University of Houston Energy Case Study

2. University of HoustonEnergy Case Study Steven P. Weiss, CPCU, AMIM, NAMS-CMS Vice President, Marine Engineering and Project Cargo

3. What are we going to do? • What is Risk Management • What is risk financing • What is the insurance industry and how does that play with Risk Management • How do the insurance players all interact • Who are the major players • Take a submission from cradle to grave

4. What is Risk Management • The identification, control and management of risks/hazards within an environment to ensure that they are always at a tolerable or negligible level

5. How is this done? • There are five steps • The identification and analyses of loss exposures • Examination of the feasibility of Alternative Risk management Techniques • Selection of the best Risk management techniques • Implementation of the techniques • Continual monitoring of the program

6. The identification and analyses of loss exposures • What are the exposures? • First Party • Third Party • Financial • Employee

7. The identification and analyses of loss exposures (cont) • First Party • Own Property

8. The identification and analyses of loss exposures (cont) • Third Party • Contractual • Personal Injury • Property Damage (others)

9. The identification and analyses of loss exposures (cont) • Financial • Business Interruption • Delay in Start Up • Self Insured Retentions • Deductible

10. The identification and analyses of loss exposures (cont) • Employee • Workers Comp • Jones Act • Longshore and Harbor Workers

11. Examine feasibility of Alternative Risk Management Techniques • Contracts to transfer risk • Training of Employees • Engineering solutions • Exit lines of business • Contractors • Insurance

12. Selection of the best Risk management techniques • In my situation, what works best? • Probably some combination of the above

13. Implementation of the techniques • Get the contracts signed • Engineer and install the solutions • Exit/sell lines of Business • Find the proper contractors • Purchase the Insurance

14. Risk Financing • What is Risk Financing • Where do you get it? • Deductibles/Self Insured Retentions • Mutual Agreements • Cash flow • Insurance

15. Insurance Industry

16. Flow of Business Insured Broker Insurance Company Reinsurer

17. ($ billions) Rank Company 1 State Farm $35.0 2 Allianz 29.2 3 AXA 20.7 4 Zurich Insurance 18.6 5 Allstate 18.6 6 AIG 18.3 7 Royal & Sun Alliance 12.8 8 Winterthur 12.4 9 Assicurazioni Generali 11.5 10 Munich Re 11.4 Gross Written Rank Company Premium $ % 1 Allianz $63.8 34.6 119% 2 AIG 56.7 38.4 210% 3 State Farm 50.2 15.2 43% 4 AXA 38.2 17.5 84% 5 Zurich 37.2 18.6 100% 6 Liberty Mutual + Safeco 34.3 28.0 444% 7 Assicurazioni Generali 32.4 20.9 181% 8 Munich Re 32.1 20.7 181% 9 Allstate 30.0 11.4 61% 10 Berkshire Hathaway 24.9 20.0 408% Top Global P&C Companies 1996 2008 ’96 – ‘08 Increase Liberty Mutual 6.3 • Source: Company Filings

18. ($ billions) Rank Company DWP 1 State Farm $35.0 2 Allstate 18.0 3 AIG 13.5 4 Zurich Insurance 12.3 5 Travelers 9.0 6 Nationwide 8.6 7 CNA 7.1 8 Liberty Mutual 5.8 9 Hartford 5.6 10 USAA 4.7 Rank Company DWP 1 State Farm $49.9 2 AIG 32.1 3 Zurich Insurance 28.2 4 Allstate 26.8 5 Liberty Mutual 26.3 6 Travelers 21.8 7 Berkshire Hathaway 16.2 8 Nationwide 15.8 9 Progressive 13.8 10 Hartford 11.1 Top U.S. P&C Companies 1996 2008 • Source: Highline Data Services • Note: LMG includes a full year of Safeco

19. The path of a submission

20. Here is what we discussed • What is Risk Management • What is risk financing • What is the insurance industry and how does that play with Risk Management • How do the insurance players all interact • Who are the major players • Take a submission from cradle to grave

21. Do you • Have any questions?