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					MMC Capital




  Casualty Actuarial Society


  May 17, 2005




                               1
Property/Casualty Industry’s ROE is Lower than All
Industries’ ROE

  20.0%




  15.0%




  10.0%




   5.0%




   0.0%




                                                                                                                                                                            E
        80

               81

                      82

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  -5.0%

                                                US P/C Insurers                                                All US Industries

                                                                                                                                                                                2
  Source: Insurance Information Institute, Fortune
Property/Casualty Industry’s ROE is Lower than Other
Financial Services Industries’ ROEs


Asset Management                                                        17.3%

Investment Banks                                                       16.8%

Credit Cards                                                     15.7%

Brokerages                                                     15.0%

Commercial Banks                                             14.0%

Life                                                 12.2%

P&C                                   6.2%

                       0.0%    5.0%          10.0%           15.0%             20.0%
  Source: McKinsey & Company
                                                                                   3
Insurance Industry can be an Attractive Sector for
Investments



 • Large, growing and profitable
 • Investment opportunities created by market dislocations,
   restructuring and outsourcing trends
 • Very complex, diversified and highly regulated
 • Few private equity investors focus on this sector
 • Wide disparity between best and worst performers




                                                              4
  Performance of Property/Casualty Companies Varies Widely


Top Performing Quintile                                          20.8%


Second Quintile                                      13.1%


Third Quintile                                9.3%


Fourth Quintile                     2.1%


Fifth Quintile -4.5%


      -10.0%         -5.0%   0.0%     5.0%   10.0%   15.0%   20.0%   25.0%

Source: McKinsey & Company
                                                                         5
The Insurance Industry Is Made Up Of Winners And
Losers



Categories         Winners          Losers

Commercial Lines   AIG              Reliance/Kemper

Reinsurance        Renaissance Re   Trenwick/Gerling Re

Personal Lines     Progressive      American Horizon

Start-Ups          AXIS             ESG Re

Services           Sedgwick CMS     MRM


                                                          6
Underwriting Performance is the Key to Book Value
Growth

Components of Surplus Growth
Averages by Surplus Growth
Quintile

                                   Top       Second      Third     Fourth     Bottom
Average Annual Growth Rate        Quintile   Quintile   Quintile   Quintile   Quintile
Surplus Growth from Operations    17.1%       8.5%       5.5%       2.0%      -8.9%
Net Income                        15.3%       7.6%       4.8%       2.7%      -7.5%
  Underwriting Contribution        5.8%      -1.6%      -5.1%      -8.5%      -23.0%
  Investment Contribution         14.0%      12.6%      11.9%      13.4%      15.6%
  Other Income Contribution        1.9%       0.7%       1.1%       0.3%       0.8%
  Dividends to policyholders      -0.6%      -0.8%      -1.0%      -1.3%      -0.9%
 Income Taxes                     -5.7%      -3.3%      -2.1%      -1.3%       0.1%
Non-income Sources of Generated
Surplus                            1.7%       0.9%       0.7%      -0.7%      -1.5%
                                                                                         7
Source: Dowling & Partners
The U.S. P/C Insurance Industry Is Large


U.S. P/C premiums were $423bn in 2004 (3.6% of U.S. GDP)
                   $450


                   $400


                   $350
 ($ in billions)




                   $300


                   $250


                   $200


                   $150


                   $100
                      1984   1986   1988   1990   1992     1994      1996      1998   2000   2002   2004

                                                   U.S. P/C NPW (CAGR 6.6% )
Source: A.M. Best.                                                                                         8
U.S. Property/Casualty Premiums Have Grown Faster
Than The U.S. Economy

U.S. P/C Insurance Premiums were $423bn in 2004
                         375
                         350
                         325     U.S. Property & Casualty NPW CAGR: 6.6%
                         300     U.S. Nominal GDP CAGR:             5.6%
    Index (1984 = 100)




                         275
                         250
                         225
                         200
                         175
                         150
                         125
                         100
                         75
                          1984      1986       1988            1990            1992   1994   1996   1998     2000     2002      2004
                                 Cumulative U.S. Nominal GDP Growth                            Cumulative U.S. P/C NPW Growth



Source: Bureau of Economic Analysis, A.M. Best and Insurance Information Institute.                                                    9
P/C Industry Has Earned $337 Billion In Net Income
Since 1985

U.S. P/C net income
                    $50

                                                      Average ROE = 8.6%
                    $40                                                                                                                                                            $39
                                                                                                                      $37

                                                                                                                               $31                                       $30
                    $30
                                                                                                              $24
  ($ in billions)




                                                                                                                                       $22
                                                                                                     $21                                        $21
                                                                                    $19
                    $20
                                                $15                $14
                                   $13   $14
                                                      $12
                                                             $11                             $11
                    $10
                                                                             $6
                            $2                                                                                                                                   $3

                     $0



                    ($10)                                                                                                                               ($7)
                            1985         1987         1989         1991             1993             1995             1997             1999             2001             2003

Source: Insurance Services Office and Insurance Information Institute. Net income includes realized capital gains. Average ROE is represents average ROE for 1986 – 2004 period.         10
 P/C Insurance Underwriting Fundamentals Are Not
 Correlated With Equity Markets
Change in commercial lines rates versus change in S&P 500
                                       25%




                                       15%
    % Change from Previous 6 Months




                                        5%




                                       (5%)




                                      (15%)




                                      (25%)
                                           Dec-87   Jun-89   Dec-90   Jun-92   Dec-93   Jun-95   Dec-96   Jun-98   Dec-99   Jun-01   Dec-02   Jun-04

                                                    % Change in S&P 500                      % Change in Commercial Lines Rates Index
Source: Goldman Sachs Research and Bloomberg.                                                                                                          11
The Private Equity Industry Is Under-Invested In The
Insurance Industry

($ in billions)

                               Contribution of Insurance Premiums to GDP
                                                                                     U.S. (1)                    Global (2)
                               Insurance Premiums                               $       890                      $ 2,408
                               GDP                                              $10,446                          $30,757
                               % of GDP                                               8.5%                              7.8%

                               Private Equity Capital Invested (’93 – ’02) (3)
                                                                                     Total                        Ex. 9/11 (4)
                               Insurance Investments                            $       8.9                      $        5.6
                               Total Investments                                $ 174.5                          $ 171.2
                               % of Total                                             5.1%                              3.3%

(1)   Source: A.M. Best and Bureau of Economic Analysis 2002 Data.
(2)   Source: Sigma Research 2001 Data.
(3)   Source: PricewaterhouseCoopers/Venture Economics/NVCA MoneyTree Survey and MMC Capital.Excludes venture capital investments.
(4)   Excludes AXIS, Allied World, Endurance, Montpelier Re, Arch and Olympus.


                                                                                                                                     12
Periodic Market Dislocations




  1985      Liability Crisis                   ACE, XL


  1992-3    Property Catastrophe Reinsurance   Ren Re, Partner Re, etc.


  2001      9/11                               AXIS, Endurance, etc.




                                                                          13
Post 9/11 Start-ups have Generated Attractive
Investment Returns



               Return to Initial Investors   Return to IPO Investors


 Arch                     26%                         16%

 AXIS                     25%                         16%

 Aspen                    26%                         14%

 Endurance                22%                         27%

 Montpelier               32%                         34%

 Platinum                  ---                        13%


                                                                       14
P/C Industry Undergoes Constant Business
Realignments


Consolidation/Entering New Businesses                                Divestitures/Exiting Businesses
    Travelers – Aetna P/C                                           Citigroup – Travelers
    AIG – Sun America, American General                             Zurich – Converium
    Chubb – Executive Risk, Hiscox                                  St. Paul – Platinum
    St. Paul – USF&G, MMI                                           CNA – personal lines
    Berkshire Hathaway – General Re                                 Multi-lines:
    ACE – Tempest Re, CIGNA P/C                                                   – Aetna – P/C, Reinsurance
    XL – Mid Ocean, NAC Re                                                        – Cigna – P/C
    Fairfax Financial – Crum & Forster, Seneca, Odyssey Re                        – Lincoln Financial – P/C

                Market Dislocations                                               Outsourcing
                                                                     Claims Administration – CMS, Gallager Basset,
                                                                      Crawford, Cambridge
    Liability crisis – ACE, XL
                                                                     Warranty Servicing – Signal, Asurion, Lock/line, NEW
    Property Catastrophe reinsurance – Mid Ocean, Partner Re,
     Renaissance Re, IPC Holdings, LaSalle Re                        Software & Information Services – AMS, Applied,
                                                                      A.M. Best, ISO
    9/11 – AXIS, Arch, Allied World, Endurance, Montpelier Re
                                                                     Run-off Management – Castlewood, East Gate,
                                                                      Resolution Group (Fairfax)
                                                                     Investment management – Wellington, BlackRock,
                                                                      New England, PIMCO
                                                                     HR / Benefits – Hewitt, Towers Perrin

                                                                                                                             15
Ownership Changes – Top 50 Property/Casualty
Groups in 1985




   Number of Ownership    Year of    Change in   Ownership
        Charges          1985-1990   1991-1995   1996-2004

           23               2           6           15




                                                             16
MMC Capital Investment Considerations



   • Market Size
   • Supply / demand imbalance
   • Rate adequacy
   • Historical profitability
   • Management track record
   • Key success factors
   • Distribution
   • Capital/rating
   • Exit

                                        17
Trident Has Invested Successfully In A Variety of
Underwriting Situations
Situation                             Investment          Cost     Total Return    Multiple     IRR
Liability Crisis                     - ACE (’85)           $24.1        $232.8         9.9x     NM
                                     - XL (’86)             24.7         414.9        16.8x     NM
Property Catastrophe Crisis          - Mid Ocean (’92)      62.3         234.2         3.8x    34.1%
Post 9/11                            - AXIS (’01)          250.0         877.8         3.5x    49.4%
                                     - Arch (’01)           35.0          57.8         1.7x    49.5%
Company Restructuring                - Terra Nova (’93)      9.3          63.8         6.9x    47.6%
                                     - Travelers (’96)      75.1         181.6         2.4x    68.7%
                                     - Gulf (’02)          124.6         136.3         1.1x     5.3%
Market Restructuring / Lloyd's R&R   - Hiscox (’94)         72.5         152.5         2.1x     28.0%
                                     - Venton (’94)        128.5         223.1         1.7x    113.4%
New Lines of Business                - Centre Re (’88)       6.4          69.7        10.9x     NM
                                     - Castlewood (’01)     40.7   Unrealized     Unrealized     -

Distressed Seller                    - SenTech (’96)        21.9          42.4         1.9x    16.5%

Total Realized                                            $834.4       $2,686.9        3.2x
Total Unrealized                                           $40.7
Total Realized & Unrealized                               $875.1

                                                                                                        18
Valuations as of 3/31/2005

				
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