WelcomeWelcome

2007 Bermuda Perspective 2007 Bermuda Perspective SymposiumSymposium

Hamilton, Bermuda ~ June 4 & 5, 2007

2007 Bermuda Perspective 2007 Bermuda Perspective SymposiumSymposium

The Present and FutureThe Present and Futureof the Bermuda Marketplaceof the Bermuda Marketplace

ACE – Rees FletcherACE – Rees FletcherAon – Dennis MahoneyAon – Dennis Mahoney

Marsh – Philip V Moyles Jr.Marsh – Philip V Moyles Jr.Willis – Donald J BaileyWillis – Donald J Bailey

XL Capital – Brian M O'HaraXL Capital – Brian M O'Hara

a panel-guided exploration

Hamilton, Bermuda ~ June 4 & 5, 2007

2007 Bermuda Perspective 2007 Bermuda Perspective SymposiumSymposium

The Past as PrologueThe Past as Prologue

FarmsFarms

ClownsClowns

and Treesand Trees

Farms, Clowns and TreesFarms, Clowns and Trees … … metaphors for …metaphors for …

Let’s take a look behind the metaphors

FarmsFarms to to FactoriesFactories– the Industrial Revolution– the Industrial Revolution

0

50

100

150

200

250

1850 1900 1950 2000

1850

15.4 %Urban

1900

39.6 %Urban

1950

59.6 %Urban

2000

79.2 %Urban

US Pop. in Millions

How manyHow manyhere todayhere todayrememberremember

this headline? this headline?

March 24, 1986March 24, 1986

Hard market of 1984 / 1985 – an upheaval for large

and complex risks, manufacturers and

medical professionals

Birth of the ModernBirth of the ModernBermuda MarketplaceBermuda Marketplace

• Specialty-drivenSpecialty-driven• Large capacityLarge capacity• Contract certaintyContract certainty

ACE Limited

EXEL Limited

“the biggest eventin the insurance business since the Great Chicago Fire”– Institutional Investor

A Remarkable TimelineA Remarkable Timeline

ACEACEXLXL

CentreCentre

Mid OceanMid OceanPartnerPartner

TempestTempestRenaissanceRenaissance

Cat Ltd.Cat Ltd. Max ReMax Re

StarrStarrChubbChubb

IPCIPC

EverestEverestMontpelierMontpelier

DaVinciDaVinciGoshawkGoshawkOlympusOlympus

NephilaNephila

2005 / 07 1985 / 86 88 92 93 99 01 03

AdventAdventAeolusAeolusAmlinAmlinArielAriel

ArrowArrowBlue OceanBlue Ocean

CyrusCyrusDe ShawDe Shaw

FlagstoneFlagstoneForterraForterra

Harbor PtHarbor PtHiscoxHiscox

LancashireLancashire

New PointNew PointNortonNortonOmegaOmegaParisParis

PeleusPeleusPenteliaPentelia

PulsarPulsarSteamboatSteamboat

ValidusValidusWhite MtsWhite Mts

ModalModalNew CastleNew Castle

AWACAWACArchArchAxisAxis

EnduranceEndurance

Growth and MaturationGrowth and Maturation

• Diversification into traditional linesDiversification into traditional lines• Globalization of operationsGlobalization of operations• Accumulation of legacy issuesAccumulation of legacy issues• Start-ups seeking to capitalize on short-Start-ups seeking to capitalize on short-

term pricing / capacity disequilibriaterm pricing / capacity disequilibria• Price competition – the aroma ofPrice competition – the aroma of

a commodity marketplacea commodity marketplace

Yesterday … TodayYesterday … Todayand Tomorrowand Tomorrow

Agrarian / Labor

The Industrial Revolution

Industrial / Technology

Recent Growth Drivers:

Capital formation

Diversification

Price Competition

Future Drivers:

Incubation

Innovation

Differentiation

The NewTransformation

= The OriginalFormula

ClownsClowns

Daniel Lamarre, CEODaniel Lamarre, CEO

• Created uncontested new market space

that made the competition irrelevant

• Appealed to a whole new group of

customers willing to pay a lot more

Red OceansRed Oceans

• Untapped market spaceUntapped market space• Demand creationDemand creation

• Opportunity for highlyOpportunity for highlyprofitable growthprofitable growth

• Defined boundaries• Competitive rules known• Crowded space, with

reduced opportunity for profits, growth

• Products become Products become commoditiescommodities

vs.vs. Blue OceansBlue Oceans

BermudaBermuda

TreesTrees

Landscaping, TreesLandscaping, Treesand Taprootsand Taproots

• Landscaping – fleeting pleasureLandscaping – fleeting pleasure A limited glimpse of beautyA limited glimpse of beauty

no real functional value … can be very expensiveno real functional value … can be very expensive

• Trees – much more time to grow, need optimal conditionsTrees – much more time to grow, need optimal conditions But can grow deep roots and last for generationsBut can grow deep roots and last for generations

Serve a number of practical applicationsServe a number of practical applications

• Bermuda’s tall trees are the companies that respondBermuda’s tall trees are the companies that respondto client needs through foresight and innovation –to client needs through foresight and innovation –and the professionals who carry on that great traditionand the professionals who carry on that great tradition

The Spirit of 1985The Spirit of 1985

• What are the challenges and opportunities facing What are the challenges and opportunities facing

the Bermuda marketplace today?the Bermuda marketplace today?

• What do our clients want and value?What do our clients want and value?

• On a practical level, what can be done to translate On a practical level, what can be done to translate

the spirit of innovation into products and services the spirit of innovation into products and services

that differentiate Bermuda?that differentiate Bermuda?

Q&A

Q&A with the PanelQ&A with the Paneland Audienceand Audience

• In 50 words or less – what would you In 50 words or less – what would you say is the Bermuda value proposition?say is the Bermuda value proposition?

The “Ultimate”Question

Side A

Occurrences Reported Form

RegulatoryEnvironment

CAPACITY

One-stop ShoppingOne-stop ShoppingTAXESTAXES

Little Venice CaptivesCaptives

Thank YouThank You

• Rees Fletcher, ACERees Fletcher, ACE

• Dennis Mahoney, AonDennis Mahoney, Aon

• Philip V Moyles Jr., MarshPhilip V Moyles Jr., Marsh

• Donald J Bailey, WillisDonald J Bailey, Willis

• Brian M O'Hara, XL CapitalBrian M O'Hara, XL Capital