A DECADE’S JOURNEYTHROUGH THE INSURANCE INDUSTRY(AND WHAT THE NEXT DECADE HOLDS…)

Joe PlumeriChairman and CEO, Willis Group Holdings plcIISA/SAIA/FIA Conference Sun City, South Africa – June 11, 2012

THE LESSONS OF HISTORY…IN BUSINESS

2000 2012

From this… …to this!

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HOW DID WE GET THERE?

1912

From memories… …to dreams

20093

IT WASN’T EASY IN A DECADE OF UPHEAVAL…

Lessons Learned: Contract Certainty & stick to your knitting

Lessons Learned:The importance of

transparency & ERM

Lessons Learned:The importance of

resiliency & analytics

Man-Made Disasters:

2001: 9/11 - Largest single property, aviation & WC loss.

2008: Global financial crisis – 389 banks failed; how many insurers?

Natural Catastrophes:

2011: Costliest year ever for nat cat losses -- $105 bn insured losses.

2005: 2nd costliest year with insured losses of $101 bn.

Regulatory Upheaval:

2004-2005: Age of Spitzer brings $3 bn in fines.

Today: Solvency II implementation cost €2-3 bn over 5 years.

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…ALL IN THE DECADE OFTHE BLACK SWAN8 of the top 10 costliest insurance losses in the past 30 years occurred in the last decade!Event Year Total Insured Losses

1. Hurricane Katrina 2005 $74.7 billion

2. Tōhoku quake and tsunami 2011 $35 billion

3. Hurricane Andrew 1992 $25.6 billion

4. September 11 Attacks 2001 $23.8 billion

5. Northridge Earthquake 1994 $21.2 billion

6. Hurricane Ike 2005 $21.5 billion

7. Hurricane Ivan 2004 $15.3 billion

8. Hurricane Wilma 2005 $14.5 billion

9. Thailand Flooding 2011 $12 billion

10. Christchurch Earthquake 2011 $12 billionSource: Swiss Re

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2010 Eyjafjallajökull Volcano: Cost airlines €150m a day for 6 days

PLUMERI’S TOP 10 RISKS:

6

10Reputation

9 Piracy

8 Cyber

Security

7

Globalization

6 Cost and

Availability of Credit

4Market

CapRisk

3Pandemics

2Terrorism

1Climate Change

5Regulation

and Compliance

NEW TYPES OF RISK PROLIFERATE

“The top 5 risks on the minds of business leaders today aren’t easily solved by purchasing insurance. Traditional risks… wind, earthquake, flood – aren’t even in the top 30 anymore.”

-- Hank Watkins, Lloyd’sDecember 19, 2011

Lloyds Risk Index 2011 – Top 5 Risks

1. Loss of customers

2. Talent and skills shortages

3. Reputational risk

4. Currency fluctuation

5. Changing legislation

All difficult or impossible to insure

Demanding resiliency

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TODAY’S GLOBAL INSURANCE INDUSTRY

Today our industry is facing aperfect storm of:

Heavy regulatory demands on capital and solvency vs need to run a profitable business

Continuing global macro economic uncertainty

Low interest rates impacting investment performance

A continued soft market – excess capacity and stiff competition; surge in mega catastrophe claims

Top 10 Risks Facing Global Insurance Industry (2011):

1. Regulation

2. Capital

3. Macro-economic trends

4. Investment performance

5. Natural catastrophes

6. Talent

7. Long tail liabilities

8. Corporate governance

9. Distribution channels

10. Interest rates

Source: PwC/CSFI

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THE INSURANCE INDUSTRY: WE OWN RESILIENCE Insurance industry proven its own

resilience throughout the decades.

Focus on extreme 1:200 year events – made us more resilient to catastrophe and shocks from mother nature and markets.

Transforming the scale, depth and quality of insight about the risks facing our clients and how to manage and transfer them.

Our market is fully operational – testament to the strength and resilience of this capital market.

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FOR OUR INDUSTRY: A ONCE IN A LIFETIME OPPORTUNITY Our responsibility as an industry:

– To “own” resilience…– To lead using our expertise and

resources to address long term risks…– To be an industry building sustainable

and predictable growth in the face of new risks…

– To bring knowledge, expertise, products and services as risk and uncertainty grows…

– To establish resilience as an aspirational purchase

Insurance is the vehicle for delivering resilience rather than a transaction; to bring risk management and analytical services to our clients.

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THE EMERGING GLOBAL MIDDLE CLASS

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The big story of the 21st Century is the rise of a new global middle class, most of it in Asia.

Two billion more people will join the middle class by 2030.

They will accumulate property and income, and rival the U.S. consumer in spending. A business opportunity this large is unprecedented.

They will want to protect their lives, property and income, too – the insurance opportunities are huge.

Greatest need will be in cities.

Relentless riseMiddle class population as % of world total

60

50

40

30

20

10

050 2000

Source: Surjit Bhalla, “The Middle Class Kingdomsof India and China”

1913 60 803890 90 061820

THE NEXT DECADE:AFRICA’S ERA?Over the past decade, the number of middle-class consumers in Africa has grown 60% to 313 million

34% of Africans are firmly entrenched in the new middle class, spending between $2 and $20 a day.By 2060, African middle class will be 1.1 bn strong On par with Chinese and Indian middle classes.2nd fastest-growing economy in the world.Huge potential for global investors.Africa now has more mobile-phone subscribers than entire U.S. population

Source: WSJ, The Economist

The emerging African Middle Class will contribute to an emerging Golden Age for Insurance!

50 15 20 25 3010

Number of companies

China

Asia

Europe and USA

Rest of Africa

South America

Offshore expansion strategies South African insurers are

focusing on: e.g. Mozambique & Angola

Source: PwC

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SOUTH AFRICA: GATEWAY TO THE CONTINENT Global brands using South Africa as a “foothold for continental expansion”:

Wal-Mart paid $2.4 billion to buy 51% of South Africa's Massmart Holdings Ltd

U.S. Yum Brands Inc. to invest $74 million in 100 new KFC outlets in Africa in 2012, and will double the number of stores to 1,200 by 2014

Ford Motor invested $500 million in its SA operations in 2011

British Vodafone now owns 65% of Vodacom, SA's largest mobile phone operator

Source: WSJ

South African insurance market will lead the way as the dominant market in Africa, accounting for 90% of regional life premium volume and half of the regional non-life premium volume.

"Yes, there are risks to doing business in Africa. However, here in Africa, right now the rewards could be as vast as the continent itself."

Donald H. GipsU.S. Ambassador to South Africa

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ANYTHING IS POSSIBLE…

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A DECADE’S JOURNEYTHROUGH THE INSURANCE INDUSTRY(AND WHAT THE NEXT DECADE HOLDS…)

Joe PlumeriChairman and CEO, Willis Group Holdings plcIISA/SAIA/FIA Conference Sun City, South Africa – June 11, 2012