2010 Houston Marine Insurance Seminar Westin Galleria Hotel September 20 th , 2010

1. 2010Houston Marine Insurance SeminarWestin Galleria HotelSeptember 20th, 2010 Oil Insurance Limited

2. Evolutionary Change at OIL Oil Insurance Limited

3. Genetic Evolution Oil Insurance Limited

4. Corporate Evolution & Adaptation • It is unlike genetic evolution • Brought about by internal and external forces • Can be slow or fast • In OIL’s case, the forces have been both monumental and subtle • Ivan, Katrina, Rita & Ike: $3.3 billion in claims • Rating & Premium Plan: Leaks, shifts & others • Deepwater Horizon: TBD Oil Insurance Limited

5. Windstorm Changes Oil Insurance Limited

6. Ivan, Katrina, Rita & Ike • In hindsight, • Ivan, Katrina & Rita • Demonstrated that the mutual did not adequately allocate premium based upon Atlantic Named Windstorm (ANWS) risk • Onshore and Offshore ANWS Sectors were introduced in 2007 • Ike • Demonstrated that the ANWS Sector Weightings were very difficult to properly calibrate and that large losses still produced scaling of limit • New Windstorm Plan in 2010 Oil Insurance Limited

7. Historical Losses (10 yrs) • Windstorm losses have contributed over 58% of OIL’s total losses during the past 5 years and 49% over the past 10 years • From 1999 to 2003, windstorm losses only accounted for 6% of OIL’s total losses Oil Insurance Limited

8. New Windstorm Plan Summary • $150M part of $250M Quota Share per occurrence limit • Per shareholder annual aggregate limit = twice the per occurrence limit • Losses up to an annual aggregate retention of $300M are mutualized among all members in the Standard Pool • Losses above the $300M retention are mutualized among windstorm members in two new pools (onshore & offshore) • ANWS Sectors are eliminated • No losses flow through the Flat Pool Oil Insurance Limited

9. New Windstorm Plan Summary • New deductible discount curves • No deductible scaling • Premium weighting for high vs. low windstorm activity areas • Rest of the World coverage • Differs from ANWS • Other features • New Retro coverage & pricing mechanism for both windstorm and non-windstorm losses Oil Insurance Limited

10. Loss to Premium Flows $750M Per Event Aggregation Limit $300MPer Shareholder Annual Aggregate Limit $150M Q/S Onshore Excess Pool Offshore Excess Pool Deductible Multiple events are added together at year’s end before allocation to the WS Pools’ Annual Aggregate Retention and Excess Pools $300M WS Pools’ Annual Aggregate Retention (8 Business Sectors & Standard Pool Only) Limits Premium Oil Insurance Limited

11. Rating & Premium Plan (R&PP) Changes Oil Insurance Limited

12. Old R&PP – What was bad? • Changes in WGAs can shift premium from one group of members to another • Immediate & Automatic • System is subject to “surprises” • The use of Current WGA to calculate Current Premium & TWP • Optionality Complexity • APS discourages deductible changes • Members must account for future obligations to OIL (TWP) Oil Insurance Limited

13. New Lock-In Method • It maintains the same 5 year post loss funding method of the Old R&PP • The new plan is designed to: • Eliminate significant swings in premium and TWP • Simplify the R&PP formula • Eliminate the periodic and unintended shifting of premium and TWP from one or more members to others Oil Insurance Limited

14. New Lock-In Method • WGA calculation and Sector Weightings remain independent of this method • Pool %N = Weighted Gross AssetsN Total Weighted Gross AssetsN • Final Pool % in any given year is calculated using the Gross Assets reported as of December 31 from the prior year • Premium is only affected in the year following a new loss year and new Pool %’s • Asset Year → Pool % Year → Premium Year Oil Insurance Limited

15. New Lock-In Method • Current Premium(separate calculations for Standard and Flat Premium) • 20% of Losses1 * Pool %1 • 20% of Losses2 * Pool %2 • 20% of Losses3 * Pool %3 • 20% of Losses4 * Pool %4 • 20% of Losses5 * Pool %5 • Expenses1 * Pool %1 • Risk Premium Factor (+ or -), if any Oil Insurance Limited

16. Deepwater Horizon Oil Insurance Limited

17. OIL’s Response ? • OIL will likely wait for final legal, regulatory & financial requirements to be established before contemplating change. Oil Insurance Limited

18. Thank You Oil Insurance Limited

19. Oil Casualty Insurance, Ltd.

20. Marine Insurance Seminar September 20, 2010

21. Hurricanes Katrina & Rita Hurricanes Katrina & Rita’s impact on OCIL: • Speculative reaction by rating agencies • Exposure analysis • Executed new underwriting strategy • Increased attachments • Reduced maximum limits • Reduced expected losses and volatility • Growth and diversity

22. Significant Changes Since the Hurricanes 2006 • Reduced the minimum limit required for membership to $25 million from $50 million 2008 • Shareholders approved amendments to the Shareholders’ Agreement to provide for Non-Shareholder Policyholders and to allow OCIL to act as a reinsurance company • Maximum Policy Limit reduced to $100M • Policy form flexibility (claims made and occurrences reported) 2009 • Wrote first assumed treaty reinsurance contract 2010 • Shareholders’ Agreement was amended permitting other lines of insurance subject to ¾ approval by the Board of Directors

23. Where we are today! • 2009 & 2010 saw significant growth and wider spread of business from direct writings and assumed reinsurance transactions • 60 Shareholders and 10 Policyholders headquartered in U.S., Canada, South America, Europe & Africa. • 4 Treaty Reinsurance Programs

24. Who we are today! • S&P’s May 2010 report states that OCIL’s capital adequacy ratio is above S&P’s minimum for the AAA range • Strong reinsurance program provided by quality reinsurance companies

25. Impact from Deepwater Horizon • OCIL’s exposure to the event is minimal • Questions remain on how the conventional market will react in maintaining capacity • Awaiting outcome of government drilling ban and amendment to OPA • OCIL has seen an increase in submissions and requests for increased limits since the explosion • OCIL is responding promptly to inquiries

26. THANK YOU!