Liberty International Underwriters

University of HoustonEnergy Panel

Steven P. Weiss, CPCU, AMIM, NAMS-CMS

Vice President – Marine Risk Engineering and Project Cargo

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A little humor

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Energy Case Study

• Discussion of how the pieces fit together– Assured– Agent/Broker/Wholesale Broker– Insurance Company– Reinsurance Company

• Liberty Mutual

• Willis Loss Data base

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Insurance Flow

Assured

Broker/Agent

Wholesale Broker

Underwriter

Reinsurer

Reinsurance Broker

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Assured

• The Assured is the purchaser of the insurance

• Normally through Broker or Agent

• Pays Commission or fee for services to Broker

• Pays premium to Underwriter

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Broker/Agent

• One who for commission or fee, brings parties together and assists in negotiating contracts between them

• Representative of the Assured

• Receives Fee for service from Assured or commission from Underwriter

• Many are very well trained and knowledgeable

• Also know as the Retail Broker/Agent

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Wholesale Broker

• Intermediary between retail Broker/Agent and Underwriters if the B/A does not have the proper market

• Normally commission paid by Underwriter

• Represents the Insured sort of as well as the retail broker

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Underwriter

• Reviews the risk as presented by the broker

• If the risk is within appetite then assumes the risk for the loss of life, property or finances of another

• Pays commission to the Broker if agreed up front

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Reinsurance Broker

• One who for commission or fee, brings parties together and assists in negotiating contracts between them

• Places insurance for insurance companies

• Normally commission paid by reinsurer

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Reinsurer

• Insures who insure other Insurance companies

• Pay commission to Reinsurance Broker

• Often pay override to the ceding insurer

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Liberty Mutual

Liberty Mutual

Agency Markets Commercial Markets Personal Markets Liberty International

Liberty International

UnderwritersLM Surety Safeco Regional Companies

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LM by the Numbers - 2007

2007

ActualCommercial Markets $6,489,000,000

Personal Markets 5,829,000,000

Agency Markets 5,569,000,000

Liberty International 6,148,000,000

Other 1,926,000,000

Total $25,961,000,000

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Financial Highlights LIU

• LIU 2007 Premium – over $2.5B

• Liberty Mutual 2007 Worldwide Revenue of $25.5 Billion up from $23.5 Billion in 2006

• Statutory Surplus - $14.0B (7.0% increase)

• Total Assets – Over US$85 billion

• World-class Fortune 100 (# 94) financial standing1.AM Best – A (Excellent)2.Moody’s – A2 (Good)3.Standard & Poor’s – A- (Strong)

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Willis Data base

• Collection of losses in excess of USD 1,000,000 at time of loss since 1972

• May or may not have been insured

• Does not account for sublimits

• 8,011 losses since 2008

• 124 plus billion in dollars

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Willis Loss Database - uses

• Project comparing premium vs losses to see how tight margins actuall are

• Can specify OEE – operators extra expense – Blow outs and well control costs– Operational

• What insurance is rated on

– Can also compare CAT to operational

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Examples

• Willis losses.pdf

• https://online1.willis.com/sites/EL/W_ELViewer.aspx

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Other Resources

• http://www.iii.org/

• http://www.aicpcu.org/

• http://www.libertymutual.com

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Summary

• A bit on Insurance operations

• A bit on Liberty Mutual

• A bit of the Willis loss data base

• What questions do you have for me?