IntroductionIntroduction

Underwriting 101Underwriting 101 2004 Accident Review2004 Accident Review Comparison of Accident Rate to Comparison of Accident Rate to

Physical Damage RatePhysical Damage Rate Helicopter Accident Rate GoalHelicopter Accident Rate Goal Economic Impact of Achieving GoalEconomic Impact of Achieving Goal

Aviation UnderwritingAviation Underwriting::

Appling knowledge of the aviation Appling knowledge of the aviation industry in order to pre-qualify and industry in order to pre-qualify and evaluate risk using exposure and evaluate risk using exposure and operation analysis to develop pricing operation analysis to develop pricing models that consistently produce the models that consistently produce the expectation of underwriting expectation of underwriting profitability.profitability.

Keys to Effective Keys to Effective UnderwritingUnderwriting

Risk SelectionRisk Selection

MathematicsMathematics

Understanding costUnderstanding cost

Rate adequacyRate adequacy

BenchmarkingBenchmarking

Exposure RatingExposure Rating Probabilistic modelProbabilistic model Deterministic modelDeterministic model Catastrophic exposureCatastrophic exposure

Experience RatingExperience Rating Accident historyAccident history Trend analysisTrend analysis Burning costBurning cost

3%

2%

3%1%

75%

10%

4%

2%

Piston Fixed Wing: 161,087 Turbo Prop: 6,841Turbo J et: 8,355 Piston Rotor Wing: 4,435Turbine Rotor Wing: 7,081 Gliders: 1,951LTA (L ighter than air): 4,426 Experimental: 21,936

2004 U.S. General Aviation Active Fleet2004 U.S. General Aviation Active FleetBy Aircraft TypeBy Aircraft Type

(216,112 Total Units)(216,112 Total Units)

2004 U.S. General Aviation Accident 2004 U.S. General Aviation Accident StatisticsStatistics

25,900,000 Flight Hours25,900,000 Flight Hours

AccidentsAccidents 1614 1614

Fatal AccidentsFatal Accidents 312 312

FatalitiesFatalities 556 556

Accident RateAccident Rate 6.226.22

Fatal Accident RateFatal Accident Rate 1.201.20

Fatalities RateFatalities Rate 2.152.15

Rate = per 100,000 hoursRate = per 100,000 hours

2004 U.S. Civil Helicopter Accident 2004 U.S. Civil Helicopter Accident StatisticsStatistics

2,225,000 Flight Hours2,225,000 Flight Hours

AccidentsAccidents 180 180

Fatal AccidentsFatal Accidents 33 33

FatalitiesFatalities 68 68

Accident RateAccident Rate 8.09 8.09

Fatal Accident RateFatal Accident Rate 1.48 1.48

Fatalities RateFatalities Rate 3.06 3.06

Rate = per 100,000 hoursRate = per 100,000 hours

2004 U.S. Civil Turbine Helicopter 2004 U.S. Civil Turbine Helicopter Accident StatisticsAccident Statistics1,740,000 Flight Hours1,740,000 Flight Hours

AccidentsAccidents 89 89

Fatal AccidentsFatal Accidents 21 21

FatalitiesFatalities 51 51

Accident RateAccident Rate 5.11 5.11

Fatal Accident RateFatal Accident Rate 1.21 1.21

Fatalities RateFatalities Rate 2.93 2.93

Rate = per 100,000 hoursRate = per 100,000 hours

2004 U.S. On Demand Air Taxi Accident 2004 U.S. On Demand Air Taxi Accident StatisticsStatistics

3,070,000 Flight Hours3,070,000 Flight Hours

AccidentsAccidents 68 68

Fatal AccidentsFatal Accidents 24 24

FatalitiesFatalities 65 65

Accident RateAccident Rate 2.21 2.21

Fatal Accident RateFatal Accident Rate 0.78 0.78

Fatalities RateFatalities Rate 2.12 2.12

Rate = per 100,000 hoursRate = per 100,000 hours

2004 U.S. Corporate/Executive Accident 2004 U.S. Corporate/Executive Accident StatisticsStatistics

7,560,000 Flight Hours7,560,000 Flight Hours

AccidentsAccidents 7 7

Fatal AccidentsFatal Accidents 1 1

FatalitiesFatalities 10 10

Accident RateAccident Rate .093 .093

Fatal Accident RateFatal Accident Rate .013 .013

Fatalities RateFatalities Rate .132 .132

Rate = per 100,000 hoursRate = per 100,000 hours

2004 U.S. Air Carrier (CFR-121) Accident 2004 U.S. Air Carrier (CFR-121) Accident StatisticsStatistics

17,575,000 Flight Hours17,575,000 Flight Hours

AccidentsAccidents 28 28

Fatal AccidentsFatal Accidents 2 2

FatalitiesFatalities 14 14

Accident RateAccident Rate 0.1590.159

Fatal Accident RateFatal Accident Rate 0.0110.011

Fatalities RateFatalities Rate 0.0800.080

Rate = per 100,000 hoursRate = per 100,000 hours

ComparisonComparison2004 U.S. General Aviation to Civil 2004 U.S. General Aviation to Civil

Helicopter Accident StatisticsHelicopter Accident Statistics

G.A.G.A. HelicopterHelicopter

AccidentsAccidents 1,614 180 11.15%1,614 180 11.15%

Fatal AccidentsFatal Accidents 312 33 10.57% 312 33 10.57%

FatalitiesFatalities 556 68 12.23% 556 68 12.23%

Accident RateAccident Rate 6.22 8.09 +30 6.22 8.09 +30

Fatal Accident RateFatal Accident Rate 1.20 1.48 +23 1.20 1.48 +23

Fatalities RateFatalities Rate 2.15 3.06 +42 2.15 3.06 +42

Rate = per 100,000 hoursRate = per 100,000 hours

ComparisonComparison2004 U.S. General Aviation to Civil 2004 U.S. General Aviation to Civil

Helicopter Accident StatisticsHelicopter Accident Statistics(Excluding Piston Helicopters)(Excluding Piston Helicopters)

G.A.G.A. HelicopterHelicopter

AccidentsAccidents 1,523 89 5.8%1,523 89 5.8%

Fatal AccidentsFatal Accidents 300 21 7.0% 300 21 7.0%

FatalitiesFatalities 539 51 9.5% 539 51 9.5%

Accident RateAccident Rate 6.00 5.11 -15 6.00 5.11 -15

Fatal Accident RateFatal Accident Rate 1.18 1.21 +2.5 1.18 1.21 +2.5

Fatalities RateFatalities Rate 2.12 2.93 +38 2.12 2.93 +38

Rate = per 100,000 hoursRate = per 100,000 hours

ComparisonComparison2004 Accident Rate vs. Physical 2004 Accident Rate vs. Physical

Damage RateDamage Rate

Accident Rate = per 100,000 hoursPhysical Damage Rate = per $100 of Insured Value

5.11

3.00

2.21

0.75

On Demand Air Taxi U.S. Air Carrier Corporate/ExecutiveTurbine Helicopter

.159.15 .093

.27

Accident Rate

Physical Damage Rate

2015 U.S. Civil Turbine Helicopter 2015 U.S. Civil Turbine Helicopter Accident Rate GoalAccident Rate Goal

AccidentsAccidents 18 18

Fatal AccidentsFatal Accidents 4 4

FatalitiesFatalities 10 10

Accident RateAccident Rate 1.02 1.02

Fatal Accident RateFatal Accident Rate .242 .242

Fatalities RateFatalities Rate .586 .586

Rate = per 100,000 hoursRate = per 100,000 hours

Economic Impact Economic Impact

DirectDirect Increase in CapacityIncrease in Capacity Lower Insurance RatesLower Insurance Rates Coverage ExpansionsCoverage Expansions

IndirectIndirect Deductibles/BettermentDeductibles/Betterment ProductivityProductivity Public PerceptionPublic Perception