FM Global

1. AJ Buono Ethan Foster Elizabeth Clarke Nicholas D’Orazio Jennifer SantaMaria

2. FM at a glance Mutual insurance company domiciled in Rhode Island Global commercial & industrial property insurance Operations spanning 130 countries PHS in excess of $10 billion Known for engineering-driven UW Loss prevention & loss control Value proposition Narrow focus → large market share

3. History Zachariah Allen 1848: Rhode Island Mutual Years later: Factory Mutual 1874: Supported creation of fire sprinkler 1878: Collective Inspection Unit is formed Inspection, appraisals, adjustments, loss analysis and research activities 20th Century: began expansion to other markets 1999: Merged with 3 other entities to create FM Global Allendale Mutual, Arkwright-Boston Manufacturers Mutual, Protection Mutual

4. Structure AFM Commercial property for mid-size businesses FM Approvals Certifies products and services for companies FM Global Cargo Comprehensive cargo coverage Mutual Boiler Re Boiler Reinsurance Emergency Response Consultants Emergency response for fire brigades, hazardous material emergency responders, technical and confined-space rescue teams, emergency medical services and local fire departments.

5. Key Executives Thomas A. Lawson- President & CEO since 2014 On the Board of the National Fire Protection Association & Member of National Society of Mechanical Engineers Graduated from Illinois University with Degree in Occupational Safety Shivan S Subramaniam- Chairman (Former CEO from 1999-2014) Degree in Mechanical Engineering from a University in India Jonathan Hall - Executive VP & COO since 2014 Degree in Management Backgrounds in Engineering and various safety programs contribute to FM Global’s superb engineering expertise & inspection and loss prevention services

6. Board of Directors Members of Board are in high leadership positions at their various companies/organizations Disney, MLB, GlaxoSmithKline, USAA, RR Donnelley, Caterpillar, etc. Many clients sit on Board of Directors, advisory boards, risk management councils Ex. Edward Rapp, Group President of Construction Industries at Caterpillar (one of FM Global’s largest clients) Beneficial to hear client needs firsthand at board meetings Contributes to long-term partnerships with clients → 95% retention ratio in 2015 Out of 13 board members, only 2 are women

7. Mission “We have a unique risk management focus. Our clients look to us to develop cost-effective insurance and risk-financing solutions, to minimize business interruption and financial impact if a loss does occur.” Meet these needs with customized programs that draw upon: State-of-the-art loss prevention engineering and research Risk management skills and support services Tailored risk-transfer capabilities Superior financial strength

8. FM in the Industry

9. Products / Services Products All Risk Property Coverage (FM Global Advantage Policy) Business Interruption Coverage (Time Element Select Policy) Sustainability Coverage (Sustainability Select Policy) All Risk Boiler and Machinery Coverage Customized Cargo Coverage (as standalone or with risk policies) Services Site Evaluations Unique Cargo Risk Engineering Services Risk Quality Benchmarking (RiskMark, Engineering Data Reporting Tools) Project Planning Client Training Supply Chain Risk Management Product Certification

10. FM Global Advantage All-Risk Property Policy A product designed to keep your business “resilient” Includes: Coverage for Scheduled, Misc. Property, and Business Interruption Expanded coverage for Cyber, “Cloud” Services, & options to expand coverage to suppliers through Contingent Time Element and Logistic Extra Cost options Benefits: Maximizes risk transfer and improved contract certainty The ability to scale the policy to fit your needs

11. Supply Chain Risk Management Available through FM Global Advantage Expert risk assessment Extend coverage through suppliers’ suppliers Global Resilience Index Ranks resilience of 130 countries Prioritization & insights

12. Customers Core strength is forming long-term strategic partnerships with clients FM seeks customers that view risk management as an investment Large commercial companies 95% customer retention rate Major customers include: Caterpillar, Modine, Mercy and HSN

13. Premium

14. Underwriting Results Loss Ratio Year FM CB TRV ZURN 2010 51% 58% 61% 71% 2011 95% 64% 73% 72% 2012 60% 64% 65% 70% 2013 51% 54% 58% 68% 2014 50% 55% 58% 67% AVG 61% 59% 63% 70% Expense Ratio Year FM CB TRV ZURN 2010 28% 31% 32% 27% 2011 25% 32% 32% 27% 2012 24% 32% 32% 28% 2013 28% 32% 32% 30% 2014 26% 33% 31% 31% AVG 26% 32% 32% 28% 2011 - Natural hazard losses added ~53 points to combined ratio 2012 - Sandy added ~13.5 points to combined ratio

15. Profitability Driven by strong underwriting Investments Inv Yield 2.2% vs Industry 2.7% Inv Inc Growth 3.9% vs Industry -2.9% Fueled by growth in invested assets Membership credits 2014 ~$465 million 7 th credit since 2001

16. Risk Profile BCAR 378.6 & RBC 439% AM BEST “A+” ; Fitch “AA” ; S&P “A+” High deductibles & attachment points No debt issued Elevated common stock leverage Facultative Coverage requirements outside UW criteria Excess-of-loss $ 1.23 billion X $250 million per-risk retention $1 billion X $500 million per-CAT retention Berkshire Hathaway & Swiss Re ~16% of ceded premium Reinsurance Program

17. Reserves Less reserving risk relative to peers Short-tail nature of risks Develop into paid losses within 3 years Favorable AY development Gg Asbestos & Environmental Discontinued reinsurance operations 27% of total reserves ~$ 650M Chubb ~$478M ; SR: 6.9

18. Reserves Driver: discontinued reinsurance operations A&E exposure

19. Strengths Non-Traditional Business Model Prevention is first priority Underwriting 61% loss ratio Expense management 26% expense ratio Customer retention 95% retention Well Capitalized Able to absorb losses and volatility $10 Billion PHS

20. Weaknesses CAT exposure Volatile underwriting results A&E exposure Continuous unfavorable development Property-only focus Contributes to undiversified book of business

21. Opportunities Data analytics Exploit data to drive new business & cross-selling Supply chain & c yber Utilize FM Global Resilience Index Emerging markets 8-9% expected growth Emerging Asia: ~12% expected growth

22. Threats Competition Risk-engineering Line bundling Global environment Macroeconomic Political Foreign e xchange Impact of strong $USD Foreign currency translation ($126 M) in 2015 Insurance regulation

23. Strategic Priorities

24. 1. Grow business with existing customers

25. 2. Access new & emerging markets through data

26. 3. Continue excellence in research Research sets FM apart Crucial to continue innovating and investing Large companies could imitate their business strategy AIG Chubb

27. Today → Tomorrow Currently positioned well in the market Excellent performance Market share Retention Looking ahead Grow with existing customers Access emerging markets Continued excellence in research → solidify FM as the premier commercial property insurer

28. Questions?