Strategy Analytics Templates

3
In order to provide clarity around the universe of analytic templates, we have structured
them to demonstrate the inter-relationships and linkages from one level to the next
Category
Topic
Analysis
Sub-Analysis
Template
High-level classification of the fundamental
issues/questions requiring research and analysis
(i.e., Market Specific or Client Specific)
Grouping that categorizes research and analysis
based on the subject matter (e.g., Supply Side,
Customer, Strategy, etc.)
Set of focused slides showing a single type of
analysis (e.g., Demand Side – Demographics,
Strategy – Competitive Positioning, etc.)
One or more individual slides showing a single
type of analysis with an additional layer of
refinement based on a specific criteria (e.g.,
Customer – Needs – Attribute Assessment or
Customer – Needs – Satisfaction, etc.)
Individual slides depicting a specific
sub-analysis
Approach: Structure of Analyses - Definitions
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All template content is for illustrative purposes only.
Strategy Analytic Templates
Analysis Content
A industry structure analysis within FSI will
cover data such as:
Key market statistics
Major Players / Market Share
Distribution Channels
Consolidation Trends
Value Chain(s)
Revenue/Cost Drivers
Trends
Time Line
Analysis Description
Provides a competitive overview of a
selected industry or sector (e.g. retail
banking, securities, transaction
banking).
Template
The template
covers the
following items:
Industry: FSI
Sector: Banking
Topic: Supply SideAnalysis: Industry Structure
Category: Market Specific
Return to Funnel Page

9
Mortgage Debt Outstanding in the U.S. Is Growing Steadily
4,024
4,365
4,755
5,239
$3,851
1996 1997 1998 1999 2000
Debt Outstanding1
$ Billions
1Mortgage debt for 1- to 4-family residences
Source: Inside Mortgage Finance
CAGR = 8.0%CAGR = 8.0%
Do not extract data. All template content is for illustrative purposes only.

12
Overview of Origination Players
1Wa Mu has acquired the mortgage operations of Fleet and PNC in 2001, making it the largest total originator and second largest originator. Wa Mu is a thrift
2Countryside is moving towards an integrated lender model after completing the acquisition of Treasury Bank in May 2001
Source: Inside Mortgage Finance; Company Websites
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Rank
Top 15 Total Originators for 2000
Wells Fargo
Chase
Countrywide2
Bank of America
Wa Mu1
ABN AMRO
Fleet1
PNC1
Cendant
HomeSide
National City
Dime/Nor. Amr.
Golden West
Citi
GMAC
Lender Market Share (%)
7.3%
7.3%
5.9%
4.9%
4.8%
2.3%
2.2%
2.1%
2.1%
2.1%
2.1%
2.0%
1.9%
1.9%
1.7%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Rank
Top 15 Retail Originators for 2000
Wells Fargo
Bank of America
Golden West
Countrywide2
Cendant
Chase
Wa Mu1
GMAC
National City
CTX
North American
First Horizon
Sun Trust
Citi
Old Kent
10.3%
5.4%
5.0%
4.6%
4.5%
4.4%
4.4%
3.4%
3.2%
2.1%
1.8%
1.7%
1.4%
1.3%
1.3%
Bold = Integrated lender
Italics = mortgage bank

15
Overview of Servicing Players
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Rank
Top 15 Servicers for 2000
Wells
Chase
Bank of America
Countrywide1
HomeSide
Wa Mu2
GMAC
Fleet2
First Nationwide
ABN AMRO
Citi3
PNC2
Cendant
National City
Principal Residential
8.6%
6.9%
6.4%
5.4%
3.6%
3.6%
3.3%
2.6%
2.1%
2.1%
1.8%
1.8%
1.5%
1.2%
1.1%
Bold = Integrated lender
Italics = mortgage bank
1Countrywide is moving towards an integrated lender model after completing the acquisition of Treasury Bank in May 2001
2Wa Mu has acquired the mortgage operations of Fleet and PNC in 2001, making it the second largest servicer
3Citi has moved to #9 with acquisition of Associates First Capital in Q4 2000
Source: Inside Mortgage Finance; Company Websites

18
How Money Is Made along the Mortgage Value Chain
Origination Servicing Securitization Investors
• Application and credit report fees
– Collected regardless of success
of application ($200 – 600)
• Origination fees
– Collected only if application
successful
– 1 – 2% of principal
• Ancillary fees
• Interest on mortgage loans OR
difference between buying and
selling price of mortgage note
• Opportunity to self-securitize loan
and sell as MBS
• Selling servicing rights
• Lenders can sell other services
and products, own client
relationship
• High probability of refinance
income
• Servicing fees
– Fraction (25 – 44 bp) of
outstanding principal
– Declines over time as loan is
paid off
• Float income
– Servicer collects payments
from borrower and earns
interest on tax and escrow
insurance, and principal and
interest before payment to
investor
• Other fees and ancillary income
– Late payment, bounced check
– Prepayment/transfer
processing fees
– Insurance products
– Opportunity to sell other
products
• Guarantee fees for securitizing of
mortgage pools
– Fees on average 20 basis
points
• Investments in MBS
– Returns higher than cost of
capital
– Cost of capital of GSE’s very
low due to AAA credit rating
as a result of GSE status and
line of credit with Treasury
• Returns on fixed-income
investments
– Higher returns than T-bills
– Almost the same amount of
risk
• Revenues from trading in MBS
– Arbitrage
– Bets against interest rate
movements
Usually collected by mortgage broker
Revenues of Key Players

21
Mortgage Industry in the Midst of a Consolidation Wave
1Using 2000 market share and including all consolidation activity as of 04/30/01
2Top 5 originators are: Wells Fargo, Chase, Countrywide, Bank of America and Washington Mutual
3Includes estimated 1% market share gained through smaller acquisition by top 5
Source: Person X; Inside Mortgage Business; BCG Analysis
“I will not be surprised to see the top five controlling 50% of originations in 5 years”
— Person X, President, Washington Mutual
“I will not be surprised to see the top five controlling 50% of originations in 5 years”
— Person X, President, Washington Mutual
Aggressive acquisitions by top 5…
Originations
…has led to increasing industry consolidation.
Acquire
r
Target Date
Chase Advanta’s sub-prime
lending
Q1, 2001
Citibank Associates First Capital Q4, 2000
Wa Mu Alta Residential Mortgage
Trust
Q1, 2000
Wa Mu Bank United Q1, 2001
Wa Mu PNC Mortgage Q1, 2001
Wa Mu Fleet Mortgage Q2, 2001
Wells
Fargo
Crossland Mortgage Q2, 2000
Wells
Fargo
First Union Mortage (parts
of servicing portfolio)
Q3, 2000
Wells
Fargo
GE Capital’s origination
and servicing
Q3, 2000
27.9 28.4 27.6
37.4
32.2
38.5
0
5
10
15
20
25
30
35
40
45
Total
Originations
Retail Wholesale
Market Share of Top 5 Originators
(%)
1999
Q1, 2001

24
Product Offerings Are Expanding To Better Fit Borrower
Needs
Standard Products Still Majority of Market
Mortgage
Products
Year 1970 1980 1990 2001
Fixed-rate Mortgages
“Plain Vanilla”
Shorter-maturity mortgages
Biweekly mortgages
Adjustable-rate mortgages
Product proliferations
• Base interest rate (COFI,
LIBOR, treasury)
• Frequency of rate
adjustment
• Graduated payment,
growing equity, shared
equity, wrap
Home equity loans
Product differentiation
• “Branded” mortgages
• Private label
Trends Stable, limited number of
mortgage products
Rapid growth in number of
products
Overall number of products increasing,
but individual players concentrating on
smaller set of products
Growth of brokers
B&C loans
“Piggyback”
Reverse mortgages
Interest only
Pledge asset loans
Risk-based

27
Location Profile: Richmond, VA Richmond, VA MSA
BAC Location Details
Local Address: 8011 VILLA PARK DR
Available Seats: 674
Number of Employees: 905
Key Functions: Consumer Service: Plus, Prime
Air Access
Airport Name(s) Richard Elelyn Byrd International
Newport News/Williamsburg International
Largest Area Airport Hub Size Small
Major Carriers Represented: Air Tran, American Airlines,
Continental Airlines, Delta Air Lines, Northwest Airlines,
United Airlines, US Airways
Annual Flights 18,600
Average Flight Delay (2004) 21%
Direct Flights to Charlotte 24
State Incentives OverviewCommunity HighlightsLocation Details and Air Access
• Major Business Facility Job Tax Credit (new or expanding companies
receive a corporate income tax credit of $1,000/FTE; credit is taken
over 3 years)
• Sales & Use Tax Exemption (exemptions include custom computer
software, internet access and telecom service)
• Enterprise Zone Tax Credit (8 Enterprise Zones around Richmond;
60% of state income tax liability for 10-years, first year is 80%; 25% of
employees must reside in a zone)
• Enterprise Zone Job Grant (up to $500/job, $1,000 if person resides in
EZ, for three consecutive years; maximum is $100,000 per company
per year)
• New Jobs Training Program (customized recruiting and training; at
least 50% of co. revenues from outside of VA)
• Governor’s Opportunity Fund (discretionary grant; eligibility depends
on size of community, jobs and investment; grant cannot exceed 10%
of fund appropriation; limited cases may be raised to $3 million)
• Virginia Investment Partnership Fund (discretionary grant for VA
employers operating 5+ years, & make large investments; 5 annual
payments, cap at $6 million/year)
Note: Corporate Income Tax Rate: 6.0%
• Key industrial segments include: chemical manufacturing, advanced
materials, pharmaceuticals, life sciences, Information Technology &
Telecommunications (IT&T), semiconductors, financial services
• Home to 10 Fortune 1000 headquarters and eight Fortune 500
headquarters including newly formed Genworth which became
independent of GE in 2004
• Other financial services expansions have recently occurred in the
mortgage services, health services, and debt collection and customer
services in 2004
• Wachovia Securities selected Richmond as it’s headquarters location
after merging with Prudential Securities in New Jersey and plans to
add approximately 1,000 new jobs in coming years
• Low current and historical unemployment rates
• Smaller workforce with moderate projected population growth
• Higher educational attainment indicators than many areas
• Favorable air access to Charlotte
• Recent office sector closings may indicate potentially available pool of
qualified employees (specifically Capital One’s downsizing of over
3,000 people)
• Several other major Financial Services firms are located in the area
• Second highest percentage (>10%) of the workforce employed in
financial services occupations of all locations evaluated with future
growth projected
• Industry concentration is the third highest of all evaluated locations
and considerably higher than the US average
• Highest business climate rating of all evaluated locations
• Very low natural disaster risk
• Eighth lowest wage index at 7.5% over the lowest cost location
DisadvantagesAdvantagesArea Map
BAC Location Details
Local Address: 8011 VILLA PARK DR
Available Seats: 674
Number of Employees: 905
Key Functions: Consumer Service: Plus, Prime
Air Access
Airport Name(s) Richard Elelyn Byrd International
Newport News/Williamsburg International
Largest Area Airport Hub Size Small
Major Carriers Represented: Air Tran, American Airlines,
Continental Airlines, Delta Air Lines, Northwest Airlines,
United Airlines, US Airways
Annual Flights 18,600
Average Flight Delay (2004) 21%
Direct Flights to Charlotte 24
State Incentives OverviewCommunity HighlightsLocation Details and Air Access
• Major Business Facility Job Tax Credit (new or expanding companies
receive a corporate income tax credit of $1,000/FTE; credit is taken
over 3 years)
• Sales & Use Tax Exemption (exemptions include custom computer
software, internet access and telecom service)
• Enterprise Zone Tax Credit (8 Enterprise Zones around Richmond;
60% of state income tax liability for 10-years, first year is 80%; 25% of
employees must reside in a zone)
• Enterprise Zone Job Grant (up to $500/job, $1,000 if person resides in
EZ, for three consecutive years; maximum is $100,000 per company
per year)
• New Jobs Training Program (customized recruiting and training; at
least 50% of co. revenues from outside of VA)
• Governor’s Opportunity Fund (discretionary grant; eligibility depends
on size of community, jobs and investment; grant cannot exceed 10%
of fund appropriation; limited cases may be raised to $3 million)
• Virginia Investment Partnership Fund (discretionary grant for VA
employers operating 5+ years, & make large investments; 5 annual
payments, cap at $6 million/year)
Note: Corporate Income Tax Rate: 6.0%
• Key industrial segments include: chemical manufacturing, advanced
materials, pharmaceuticals, life sciences, Information Technology &
Telecommunications (IT&T), semiconductors, financial services
• Home to 10 Fortune 1000 headquarters and eight Fortune 500
headquarters including newly formed Genworth which became
independent of GE in 2004
• Other financial services expansions have recently occurred in the
mortgage services, health services, and debt collection and customer
services in 2004
• Wachovia Securities selected Richmond as it’s headquarters location
after merging with Prudential Securities in New Jersey and plans to
add approximately 1,000 new jobs in coming years
• Low current and historical unemployment rates
• Smaller workforce with moderate projected population growth
• Higher educational attainment indicators than many areas
• Favorable air access to Charlotte
• Recent office sector closings may indicate potentially available pool of
qualified employees (specifically Capital One’s downsizing of over
3,000 people)
• Several other major Financial Services firms are located in the area
• Second highest percentage (>10%) of the workforce employed in
financial services occupations of all locations evaluated with future
growth projected
• Industry concentration is the third highest of all evaluated locations
and considerably higher than the US average
• Highest business climate rating of all evaluated locations
• Very low natural disaster risk
• Eighth lowest wage index at 7.5% over the lowest cost location
DisadvantagesAdvantagesArea Map
BAC Location

30
Corporate Overview - General
Sources: Company web sites, Thomson Financial, Hoover’s
Stock Information:
<Company Name> (Parent): N/A (Mutual)
<Company Name> Financial:
Stock Symbol: NFS
Exchange: New York
Rankings:
Fortune 500: #111
P&C rank (by NPW): #7
LAH rank (by NPW): #3
Top Competitors (Hoover’s):
AIG
Prudential
State Farm
Company Description:
<Company Name> is one of the largest insurance and financial services companies in the U.S., offering property & casualty, life and health and asset
management products. The Property & Casualty division (CP&C) operates as <Company Name> Mutual Insurance, while the Life and Health division
(LAH) operates as <Company Name> Financial, a publicly traded company 63% owned by <Company Name>. Gartmore Group is <Company Name>’s
asset management arm. The company sells its products through such affiliates as Farmland Insurance, Gates McDonald, Scottsdale Insurance, and asset
manager Gartmore.
Focusing on personal and small business lines in the US, <Company Name> is buying specialty auto insurer THI from Prudential. <Company Name>
Financial also bought Provident Mutual Life Insurance (now <Company Name> Provident); the acquisition made the company the fourth-largest US
provider of variable life insurance.
Although <Company Name> Financial and its Strategic Investments segment underperformed in 2002, the company swung to a net profit, helped in part
by improved underwriting results by its insurance subsidiaries.
Organizational Overview
<Company Name>
<Company Name>
Financial (NFS)
LAH ‘02 NPW $12.6B
LAH 2002 NPW $12.6B
<Company Name> Mutual Insurance Co
<Company Name> Mutual Fire Insurance Co
P&C ‘02 NPW $10.9B
P&C 2002 NPW $10.9B*
Columbus, OH 30,000
Primarily Annuities (even split
between Personal and Group)
Primarily Personal
(Auto & Home)
Columbus, OH Columbus, OH
*: Does not include subsidiaries with DPW<$1B

33
Product Overview
LAH vs. P&C Premiums 2002
Top Product Lines – 2000 - 2002 Premiums
<Company Name> Mutual
P&C
46%
P&C
LAH
54%
<Company Name>
Mutual
<Company Name>
Mutual Fire
<Company Name> Life
Insurance
Sources: Thomson Financial
Top Product Lines – 2000 - 2002 Premiums Top Product Lines – 2000 - 2002 Premiums
Ordinary Life
10%
Ordinary
Annuities
34%
A&H Other
0%
Group Life
1%
Group
Annuities
55%
<Company Name> Mutual FireP&C <Company Name> MutualLAH
125 180 197
3118
3300 3482
637
754
813
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2000 2001 2002
Commercial
Personal Auto
Personal Home
Personal
Home
4%
Personal Auto
78%
Commercial
18%
1072 1102 1218
1002 1115
1291
338
346
411
0
500
1000
1500
2000
2500
3000
3500
2000 2001 2002
Commercial
Personal Auto
Personal Home
Personal
Home
42%
Personal Auto
44%
Commercial
14%
2002 2002 2002
A&H Other
Group Annuities
Group Life
Ordinary Annuities
Ordinary Life
1695 1433 1260
81
4177 4308
8191
6870
0
2000
4000
6000
8000
10000
12000
14000
16000
2000 2001 2002

36
<Company Name> Financial buys Provident Mutual for $1.56B
8/8/2001—The Financial Times
NFS announced plans to acquire rival Provident Mutual in a deal valued at $1.56B
Recent News Articles
<Company Name> Varies Menu
4/16//2003—American Banker
NFS released a new fixed life product into the bank channel
NFS had made its name in bank life insurance sales with variable universal life products, but now <Company Name> has launched a fixed product
NFS Informed of Verdict in Monumental Life Litigation
2/24/2003—PR Newswire
NFS reported that a verdict was reached against its subsidiary, <Company Name> Retirement Solutions (NRS), awarding Monumental Life $28M
Monumental claimed that NRS has breached its contractual relationship when NRS modified its business model effectively ending the use of a field
sales force to serve the public sector marketplace
NRS will appeal the decision
<Company Name> Variable Annuity Strategy
1/6/2003—American Banker
NFS is adopting a variable annuity strategy that includes a group of customized products and tools that enable registered representatives to choose
subaccounts for their clients
The tools are web-based and are intended to help reps more easily explain the difference among annuity investment options and to pick the most
appropriate investment options for their clients
The new lineup and web tools are to be offered through registered reps in banks, broker-dealer firms, <Company Name> agents, and brokerage firms
Unifying <Company Name>’s IT Operations
10/1//2002—Insurance Networking
Person X is CIO of NFS, reports directly to the CEO, W.G. Jurgenson, and oversees 5,000 IT staff members
His mission is to create a collaborative IT environment, maximize ROI on technology investments, and deliver value-added services
With the rapid increase in the number of companies under the NFS umbrella, Person X has faced a significant challenge
A three-part IT strategy has been created for the organization
Strengthen the company’s core IT capabilities
Analyze the multiple, relatively autonomous lines of business that sell different products in different distribution channels to be sure that
sound business technology strategy supports the efforts to differentiate products in the marketplace
Leverage and share IT capabilities across the various companies to reduce expenses or find new revenue or growth opportunities
<Company Name> Mutual Deal Boosts Asset Management
6/25//2002—Life Insurance International
<Company Name> Mutual is to buy the money management unit of its majority owned life insurer, NFS, for $340M
The deal is designed to bring together <Company Name> Mutual’s asset management operations and allow NFS to focus on the sale, rather than the
management of investment products

Analysis Content
Trends shown can describe
developments regarding
Clients / Competitors
Markets / Industries
Products
Technology
Information can cut across
various dimensions e.g.,
Adoption Rates
Usage Behaviors / Patterns
FTE’s
Price
Number of Offices
Revenues
Time period
A timeline of developments and major
events for a particular industry,
commodity, or company.
Template
The template covers the
following items:
Industry: FSI
Sector: Neutral
Topic: Supply Side
Analysis: Emerging Technologies and
Innovations - Trend Analysis
Category: Market Specific

42
Product Analysis: Private Passenger Auto Liability and Physical
Damage
Private Auto insurance is the largest product line within the Property & Casualty industry – accounting
for nearly 40% of the entire market. Slow growth is driving new strategies to capture market share
Trends
Auto insurance is a mature product. The number of
licensed drivers in the US is growing slowly1. Analysts
forecast growth for the auto insurance market at about
2%. In order to grow premiums, insurers will have to
fight for market share. Insurers are attempting this
using a number of strategies:
Heavy price competition – Progressive and GEICO are
leading the way with price-focused marketing pitches.
Recently, Allstate began mentioning price in their
advertisements for the first time
Move to Direct Distribution – Given the relative simplicity of
auto insurance and the lower costs associated with
direct channels such as Internet and phone, insurers are
investing heavily in their direct distribution capabilities
(Example: GEICO)
Multi-Tiered Rate Plans – Insurers are using advanced
analytics to further segment customers to better price
policies. Additionally, analytics are being used to
determine a customer’s propensity to purchase
additional products (Example: Progressive)
Concierge Services – In a move to own the entire customer
experience and improve customer retention efficiency,
insurers are developing full service claims centers that
assist customers in filing claims quickly, getting car
repairs and facilitating car rentals (Example:
Progressive, Safeco)
Key Product Metrics 2001 2002 2003
Private passenger auto liability
Net Written Premiums
($millions)
$89,286.
4
$89,286.
4
$89,286.
4
Growth Rate (5 Year CAGR) 6.4% 6.4% 6.4%
Product Profit Margin (6.2%) (6.2%) (6.2%)
Loss Ratio 94.8% 94.8% 94.8%
Expense Ratio 11.4% 11.4% 11.4%
Combined Ratio 106.3% 106.3% 106.3%
Losses Incurred ($millions) $97,708.
1
$97,708.
1
$97,708.
1
Average commission per car1 $56.15 $56.15 $56.15
Private passenger auto physical
damage
Net Written Premiums
($millions)
$62,017.
3
$62,017.
3
$62,017.
3
Growth Rate (5 Year CAGR) 4.1% 4.1% 4.1%
Product Profit Margin 29.0% 29.0% 29.0%
Loss Ratio 58.5% 58.5% 58.5%
Expense Ratio 12.0% 12.0% 12.0%
Combined Ratio 70.6% 70.6% 70.6%
Losses Incurred ($millions)
$44,927.
2
$44,927.
2
$44,927.
2
Average commission per car2 $36.58 $36.58 $36.58
Source: Highline Financials & XYZ Analysis
Source: iii.org
1 Average auto liability revenue ($449.18) X Ind. Agent Commission (12.5%) = $56.15
2 Average auto physical damage revenue ($292.67) X Ind. Agent Commission (12.5%) = $36.58

45
Source: Pricing_Discipline_Key Steps Creating Pricing Approachl_FSI.ppt
Private Auto Insurance Ratios
15%
30%
45%
60%
75%
Loss
Ratio
Product Profit
Margin
Growth Rate
Expense
Ratio
= Range of findings
= Company
= Median
Private Auto Insurance Financials
20
40
60
80
100
Losses
Incurred
Net Written
Premiums
Observations
Expense
Ratio
(BN$)
Financial Variable Benchmarks

48
Company G
• Insert text here
Company F
Company E
Company C
Company D
Company B
Company A
200X Product Assessment - Select Competitors
Company Home Owner Life
Private
Passenger
Liability
Private
Passenger
Liability
Observations / Implications / Key Findings
Client
Source: Annual Reports, Company Press Releases

51
The P&C Insurance Market Is Changing
Observation
Since 2001, low interest rates have fueled booms in
both auto and home purchases. As a result of this
activity, the number of consumers applying for auto and
homeowner's insurance has risen dramatically

54
Online P&C Researchers Are The Best Prospects
Online researchers are
less likely to apply . . .
Younger, higher-income
consumers who browse P&C
products online are not as
committed to purchasing as offline
P&C researchers are. Less than
half of online P&C researchers
ultimately apply, compared with
more than 60% of offline
researchers.
. . . but more likely to
apply online
Of those online researchers who
do apply, about half apply over the
Internet. This makes them very
attractive prospects to insurers
because it's far less expensive to
close a policy online than it is in
person or over the phone

57
Client Specific: Operations
Understanding and improving operations is a core consulting function and includes many wide-
ranging types of analyses. At a higher level, the operation analyses can be grouped into the
following groups:
Corporate Overview
Process Improvement
Capabilities Assessment
Controls
Organization Analysis
Asset Management
Enterprise Cost Reduction
Outsourcing
Analyses
Contact Centers
Merger Integration
Benchmarking
• TBD
• TBD
• Capabilities by dimension
across competition
• Executive Position
• Education / prior work experience
• News Articles published
• FSI Sector Financial Data
• TBD
• TBD
• TBD
• Survey / Plans for IT Outsourcing
• Survey / Plans for Consulting services
• TBD
• TBD
Sub-AnalysesScope
Broad
Narrow
• Trends
• Volume
• Key Facts and Figures
• News / Thought Pieces
• Civic Organizations / Board
of directors
Return to Structure and Analysis Page

Analysis Content
An executive profile will normally
include:
Position
Tenure
Prior Work Experience
Number of Organizations
News Articles
Thought Pieces
Education
Civic Organizations
Board of Directors
Profiles of major executives detailing
their tenure with a company, major
accomplishments, news, and previous
work experience.
Template
The template
covers the
following items:
Industry: Neutral
Sector: Neutral
Topic: Operations
Analysis: Organizational Analysis –
Executive Profile
Category: Client-specific

Analysis Content
A financial benchmarking
analysis within FSI will most
likely cover data such as:
Banking Financial Data
Efficiency Ratio
Net Interest Income
Loan Loss Provision
Net Non-Interest Income
Loan Loss Reserves
Insurance Financial Data
Net Investment Income
Realized Gains/Losses
Benefits, & Adjustments
Deferred Policy Acquisition Costs
Policy Liabilities
Securities Financial Data
EBIT
Market Capitalization
PE Ratio
Return on Assets
Return on Equity
In addition, key findings or
interesting facts may be
added as appropriate
A comparison of publicly available
financial variables across industry
participants that provide comparable
ratios and data points at the corporate
level. For a financial benchmarking, the
financial variables can either be
industry neutral or specific.
Template
The template
covers the
following items:
Industry: FSI
Sector: Banking
Topic: OperationsAnalysis: Benchmarking
Category: Client-specific

Analysis Content
A comprehensive analysis will ideally
include:
Plans for IT Outsourcing:
New application development work
Individual applications besides ERP
Desktops
Distributed server environment
Mainframe operations
Portfolio of applications
Telecom network
Database and storage
ERP application
IT Infrastructure
Plans for Consulting services:
IT strategy consulting
Web site design
Architecture planning
Business process design
Application development or
implementation
A survey of banks’ and insurers’
spending plans for IT outsourcing and
consulting services.
Template
following items:
Industry: FSI
Sector: Neutral
Topic: OperationsAnalysis: Outsourcing
Category: Client Specific

69
Supply Side analysis evaluates industry structure and company position in the market, as
well as product trends, existing product and services, and innovations.
Sub-Analyses
• TBD
Sourcing
Supplier Analysis
Analyses
Customer & Channel
• TBD
• TBD
Client Specific: Supply Chain
Scope
Broad
Narrow
Return to Structure and Analysis Page

72
M&A Activity in Insurance
Recent deal statistics show varying levels of M&A activity within the four major
sectors …

75
Internal M&A Drivers in Insurance
There are a variety of strategic end–games of various insurance market strategies. Multiple, complimentary end–game
strategies are possible.
Focus on core competencies
Unique product or service
Market share gain within specific
product and/or geographic
market
Business line expertise
Strategic focus will be around
building superior market
leadership within a specific
product and/or demographic
achieving operational
efficiencies across product
and/or geography
Geographic reach
Efficient cost structure
Product breadth
Diversification of business
lines
Expansion into new markets
Boost to operating results
Increased market share within
core business
Elimination of under–performing
lines
Potentially more attractive
longer–term acquisition target
Improved cost structure,
particularly in technology
Greater price control through
scale economies
Global branding
Increased earnings stability,
particularly in downturn periods
StrategyM&ADriversDestination
building a perception of
superior value and quality to
employers and distributors
Market/consumer awareness
Distribution preference
Pricing benefits
Cross–selling capabilities
Value added products and
servicing
Global branding
Enhanced price control
Increased wallet share
Life time value relationships
with consumers
gaining true multiple channel
access
Geographic reach
Distribution preference
Pricing benefits
Cross–selling capabilities
Expansion into new markets
Global distribution
Enhanced price control
Increased wallet share
Specialization Scale Brand Distribution
Unum acquired Provident–Paul
Revere to further its dominance
in disability market
Lincoln National bought life ops
from Aetna and CIGNA, sold
P&C and reinsurance
American General acquired
numerous small targets to
broaden and deepen its
product portfolio
Travelers bought Citibank
Aegon bought Transamerica
Conseco bought Green Tree
Financial
AIG acquired SunAmerica &
American General to increase
out its global reach, gain life &
annuities scale, & generate
cross–selling opportunities
ING bought ReliaStar and Aetna
Financial Services
AXA acquired Acquired
Guardian Royal, Royale Belge
and UAP
Hartford bought Fortis’ life
operations to acquire 3,000
financial planners
MetLife bought GenAmerica
Royal Bank of Canada bought
Liberty Life’s distribution network
AJ Gallagher uses multiple
agency acquisitions as ongoing
strategy
Cases

78
New and alternative channels have different growth patterns
14.8
13.412.5
11.5
10.4
2.3
3.5
4.9
7.0
9.1
10.70 10.90
11.20
10.90
12.90
2000 2001 2002 2003 2004
Channel Transaction Growth
2000 – 2004
Billions of Transactions
Trans-
actions
(CAGR = 9.4%)
(CAGR = 39.2%)
(CAGR = 4.9%)
Channel 1
Channel 2
Channel 3
Transactions
ObservationsObservationsObservations
• Insert text here• Insert text here

81
Existing infrastructure of the country
can pose challenges, but architecture
workarounds need to be made
accordingly
Identification of key areas where the
business needed to be expanded and
finding the best suitable option of
connecting to those locations
Technology must keep pace with
business growth
The vendor selected was ICICI-
Infotech (India)
Implementation of a hub and spoke
architecture
A design with a mix of VSAT, leased-
lines, radio-links and ISDN were
selected because of infrastructure
variations across the country
Systems were very centric to the
branch
ATMs were stand alone catering only
to the city branch
Customer data was not available to
other branches
Duplication of backend services and
procedures
Challenges and Lessons
Learned
SuccessesVendor and SolutionIssue
Case StudiesCase Studies
With the centralization of data all
applications are controlled, modified
and administered from one location
Network-enabled bank to shift from
traditional banking to virtual banking
All backend applications run from a
centrally located data centre thereby
eliminating duplication of processes
Clients have access to anytime-
anywhere banking
Challenges were faced in porting the
data warehousing cube from the 32-
to 64-bit environment
Multi-vendor coordination was critical
as a number of hardware vendors
were involved in implementing the
data warehousing solution
Data quality was a major issue when
converting the system onto Silverlake
Training of the Bank staff
Testing was one of the crucial
activities that required a lot of
management and attention
Distributed systems; relatively high
operational risk
Customer loss and inability to attract
new customers; lost business
opportunities
Inability to increase fee based
income
Unable to compete with other banks
based on convenience and service
delivery
Inability to quickly respond to market
changes
Solution supports all savings, term-
deposits and all loan products for all
businesses
Integrated GL and multi-currency
support and integrated CIF
Consolidated financial reporting
Integrated with all e-delivery
channels
Integration with data warehouse
Integration with web based branch
teller system
Integrated Islamic banking support
Customers unhappy with increasing
costs associated with roll-out of new
technologies
The technology used was Barclays
proprietary banking system (ORBIT)
Lack of public confidence
Lack of speed and efficiency in
banking operations
Low profits
Improved customer confidence,
increase in profits, increase in speed
Magnetic Ink Character Recognition
(MICR) was popular with customers
and greatly improved
payment/settlements
The introduction of ATMs, along with
completely doing away with manual
banking processes, completely turned
around customer services at Barclays
bank as the traditional long counter
queues disappeared and a good
portion of new customers signed up
with the bank
Case Studies
ICICI Bank
India
Bank Rakyat
Indonesia
Barclays Bank
Ghana
BRI selected the Silverlake (Malaysia)
solution including the following
components:
– The Core Banking Solutions
(Deposits, Remittances, General
Ledger, Loans and Term
Deposits), Silverlake
Middleware System (Delivery
Services Processor), Branch
Teller System, MIS and Central
Bank Reporting (Data
Warehouse implementation),
and Trade Finance
– Two versions of the Branch
Teller System were selected:
the client-server version and
the Web version

Category: Client Specific
Template:
Analysis Content
A comprehensive analysis will ideally
include:
Business Overview
Company Financials
Competitive Assessment
Market Trends
Recent News
Analyst Reports
Financial Projections
Assessment of P/E ratio benchmarks
across industry.
Industry: FSI
Sector: Banking
Template
following items:
Valuations
Topic: Financial Analysis / Modeling

Although B of A’s P/E Ratio is now comparable with its
competitors’, there are still areas where analysts maintain
concerns that limit their target prices
Issue
International
Operations
4 “B of A has pared back its exposure in emerging markets post the 1998 merger. It has
also pared back its GCIB group in Europe previously, but has been building it again
recently. These changes in respective strategies and the improvement in the global
economy will require B of A to redefine its international strategy for the long term.”
(Source: JPMC North American Equity Research 8 July 04)
4 Due to its proximity to the 10% regulatory deposit cap, industry sources indicate the
need for B of A to do deals involving other businesses or countries. Asset managers,
broker-dealers and insurance companies have all been listed as possible acquisition
targets. Sources say that there is potential for the company to make a foray into
international markets such as England, France or Germany.
4 However, many analysts believe that the stock would likely come under pressure if B of
A announced a large acquisition as investors would want to see the Fleet deal
integrated as well as evidence of stand-alone growth and the ability to leverage the
franchise rather than simply do deals and cut costs
Details
4 Concerns over lack of
international strategy
4 Concerns of over-reliance on
domestic market
Concern
Sources: Deutsche Bank Global Equity Research, 14 October 04; A.G. Edwards Equity Research Report, 7 October 04; JPMC North American Equity Research, 8 July 04;
UBS Global Equity Research, 22 September 2004;
Expense
Management
Ability to grow
core businesses
4 “We have long had concerns about the company’s GCIB unit (16% of revenues and
13% of earnings)” and one of the main reasons is that “managing expenses
consistently has been a perennial challenge [for B of A]. We believe under the new
leadership of Al de Molina, this unit may experience far more financial discipline.”
(Source: Deutsche Bank Global Equity Research 14 October 04)
4 Saturation of consumer and commercial markets and changing market conditions have
some analysts worried about Bank of America’s ability to grow organically.
4 Company calculations put consumer and commercial banking as the biggest revenue
drivers, accounting for about 68% of standalone earnings.
4 After the Fleet merger, B of A is just shy of 10% of the U.S. deposit market, and
regulators will not allow any bank to grow beyond that through acquisitions.
4 Managing expenses has been a
perennial challenge for GCIB
4 Saturation of consumer and
commercial markets

90
TSR: 1998 - 2004
100
43
38
54
70
58 60
-
20
40
60
80
100
120
1998
1999
2000
2001
2002
2003
2004
Relative TSR
Comparative TSR Relative to the Market: 1998 - 2004
0.0
20.0
40.0
60.0
80.0
100.0
120.0
1998
1999
2000
2001
2002
2003
2004
BOFA
S&P 500
Observations
Observations

93
1 Year Asset Growth: 1998 - 2004
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1998
1999
2000
2001
2002
2003
Cost of Capital: 1998 - 2004
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
1998
1999
2000
2001
2002
2003
2004
Total Assets 1998 - 2004 ($BN)
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
1998
1999
2000
2001
2002
2003
2004
Capital
Observations

96
Observations
Technology Production Distribution Marketing Service Total Cost
Cost Breakdown
Year 2004
$ Millions
Cost 1
Cost 2
Cost 3
Cost 4
Cost 5
Cost 6
Cost 7
Cost 8
Cost 9
Cost 10
Cost 11
Cost 12
Elements of Business System Cost
Illustrative

1
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