SIME DARBY GROUP’s EXPERIENCE

INSURANCE EFFECTIVENESS “IN CLIMATE CHANCE ADAPTATION AND DISASTER RISKS RECDUCTION”

Osman Ahmad Principal Office

Sime Darby Insurance Pte Ltd 05th July 2014 (Bangi,Selangor)

Sime Darby Plantation - Contents

Sime Darby Group Core Business

Sime Darby Plantation (Up and Downstream)

Sime Darby Plantation Upstream

Sime Darby Plantation Achievement

Climate Change/Disaster Risk

Insurance Is The Answer

Claims / Losses

Moving Forward

Question and Answer

Sime Darby Group Core Business

Business Activities

PLANTATION PROPERTY ENERGY & UTILITIES

MOTORS INDUSTRIAL NON-CORE

SIME DARBY GROUP

Sime Darby Plantation (Up & Downstream)

Sime Darby Plantation (SDP)- Downstream

SDP Downstream Operation – Food and Non-Food Based Segments.

Food based, cooking oil, margarine, shortening and cooking fats.

• 8 Refineries

o Malaysia, Singapore. Thailand, Vietnam, Netherlands and South Africa.

Non Food Based

• Biodiesel and Oleochemicals.

• Biodiesel and Plant in Malaysia

• Oleochemicals Plant in Malaysia, Germany, USA and Canada.

Sime Darby Plantation (Upstream)

Sime Darby Plantation - Location

Sime Darby Plantation (SDP)- Upstream

SDP Upstream Operation – Agriculture Based Segments. SDP one of the largest Palm Oil producer in the world. About 2.47 million tons or 5.00% of the world’s crude palm oil (CPO) annually. Total of 205 Estates (Oil Palm Plantation) Worldwide.

Sime Darby Operations Include:

• Development of Oil Palm Plantation • Cultivation of Oil Palms • Management of Estates • Milling of Fresh Fruit Bunches (FFB) of CPO and Crude Palm Kernel Oil (CPKO)

Total Land Bank More Than 860,000 Hectares • Malaysia - 350,000 Hectares (320,000 Hectares Planted) • Indonesia - 290,000 Hectares (200,000 Hectares Planted) • Liberia - 220,000 Hectares (10,00 Hectares Planted)

Sime Darby Plantation – Historical Achievements

• Introduced in 1989 by Sime Darby

• Adopted as National standard in 1997

• Adopted by ASEAN in 2003

• Innovative, pollution free, recycles nutrients and no fallow period

• Awarded the Global 500 Roll of Honour at Rio de Janerio in 1992 by

the United Nation Environment Programme (UNEP)

1. Zero Burning

Sime Darby Plantation – Historical Achievements

Sime Darby Plantation – Historical Achievements

Sime Darby Plantation – Historical Achievements

Sime Darby Plantation – Historical Achievements

2. High Quality Planting Materials

Seed producer for oil palm & rubber since 1924 and 1921 respectively.

Fresh fruit bunch (FFB) potential yield has risen from15 mt/ha to 30 mt/ha for oil palm and oil extraction rate (OER) of 16% has risen to 22%.

Holds 30% of market share of oil palm seeds sales in Malaysia.

Ranked first in Malaysian Palm Oil Board (MPOB) trials in 1992 and 1999.

Produced rubber PB260 planting material which is widely found in rubber plantation nowadays.

Leader in high quality oil palm and rubber planting materials.

Sime Darby Plantation – Historical Achievements

3. Integrated Pest Management

Leader in oil palm estate pests and disease management.

To date, over 500,000 ha of oil palm in Sime Darby has been managed

under this regime for Oryctes rhinoceros, leaf pests (bagworms and

nettle caterpillars), rats and Ganoderma.

Promotes the usage of beneficial plants for control of leaf pests.

Verified pathogenicity of Ganoderma through Koch’s Postulates in oil

palm and provide better understanding of effective disease management.

Sime Darby Plantation – Historical Achievements

4. Water Management System

Leader in oil palm estate water management.

Water management system was introduced for acid sulphate oil palm

soils in 6,600 Ha (Carey Island) and 12,500 Ha, peat soils (Lavang Estate,

Sarawak).

Improvement in yield by more than 10% has been recorded.

Sime Darby Plantation – Historical Achievements

5. Utilisation of POME, EFB and Compost

Empty fruit bunch (EFB) and palm oil mill effluent (POME) are used as organic fertilisers/manure in plantations.

Conversion of EFB and POME into compost.

Developed and registered as Clean Development Mechanism (CDM) for compost with Danish Development Cooperation (DANIDA).

Sime Darby Plantation – Historical Achievements

6. Red Palm Olien

A fully refined palm oil rich in natural carotenoids and tocopherol/ tocotrienols.

Used as a natural food colorant, frying and baking.

The frying time is shortened, producing a more desirable french fries colour with decreased acryl amide levels.

Customers: Britannia (United Kingdom), Sumitomo (Japan) and Hudson & Knight (South Africa)

Sime Darby Plantation – R&D

Climate Change/Disaster Risk Managed/Reduction

Insurance Is The Answer

• Growing Trees

Interest Insured

ESTATE

• Building • Plant & Machinery • Equipment

MILLS

• Staffs • Support Staff

HUMAN

Insurance Coverage

Fire and Lightning

Animal Damage

Flood, Windstorm

RSMD, Aircraft Damage

Earthquake, Volcanic Eruption or other convulsion and nature

Plants & Planting cost (less than 1 year old)

Up Keeping Cost

A. Growing Trees

1. Material Damage

BASIC COVERAGE

Insurance Coverage

Loss of Revenue

A. Growing Trees

2. Business Interruption

B) MILLS

• Fire & Perils

• Business Interruption

Building

• Fire & Perils

• Accidental

• Theft

• Machinery Breakdown / Loss of Profit

• Boiler

Plant, Machinery, Equipment & Boiler

Insurance Coverage

1. Material Damage

C) HUMAN

Group Term Life / Group Personal Accident/Others

Insurance Coverage

Group Medical

D) TRANSPORTATION

Motor / Equipment Used In Public / Private

Marine Cargo – Land/Sea Transit

Insurance Coverage

E) LIABILITY

Public Liability & Others

Product Liability

Rating

Insurance Coverage

GROWING TREES

Sum Insured

Rating

As per agreed values

basis per hectare

As per Tariff

Basic Rates As Per Attachment

Sime Darby Plantation – Section 14 (RFT)

Insurance of Growing Trees

1. SUM INSURED

AGE OIL PALM (Value In RM Per Hectare)

0 – 1 Year 2,220

1 – 2 Years 3,290

2 – 3 Years 4,510

3 – 4 Years 5,255

4 – 5 Years 5,255

Over 5 Years 5,255

Average no. of trees per hectare 140

Sime Darby Plantation – Insurance of Growing Trees

2. RATING

Code (for statistical purpose)

5004

Perils Covered Oil Palm

1. Fire & Lightning 0.45%

2. Animal damage: a) Plants less than 2 years old b) Plants over 2 years old

0.05%

0.025%

3. Flood 0.10%

4. Windstorm 0.10%

5. Riot, Strike, Malicious Damage 0.03%

6. Aircraft Damage 0.01%

Sime Darby Plantation – Oil Palm

VALUE OF TREES PER HECTARE (Breakdown) / RM

Particular 0 – 1 Year 1 – 2 Years 2 – 3 Years 3 – 4 Years

Felling, Clearing ploughing 600 - - -

Plants & Planting 800

Cover Crop

400

- -

- -

- -

Unkeep -

Manuring -

Overheads 420

2,220 (2,020)

420

1,070

420

1,220

420

745

Value brought forward 2,220 3,290 4,510 -

T.S.I 2,220 3,290 4,510 5,255

Note: 1. Mature trees S.I per ha - RM5,2255 2. Number of trees per ha - 140 3. Average value per mature tree - RM37.5 4. Big plantation companies normally plant pure cover crops

Claims/Losses

Sime Darby Plantation – Contingency Strategy

Participate on Risk Exposure

Partly Self Retention

Captive / Saving [Sime Darby Insurance (Labuan) Pte Ltd]

SD Plantation

Insurers

Sime Darby Insurance (Labuan) Pte Ltd

1. Reinsurance Retro Cover To Protect SDIPL Balance Sheet

2. Average Saving Annually USD2 Million

Captive 30%

Insurance Co. 70%

Sime Darby Plantation – Captive Arrangement