Parametric Risk Management Products for Weather and Natural Catastrophe Risks

1. Parametric Risk Management Products for Weather and Natural Catastrophe Risks 35th Conference and General Assembly of AIOAlgiers, May 26th 2008

2. Partner Re: Highlights • International Multi-Line Reinsurer • Property, Casualty, Catastrophe, Life, ART and Specialty • Strong Balance Sheet • Credit Ratings: AA- (S&P), A+ (AM Best) • Total Assets: $16.0 Billion (as of 12/31/2007) • 2007 Premium: $3.75 Billion • Historic Highlights • Established in 1993 in Bermuda as a CAT reinsurer • Expanded into multi-line reinsurance through SAFR (French) and WinterthurRe (Swiss) acquisitions • Further diversified through the establishment of PartnerRe US, Alternative Risk Transfer and Life units • Relevant Lines of Business • Global Catastrophe, Weather and Agriculture

3. Natural Disaster Exposure: Africa Source: United Nations Office for the Coordination of Humanitarian Affairs

4. 2007 UNCTAD Report: Key Findings • Africa: lowest insurance penetration in the world • Measured by premiums per capita • Main Reasons Identified • Lack of Support for Local Financial Markets • Limited Awareness of the Benefits of Insurance among the General Populations • Outdated Products and Services • Regulatory Barriers • Tax Barriers • My Conclusion • Additional support for local insurance institutions and product development in Africa is required for market development

5. Parametric Products: What are they? • Payment of Losses • Based upon values calculated from an index • Index serves as a proxy to actual losses • Payment formula is defined in advance (relationship between selected index and insurance coverage) • Types of Underlying Indices • Independent, objective and verifiable measure (e.g. rainfall, temperature, wind speed, earthquake intensity) • Related to an insurable interest (assets or economic flows) • Conceptual Examples • Drought: Less than X cm of rain at a location pays Y • Wind: Category X storm within Y km of location pays Z • Quake: Richter scale X within Y km of location pays Z • Can be complex: Rain shortfall of successive 10 day periods

6. Parametric Products: Why use them? • Benefits: • Reduced moral hazard and adverse selection • Lower administrative costs • Customizable, yet transparent structures • Appetite from the International Reinsurance Market • Efficient in transferring CAT risks from developing countries • Potential to target underserved market segments that lack exposure and historic loss data • Versatility: can be bundled with other financial products • Simplified Risk Assessment: Does not require broad exposure data that is often unavailable. • Limitations: • Not an “all-risk” product • Basis Risk • Summary • Parametric products can be effectively and efficiently offered in some areas where traditional insurance can not be written

7. Global Index Reinsurance Facility: GIRIF • Objectives: • Develop sustainable local markets • Develop local capacity • Promote specialized financial and technical capacity for new markets • Key Stakeholders: • International Financial Institutions • Multilateral and Bilateral Donors • Ultimately, Local Financial Institutions • Local Financial Institution Benefits: • “Technology Packages” for Local Insurers • GIRIF Invest in suitable technologies to support new markets • Certainty of execution (sustainability and outreach) • Provide confidence to end-users (credibility)

8. GIRIF: Development Approach • Bridge the Technical Gaps • By joining commercial and public development expertise for the creation of new markets • Bridge the Regulatory and Legal Gaps • By assisting in the development of commercially viable regulatory standards for emerging markets • Build a sustainable marketplace • By building technical capacity within local financial institutions • By warehousing pilot programs and packaging them into a market acceptable scale • By assisting in the education of the marketplace regarding parametric products • By establishing long-term sustainable pricing in new programs • By serving as a lead underwriter to develop new programs in a manner appealing to the international reinsurance community

9. Why is Partner Re involved with GIRIF? • Desire additional portfolio diversification • The potential of a developed , self-sustaining African catastrophe market is appealing • Develop sustainable new markets • Willingness to invest in the short term for long term market development • Decrease frictional costs for market development • Leverage investments in new technologies • Promote the broad participation of the reinsurance market • Willing to lend first hand experience from other markets • Strong track record in developing countries • Understanding of local market needs

10. What does GIRIF offer? • To Private Financial Institutions…. • Opportunity to launch parametric agriculture and catastrophe products • Potential support from donors and development institutions for initial stages of product development • Education of key stake holders (potential end-users, regulatory authorities, financial institutions) • Design of commercial insurance programs • Pricing support • Support the preparation of technical note for product approval • Development of insurance policies • Certainty of Execution • Long Term Partnership

11. PartnerRe Contact Information • Brian Tobben • Senior Vice President • PartnerRe New Solutions, Inc. • One Greenwich Plaza • Greenwich, CT 06880 • (203) 485-4626 • brian.tobben@partnerre.com