Broker and Independent Agent Compensation

Chartis insurance companies compensate insurance brokers and independent insurance agents through commissions of either a specific dollar amount or a percentage of premium set at the time of each purchase, renewal, placement or servicing of a particular insurance policy.

Chartis Insurance Companies may also pay contingent compensation to insurance brokers and independent insurance agents. Contingent Compensation may be paid in addition to commissions of a specific dollar amount or a percentage of premium set at the time of a purchase, renewal, placement or servicing of a particular insurance policy. Contingent compensation is typically based on criteria such as the volume of new sales, overall production volume, persistency, or overall profitability of the policies placed by an insurance broker or independent insurance agent. In 2010, the Chartis insurance companies did not pay contingent compensation to insurance brokers in the United States. However, please note that starting in 2011 recent amendments to the settlement between AIG and the New York Attorney General allow Chartis greater flexibility concerning payment of compensation to insurance producers. Examples include contingent compensation arrangements or other compensation to producers, such as payments for producer meetings and events, travel, accommodations or other expenses, all of which must be in support of a Chartis business purpose. All such payments are subject to controls administered by Chartis Legal, Compliance and business management. Where required by law, regulation or agreement, details of commission or compensation arrangements between Chartis and a producer should be disclosed by the producer to its client.

Chartis insurance companies may also have reimbursed certain expenses of insurance brokers and independent insurance agents that place personal lines business and insurance producers that act as program administrators, including but not limited to, advertising and marketing expenses, costs of software and systems upgrades, loss control services and certain other underwriting expenses. They may also have provided these insurance brokers and/or their employees the opportunity to receive additional incentive compensation for placing certain types of policies. This incentive compensation has been both in the form of sales contests where cash or other prizes were awarded and in the form of additional commissions. In addition, recent amendments to the settlement between AIG and the New York Attorney General allow Chartis greater flexibility starting in 2011 concerning payment of compensation to insurance producers. Examples include contingent compensation arrangements or other compensation to producers, such as payments for producer meetings and events, travel, accommodations or other expenses, all of which must be in support of a Chartis business purpose. All such payments are subject to controls administered by Chartis Legal, Compliance and business management. Where required by law, regulation or agreement, details of commission or compensation arrangements between Chartis and a producer should be disclosed by the producer to its client.