JANUARY 16-19, 2018 HYATT REGENCY COCONUT POINT ...

A Berkshire Hathaway Company

JANUARY 16-19, 2018 HYATT REGENCY COCONUT POINT RESORT AND SPA, BONITA SPRINGS, FL

JANUARY 16-19, 2018 | HYATT REGENCY COCONUT POINT RESORT AND SPA, BONITA SPRINGS, FL

Welcoming Remarks and Thoughts Presented by Berto Sciolla January 17, 2018

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla 2

A Timeless Thought…

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla 3

“ Today’s results are from yesterday’s decisions, tomorrow’s results are from today’s decisions.”

Gen Re

Predictive Analytics

BIG DATA Affiliation/M&A

PCI NCCI

Technology

Process Risk

Parameter Risk

A Day in the Life of a Manager

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla 4

Digital Presence Distribution Investment Income

Trend NAMIC Access to Capital

Culture

Governance

Brand Inflation Disaster Recovery

Credit Risk

Underwriting Results (Gross, Net)

Auto Trends Cyber

Cat Risk Geography

Growth Market Risk

Emerging Issues

Terrorism Capital Markets Taxes Underwriting Product Offerings Peers

Board of Directors

Data Analytics

Operational Efficiency

Float Commissions Demographics

Claims Customer Satisfaction

Execution Risk Legacy Issues

InsurTech Reinsurance A.M. Best

Expense Ratio

Loss Ratio

Combined Ratio

A Manager’s Definition of Success (Ward Group EF 2016)

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla 5

Capital Preservation and Policyholder Surplus Growth Gross (and Net) Underwriting Profits

Investment Income Corporate Governance

Premium Growth, M&A / Affiliation / Distribution Policyholder Retention and Satisfaction

Brand Development Rating Agency Management

Peer Comparisons Expense Management Talent Management

How We Think About “Units of Risk”

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla 6

Natural Catastrophe

Pricing & Underwriting (Non-Nat Cat)

Pandemic

Terrorism

War

Reserving

Cyber

Credit Spread

Liquidity

Equity

Interest Rate

Currency

Counterparty Default

Concentration

Reputational

Strategy

Emerging Risk

Group Risk

Legal and Regulatory Compliance

Tax Compliance

Transaction and Data Processing

IT Risk

Business Interruption / Disaster Recovery

Service Provider / Outsourcing

Personnel

Cyber Security Risk

Insurance

Market

Operational

Strategic Risk

110.1

115.8

107.5

100.1

98.4

100.8

92.6

95.7

101

99.3

101.1

106.5

102.5

96.4 97.0 97.8 99.5

104.0

90

100

110

120

0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

P/C Insurance Industry Combined Ratio, 2001-2017*

*Excludes Mortgage & Financial Guaranty insurers 2008-2014. 2017 is first nine months. Including M&FG, 2008=105.1, 2009=100.7, 2010=102.4, 2011=108.1; 2012:=103.2; 2013: = 96.1; 2014: = 97.0. Sources: A.M. Best; ISO, a Verisk Analytics company; 2017 is I.I.I. estimate

Heavy Use of Reinsurance Lowered Net

Losses Best

Combined Ratio Since 1949 (87.6)

Higher CAT Losses, Shrinking Reserve

Releases, Toll of Soft Market

Sandy

3 Consecutive Years of U/W Profits; 1st time

since 1971-73

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla 7

$400

$450

$500

$550

$600

$650

$700

$750

07:Q

3

07:Q

4

08:Q

1

08:Q

2

08:Q

3

08:Q

4

09:Q

1

09:Q

2

09:Q

3

09:Q

4

10:Q

1

10:Q

2

10:Q

3

10:Q

4

11:Q

1

11:Q

2

11:Q

3

11:Q

4

12:Q

1

12:Q

2

12:Q

3

12:Q

4

13:Q

1

13:Q

2

13:Q

3

13:Q

4

14:Q

1

14:Q

2

14:Q

3

14:Q

4

15:Q

1

15:Q

2

15:Q

3

15:Q

4

16:Q

1

16:Q

2

16:Q

3

16:Q

4

17:Q

1

17:Q

2

17:Q

3

Policyholder Surplus, Quarterly, 2007:Q3–2017:Q3

Sources: ISO, A.M .Best; 2017: Q3 is I.I.I. estimate.

($ Billions)

2007:Q3 Pre-Crisis Peak

Surplus as of 9/30/17 stood at $720B, an all-

time high

The industry now has $1 of surplus for every $0.76 of NPW, close to the strongest claims-paying status in its history.

Drop in 2011 due to very

large CAT losses

Surplus grew by 8.4% over the last

8 quarters

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla 8

The “Magic Sheet” – 2007 – 2016

9

CALENDAR YEAR U/W RESULT

CALENDAR YEAR DECOMPOSITION

APPROX. CONTRIBUTION TO FLOAT

ACTUAL VS. EXPECTED LOSSES

ACCIDENT YEAR – AS FIRST REPORTED

ACCIDENT YEAR – DEVELOPED THRU 12/2016

PREMIUM VOLUME – CALENDAR YEAR

UNDERWRITING AND PRICING METRICS

AGGREGATE MANAGEMENT

PORTFOLIO CLAIMS COUNTS

MARKETING METRICS

BUDGET/EXPENSES

STAFFING

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla

?

Gen Re North America Property / Casualty

10

Bob Jones Regional & Specialty Companies – Treaty

Berto Sciolla Mutual Companies –

Treaty

Martin Leitch National & Multinational

Companies – Treaty

Chris Brock Casualty Facultative

Patrick Carroll Property Facultative

Kara Raiguel CEO

Vickie Seeger Underwriting

Gary Vaughan Underwriting

Carole Ferrero Underwriting / Claims

Upendra Belhe Chief Data & Analytics

Officer for P&C

Marc Nerenberg Underwriting

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla

Agenda

11 2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla

12

A Timeless Thought…

2018 Winter Executive Forum | Welcoming Remarks and Thoughts – January 17, 2018 | Berto Sciolla 13

“ Today’s results are from yesterday’s decisions, tomorrow’s results are from today’s decisions.”

Gen Re