bob courtemanche chief executive officer september 14, 2010 ace private risk services ® tapping the...

Bob CourtemancheChief Executive Officer

September 14, 2010

ACE Private Risk Services®

Tapping the Potential of High Net Worth Clients

Proprietary & Confidential2

Overall P/C Market Under Pressure

$260

$229

$245

$230

$0

$100

$200

$300

$400

$500

Billions

2007 2008

Commercial Personal

-3% Overall

-9%

Flat

Source: IIABA 2010 Market Share Report


Direct Response Taking Independent Share


Personal Lines Market Share

36.0%35.9%

35.0%

34.7%

34.5%10.6%

11.1%

11.8%

12.1%

12.6%

33.5%

34.0%

34.5%

35.0%

35.5%

36.0%

36.5%

2004 2005 2006 2007 2008

Ind

ep

en

de

nt

Ag

en

t S

ha

re

9.5%

10.0%

10.5%

11.0%

11.5%

12.0%

12.5%

13.0%

Dir

ec

t R

es

po

ns

e S

ha

re

Independent Agents Direct Response


Caught Between the Hammer and Anvil

Personal Lines

Direct Response 13%

Captives 53%

Independent Agents 34%



Price or Advice?

Commoditization

Price

Customization

Advice / Value

Scale Mass advertising Web transaction

platforms

Relationship Expertise Breadth of solutions


Advise Whom?

Affluent/HNW Affluent/HNW customerscustomers

Value orientedValue oriented Advisor orientedAdvisor oriented Package purchasersPackage purchasers Better retentionBetter retention More More

revenue/customerrevenue/customer Can be 30-40% more Can be 30-40% more

profitableprofitable


A Growing Market

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

6.3

9.2

7.8

0.5 1.2 1.0

0

2

4

6

8

10

Affluent Consumer Population Growth

$1MM Net Worth NIPR+2.4%/Yr.

$5MM Net Worth NIPR+8.5%/Yr.

Mill

ion

People

Source: Spectrem Group


Untapped Potential

Source: Conning Research & Consulting, 2008

$7B

$5B

$18B

$30 $30 BillionBillion


Untapped Potential

$12BInd.

Agent

$18BCaptive,

Dir. Resp.

Source: Based on rough estimate by ACE PRS that independent agents have a 40% share of the affluent/HNW market


Untapped Potential

$5BHNW Co.

$18BCaptive,

Dir. Resp.

$7BStd. Co.

Source: HNW Co. dollars are based on a rough estimate using publicly available records of HNW carrier premium.


Untapped Potential

$25Bto win or up-sell


Confidence Shaken, Ready to Engage

““Post financial crisis, HNWIs are much Post financial crisis, HNWIs are much more engaged in financial affairs.”more engaged in financial affairs.”

• More motivated to educate More motivated to educate themselvesthemselves

• Expect specialized or independent Expect specialized or independent adviceadvice

• Seeking transparency and Seeking transparency and simplicitysimplicity

Source: 2010 World Wealth Report, Capgemini / Merrill Source: 2010 World Wealth Report, Capgemini / Merrill LynchLynch


Value of Advice to Client

64%

66%

70%

72%

73%

82%

83%

86%

89%

0% 20% 40% 60% 80% 100%

Not-for-Profit D&O

Auto Liability

EPLI

Mold

Flood

Uninsured/Underinsured

Valuables

Home Value

Umbrella

Percent of Agents Saying Customer Likely Underinsured

Source: ACE Survey of 600 Independent Agents and Brokers


Value of Advice to Client

16%

19%

36%

55%

78%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Storing jewelry athome vs. bank

Regular vs collectorcar coverage

Loss preventioncredits

Package discounts

Deductibles too low

Percent of Agents Saying Customer Likely Missing Savings Opportunities

Source: ACE Survey of 600 Independent Agents and Brokers


Auto – Value of Advice, Customized Coverage

Agent Advice BI limits / excess gaps UM/UIM Deductible options Regular vs. Collector Multi-state exposures

Coverage / Service New for old / agreed value OEM parts Choice of local repair shop Roadside svc. & overnight

expenses No daily limit on rentals Betterment, no depreciation for

partial losses

Get QuoteGet Quote


Umbrella – Value of Advice, Customized Coverage

Agent Advice Limits / gaps Un- / Under-insured Special exposures

Domestic staff Not-for-profit board member

Coverage / Service Limits up to $100 million Legal expenses outside limit Shadow counsel Reputation damage EPLI Not-for-profit D&O


Value of a HNW Specialist Carrier

Coverage innovations Contents/other structures limits -- full

flexibility Uninsured/Underinsured liability

beyond motorists Blanket property coverage for Ultra

HNW

Service innovations Background screening of financial

advisors Wildfire and hurricane safety

programs Water loss prevention programs Unified claims and loss prevention

advisory teams

Constantly evolving to match HNW changing needs

Leads to extraordinary claims service

Generates referrals 99% would refer

to family, friend


Summary

Compete on advice and value versus price in personal lines

Target HNW clients

Advice oriented, profitable

$25-30 billion size, on rebound

Most are underserved

Use many opportunities to maximize value of insurance program

Leverage access to specialty carrier geared to the HNW market

bob courtemanche chief executive officer september 14, 2010 ace private risk services ® tapping the...

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