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Project Cargo

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Worldwide Financed Projects

Middle East, SE Asia and Latin America KeyDeveloping Insurance Markets

North America

USD28.4bn

67 deals

W Europe

USD44.8bn

160 deals

E Europe

USD4.1bn

7 deals

SE Asia

USD20.3bn

54 deals

USD3.9bn

7 deals

Latin America / Caribbean

USD16.9bn

30 deals

Middle East / Africa

USD53.2bn

47 deals

Australasia

USD7.3bn

29 deals

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Worldwide Financed Construction DealsUSD180bn Project Finance Q1/Q3 2007

Investment in USD bn

10 0

12 0

14 0

16 018 0

20 0

nUSD

0

2040

6080

2001 2002 2003 2004 2005 2006 2007

Yearly Q1 - Q3

inb

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Worldwide Financed Construction Deals410 Project Deals Q1/Q3 2007

Number of Deals

25 0

30 0

35 0

40 045 0

ofDeals

0

50

10 0

15 0

20 0

2001 2002 2003 2004 2005 2006 2007

Yearly Q1 - Q3

Num

ber

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Financed Construction DealsUSD180bn Project Finance Q1/Q3 2007

Breakdown of Financed Construction

Deals

Energy Petrochemical Oil & Gas Industrial

Infrastructure M ining Telecom

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Project Cargo

What is covered?

Physical Loss or Damage cover under the Material

section of the Cargo Cover and not explicit excludedin the DSU Cover

Which Clause do we use?

London E.C. Bruce Endorsement under the CargoCover or equivalents in the local markets

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Project Cargo

Project cargo insurance is coverage for equipment

destined for infrastructure projects and Industrial

facilities. Policy coverage includes physical loss &damage and may include consequential loss, such as

delay in start-up (DSU) and additional cost of working

US$300m, with placements up to US$1.2bn possible

in the marine market. Global project cargo income isestimated at USD165m (2007)

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Project Cargo

Insurance coverage is typically driven by banks, and

the projects construction placement followed by

other coverages, including cargo.

Increased traditional reinsurance participation in

emerging markets with particular focus on Middle

East, Latin American and Asia

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The Project Cargo Time Schedule

Provisional Certificate of Acceptance50 / 50 Clause

RM, PBRM etc.

03

construction value at

the end of the project

01 02

maintananceTRC/TRM & DSU

Slide 9

Hot testing

Cold testing

Sea, air or land cargo transportation property, BI,

TPL etc.Constrction or

Erection period

Time

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The Project Cargo Indemnity Period

$

Slide 10

Provisional

Deductible

Indemnity Period

Maximum Indemnity Period

Final CAR / EAR & DSU Period

Original Transport

Period

Time

CAR / EAR & DSU

Period

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The Project Cargo Indemnity Period

IllustrationofahypotheticalUS$250mioconstructionproject

150

200

250

300

alue

US

Critical

transit

timeframe

Illustration of a hypothetical USD 250 Mio construcion project

0

50

100

6 12 18 24 30 36

Time(Months)

Pro

ect

Time (Months) Project Start Date

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The Project Cargo Indemnity Period

Critical item #1

Critical item #2

Critical item #3

Deductible

Critical

transit

timeframe

Slide 12

Critical item #4

6 12 18 24 30 36

Time (Months)

Project

Start DateShipmentDate

ArrivalDate

ReplacementTime

Key:

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Important Considerations

It is essential that underwriters also insure the

physical loss or damage insurance (cargo policy) in

conjunction with the consequential loss policy, as

control by the underwriters is vital. Preferably they

will be written as two sections of the same policy

with the loss of profit claim triggered by a loss under

the material dama e car o section. Thus an

condition or warranty imposed by Underwriters on

the cargo policy will similarly affect the advance lossof profit coverage.

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Important Considerations

Otherwise the consequential loss underwriters

would have no control over the damaged cargo and

would be unable to influence the course of action.

The assured would have to submit any claims

se aratel to two sets of insurers who ma not

adopt identical positions. With the same

underwriters the claim will be dealt with byone Claim Department in conjunction with the

Underwriter who assessed and wrote the risk in the

first instance. Therefore an overall view would be

adopted minimizing the loss to both insurers.

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Important Considerations

It also ought to be remembered that the value

of any one item or part of one item has little bearing

on its significance to loss of profit Underwriters. AnAll Risks Underwriter receives premium based on the

value and the claim is paid relative to that value.

For the consequential loss Underwriter, loss or

damage to quite low value items which are vital to acontract might result in an entire plant being

inoperable if repairs or replacement parts are not

quickly available.

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What is the Reinsurers Role on DSU?

Capacity

Knowledge Transfer

Diversifying: Worldwide view and allocation of

the Risk

Surveys / Claims Handling Support

Capacity

Capacity

Capacity

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DSU Reinsurance Types

The market differentiates between two reinsurance

methodologies:

TYPE 1:

Quasi-direct reinsurance (fronted), written out of

London and Singapore. Singapore is a growing

market that is becoming dominant in Asia, leaving

little room for London other than for the largest or

most complex projectsTYPE 2

Traditional reinsurance (supporting experienced

cedants)

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Market size by Region

USDm

Capacity for

global deals any

one risk

Capacity

stand-alone

Global Total 1,232 -

London 872 872

Singapore 60 310

North America 150 225

Europe 100 200

Other 50 100

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Worldwide Market Size

Leading carriers in market on stand-alone basis

1025800

1000

1200

1400

acity,

US$mio

Following

207 152

720

0

200

400

600

Worldwide London

Availab

leCap

Leading

Carriers

Carriers