Title Slide

1. Bermuda as a Domicile for Latin American Captives Title Slide Second Header

2. Introductions Speakers: • Federico Candiolo, Counsel at Attride-Stirling & Woloniecki • Eduardo Fox, Appleby • TommasoMascarucci, President Black Gold Re Limited Moderator: • Steve Arrowsmith, JLT Insurance Management

3. Captive Insurance Companies: the LatAm market Federico Candiolo Counsel Attride-Stirling & Woloniecki Title Slide Second Header

4. Captive formation process • Why should LatAm multinationals consider forming a captive in Bermuda? • Prudent and flexible regulation • Speed to market • Pre-eminent captive domicile • Access to the Bermuda reinsurance market • World class infrastructure • Compliant with OECD recommendations • Intellectual capital

5. Captive formation process • The path to Licensing • Commission feasibility report • Consider onshore law issues and fronting arrangements • Select service provider team • Apply to incorporate the company • Apply to license the company • Incorporate, organise and capitalise • Registration as an insurer/reinsurer • Legislative Developments: Companies Amendment (No 2) Act 2011 et al.

6. Captive formation process • Choosing the team • Insurance manager to manage the captive and principal representative • Auditors • Lawyers and corporate administrators • Actuary if required

7. Captive formation process • Captive formation • Captive formation involves incorporation of a company under the Companies Act 1981 and registration under the Insurance Act 1978 • Quite distinct processes – possible to run both simultaneously or apply to incorporate ahead of licensing application

8. Captive formation process • Incorporation • Application to incorporate company made on specific application form to Registrar of Companies and Bermuda Monetary Authority (“BMA”) Controller of Foreign Exchange – online application • Details of proposed ownership structure in captive must be disclosed right through to ultimate beneficial owners. Special considerations concerning family owned groups of companies.

9. Captive formation process • BMA vets shareholders to make sure they are “fit and proper” persons - must also be approved as ‘shareholder controllers’ of insurance company • Individuals owning more than 5% of voting equity of captive must also complete a personal declaration form • Incorporation process is very streamlined and can have ‘same day’ approval • Special considerations for family owned Groups

10. Captive formation process • Insurance application • Application to register as an insurer must be made to the BMA Insurance Division • Application made on a Monday of each week and considered at the weekly Friday meeting of the Assessment and Licensing Committee (“ALC”) of the BMA • ALC may approve the application with or without conditions, approve it conditional upon production of certain information, defer it or decline it if business case cannot be substantiated

11. Captive formation process • Mechanics of insurance application • Application will have cover letter from the captive’s attorneys together with the business plan for the captive setting out the business case for the captive • Proforma financials should be included preferably over 5 year period and ideally actuarially evaluated to test adequacy of reserves, solvency margins and liquidity ratios • Details of service providers should also be included (insurance manager, auditor, loss reserve specialist and principal representative)

12. Captive formation process • Business Plan • Details of Shareholder • Proposed insurance program • Capitalisation of the company • Directors • Service Providers • Reinsurance arrangements

13. Captive formation process • Steps to insurance registration • Incorporation • Organisation of company • Hold board and shareholder meetings to: • issue shares • adopt bye-laws • appoint auditors and insurance manager • Capitalise captive • Amount of capital will depend on class of insurer

14. Bermuda as a Domicile for Latin American Captives Bermuda Tax Information Exchange Agreements (TIEAs) with Ibero America Eduardo Fox Title Slide Second Header

15. TIEAs Purpose • To Promote international co-operation in tax matters through the exchange of information

16. Bermuda TIEAs How many TIEAs has Bermuda signed? • Bermuda has signed 35 TIEAs as of May 2012. • Within that number, 3 have been signed with Ibero American countries, namely, Mexico, Argentina and Portugal. • Bermuda has also signed treaties with other Euro-Latin countries like France and Italy

17. Bermuda TIEAs Are there any other Ibero American countries considered? • Brazil and Spain amongst the most advanced in negotiations, but also all other major economies in the region, if required and/or necessary

18. Mexico / Bermuda TIEA Full benefits of the TIEA • Brazil and Spain amongst the most advanced in negotiations, but also all other major economies in the region, if required and/or necessary Bermuda will no longer be considered a “Preferential Tax Regime for the purposes of applicable withholding tax under the Mexican Income Tax laws • Revenue from transactions and other payments made from persons or entities, deemed resident in Mexico, to related entities based in or carrying on business from Bermuda, shall no longer be subject to a withholding tax rate of 40%, and shall instead be subject to standard rates set our in the applicable sections of the Mexican Income Tax Laws; and

19. Mexico / Bermuda TIEA • Mexican taxpayers who generate income of ANY KIND derived from interests in Bermuda, will no longer be required to file an Annual Informative Declaration in relation to such income generated or to be generated during applicable tax periods

20. Bermuda as a Domicile for Latin American Captives Ecopetrol S.A. / Black Gold Re Limited A case study by Tommaso Mascarucci Title Slide Second Header

21. Black Gold Re – History • Since 2003 we identified that risk financing strategy should be optimized, finding that the constitution of captive was a tool widely used by companies in the sector world-wide. • At that time, benchmark with several companies that had captives (PDVSA, PEMEX, BP, and Carvajal) were made to learn of their experience. • An internal pre-feasibility study was made, results were presented to the Board of Directors of Ecopetrol S.A. in September 2005. • Following additional internal Legal, Treasury and Accounting considerations, it was determined that it was viable to constitute a captive. • Ecopetrol S.A. Board of Directors considered it advisable to engage an expert consultant to perform a detailed captive feasibility study Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda

22. Why was the Captive convenient for Ecopetrol S.A • Provide direct access to the reinsurance market • Mitigate impact of market cycles • Promote the control and prevention of losses • Ability to stabilize the cash flows of the company (increase retentions in periods of market hardening and to reduce them in periods of softening) • Cover un-insurable risks and or design products that are not available in commercial markets • Allow the design of individual strategies of deductible covers, terms and conditions in line with the requirements of each unit of Ecopetrol S.A. • Reduce costs and generate income Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda

23. Black Gold Re – Development Stages Stage 1 Benchmarking process Legal, Treasury and Accounting support Internal pre-feasibility study Stage 2 Buy In process with CEO and BD RFP for Feasibility Study RFP results to Board of Directors Stage 3 Approval of incorporation process Selection of advisors to implement incorporation Proceed with incorporation process forthe captive in Bermuda Stage 4 Operationalconsolidationprocess Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda

24. How to run a Captive successfully … Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda

25. How to run a Captive successfully … Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda

26. Design your strategy “strong busines Plan” How to run a Captive successfully … Right Domicile • Reputation • Regulatoryframework • Financialservices • Insurance/reinsuranceservices • Taxregulation U.S. Bermuda • Riskprofile • Operationscheme • Premium Drivers • Profit Center vs Cost center • Forecastmodel • Strategirreviewprocess Colombia World Class Service provider Brazil Peru • Captive Managers • Legal Council/Secretarial services • Auditors • Reinsurers • Actuaries • Brokers Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda

27. How to run a Captive successfully … Management control system Local / International Insurance programs Placement cover notes REINSURER Insured Risks Accept and cede % of riskfromCompany and premiumpayment to Broker RISK GROUP REINSURANCE BROKER INSURANCE COMPANY Insurance Policy Master slip Premium Reinsurancecontract Master Slip and cover notes Premiums CAPTIVE LossPayments • BOARD OF DIRECTORS • COMMITTEES CAPTIVE MANAGER SERVICE PROVIDERS CONTROL PERFORMANCE TRANSPARENCY Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda

28. Black Gold Re – Why Bermuda • Highreputationwithininsurance and reinsurancemarket • Consideredfavourablybythe OECD • Transparency and regulatorystability • largest captive domicile in theworld (17% of the total number of captives 5.524) • Facility for the intergovernmental exchange of information • Oil& Gas Captives(PEMEX, PDVSA, PETROBRA'S CHEVRON TEXACO, TOTALFINA, CONOCO-PHILLIPS, SHELL, REPSOL-YPF,) • Presence of multiple companies that offer products and services of insurances and reinsurance Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda

29. Black Gold Re – What´s Next? • Retaining more risk now with greater capital base • Maintain international rating rate levels given by Fitch and Moody’s • Redesigned entire Ecopetrol placement utilizing Black Gold Re • Strengthen rigorous and comprehensive governance structure in line with Ecopetrol standards and Code of Conduct • Synchronize budget with annual strategic review process business plan Registered Office: Cannon’s Court – 22 Victoria Street Hamilton HM 12, Bermuda