BANK SURETY SYNDICATION DESK

David Moylan

Chairman Global Surety Practice

Manuel López

Global Bank Surety Leader

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MARSH

Banks still dominate – This is our opportunity!

2 September 24, 2014

2014 Global Surety Market

Estimated $10-11 bn written premium

US/Canada $6 bn LAC $2.1 bn Europe $1.5 bn Africa, Australia, Asia $1 bn

Excellent Results

55-60% estimated combined ratio in the Americas Combined ratios in other geographic regions well within profit zone

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Premiums, Claims, Claims Ratio

3

Source: ICISA

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Insured Exposure

4

Source: ICISA

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MARSH 5 24 September 2014

Bank Guarantee and Surety Market

Potential

EUROPE USD 1.5bn

GLOBAL USD 12bn

around 80% of guarantee business in Europe is carried out by banks

Estimated surety written premium per year

Estimated surety written premium per year

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6

New ideas and ways of doing business

will become a major differentiator and competitive advantage

Higher capital requirements in qualitative and quantitative terms have an impact on banks’ risk appetite, earnings and business models

Regulation is changed client needs have not

Challenging Banking Environment

As a consequence of much higher capital constraints,

banks’ risk appetite is increasingly reduced

becoming a major hurdle and sometimes even impeding new business

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RWA of 50% because of existing collateral

100 €

50 €

4 €

before risk transfer to insurer(s)

100 €

20 €1.6 €

after risk transfer to insurer(s)

Capital Requirements 8% RWA

Risk weighted assets (RWA)

Exposure Exposure

Risk weighted assets (RWA)

Capital Requirements 8% RWA

7

Increasing profitability and single deal risk appetite of underlying trade finance operations De-risking to comply with capital restrictions: Alternative to winding down credit positions Releasing capital for re-deployment: Competitive advantage for banks

Increased RWA efficiency

Above return will be further improved by saved capital costs of appr. EUR 240k to € 360k (estimated capital costs of 10 -15%) by reducing capital allocation by € 2.4 mn (=€ 4 less € 1.6 mn)

Profitability: 150 bps / 1.50 €

Return on RWA: 3%

Base profitability: 150 bps / 1.50 € Premium: 50 bps / 0.50 € Underlying profitability: 100 bps / 1.00 € Return on RWA: 5%

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Strategic Solutions for Banks and Sureties

Risk Distribution. In light of the banks increasingly reduced risk appetite as a consequence of capital constraints, effective and efficient risk distribution is becoming crucial for delivering the bank’s

client, risk and business strategy. This is especially important for high-volume and relatively low-priced guarantee lines.

Global Partnership between Banks and Sureties. For this reason Marsh offers a global partnership between banks and sureties on a worldwide basis leveraging existing Marsh bank relationships on other products and in-depth knowledge of the banks’ organization, processes and

their different business models and strategies.

MPA. Specifically, risk transfer to this global risk platform is delivered also through a general framework contract in form of a silent, risk participation agreement (Master Participation Agreement “MPA”) which has the following features:

Regulatory compliant counterparty risk transfer, representing the equivalent of an irrevocable,

first demand guarantee obligation

Meets the international bank standard requirements for such transfer solutions

Globally accessible risk and collateral sharing solution giving access to high volume of bank guarantee deals

Pre-agreed panel of surety insurers

Silent and undisclosed risk participation

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Strategic benefits of this innovative partnership include:

Access to profitable high-quality deal flow and already booked deals sharing existing collateral

No additional investments necessary

Focus on sureties’ core competence underwriting

Benefit from Marsh core competence distribution and specific knowledge of bank client needs (including regulatory requirements, organizational set-up, decision processes, local and regional particularities) delivering specific tailor-made solutions

Leverage the existing Marsh’ global surety expert network (over 240 people worldwide) and the multi-entry and product strategy

Benefit from existing (some exclusive) and new relationships of the MMC organization in the banking world

Innovative and unique bank syndication desk approach steered by a bank syndication task force with decades of international commercial bank and surety experience

Implementation of the MPA in different regulatory environments achieving limit and capital relief

The MPA-approach sets the framework; every single deal will be judged on its own merits

Strategic Solutions for Sureties Benefits

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MARSH 10 September 24, 2014

Marsh Global Surety Practice

Global Risk Practice –

Combination of International, US and Canadian Surety Businesses

- All surety operations report into Practice and Geography - Top line growth, client retention and direct margin driven - Investment decisions jointly made, driven by Practice - Performance goals set within Practice, with Geography agreement

234 global surety colleagues

Place over $600 million of surety premiums into global market

Teamwork, communication, and collaboration are critical for success

Innovation & market relations key

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OUR VISION

The Marsh Global Surety Practice

will bring together

the scale, scope and intellectual capital of the organization

to deliver innovative surety risk solutions

to our clients

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MARSH 12 September 24, 2014

Global Surety Team

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Global Expertise

13 13 September 24, 2014

David Moylan Global

Surety Practice Leader

Vincent T Moy ASIA

Surety Practice Leader

David C. Moylan EMEA

Surety Practice Leader

Drew Brach US

Surety Practice Leader

Hernan Monroy LATIN

Surety Practice Leader

Patrick Baker CANADA

Surety Practice Leader

Beijing , CHINA Robinson Zhang

Tokyo , JAPAN Hiro Kinoyama

Seoul , KOREA KK Yoon

SINGAPORE Jimmy Kho

, Sydney , AUSTRALIA

Eric Wojcik

UNITED KINGDOM Steven Lewis / Rob Ling

Milan , ITALY Marco Bagattin

Madrid , SPAIN Javier Samaniego

Gonzalez

Brussels , BELGIUM Stefaan Germonpre

Paris , FRANCE Karim Khedimi

Munich , GERMANY Thomas Dusny

Johannesburg

,

SOUTH AFRICA Lynn Harrod

Santiago , CHILE Jorge Veloso

Caracas , VENEZUELA Jose Villasmil

Montevideo , URUGUAY Sergio Aboy

Lima , PERU Enrique Matallana

San Juan , PUERTO RICO

Francisco Tirado

Buenos Aires , ARGENTINA Gonzalo Rigo

Sao Paulo , BRAZIL Silvia Vergara

Mexico City , MEXICO Miriam Cassis

/ Marisol Giribet

Contract , US . (TBD)

Commercial , US Joseph Poplawski

Surety Practice Leader

East Zone , US John O’Keefe

Central Zone , US Phil Neighorn

West Zone , US Jeffrey Strassner

Toronto , CANADA Shane Sinclair

Dusseldorf, GERMANY

Manuel Lopez

Manuel Lopez Global Bank Surety Syndication Leader

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VALUE PROPOSITION

Through Marsh‘s Bank Surety Syndication Desk

sureties obtain global and systematic access

to new high-quality deal flow from banks.

This is achieved by leveraging decades of specific

bank experience and technical knowledge

delivering specialist solutions to sureties and

banks

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Marsh & McLennan

MMC

140-years history

Serve 75% of Fortune 1000 companies

Approximately 55,000 colleagues

Serving clients in more than 130 countries

Marsh

Largest broker by revenue

$ 50 bn insurance premium placed

Approximately 25,000 colleagues

Marsh serves 87% of the Fortune Global 500

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