Transurance Maximizing the Value of Insurance Bruce Thomas

1. TransuranceMaximizing the Value of InsuranceBruce Thomas CT Valley RIMS Meeting – 11/08/06

2. What Executives Think About Insurance • Pros • “Insurance helps us maintain our budgets.” • “Insurance is a great financial tool. It’s very leveraged.” • “Insurance recoveries are essential when you have had a large loss.” • “Insurance works best when other risk management initiatives don’t.” Transurance Services, LLC

3. What Executives Think About Insurance • Cons • “Insurance recoveries are never enough.” • “Insurance policies are hard to understand.” • “Settling claims is slow and painful.” • “Many types of loss are difficult or impossible to prove.” • “The broader my coverage, the harder it is to get paid.” Transurance Services, LLC

4. What Executives Think About Insurance • Wishes • “Payments should be more certain, like other financial contracts.” • “I would like to buy more insurance but not if it involves more hassle or if I do not know what I am getting.” • “I would like to retain more risk, but I’m concerned about all of the expenses that will not be reimbursed by insurance when I have a large loss.” Transurance Services, LLC

5. Interpreting These Comments • Companies have significant damages that are collateral to covered loss events but that are not paid by their insurance. • These damages are difficult to define, prove, or measure. • They want more coverage to pay for these damages. • They want a means of insuring these damages that: • Combines economic efficiency with payment certainty • Does not involve more hassle Transurance Services, LLC

6. Transurance • Transurance is a new form of agreed value insurance • It supplements traditional insurance to pay for “collateral damages” that are not covered. • The payout is a pre-agreed percentage of the recovery from a traditional insurance policy so the loss does not need to be proved. • The proceeds can be used as the policyholder sees fit. • The cost is the same pre-agreed percentage of the referenced insurance premiums. • Transurance can be applied to any type of insurance. Transurance Services, LLC

7. Transurance 1.0 Arch Property Transurance Program • Pays for “Collateral Damages” • Economic costs that are not covered by property insurance • Payout is a percentage of the insurance payment • Insured may choose payouts up to 20% • Maximum limit is $20 million per occurrence and in the aggregate • Premium is generally the same percentage of the insurance premium • Pay 10% more to get 10% more • Minimum premium is $15 thousand • Proceeds may be used as policyholder sees fit • Collateral Damages do not need to be “proved” Transurance Services, LLC

8. Transurance 1.0Arch Property Transurance Program • Exclusions • Named windstorms, earth movement, flood, and other typical exclusions • Credits will be granted to the extent these perils are covered by insurance • If 50% of the insurance premium is for these perils then one should be able to buy 20% Transurance for 10% of the referenced insurance premium Transurance Services, LLC

9. What Are Collateral Damages? • Any expense or loss of revenue associated with an insured property loss that is not paid by property insurance • Deductibles and amounts in excess of limits • 15% to 20% of claimed amounts are not covered by insurance • Business continuity expenses that are traditionally uninsurable • Difficult to define, prove or measure • Discretionary in nature • Include advertising expenditures; concessions to vendors, distributors, and employees; legal and consulting expenses; additional administrative and financing cost; lost revenues; cost of new risk management programs; etc. Transurance Services, LLC

10. The Business Environment External Competitors Community Customers Internal PPE Employees Capital Other Property Politicians Suppliers J/V Partners Regulators Debtholders Stockholders Transurance Services, LLC

11. $ 100,000 Transurance Insurance $ 50 Transurance Services, LLC

12. Structuring Transurance $1,250MM $500K $750MM $1MM $250MM $1MM $50MM $3MM Transurance Services, LLC

13. Reasons to Buy Transurance • Collateral damages are significant • 15% to 40% of property insurance recoveries • Transurance covers them simply and cost-effectively • No hassle buying this coverage or settling claim • Cost is typically the same as property insurance • Everyone is sensitized to coverage gaps after a loss • Why be second-guessed? Transurance Services, LLC

14. Obtaining a Quote • Transurance Services, LLC is the Program Administrator • This is a surplus lines product • Submission requirements • Property insurance underwriting submission • Contact Information • TransuranceServices.com • Ware Preston 203-356-1583 WP@transuranceservices.com • Bruce Thomas 203-445-0830 BT@transuranceservices.com Transurance Services, LLC