Guy Carpenter Unveils Disclosure Doctrine

December 16, 2004

Guy Carpenter & Company, Inc., a global risk and reinsurance specialist and a part of the Marsh & McLennan Companies, has published a “Disclosure Doctrine” for treaty placements globally. The new policy was disclosed to Guy Carpenter’s clients and reinsurance markets earlier this month.

In a letter to clients dated Dec. 1, 2004 announcing the new policy, Guy Carpenter’s Chairman & CEO, Salvatore Zaffino, noted there is a “need within the industry to address issues of full disclosure to clients within the reinsurance marketplace.”

“Guy Carpenter’s relationship with its clients is built on longstanding trust and our ability to help our clients make important decisions in a difficult environment. Transparency and full disclosure should strengthen the trust among all parties to the reinsurance contract and foster better decision-making. Since we announced our commitment to transparency, the feedback from clients and reinsurance markets worldwide has been overwhelmingly positive,” Zaffino said.

“The industry faces many challenges at the moment, from ratings downgrades and financial security to claims payment performance and standards of practice around the world. Guy Carpenter intends to be a positive force in addressing these and other issues, individually with our clients, and as an agent of change across the industry,” Zaffino concluded.

Guy Carpenter’s “Disclosure Doctrine” addresses the firm’s varied forms of compensation, including standard rates of brokerage for treaty placements, fee for services and the firm’s history with market agreements, all of which have expired or have been terminated.

As part of its “Disclosure Doctrine” Guy Carpenter has committed to making the following disclosures on an ongoing basis:

— When a client appoints Guy Carpenter broker of record, the company will disclose to its client the compensation that it anticipates receiving for the services to be provided on the client’s behalf.

— Prior to subsequent renewals of reinsurance contracts, the company will review with its client Guy Carpenter’s expected compensation based on standard commission rates.

— Guy Carpenter will continue to strive for consistency in rates of brokerage to be earned by Guy Carpenter within a layer and will disclose any variation in rates to all parties within that layer.

— Brokerage for each reinsurance transaction will be listed on the Cover Note for all treaty business.

The above policy covers treaty placements globally, which represent in excess of 90 percent of Guy Carpenter’s revenues, and will be extended to include facultative placements once a worldwide review of current practices is completed.

DISCLOSURE DOCTRINE

Treaty Placement

In light of recent developments affecting the industry, Guy Carpenter believes it is important to address the issue of compensation in the reinsurance broker marketplace and take this opportunity to reaffirm our commitment to our clients in this regard. Therefore, Guy Carpenter developed this Disclosure Doctrine, which identifies our procedures with regard to the services we provide, the ethics we espouse, and general manner in which Guy Carpenter is compensated.

Compensation and Services

The following outlines the manner in which Guy Carpenter receives payment for treaty placement services rendered as a reinsurance intermediary:

Broker Commissions (Brokerage)

Guy Carpenter’s longstanding practice is to conform to rates of brokerage in accordance with industry custom and usage. We also continue to support consistency of rates within a placement and disclosure of brokerage rates. To that end, Guy Carpenter sets forth below the rates of brokerage that would apply to the majority of business we place. These rates are guidelines and are generally standard in the marketplace but can vary depending on the specifics of a particular placement.

— Guy Carpenter generally receives brokerage on pro rata placements of between 1% and 2.5% of gross premium. There are some placements where brokerage is greater than 2.5%.

— For excess of loss placements, Guy Carpenter generally receives brokerage of 10% of contract premium.

— When excess of loss placements are made into the London market, an additional 5% brokerage is charged and retained by the London correspondent broker. A Guy Carpenter affiliated London broker is often used on these placements.

— In some markets, Guy Carpenter receives brokerage of up to 5% on reinstatement premiums.

— On some placements a stated margin is paid to the reinsurer. In such cases, Guy Carpenter generally receives 20% of the margin.

Fee for Service

In addition to our traditional reinsurance intermediary role, Guy Carpenter also provides other “non-traditional” reinsurance related services for which we receive fees. Revenue from these activities represents a small portion of Guy Carpenter’s annual revenue. Currently, the two primary examples of these services are:

— Reinsurance Solutions International LLC is a Guy Carpenter subsidiary that receives fees for providing unbundled services such as policy administration, claims administration, premium/reinsurance collections, statutory/GAAP accounting, regulatory compliance and auditing. In addition, RSI provides specialized consulting services focusing on process re-engineering, benchmarking, and performance management metrics and measures.

— Guy Carpenter & Company Inc., of Pennsylvania is a subsidiary of Guy Carpenter and is a licensed reinsurance manager overseeing a reinsurance underwriting facility for certain reinsurers. This underwriting facility assumes business from smaller regional and mutual companies.

History of Market Agreements

In the past, Guy Carpenter entered into a limited number of agreements with certain reinsurers that provided payments to Guy Carpenter. These agreements, in the aggregate and in any one year, represented a very small percentage of Guy Carpenter’s total revenue. All of such agreements have either expired or have been terminated.

Disclosure

Guy Carpenter believes that the reinsurance marketplace would benefit from more transparencies with the clients with regard to broker compensation. In order to promote this objective, Guy Carpenter will implement the following steps effective on Jan. 1, 2005:

— When a client appoints Guy Carpenter broker of record, we will disclose to our client the compensation that we anticipate receiving for the services to be provided on the client’s behalf.

— Prior to subsequent renewals of reinsurance contracts, we will review with our client Guy Carpenter’s expected compensation based on standard commission rates.

— Guy Carpenter will continue to strive for consistency in rates of brokerage to be earned by Guy Carpenter within a layer and will disclose any variation in rates to all parties within that layer.

— Brokerage for each reinsurance transaction will be listed on the Cover Note for all treaty business.

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