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Out of the Storm ’08September 18, 2008

Jeffrey FieldsonNashville, Tennessee

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State of Florida (1851-2005)

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2004 Hurricane Season

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2005 Hurricane Season

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2006 Hurricane Season

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2007 Hurricane Season

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2007 Hurricanes – Dean & Felix

Only four times — in the 1960, 1961, 2005 and 2007 hurricane seasons — have multiple Category 5 hurricanes formed. Only in 2005 have more than two category 5 storms formed, and only in 2007 has more than one made landfall at category 5 strength.

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U.S. Insured Catastrophe Losses*

$7.5

$2.7

$4.7

$22.

9$5

.5 $16.

9$8

.3$7

.4$2

.6 $10.

1$8

.3$4

.6$2

6.5

$5.9 $1

2.9 $2

7.5

$6.5

$100

.0

$61.

9

$9.2

$0

$20

$40

$60

$80

$100

$12089 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

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*Excludes $4B-$6b offshore energy losses from Hurricanes Katrina & Rita. Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01. Includes only business and personal property claims, business interruption and auto claims. Non-prop/BI losses = $12.2B.Source: Property Claims Service/ISO; Insurance Information Institute

$ Billions

2006/07 were welcome respites. 2005 was by far the worst year ever for insured catastrophe losses in the US, but the worst

has yet to come.

$100 Billion CAT year is coming soon

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Top 10 Most Costly Hurricanes in US History, (Insured Losses, $2005)

$3.5 $3.8 $4.8 $5.0 $6.6 $7.4 $7.7$10.3

$21.6

$41.1

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

Georges(1998)

Jeanne(2004)

Frances(2004)

Rita (2005)

Hugo(1989)

Ivan (2004)

Charley(2004)

Wilma(2005)

Andrew(1992)

Katrina(2005)

$ B

illio

ns

Sources: ISO/PCS; Insurance Information Institute.

Seven of the 10 most expensive hurricanes in US history occurred in the 14 months from Aug. 2004 –

Oct. 2005:

Katrina, Rita, Wilma, Charley, Ivan, Frances & Jeanne

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Insured Losses: $110BEconomic Losses: $200B+

$70

$30

$5 $4 $1$0

$20

$40

$60

$80

NY NJ PA CT Other

Nightmare Scenario: Insured Property Losses for NJ/NY CAT 3/4 Storm

Total Insured Property Losses =

$110B, nearly 3 times that of

Hurricane Katrina

Distribution of Insured Property Losses,

by State, ($ Billions)

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Track of “Long Island Express” Hurricane of 1938

Source: WeatherUnderground.com, accessed February 4, 2006.

“Great New England Hurricane” of 1938

a.k.a.“Long Island Express” caused severe damage through much of the

Northeast.600+ Deaths$308 million

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Storm Season of 1944: A Busy one for the Northeast

Three storms affected NY, NJ and New England in 1944, including “Great Atlantic

Hurricane”46 deaths

$100 million damage109mph gusts in Hartford

Source: WeatherUnderground.com, accessed May 31, 2006; NOAA loss & fatality figures.

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Storm Season of 1954: The Northeast Hit Again

NY/New England areas hit by Carol & Edna two

weeks apartCarol: 8-10 ft.

floodwaters in ProvidenceEdna hits Cape CodCombined: 80 deaths,

$501 million losses

Source: WeatherUnderground.com, accessed May 31, 2006; NOAA loss & fatality figures.

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Storm Season of 1960: Brenda & Donna Came to Visit

NY/New England areas were hit twice in 1960.

Donna killed 50, $387 million damage along East Coast

Source: WeatherUnderground.com, accessed May 31, 2006; NOAA loss & fatality figures.

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After a 25 Year Hiatus, Hurricane Gloria Hit in 1985

Source: WeatherUnderground.com, accessed May 31, 2006; NOAA loss & fatality figures.

NY/New England areas were hit by Gloria 9/27/85

8 deaths$900 million damage

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Floyd Visited in 1999, Causing $4.5 Billion in Losses

Source: WeatherUnderground.com, accessed September 16, 2007; NOAA loss & fatality figures.

NY/New England areas were hit by Floyd 9/14 – 9/17/99$4.5 B in damage US

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More than 8,000 people were killed in the 1900 Galveston hurricane, most by the storm tide. Hurricane Camille in 1969 produced a 24-foot storm tide in Mississippi. Hurricane Hugo in 1989 generated a 20-foot storm tide in South Carolina. Hurricane Katrina in 2005 generated a 27-foot storm tide in Mississippi.

STORM TIDE FACTS

Mean Sea Level

15 ft surge17 ft storm tide

2 ft normal high tide

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Source Date Named Storms Hurricanes Major Hurricanes

CSU Average (1950-2000) 9.6 5.9 2.3

NOAA Average (1950-2005) 11.0 6.2 2.7

Record high activity 28 15 8

Record low activity 4 2 0

CSU 8/5/2008 17 9 5

NOAA 8/7/2008 14-18 7-10 3-6

Actual activity (as of 9/16/2008) 10 5 3

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Hurricane Ike Stats

Will become the third most costly hurricane in U.S. history

Was a CAT 2 storm with sustained winds of 110 mph. This was 1 mph below a CAT 3 level storm.

48 deaths confirmed in the U.S. – 80 in the Caribbean

4 million people without power after Ike made landfall

2 million residents in Houston without power as of 25 September

40,000 evacuees – sent to 250 shelters

10 inches of rain in Indiana, Illinois, Missouri. Ohio and Kentucky had CAT 1 Hurricane force winds

1.3 million homes without power in Ohio as of 25 September

600,000 customers without power in Kentucky – the largest power outage in state history

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Hurricane Ike Stats (continued)

97.5% of oil production and 95% of natural gas production shut down

28 of 3,800 offshore platforms destroyed (64 destroyed in Rita – 44 destroyed in Katrina)

Estimated insured losses from Ike -- $16-$20 billon onshore plus $600 million to $1.5 billion for offshore assets

TWIA (Texas Wind Insurance Association) has a $370 million reserve Trust Fund – plus $1.5 billion in reinsurance. Losses to TWIA will exceed $2.2 billion or more

Ike and Gustav will not be a solvency issue for property insurers but is likely to be an “earnings” event for many insurers

Gustav hit two weeks before Ike – Gustav loss estimates exceed $4 billion