Towers Perrin Commercial Insurance Pricing Study Reports Ongoing Modest Price Decreases in First Quarter of 2008

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Survey Indicates Growing Price Disparity Between Larger and Smaller Insureds, Ongoing Loss Ratio Deterioration, Specialty Lines Decline Slows

STAMFORD, CT, July 1, 2008 – Towers Perrin’s quarterly survey of commercial lines insurance pricing and profitability (CLIPS) indicated that average prices for all lines of coverage combined continued to decrease during the first quarter of 2008, dropping about 6% compared with the same quarter a year ago.

According to the survey, large insureds experienced price decreases nearly four times larger, on average, than small accounts. However, the dramatic drop in prices seen in 2007 for specialty lines, including Directors & Officers (D&O) liability coverage, appears to have tapered off.

Further, for the majority of product lines surveyed, the deterioration in loss ratios seen in 2007 � which increased 12% versus 2006 � has shown signs of continuing into 2008, as price reductions were not matched by reductions in the cost of claims.

“The overall deterioration in pricing is a continuation of the trend cited when we published our first survey three years ago,” said Jeanne Hollister, Towers Perrin managing principal and property/casualty insurance practice leader for the Americas region. “Our data indicate more conservative price reductions than other marketplace surveys � only Towers Perrin’s survey has as its source the insurers that are underwriting each of these lines of business.”

CLIPS participants represent a cross section of U.S. property/casualty insurers that include the majority of both the top 10 commercial lines companies and the top 25 insurance groups in the U.S. CLIPS’ measurement of both pricing changes and loss ratio changes also sets it apart from other studies.

Pricing data are a critical component of the information insurers use to develop business plans and anticipate changes in product profitability. As investors and regulators closely monitor insurance pricing trends and use this information to analyze insurance company performance and financial security, it is critical that these audiences have access to accurate data.

“In our view, these data are the most reliable, because they reflect price change information captured in companies’ price monitoring systems, as compared to data coming from secondhand sources cited in other reports,” said Ms. Hollister.

About the Commercial Lines Insurance Pricing Survey (CLIPS)

The purpose of the CLIPS report is to provide participants with regular benchmarks of industry price changes along with improved historical loss ratio change information for decision making. The survey is updated on a quarterly basis, with historical changes in price and loss costs reported relative to the same period in the prior year. Towers Perrin conducts this survey in accordance with the antitrust laws and recent guidelines issued by the Department of Justice.

Launched in the summer of 2005, the data in CLIPS reflect information compiled by commercial lines insurance companies based on their price monitoring systems, distinguishing the study from commercial lines pricing reports that are based solely on agent/broker perceptions.

About Towers Perrin

Towers Perrin is a global professional services firm that helps organizations improve performance through effective people, risk and financial management. The firm provides innovative solutions in the areas of human capital strategy, program design and management, and in the areas of risk and capital management, reinsurance intermediary services and actuarial consulting. The firm also provides retail brokerage services. Towers Perrin has offices and alliance partners in the United States, Canada, Europe, Asia, Latin America, South Africa, Australia and New Zealand. More information is available at

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