Investing in innovation, talent and

Specialty Insurance: Current Market

Specialty lines of insurance          Insurance Groups

Market challenges

                    •   Plentiful supply of capital
  Deteriorating     •   Continued pressure on acquisition costs and operating expenses

                    • Insurer’s market remains fragmented
Increasing power    • Creating the capability to access global business locally tends to be expensive
  of distribution

                    • Insureds and brokers require lead relevant lines
 Lack of scale/     • Challenging to increase line size in current rating environment

   Technology       • Growing complexity of risks require greater analysis
                    • Need for investment in technology and increase in information flow
 investment to
  harness data
                    •   Brokers and insurers variable expenses are constantly increasing
 High expense       •   Increasing fixed costs of compliance and technology

elseco: Insurtech to address the insurance market challenges

•   Critical mass and relevance to
•   Shared costs of best in class     Pooling
    teams and cutting edge            capacity
    technology                                                    Use technology to improve
•   Members’ networks to get                                      performance
    closer to clients                                                Inform underwriting decision
                                                     Technology       making
Business model attracts                                              Reduce frictional cost with
   Entrepreneurial, best in class                                    single open platform
    talent                                                            addressing underwriting,
                                     Best in class                    regulatory and compliance
   Innovative thinkers who can      Technology
                                      expertise                       needs
    harness distribution and
    technology to improve                                            Service global client base
    underwriting result                                               without expense of global
                                                                      office network
   Team minded players with a
    focus on collective success

           elseco provides access to superior underwriting results at lower cost

Improving performance with pooled capacity                                                   Capacity

      expense                            Access             Access          Flexibility to
                                          better             multi-         exit without      hnol
                                        systems           disciplinary         costs          ogy
                                          while            teams of
                                        avoiding            experts
                                       fixed cost

                         Relevance          Relevance
      Proximity to the   over terms         over claims
         customer        and product         handling     Differentiation

Best in
Improving underwriting result with best in class talent                          class

                                           The entrepreneurial nature of elseco, the
                                           strong culture and business model
                                           attracts underwriters who are
                                           disillusioned within the confines of large

           elseco has proven it can
        attract best in class expertise
          who are able to maximize               The ability to create wealth through
       performance using technology              profit related remuneration attracts
                                                 expertise that is competent,
                                                 confident and with stand-out track

                                          Access to tools and technology, far
                                          superior than competitors, that allows
                                          talent to maximise underwriting margin at
                                          a lower cost

Technology – In-house developed platform                                                                          Technology

  In-house            Scalability                             ecommerce                         Plug in with members
   system       Allows elseco to move from            Ability to get closer to the source          Members can have real time
developed in    thousands of transactions to          of business and reduce the costs          access to their portfolio, providing
                 millions of transactions per                 of the supply chain.               simplified performance analysis
partnership    year, opening up new lines of          Reduce the costs associated with            and an ability to manage their
  with SAP                 business                              double entries                      income at a lower cost

                                                                              Big Data & Data
                                     Financial and underwriting
                                   control are imbedded into the                A level of information at
                                  solution and reduce the burden          underwriters finger tip, surpassing
                                     of reporting and associated          that of the competition allowing for
                                    costs. Opens up platform for               advanced pricing and risk
                                  franchising to third party teams              selection. Proactive data
                                                                            collection disrupting the current
                                                                             data dependence of insurers

Specialty Insurance: elseco Optimized


Specialty lines of insurance            Insurance Groups

elseco to date
                                                      3 successful lines
                                               01     World wide leader in Space.
                                                      Rapidly growing presence in
                                                      Aviation and Energy
       Underwriting Profit
      USD 250m of underwriting profit has
          been generated since elseco’s

                                                     11 years
                                               03    Long term relationships have been
                                                     developed and fostered over the last
                                                     11 years.
Local offices, global footprint
         Physical offices in Dubai, London,
      Washington, and Paris, but platform
      allows for local servicing and access     04
                            across the globe         60 members
                                                     Key relationships include

                    23% YoY growth
         elseco’s growth has been funded
       solely through reinvestment of prior     06
                               year profits

elseco performance – Net Written Premiums (USD)

 USD 140,000,000

 USD 120,000,000

 USD 100,000,000

  USD 80,000,000

  USD 60,000,000

  USD 40,000,000

  USD 20,000,000

          USD 0
                   2007   2008   2009     2010    2011       2012   2013     2014   2015   2016   2017
                             Net Written Premium (to date)      End of the Year

elseco business model – challenging insurance market dynamics

        Deteriorating                                     Specialty lines
        performance                                       Insurers hesitate to enter very specialized lines where technicality
                                                          and need of expertise creates high barriers of entry

                                                          Arms Race for Talent
                Market                                    Hiring the best talent puts further pressure on expenses and
              Challenges                                  therefore margin

                                                          Placing Broker Control
                                                          With no single market controlling the placement, the broker
                                                          controls the dynamics to the capacity providers detriment

Pooling Capacity                            Expertise                                        Technology

Relevance to obtain best terms available   Product expertise and innovative               Harness data to more accurately select
on the placements                          approach, supported by insight analytics to    risk, optimizing chances to over perform
                                           improve the quality of the risk.               the market
Line size to maximise share on
placements where significant margin is

elseco business model – challenging insurance market dynamics

                                                               Broker channels
                               Increasing                      Increased acquisition costs as brokers utilize facilities, wholesale,
                                power of                       and retail outlets to bolster hold over business
                                                               Distance from customer
                  Market                                       Accessing the direct customer is becoming more difficult, as
                Challenges                                     carriers continually fail to differentiate

                                                               Globalization of the supply chain
                                                               Risks are originated all over the globe, making it harder to service
                                                               at a local level without investment

 Pooling Capacity                               Expertise                                          Technology

Proximity to the client achieved through       Ability to offer a complete service covering     Ability to service directly retail brokers
relevance of the pooled line, and ability to   all the elements of the value chain.             worldwide without significant investment in
lead; use of the members’ local presence                                                        local offices.
when available                                 Market leading knowledge is highly valued
                                               and can add to broker’s offering                 Provides brokers with low cost solution to
                                                                                                quote and bind less complex business

elseco business model – challenging insurance market dynamics

                                                            Capacity is not significant enough to be relevant in pricing and

                                                            High fixed costs
                Market                                      High costs of underwriting team, compliance and technology
              Challenges                                    versus income
                               Lack of
                                scale /                     Challenge to increase line size
                              relevance                     Carriers find it difficult to increase line size and utilize it effectively
                                                            whilst maintaining portfolio balance

 Pooling Capacity                            Expertise                                             Technology

Ability to influence placements while       Ability to be a market lead, working closely        Pooled capacity allows for costs of cutting
sharing the costs associated with being a   with clients attracts the best talent.              edge technology to be shared
lead market. Natural spread of the risk     Scale allows to build larger teams of
reducing the dependence on reinsurance.     underwriters with diversified expertise

elseco business model – challenging insurance market dynamics

                                                         Increasing number of data sources
                                                         Risks are becoming more complex and more accurate pricing
                                                         requires harnessing of data from multiple sources

                                                         Expense burden of legacy systems
                Market                                   Compounding the pressure on expenses is the heavy investment
              Challenges                                 required to update legacy systems and improve efficiency

                                                         Big data
            Technology                                   Many companies struggle with “small data”, so the move towards
          investment to                                  harnessing big data is a big challenge
           harness data

 Pooling Capacity                          Expertise                                      Technology

Access better technology by sharing the   elseco attracts teams with product line      Significant investment on technology
cost of the investment.                   expertise and entrepreneurial outlook to     infrastructure since day 1. Major upgrade
                                          understand how to optimise the investment    to open the system and be prepared to
                                          in technology and big data                   scale up the platform and the volume of
                                                                                       data analysed

elseco business model – challenging insurance market dynamics

                                                            High fixed costs
                                                            Costs of being a follow market can be disproportionately high

  High                                                      Talent
                Market                                      High costs of attracting talent to underwrite business

                                                            Technology to support underwriting and compliance is high and
                                                            replicated many times over in a syndicated market

 Pooling Capacity                            Expertise                                         Technology

Costs are maintained to the minimum due     Access the best talent for a fraction of the    Automate back office functions to gain in
to rigorous discipline and shared between   cost                                            operational expenses.
the members.                                                                                Manage high volumes of transactions at
Alignment of interest through PC based                                                      low incremental cost
compensation schemes

Multi-factorial market over-performance

                                                                                                        Net Incurred Results
                          elseco’s better informed and                              120%

                                                          Net Incurred Loss Ratio
  Member                  disciplined underwriting
   results     21%        teams have outperformed the                               100%
                          market by 21% through risk
improvement                                                                         80%
  > 27%

                        elseco low cost structure has                               20%
              6%        allowed members to operate at a                              0%
                        cost structure which is 6
                        percentage points better than
                                                                                                               elseco LR    Industry LR
                        their internal expense levels
                                                                                      Sources: Marsh Space Insurance Market Review and Future Outlook,
                                                                                      Lloyd’s audit code data at 31/12/2016 and Willis Re projected aviation
                                                                                      market result

        50%        To date, elseco members have received a
                   50% return on accounted premiums

Going forward

 • Development of market share in Space, Aviation and Energy

 • Launch of new products in these lines via the electronic platform

 • Launch of at least 3 other lines of business with expertise and/or data
   driven barriers of entry

 • Development of geographic footprint through innovative partnerships


This presentation and the accompanying slides (hereinafter called the “Presentation”) have been prepared by elseco solely for
information purposes. References to the “Presentation” include any information which has been or may be supplied in writing or orally in
connection with the Presentation or in connection with any further inquiries in respect of the Presentation. It does not constitute any offer
or recommendation and shall not form the basis of any contract or binding commitment for elseco. This presentation may not be copied
or disseminated, in whole or in part, and in any manner. The information contained in this presentation is subject to change without
notice and past performance is not indicative of future results.

The information and data that were used to prepare this Presentation are considered as reliable, but the company makes no
representation or warranty, express or implied, and no reliance shall be placed on the accuracy, completeness, fairness and
reasonableness of the contents of this Presentation. Any liability in respect of the contents of, or any omission from, this Presentation is
expressly excluded.

Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business
prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future
performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict.

The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this presentation
comes should inform themselves about and observe any such restrictions.

You can also read
NEXT SLIDES ... Cancel