Reinsurance Market Outlook: Value Creating Capital

1. Reinsurance Market Outlook: Value Creating Capital Azerbaijan International Insurance Forum - AIIF 2012 Baku, 04th – 05th July, 2012

2. Contents Who is Aon Benfield Setting the Scene

3. Who is Aon Benfield

4. About Aon Aon plc (NYSE: AON) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human resource consulting and outsourcing. Aon plc Aon Benfield Aon Hewitt Aon Risk Solutions Human Capital Consulting Retail Brokerage • Reinsurance Total 2011 $ 1.5 billion $ 29 billion ~3,000 $ 3.8 billion ~30,000 $ 11.3 billion $ 107 billion ~61,000 Commissions & Fees Premium Colleagues $ 6.0 billion $ 78 billion ~28,000 Proprietary & Confidential

5. Aon Benfield • Aon Benfield is world’s No.1: • Treaty • Facultative • Investment bank exclusively focused in (re)insurance • Why is Aon Benfield No.1: • Experience and knowledge about each country and region • offices in more than 50 countries • Unrivalled investments in Analytics • Over US$ 120m invested annually • Over 500 in analytics • 16 partner universities globally • Best Transactional team • Widest Market Access • Global Reach • Trusted Advisor Numbers for 2010, Source: Business Insurance 24th October 2011 • Aon Benfield CEE team • All part of ONE CEE Team with 87 members • The most experienced team in the region • 27 Analytics dedicated to the region Moscow Hamburg Warsaw Kiev Prague Vienna Bratislava

6. Aon Benfield CEE Business 127 direct cedents In CEE Placing business with 163 reinsurers. EUR 428m ceded premium

7. Setting the Scene Full year ended December 31, 2011

8. Economic Climate • Main issues for insurance and reinsurance market:

9. Reinsurer Capital Change (USD Billions) • Reinsurance capacity ended 2011 down 3 percent over FY 2010 despite nearly USD113 billion in insured catastrophe losses during 2011 • Reinsurers covered a higher proportion of losses in 2011 than in prior major catastrophe years because affected insurers generally held lower retentions and utilized substantial proportional contracts Source: Individual Company Reports, Aon Benfield Analytics

10. Aon Benfield Aggregate Combined Ratio Comparison • The ABA combined ratio increased to 108.2 percent, an increase of 13.5 percentage points compared to 2010 with a 14.1 percentage point increase in natural catastrophe losses • Reinsurer returns on equity in 2011 dropped to 3 percent due to catastrophe losses and lower investment yields; Analyst consensus earnings for public reinsurers show returns on equity rebounding to the 10 percent range for 2012 and 2013 Source: Individual Company Reports, Aon Benfield Analytics

11. Shareholders’ funds development – FY 2011 vs FY 2010

12. Insurer Capital Change • Insurer capital increased 1 percent year over year and reinsurance demand remains stable with some insurers decreasing capacity amid higher prices and a stable capital level • Demand will continue to be sensitive to price increases sought by reinsurers throughout renewals in the remainder of 2012 Source: Individual Company Reports, Aon Benfield Analytics

13. Impact Forecasting Economic Loss Estimates • Global losses for 2011 are currently estimated at USD 434 billion Source: Impact Forecasting

14. 2011 Economic Loss versus Recent Years’ Average • Losses in Asia alone accounted for 65 percent of total losses for 2011, more than six times the average annual economic loss in that region in recent years • Higher insurance penetration in the regions with loss in 2011 increased total loss covered by insurance to approximately 25 percent (USD 106 billion), up from 15 percent in 2010. Source: Impact Forecasting

15. 3 of Top 10 Events in the past 30 Years Occurred in 2011 • The New Zealand government has only released a combined USD 30 billion economic loss total for the September 2010, February 2011 and June 2011 EQ Events. • Sources: Impact Forecasting, Insurance Information Institute, National Hurricane Center, National Climatic Data Center, USGS

16. 2011 Catastrophe Losses as Percent of FY 2010 Shareholders’ Funds • The impact of the 2011 catastrophes varied widely by reinsurer • Catastrophe losses in Q1 2012 were significantly less than in 2011; 2012 has resulted in approximately USD10 billion in economic loss and nearly USD3 billion in insured loss compared to USD270 billion in economic loss in Q1 2011 and almost USD53 billion in insured loss *Includes other major events, additions/releases from previous quarter(s) loss estimates (when not split by event), reinstatements, FX reconciliations, etc. Splits by event are shown as latest reported, i.e. could be from Q1, Q2, Q3 or FY 2011 results. Some Thai flood loss estimates are from preliminary announcements All losses are assumed pre-tax All losses are net of reinstatement premiums except for Validus and ACE All losses converted to USD at 2011 full year average FX rates US tornadoes includes Hurricane Irene for Argo, Ariel and Novae Source: Individual company reports, Aon Benfield Analytics

17. Timeline of 2011 Industry Events • 2011 was an eventful year with elevated catastrophe losses, volatile stock market conditions, record low investment yields and downgrade of U.S. debt and the European sovereign debt crisis Source: Aon Benfield Analytics

18. Lessons Learned from Observed Events • Loss events in 2011 brought interesting tests of coverage, deductibles, policyholder co-participations and government / private insurer partnerships Source: Aon Benfield Analytics

19. Impact of 2011 Cat losses • Economic losses of USD438bn made 2011 the costliest natural disaster year on record • Insured losses of USD112bn are second only to 2005’s USD120bn (KRW: USD90bn) • Reinsurers’ assumed losses in 2010/2011 are now likely to exceed those in 2004/2005 • Compared with 2005 • industry capital is much stronger (near peak levels) • risk modelling is much improved • risk management is more robust • risk tolerance is generally lower • Capital has been impacted but • widespread capital raising is not required • total capitalisation remains high • the rating impact has been limited

20. Financial strength ratings: negative action Source: A.M. Best, S&P (ratings as at April 11,, 2012)

21. Financial strength ratings: positive action Source: A.M. Best, S&P (ratings as at April 11,, 2012)

22. January 2012 Property Catastrophe Renewals Recap U.S. Property Catastrophe January 1, 2012 Recap Rest of the World: Property Catastrophe January 1, 2012 Recap Results are summarized for contracts that did not cede material losses to the expiring reinsurance program. Rate changes are based on exposure neutral pricing and measured from the expiring January 2011 terms. Source: Aon Benfield Analytics