table. Plan 2005 36

27. M.C.I. 2005 DISTRIBUTION OF INSURANCE ENTITIES ACCORDING TO COINSURANCE PARTICIPATION

28. AGROSEGURO. FUNCTIONS 2 REINSURANCE MANAGEMENT SUBSIDIES AND OTHERS FUNCTIONS 3 1 INSURANCE MANAGEMENT

29. AGROSEGURO. INSURANCE MANAGEMENT 1 PROCESSING AND CONTROLLING OF INSURANCE POLICIES ISSUING AND COLLECTING MANAGEMENT OF PREMIUM RECEIPTS - RECEIVING, PROCESSING AND CONTROLLING OF CLAIMS - ADJUSTMENT OF LOSSES - SETTLEMENT AND PAYMENT OF CLAIMS ON BEHALF OF THE COINSURANCE COMPANIES STATISTIC STUDIES AND ACTUARIAL RESEARCH (PRICING)

30. AGROSEGURO. REINSURANCE MANAGEMENT 2 COLLECTING OF REINSURANCE SURCHARGES IN FAVOR OF C.C.S. AND ITS PAYMENT TO C.C.S. MANAGEMENT OF THE REINSURANCE PORTION NOT TAKEN BY THE C.C.S.

31. 3 AGROSEGURO. SUBSIDIES AND OTHERS RECEIVING OF SUBSIDIES FROM ENESA AND AUTONOMOUS REGIONS OTHER FARMING STUDIES COMMISSIONED BY THE PUBLIC ADMINISTRATIONS

32. PREMIUMS AND CLAIMS A G R O S E G U R O (millon Euros) 1 Million Euros = € 1,000,000.00 Forecast November 2005

33. I N S T I T U T I O N S AGRICUL. MINISTRY ENESA INSURED FARMERS AGROSEGURO CONSORCIO COMP. SEGUROS

34. CCS LEGAL FRAMEWORK: • Public Business Institution • Legal personality on its own and full capacity to act • Its activity is subject to laws governing private companies CCS ASSETS: • Holds its own assets, independent of State´s.

35. CONSORCIO DE COMPENSACIÓN DE SEGUROS COINSURER ADJUSTMENT SUPERVISING REINSURANCE

36. C O I N S U R E R

37. M.C.I. C.C.S.’s participation in Coinsurance

38. PREMIUMS AND CLAIMS C.C.S. AS COINSURER (Millon Euros) Million Euros = € 1,000,000.00 Forecast November 2005

39. Total Coinsurance outcome and C.C.S. outcome according to its participation (€)

40. ADJUSTMENT SUPERVISING

41. It guarantees: A higher degree of reliability of adjustments and reinsuring function M.C.I. ADJUSTMENT SUPERVISING An expert system implemented by the C.C.S., required by law Is carried out both in the field and through documents The supervision can be made before, during or after the adjustments It is based on a technical tool:OFFICIAL ADJUSTMENT RULES It is based on quick, truthful information interchanged among Agroseguro and C.C.S. about claims

42. M.C.I. OFFICIAL ADJUSTMENT RULES TYPES General agricultural produce Specific General livestock Within agriculture by industry (example: production with quality damage guarantee) Within livestock by industry (example: cattle insurance)

43. M.C.I. PUBLISHED ‘OFFICIAL ADJUSTMENT RULES’ GENERAL AGRICULTURAL CEREALS (WINTER AND SPRING) PULSES OLIVE (TABLE AND OIL) GARLIC, ARTICHOKE, ONION, CAULIFLOWER, STRAWBERRY, GREEN PEA, GREEN BEAN, SNAP BEAN, MELON, WATER MELON, POTATO, TOMATO, PEPPER AND AUBERGINE COTTON, RAPESEED, SUNFLOWER, HOPS, BEET SUGAR, TOBACCO HAZELNUT FRUIT AND CHERRY CITRUS BANANA GRAPE (WINE AND TABLE)

44. R E I N S U R A N C E

45. Compensation or Profit-Sharing Outcomes by groups ( - ) and ( - ) Compensation for both groups ( - ) and ( + ) Partial compensation of ( - ) with ( + ) of the other (+ ) and ( + ) Profit-Sharing M.C.I. MAIN CARACTHERISTICS OF THE REINSURANCE AGREEMENT • Ministerial Order • It depends on groups A: Experimental B: Viable • Compensation

46. Reinsurance: compensation and profit sharing ( - ) and ( - ) COMPENSATION FOR LINES GROUP A • Losses superior to 601.012,10 Euros COMPENSATION FOR LINES GROUP B • By tiers of losses. C.C.S. compensates as per a percentage over the excess of losses. ( - ) and ( + ) PARTIAL COMPENSATION FOR THE NEGATIVE OUTCOME OF ONE GROUP WITH THE POSITIVE OUTCOME OF THE OTHER. • The loss to be compensated for the C.C.S. is deducted by a percentage that depends on the profit. (+ ) and ( + ) PROFIT SHARING

47. PREMIUMS AND CLAIMS C.C.S. AS REINSURER (Millon Euros) 1 Million Euros = € 1,000,000.00 Forecast November 2005

48. Accepted Reinsurance: premiums, excess of loss and porfit sharing (€) Reinsurance premiums and excess of loss: forecast for 31/12/2005 based on data from 16/11/2005

49. Reinsurance premiums, Excess of loss and Equalization Reserve (€) Reinsurance premiums and excess of loss: forecast for 31/12/2005 based on data from 16/11/2005

50. I N S T I T U T I O N S AGRICUL. MINISTRY ENESA INSURED FARMERS AGROSEGURO CONSORCIO COMP. SEGUROS INTERNATIONAL REINSURANCE