“Man can live for minutes without air, days without water, weeks without food, and forever without thinking”

1. 2009 World Economic Forum Annual Meeting “Shaping the post-crisis world”Davos, Switzerland, 28 January to 1 February High level summary of the key issues we see emerging from Davos 2009 “Man can live for minutes without air, days without water, weeks without food, and forever without thinking” Davos delegate on the reason for the financial crisis Disclaimer: The opinions of those quoted herein are theirs, not Zurich's. Regarding individual WEF sessions, whilst we have attempted to give a reasonable and balanced representation of some sessions herein, for a more complete picture readers should consult WEF webcasts / podcasts / session summaries available at http://www.weforum.org/en/index.htm For queries about Zurich’s association with the WEF contact Gregory Renand +41 44 625 26 23 or gregory.renand@zurich.com For queries about this report contact Mike McPhee +44 7841 562 767 or mike.mcphee@zurich.com

2. ContentsSummary of the WEF and Zurich’s participation 3Background to this year’s Annual meeting “Shaping the Post-Crisis World” 4 Summary of the key issues emerging from Davos 2009 5 • Acknowledgements • Without the assistance of a variety of people this report would not have been possible. We would like to acknowledge and thank in particular: • - our six delegates • - our media, events, brand and marketing teams • - our on-site core support team • the many people from the wider Zurich who provided input and assistance to our delegates and core support team in the lead up to, • during and after the Annual Meeting • - Rainbow Insight, a Swiss think tank, with whom we collaborated on some of our Davos 09 thinking

3. The Forum and Zurich’s participation The World Economic Forum (WEF) is an independent International organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. The WEF is an influential organization bringing together key global decision-makers, with the Davos community representing around one fifth of the worlds GDP. Zurich and the WEF The Forum provides an unequalled opportunity for businesses to help prepare and shape global agendas. With nearly 2,600 delegates attending the Davos week, including over 40 heads of state and executives from many of the world’s largest and most influential organizations, the WEF also provides a unique opportunity for companies to develop relationships and explore business opportunities. Zurich has been a strategic partner of the Forum since 2003. In the context of our continuing efforts to drive customer centricity it is worth noting that Zurich is clearly seen as the genuinely customer-focussed insurance company at Davos. Last year the perception of our WEF peers was that other insurance companies attend WEF to find their way and learn, whilst Zurich attends as a genuine thought leader1. This year we have probably widened that gap. Once again this year Zurich was the highest rated insurance company in terms of coverage at the WEF, and the efforts and involvement of our six delegates at Davos were again rewarded with our being one of the most quoted organizations of any industry participating in the WEF. Zurich’s year round work with the WEF (also see our “Davos 2009 deep dive report”) also once again resulted in our collaboration on key WEF reports2,3. “We have to look at the global agenda in its totality and so we will focus on the economy as well as the other global challenges holistically and with a long-term perspective so we can come to solutions that can really help to improve the state of the world.“ Lee Howell, WEF Senior Director, Head of Programming, and Senior Adviser on Asia • This year at WEF, for instance, we launched our proprietary Global Risks Assessment Module GLORAM. See deep dive report or contact the Office of the Chief Economist +41 44 625 2151 or email kerry.karageorgis@zurich.com • Global Risk Report contact daniel.hofmann@zurich.com • Convergence of Insurance and Capital markets report contact daniel.hofmann@zurich.com

4. WEF Davos 09 - “Shaping the post crisis world” 2. Effective governance 1. Promoting financial stability 3. Sustainability and development 4. Post-crisis world values and principles 6. Industry implications 5. Catalyzing the next wave of growth Background to this year’s Annual meeting “Shaping the Post-Crisis World” The international landscape will be radically altered as a result of the present global economic crisis. Countries, communities and companies are being forced to review their assumptions about the future and to rethink their strategies in light of the global transformation taking place. Complexity and interdependency are not only characteristics of globalization but are also at the root of a systemic crisis. Future solutions will need to be developed in a holistic and interdisciplinary way to ensure that the concerns of all stakeholders are addressed and a broad-based backlash is avoided. The imperative going forward will be to “connect the dots” to understand the relationship between issues, interests and institutions in order to catalyse solutions for the long term. 2009 therefore commences with a unique opportunity for leaders from industry, government and civil society to shape this transformation. To this end, the Annual Meeting 2009 was organized under the theme “Shaping the Post-Crisis World” with the objective to catalyse a holistic and systematic approach to improve the state of the world in a manner that integrates all stakeholders of global society. The primary theme “Shaping the Post-Crisis World” was explored through almost 300 sessions1 , broken down into the six supporting themes shown at the left. This report now goes on to outline our view of the most pertinent emerging issues arising from this years annual meeting. Our “Davos 09 deep dive”2 report provides a deeper examination of key issues and quotable quotes from the sessions conducted in support of these themes at the left. • For 1 page summaries of most WEF sessions see http://gaia.world-television.com/wef/worldeconomicforum_annualmeeting2009/ • For the deep dive report see ‘External Deep Dive Report’

5. Summary of the key issues emerging from Davos (1/4) A malign interaction - Martin Wolf’s (and others’) central thesis, which is now seen to be generally agreed, is that the current global crisis is primarily caused by a “malign interaction between some countries’ propensity towards chronic excess supply and other countries’ opposite propensity towards excess demand”. Since excess demand in deficit countries is rapidly coming to an end, the excess supply of surplus countries can only collapse. The adjustment has to occur either via offsetting increases in demand or via a brutal contraction in supply. Since an increase in demand is highly unlikely in the short term, it is supply contraction that will prevail, dragging down all exporting countries.Deathknell of the efficient market hypothesis - Trust in the financial system in general and banks in particular is totally destroyed, and to rebuild it requires faith in transparency and market efficiency to be restored. More and more market participants believe that asymmetric information reigns, and faith in the efficient market hypothesis (and mathematical models which support it) is severely strained. In private conversations, market participants acknowledge that no one really knows just how much complex packages of loans and securities are really worth. Developing transparency in such conditions (when no-one understands what’s on the balance sheets and what valuations are) is a daunting task. The threat of protectionism – Many feel that protectionism is the greatest threat of the months to come, and there is ample evidence that both trade protectionism and capital protectionism are growing. Indeed, many countries are starting to raise tariffs, to increase subsidies and more perniciously to impose non-tariff barriers (protectionism by stealth). There is also a rising tide of economic nationalism, with the associated risk of a new mercantilist system centred on credit availability as many banks are de facto nationalised. The risk may be somewhat mitigated by the intricate and intertwined nature of global supply chains.Inflation - Deflation is seen as the immediate issue and central banks and governments are clearly trying to prevent it at all costs. However the economic stimuli / fiscal deficits required to prevent deflation now are likely to cause inflation in future, Some major industrialized countries are risking a period of debt disaster. The only way out is probably through huge write-downs, aggressive counter-cyclical policies and monetary easing to reduce the real burden of debt., which eventually implies inflation. The question is when? Yield curves show that the markets are not seeing this in the next five years.G20, not G8 - A broad consensus emerged that not the G8 but rather the broader G20 grouping must now become the main forum for global decision making, and that China in particular will now almost certainly be at the table for almost everything. Leaders of the G20 countries, who will meet in London in April for what is being billed as the new Bretton-Woods, must therefore quickly develop and deliver on a coordinated policy response.

6. Summary of the key issues emerging from Davos (2/4) Rise of Brazil - Even though the country is likely to be hit hard by the crisis, as everywhere else, it was felt that Brazil will ride the storm much better than other emerging countries, thanks to its prudent policies and very successful exchange rate and monetary policies. The deterioration in the terms of trade is very real, but people feel the country might still grow positively this year (from 0.5% to possibly 2%). Brazil is without any doubt a new power broker whose influence is bound to rise. Alongside India, but for different reasons, it is expected to perform better than other countries (and certainly than the other two BRICs). Its influence will grow commensurately.Dangerous demographics - Demographics is the most powerful long-term trend, affecting in a very different manner ageing populations (mainly in Western countries, but with significant exceptions, such as the US) and populations experiencing a “youth bulge”. The global population will increase from 6bn people today to 9bn in 2050, thereby increasing by 50% in the space of a generation. Over the next ten years, 1.2bn people will come into the age of employability, 90% of which will be in emerging markets. If a great majority of these 1.2bn people can have a job, economic benefits and ensuing growth are considerable. If they remain unemployed, the risk of social instability becomes enormous. A majority of this youth bulge is taking place in Africa and the Middle East, which in turn have the highest rate of youth unemployment in the world. This formidable shift is forcing governments across the world to fundamentally rethink policies.Healthcare – Although many of the more interesting fringe subjects were neglected at Davos this year, developmentsin medicine were given significant attention. It is clear that stem cell research, bionic engineering and gene manipulation will all start to deliver real benefits in the next five years. What is less clear is how this will impact the apparently uncontrollable inflation in healthcare costs. The US now spends $2.2tr on healthcare, and it is estimated that the figure will double in real terms over the next 10 years. Several thought leaders suggested that the US will have no choice but to adopt a more European model in the foreseeable future, one that is more focussed on health and wellness and less on disease treatment.New world values - The current global economic slowdown has lead to a crisis in confidence in the private sector’s commitment to good corporate citizenship. The crisis coincides with a moment in which religious criticisms of the secular world are sharpening, and likely to appeal to millions of people. It also coincides with a growing conviction among scientists that people do not fit the Enlightenment model of conscious, self-knowing, self-directed utility maximizers. As a result, the values crisis poses fundamental challenges for the free market ideology that was once hailed as the end-point of history.

7. Summary of the key issues emerging from Davos (3/4) Neuro-economics - The twin disciplines of neuro-science in general and neuro-economics in particular have made tremendous progress over the past few years but they did not get the proper attention of the WEF before this year. Some believe the 21st century will be the century of neuro-economics. Indeed, this new discipline has shattered the illusion anchored in traditional economic theory that people always make rational decisions (the so-called “rational agent assumption”). The sentiment of fear is a deep-rooted and powerful driver which greatly influences personal decisions in conditions of uncertainty. At the moment, for example, it is obvious that fear is a key market driver. The only antidote to fear and anxiety is trust – something that has been shattered by the crisis.Cyber fraud - The increase in cyber-fraud, criminality and other malevolent cyber actions is inversely correlated with the degradation in the economic environment. It is likely to explode and indeed specialists acknowledge that risks linked to the internet are not only rising in number, but also in scope. Recently, there has been a considerable rise in the number of “malwares” (malicious software) coming online, increasing by as much as 400% last year. The risk of identity theft is real and growing. Like all other global risks, this is a global problem that requires a global solution, which for the moment is non-existent. Vulnerabilities exist everywhere, but they may be the greatest in the private sector where some companies might be tempted not to invest in cyber-security to reduce their overheads in times of economic duressA coalescence of crises - During 2008 we witnessed a coalescence of issues in addition to the financial crisis which were previously seen as separate (energy crisis, food crisis, the imminent water crisis, the environment, poverty etc) but which are now seen as intrinsically interlinked. If the fiscal stimulus planned to get us out of the economic crisis fails to address these issues in a coherent and synthesized way, then it will fail. Global risks can only be understood when explored in the context of interlinkages with other risks, and no one group acting alone can mitigate them effectively. These aspects of global risks are also why they pose more challenges now than ever before for policy-makers and business leaders alike. In trying to resolve the current situation quickly, leaders must also be mindful of the long term implications of today’s decisions.

8. Summary of the key issues emerging from Davos (4/4) A new “war footing” for growth - While some point to the current financial crisis as being an excuse for failing to meet global climate change responsibilities, others (including Ban Ki-moon, Secretary-General, UN) believe it presents a gilt-edged opportunity. By tackling climate change head-on, we can solve many of our current troubles, including the threat of global recession. Climate change is quickly becoming a non-partisan issue and citizens, businesses and governments each have a stake in the outcome. Indeed, the global consensus emerging on climate change is that solving the crisis will require leadership from every country and every sector of society. The world needed the “war footing” of WW2 to begin the long haul out of the depression. Perhaps a united, interdisciplinary, multilateral fight against climate change becomes the “war footing” needed to haul the world out of the global economic recession, with the "killer application" for mass collaboration being saving the planet – literally?Supply chain risk – this is a huge issue, but one totally absent from formal discussion at Davos 09. Supply chains are under increasing threat because companies are struggling to survive, exacerbated by just-in-time manufacturing. Supply chain risk isn't traditionally insurable (though Zurich has recently developed a supply chain business interruption product) meaning that companies are bearing this increased risk on their already strained balance sheets. A related point is that just-in-time supply chains, because of the extreme interdependence they create among suppliers and producers, may perhaps help prevent the world succumbing to protectionism.