Canadian Update Last updated: July 2010 Commercial Property

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Canadian Update: Commercial Property

GRIP data indicates that the commercial property rate is stable in the first half of 2010. A review of FY’09 statutory financials indicates that commercial property written premium grew very slightly at 0.34% which was below the 2.7% growth in total premiums written for all other products. At 68%, the commercial property direct loss ratio was slightly better than the average 72%. However, the two largest markets (Ontario and Quebec) significantly underperformed, with direct loss ratios of 77% and 79% respectively.

PRICING STATISTICS On an annualized basis, GRIP data indicates that the commercial property rate for Q2’10 fell 2%. The GRIP estimate for Q3’10 shows a continuation of this trend with a 2.9% drop. Estimates are achieved using closed transactions and work in progress quotations. In terms of exposures, the average renewing commercial property client appear to be reporting a higher total insured value than the previous year. An increase in exposure variables is not unexpected given the general economic revival.

Quarterly Update Q3/09 Construction

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Canadian Update: Commercial Property

Year Loss $mn Territory Event Note1998 1,377 Quebec Ice storm Greatest natural disaster in Canadian history with over 650,000 property claims filed 2005 500 Ontario Rainstorm Significant damage caused to more than 500,000 homes2009 365 Alberta Hailstorm Powerful hail and wind storm hits rural Alberta2005 300 Alberta Flooding Southern parts of the Alberta territory suffer extensive flooding1996 288 Quebec Flooding Severe flooding results in nearly 17,000 property claims2003 200 British Columbia Forest Fire Over 3,000 property claims are recorded as forest fires engulf BC's forests2009 196 Ontario Rainstorm Torrential rain recorded in the Ottawa and Hamilton region of Ontario2004 188 Alberta Hailstorm Hailstorms in Edmonton and Calgary result in over 17,000 property claims1993 185 Manitoba Flooding Severe flooding in Winnipeg results in over 21,000 property claims2008 172 Quebec Storm Severe thunderstorm hit Montreal resulting in massive disruption

Source: Insurance Bureau of Canada

Top 10 Canadian Natural Disasters by Property Losses $mn

STATISTICS and FINANCIALS: Ten years of loss data show that flooding has been the principal cause of property losses at 21%, followed by windstorms at 15%. In geographic terms, Quebec reports a large share of property losses at 36% (relative to its share of economic activity (GDP) at approximately 20%). With the exception of the Quebec ice storm in 1998, the top ten natural disasters by property losses are relatively benign in the context of industry profitability. Written premium grew very slightly in FY’09 at 1.1%. This is likely to have been caused by a combination of reduced economic activity and a soft rate market. Positively, loss cost growth was similarly subdued at -0.03% and likely to have benefitted somewhat from the recent negative trend in commercial construction prices. The FY’09 Canadian direct loss ratio for commercial property of 68% was slightly below the all product average of 72%. However, the two largest markets Ontario and Quebec had a direct loss ratio significantly above average at 77% and 79% respectively. The Lloyd's market was the largest writer of both commercial property and all commercial premium at a national level.

Quarterly Update Q3/09 Construction

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Canadian Update: Commercial Property

Canada FY'09Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR

Lloyd's Underwriters Lloyd's 464 335 72% 52% AIntact Ins Co ING Grp 461 311 70% 67% A+

Aviva Ins Co (CAN) Aviva 460 358 80% 70% A-Chartis Ins Co (CAN) AIG 382 243 60% 66% A

Zurich Ins Co Zurich 308 173 55% 59% ATotal 5,065 3,163 68% 72%

$Mn

Source: The Office of the Superintendent of Financial Institutions Canada (OSFI)

Alberta FY'09 $Mn British Columbia FY'09 $MnTop 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR

Chartis Ins Co (CAN) AIG 125 75 62% 26% A Lloyd's Underwriters Lloyd's 121 72 60% 59% ALloyd's Underwriters Lloyd's 118 43 36% 40% A AXA Pacific Ins Co AXA 77 38 49% 54% A

Co-operators General Ins Co The Co-operators Grp Ltd 94 80 85% 60% A- Aviva Ins Co (CAN) Aviva 77 44 58% 57% A-Intact Ins Co ING Grp 82 56 69% 60% A+ Zurich Ins Co Zurich 64 27 41% 45% A

Wawanesa Mtl Ins Co Unaffiliated 72 64 94% 80% A+ Economical Mtl Ins Co Economical Ins Grp 57 40 73% 65% B++Alberta Total 1,019 644 71% 60% British Columbia Total 914 427 54% 60%

Manitoba FY'09 $Mn New Brunswick FY'09 $MnTop 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR

Wawanesa Mtl Ins Co Unaffiliated 26 14 57% 65% A+ Lloyd's Underwriters Lloyd's 9 5 60% 44% AAviva Ins Co (CAN) Aviva 24 27 118% 80% A- Aviva Ins Co (CAN) Aviva 8 5 59% 62% A-

Intact Ins Co ING Grp 16 12 74% 79% A+ Factory Mtl Ins Co FM Global Grp 8 0.1 2% 3% A+Lloyd's Underwriters Lloyd's 14 11 81% 46% A Chartis Ins Co (CAN) AIG 6 1 17% 66% AChartis Ins Co (CAN) AIG 11 18 113% 115% A Co-operators General Ins Co The Co-operators Grp Ltd 6 3 60% 89% A-

Manitoba Total 183 144 85% 67% New Brunswick Total 94 56 64% 69%Newfoundland & Labrador FY'09 $Mn Northwest Territories FY'09 $Mn

Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSRLombard General Ins Co (CAN) Fairfax Financial Grp 7 2 34% 38% A Zurich Ins Co Zurich 5 0.5 10% 67% A

Aviva Ins Co (CAN) Aviva 6 2 45% 44% A- Aviva Ins Co (CAN) Aviva 3 2 58% 56% A-RSA Ins Co (CAN) RSA 5 5 114% 67% A Chartis Ins Co (CAN) AIG 2 0.5 17% 26% AFactory Mtl Ins Co FM Global Grp 5 7 144% 143% A+ Co-operators General Ins Co The Co-operators Grp Ltd 2 n/m n/a 41% A-

Lloyd's Underwriters Lloyd's 5 3 50% 19% A Lloyd's Underwriters Lloyd's 2 0.3 16% n/a ANewfoundland & Labrador Total 59 40 74% 61% Northwest Territories Total 23 11 54% 58%

Nova Scotia FY'09 $Mn Nunavut FY'09 $MnTop 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR

Intact Ins Co ING Grp 13 9 72% 62% A+ Lloyd's Underwriters Lloyd's 3 2 86% 196% ARSA Ins Co (CAN) RSA 10 5 56% 52% A Chartis Ins Co (CAN) AIG 2 n/m n/a n/a A

Economical Mtl Ins Co Economical Ins Grp 9 11 123% 58% B++ Factory Mtl Ins Co FM Global Grp 1 n/a n/a n/a A+Aviva Ins Co (CAN) Aviva 8 4 47% 35% A- ACE INA Ins ACE 1 0.2 28% 26% A+

Sovereign General Ins Co The Co-operators Grp Ltd 6 4 80% 69% B++ Westport Ins Corporation Swiss Re 1 0.3 45% 45% ANova Scotia Total 105 58 61% 53% Nunavut Total 8 3 55% 79%

Ontario FY'09 $Mn Out of Canada FY'09 $MnTop 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR

Aviva Ins Co (CAN) Aviva 168 142 89% 92% A- Commonwealth Ins Co Fairfax Financial Grp 91 5 5% n/a AIntact Ins Co ING Grp 146 114 80% 76% A+ Chartis Ins Co (CAN) AIG 11 3 43% 170% A

Economical Mtl Ins Co Economical Ins Grp 128 89 68% 83% B++ Allianz Gbl Risks US Ins Co Allianz 7 1 12% 6% A+Zurich Ins Co Zurich 102 64 59% 67% A ACE INA Ins ACE 3 n/m n/a 20% A+

Lloyd's Underwriters Lloyd's 94 106 113% 55% A Pool Ins Co Viterra 3 n/a n/a n/a B+Ontario Total 1,545 1,124 77% 82% Out of Canada Total 120 9 7% 34%

Prince Edward Island FY'09 $Mn Quebec FY'09 $MnTop 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSR Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSRCo-operators General Ins Co The Co-operators Grp Ltd 2 0 24% 45% A- Intact Ins Co ING Grp 142 93 69% 61% A+

Lloyd's Underwriters Lloyd's 2 1 30% 15% A Lloyd's Underwriters Lloyd's 79 81 102% 56% AAviva Ins Co (CAN) Aviva 1 4 270% 65% A- Aviva Ins Co (CAN) Aviva 72 56 78% 61% A-

Intact Ins Co ING Grp 1 1 104% 53% A+ Chartis Ins Co (CAN) AIG 62 55 81% 114% AChartis Ins Co (CAN) AIG 1 2 153% 46% A Zurich Ins Co Zurich 55 35 66% 62% A

Prince Edward Island Total 17 14 90% 48% Quebec Total 760 544 79% 66%Saskatchewan FY'09 $Mn Yukon FY'09 $Mn

Top 5 Underwriters by DPW GROUP DPW DCI DLR DLR FSR Top 5 Underwriters by DPW GROUP DPW DCI DLR APLR FSRWawanesa Mtl Ins Co Unaffiliated 37 17 47% 48% A+ Aviva Ins Co (CAN) Aviva 2 0.3 21% 41% A-

Aviva Ins Co (CAN) Aviva 23 16 72% 63% A- Lloyd's Underwriters Lloyd's 1 0.2 22% 53% ACo-operators General Ins Co The Co-operators Grp Ltd 21 9 43% 62% A- Chartis Ins Co (CAN) AIG 1 n/m n/a n/a A

Chartis Ins Co (CAN) AIG 14 6 41% 51% A Allianz Gbl Risks US Ins Co Allianz 1 0.1 20% 5% A+Lloyd's Underwriters Lloyd's 11 8 72% 26% A RSA Ins Co (CAN) RSA 1 0.0 5% 25% ASaskatchewan Total 210 87 45% 41% Yukon Total 9 1 9% 31%

Quarterly Update Q3/09 Construction

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Canadian Update: Commercial Property

Aon Global Risk Insight Platform (Aon GRIPTM) is the world’s leading global repository of global risk and insurance placement information. By providing fact-based insights into Aon’s USD $54 billion in global premium flow, Aon GRIP helps identify the best placement option regardless of size, industry, coverage line or geography.

The Web-accessible data produced by Aon GRIP helps Aon brokers evaluate which markets to approach with a placement and which carriers may provide the best value for clients. It also gives Aon brokers a leg up when it comes to negotiations, making sure every conversation is based on the most complete, most current set of facts.

GLOSSARY

• DPW: Direct Premiums Written in the period for the specific line of business without taking into account premiums ceded or premiums assumed under reinsurance.

• DPE: Direct Premiums Earned is the portion of direct premiums written attributable to the risks borne by the insurer during the accounting year.

• DCI: Direct Claims Incurred in the period (including prior year development and forward estimates of losses) for the specific line of business without taking into account losses ceded or losses assumed under reinsurance.

• DLR: Direct Loss Ratio is a primary component of underwriting profitability. It is calculated as Direct Claims Incurred / Direct Premiums Earned. The ratio excludes any impact from reinsurance.

• APLR: All Products Loss Ratio (as direct loss ratio but for all non-life products). • FSR: Financial Strength Rating by A.M. Best. • Commercial P&C market is estimated by subtracting the following insurance lines from the aggregate P&C

market: Personal property, accident and sickness, and 85% of auto premium and losses. This report has been compiled for you on behalf of Christine Lithgow Executive Vice President National Client Service - Market Relations T: 1 416 868 5638 e: christine.lithgow@aon.ca CONTACTS Please direct any questions about this report to: Nicholas Keye, CFA Susie Crawford The Aon Centre for Innovation and Analytics The Aon Centre for Innovation and Analytics T: +353 1 266 6419 T: +353 1 266 6512 e:nick_keye@aon.ie e: susie_crawford@aon.ie DISCLAIMER Aon does not provide or express an opinion or recommendation regarding any company or matter mentioned herein. The recipient understands that Aon has endeavored to include information known to it which it believes to be relevant to the recipient. The recipient further understands that neither Aon nor its employees shall make any representation or warranty as to the accuracy or completeness of this information. Aon shall not have any liability to the recipient or any other party resulting from the use of this information by the recipient or such other party. Copyright 2010 Aon Commercial Services and Operations Ireland Limited. For use only by an Aon employee for client purposes. May not be reproduced in any way or disseminated to an insurance company or to any other party without the prior written consent of Aon Commercial Services and Operations Ireland Limited.