Jan PetersenFredericia 8th October 2009

Codan and Wind Turbines

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Agenda/aims

To give an overview and understanding of:

• Codan and RSA

• The roles and responsibilities of Codan, Centre of Excellence for Wind

• Wind Energy: a market overview

• Our experience of wind turbines

• Wind Turbine Insurance

Codan & RSA

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Overview of Codan

We are represented in Scandinavia and the Baltics

We are approx. 5000 employees

Our annual turnover is approx. EUR 2bn

The Codan Group writes general insurance in Scandinavia, Latvia, Lithuania and Estonia plus Wind Turine Insurance worldwide. Codan is 100% owned by RSA

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Overview of RSA

Net Written Premiums of £6,4b in 2008

Offices in 34 Countries Worldwide

Employ around 22,000 people worldwide.

Ability to write business in over 130 countries worldwide

RSA global CentreOf Excellence for Wind

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RSA Global Centre of Excellence - Strengths

• A dedicated team: Specialists centralised in Denmark (Copenhagen and Århus)

• Technical expertise: 90+ years combined experience in Wind turbine Insurance and claims handling.

• Flexibility: Underwriters use their knowledge and expertise to tailor solutions to each individual case.

• 25+ years experience underwriting onshore wind turbines, with over 19 years experience underwriting offshore projects. This makes us by far the most experienced insurer in the market.

• Specialist engineers and loss adjustors focusing on risk management, control and speedy claims resolution.

Where we do business

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Domestic (Denmark, Sweden, Norway, Finland, Latvia, Lithuania and Estonia)

Danish manufacturer Wind business globally through our network of global partners.

Provide technical and sales support for other RSA regions in their domestic wind turbine markets.

All offshore wind business is written by Codan, who have the experience, knowledge and reinsurance support to underwrite the business effectively

Codan’s relationship with Wind Turbine Manufacturers.

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Codan have strong relationships with 3 of the world’s leading Wind Turbine Manufacturers:

• Vestas• Suzlon• Siemens

Codan supply a range of covers through the Global Network Partners including:

• Construction/Erection All Risks• Advance Loss of Profits• Operational All Risks• Business Interruption

• Over 250 projects have been insured with the help of our global network partners over the last 3 years.

•Projects are on the increase and have grown significantly in 2008 and 2009. In this respect, the support given to Codan from the Network Partners is even more valuable.

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RSA Global Centre of Excellence - Goals

Maintain number 1 market position in Danish domestic market.

Achieve growth in the Danish, Swedish and Norwegian market.

Lead the profitable growth of the Global Wind portfolio through the roll as Centre of Excellence for wind.

Ensure delivery of top and bottom line result of the wind business for all RSA regions.

RSA Global Centre of Excellence - Roles and Responsibilities

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On a High Level we have responsibility for:•Managing the global wind portfolio.

• Developing the top and bottom line result for RSA wind business world wide.

In practice that means we undertake the following activities:•Provide expert knowledge, support and technical training for Under Writers , Claims and loss adjusters to the RSA country teams

•Provide proposition / sales support for the countries.

•Coordinate Audit and Underwriting File Review processes for all country businesses & apply corrective measures as required .

•Regular portfolio management calls with each region to review key financials and share knowledge.

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RSA Global Centre of Excellence

• Gained invaluable experience in the industry

− Insuring our first wind farm onshore more than 25 years ago and offshore more than 19 years ago

− Working closely together with manufacturers

− Added value to their business

− Codan contributes to setting standards for wind turbine design, erection, operation and maintenance.

− We participated in the work to develop rules at Risø National Laboratory for Wind Power.

− We represent the Danish insurance industry in the Ministry of Energy’s Consultative Committee for Wind Power.

− Throughout the years some 20 series of losses regarding wind turbine components have been reported, discussed and settled based on insurance terms and conditions.

− Codan is a member of IMIA and participate in the working group for wind power, which has prepared three reports about wind turbine insurance, all available on www.imia.com

Wind Market Overview

Statistics - Annual Installation (2000 – 2020)

Source Swiss Ree

GW

Statistics - Total New Capacity added in 2008

Source Global Wind Energy Council

Statistics - Total installed MW capacity at end of 2008

Source Global Wind Energy Council

Operational Risk

Operational Risk

Property covered under the insurance?

− wind turbine (nacelle, tower)

− transformer station, inside the turbine / outside the turbine

− cables from turbine to outside transformer

− foundation

− cables between turbines

− cable(s) to substation (step up transformer)

− overhead lines (limits, special conditions)

− house (transformer, electrical equipment)

− small buildings (control room, office, stock)

Operational Risk

Extent of cover

− physical loss or damage due to any sudden and unforeseen occurrence arising out of any cause

− loss or damage occurring during servicing.

Extensions

− natural disruptions (NAT/CAT)

− Terrorism

Exclusions

− damage for which a manufacturer, repairer, supplier or carrier shall be liable according to agreement or legislation, irrespective of whether the liable party shall meet the obligations which rest upon him

− wear and tear, rust, corrosion and other gradual deterioration and/or breakdown as well as technical deterioration

Operational Risk

Extensions of Insurance (Subject to Sub-Limit stated in the Policy Schedule)

• Removal of Debris

• Expediting Expense

• Escalation

• Removal (prevent a loss)

• Land & Water Pollutants Clean Up

• Offsite Storage (unnamed location) Temp. removal

• Leased Equipment & Rental Costs

• Professional Fees

• Valuable Papers & Records

• Public Authorities

• Capital Additions

• Property In Transit

Operational Risk

Serial losses

In respect of loss or damage resulting from the sub-supplier’s defective design, material,

casting or workmanship (except for faults in the construction) arising out of the same

cause and being caused to machinery or equipment of the same type or design,

compensation will be paid for any one loss according to the following scale net of the

deductible stated in the policy:

100 % of the first 3 losses / wind turbines

50 % of the next 3 losses / wind turbines

Further loss or damage is not covered.

Operational Risk

72 Hour Clause / One Occurrence

All Damage occurring within 72 consecutive hours and caused by Act of God is deemed to be

one event and therefore to constitute one occurrence for the purpose of determining the

number of Excesses applicable under this Policy

The commencement of any such 72 hour period shall be at the discretion of the Insured

Act of God (NAT/CAT)

earthquake, tempest/windstorm, thunderstorm, ice, hailstorm, flood, hurricane, typhoon, tornado, seaquake, tsunami and/or volcanic eruption

Operational Risk

Precautionary measures

It is provided that

− servicing contract is maintained with the manufacturer or a service company approved by the manufacturer (or Codan / RSA)

− the wind turbines are protected by a special lightning protection system with receptors in the blades and conductor in the nacelle

− if the transformer station is placed in the nacelle then it must be protected by a special arc protection system that will stop the turbine immediately if an arc is detected.

− insulation material for noise reduction shall be approved in accordance with standards concerning flammability of interior materials of passenger cars

Gearboxes with External oil circulation system

− efficient and active monitoring system must be installed for continuous monitoring of pressure drop of at least one of the gear oil filters and current oil level in the gearbox.

− if pressure drop is outside the limits predetermined the WTG shall be stopped immediately.

Operational Risk - Business Interruption

Extent of cover

− loss sustained as a result of a decrease in the WTG’s output in terms of kilowatt-hoursProvided that damage is recoverable according to the All Risks Insurance

Extensions of Insurance (Subject to Sub-Limit stated in the Policy Schedule)

− Contingent Business Interruption (first non-owned sub-station)

− Professional Fees

− Failure of public utility

− Interruption by civil authority

− Local authorities

− Property away from premises

Operational Risk - Business Interruption

Comments: Settlement of claim

− Any compensation cannot exceed the amount necessary for covering the actual loss

− The basis of calculation can be the total output of the last 12 months immediately priorto the occurrence

− The basis of calculation output should be adjusted for the actual wind conditions

− The calculated loss will also be adjusted for the actual wind conditions

− The basis of calculation can be the output from the nearest turbine / nearest turbines inthe wind farm

Operational Risk – Third Party Liability

Third Party Liability Insurance (in Denmark)

• Extent of cover

− Insured’s liability for bodily injury or property damage caused during use of the WTG

• Sum insured

− Bodily injury 10.000.000 DKK

− Property damage 5.000.000 DKK

− The sums insured is the maximum limits in respect of claims reported in the period of insurance

• No deductible

Questions ?