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    Willis: General Insurance Sector Sees Limited Impact Thus Far From Credit Crisis

    London, UK, October 20, 2008 – The general insurance sector has seen limited impact from the current credit crisis, with carriers having relatively limited exposure to subprime investments and relatively few experiencing negative ratings actions, according to a new report by the Market Security team of Willis Group Holdings (NYSE: WSH), the global insurance broker.

    The Willis report notes that unlike banks, general insurance companies did not play a key role in each link in the chain of transactions that originated mortgage loans and subsequently bought, warehoused and distributed the derivatives to investors throughout the financial sector. The report also highlights that the investment portfolios of general insurance companies typically contained smaller proportions of subprime-exposed collateralised debt obligations and less mortgage-backed securitisations compared to banks.

    Commenting on the findings of the paper, Sally Bramall, Managing Director of Global Carrier Management at Willis, said, “The general insurance sector as a whole appears to have remained relatively isolated from the direct impact of the credit crisis so far. Whilst there have been some notable exceptions, these have been companies that have stretched the boundaries of traditional insurance, assuming more of a ‘financial superstore’ structure.”

    The paper goes on to highlight three indirect impacts of the credit crisis on insurers that may become more apparent in third-quarter earnings reporting, including: falling investment income due to deteriorating returns, increased E&O and D&O claims related to subprime litigation, and adverse investor sentiment against the entire financial sector.

    The Willis report concluded that there will inevitably be some wider impact on the investment portfolios and investment returns of general insurance companies, which will become evident throughout the upcoming reporting seasons. It noted that with the anticipated moderation in the soft phase of the insurance cycle, the relatively stable rating outlook for the general insurance sector currently appears reasonably justified, but will inevitably be subject to review as financial market turbulence and attendant market sentiment plays out over the coming months.

    Willis Group Holdings Limited is a leading global insurance broker, developing and delivering professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 20,000 Associates serving clients in some 190 countries. Additional information on Willis may be found at www.willis.com.

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    Note to Editor: To view the full report go to:
    www.willis.com/Documents/Publications/General_Publications/Willis_Market_Securit y_Report_20_October_2008.pdf

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