TAUSSIG CAPITAL Outperformance & Permanent Capital O r..,,,,121'2012 EFTA00506380

TAUSSIG CAPITAL The General Idea (Re)insur or Ban Con Ass Strateg e)insurance Banking a agement o sor Capital — D'/0 of Offering > $20 million With all 4 elements in place, IRRs should exceed the ROEs of a fund or managed account with the same asset strategy as well as the ROEs of a traditional (re)insurer or bank that is in the same line of business Via a 144A offering, the asset manager should secure $200 million to $5 billion in permanent capital (some or all of which would be new AuM) with a high degree of certainty 1 EFTA00506381

Why the Idea Works TAUSSIG CAPITAL Buffett — from hedge fund manager to (re)insurer/banker Capital in fund structure works only once K In at NAV; Returns compound; Out at NAV K High levels of taxation for investors in the UK, Canada, and the U.S. al Same Capital in insurer, reinsurer, or bank works twice K Once — equity capital is invested in the given asset strategy K Twice — allows premiums or deposits to generate operating profits K If operations break even, (re)insurer or bank earns the same as fund K 4 million people in the U.S. generate 10% ROEs in operating profits K Traditionals — buy and hold high grade fixed income to maturity K Fixed income (5%) + operating profits = pre-tax 15% (a-tax 8%-10%) K Fund strategy+operating profits = higher ROEs than fund/traditionals K In addition to higher ROEs, shares should trade at premium to book K No K-1s and capital gains treatment in the UK, Canada, and the U.S. Proof of concept — Greenlight Capital Re (symbol - GLRE) 2 EFTA00506382

144A Offerings TAUSSIG CAPITAL ■ Hybrid private placement and public offering ■ Simpler/quicker/cheaper than private placements or IPOs ■ Primarily used for structured products and foreign equities ■ 91 U.S.- centric equity offerings in last 10 years - $25 billion ■ FBR has done 51 of the 91 offerings totaling $16 billion K FBR treats 144A like a business — all other !Bs treat it as a hobby K Qualified institutional/accredited/offshore investor universe of 1,200 K Dedicated sales force specializing in 144A offerings K Commits own capital to market making via NASDAQ's Portal System ■ Profile of FBR transactions K Minimum of $200 million — (One $1 billion + deal in each of last 3 years) K 70% are financial services - 50% are startups K 3 Bermuda reinsurance startups totaling $1.25 billion in equity capital 3 EFTA00506383

TAUSSIG CAPITAL (Re)Insurers Needing Sponsors ■ Insurance and reinsurance without letters of credit K Private placement variable universal life insurance (operational) K Cat reinsurer/ILS hybrid (1 startup, 2 acquisitions) K GigaLife — PPVULs of $1 billion or more (1 startup) * K Residual value insurance (1 startup, 1 acquisition) K Trade finance insurance (MGA conversion) K Letter of credit liberation (early stage operational — Berkshire connection) K Risk Retention Groups paired with matching reinsuers (multiple startups) * K Sharia compliant reinsurer (1 startup) ■ Insurance and reinsurance requiring letters of credit K GLRE clones (virtually unlimited number but a crowded trade) * K Life and annuity reinsurance (1 acquisition, 2 books of business) K Assuming Pension liabilites and running them off (1 startup) * K Synthetic acquisitions (virtually unlimimted number) * K Reinsuring captives (1 strategic relationship, several acquisitions) K Point of sale reinsurance (car rentals, trip, warranties, credit life) * K MGA profit sharing (startup) * Will need to recruit a management team 4 EFTA00506384

Banks Needing Sponsors TAUSSIG CAPITAL ■ Commercial Banking K Converting asset based lending funds into banks (virtually unlimited number) K Specialty Lenders — all would be startups ■ Litigation (2); Trade finance (3); Libraries (2); Hospital receivabes (1) K Point of Sale Lending ■ Time share receivables (1); Manufacturers (1) K Commercial mortgages (1 startup); Residential mortgages (1 startup) K Corporate loans (1 startup); Leveraged loans (2 startups); DIP loans (1 startup) ■ Private Banking K Traditional Swiss private bank (1 startup, 2 acquisitions) K Providing portfolio financing for clients of other private banks * K Serving Swiss Independent Asset Managers * K Rolling up Swiss Independent Asset Managers * K Swiss private bank that only serves Americans * K Private bank serving clients of major deferred compensation provider * Will need to recruit a management team 5 EFTA00506385