Risk Management & Insurance Overview February 2, 2005 Confidential

Risk Management EPS Cash Flow Balance Sheet Risk Hazard Financial Operational Strategic Natural Disaster Mechanical breakdown Fortuitous event Inaccurate Financial Reporting Liquidity Business interruption Workers Comp. Claims Employment Matters Auto Liability Claims Loss in Shareholder Value Loss of Reputation Perils Creating Exposure to Losses

Managing Exposure to Loss Alternatives to managing exposure Risk Avoidance (loss control, safety programs, etc.) Assumption of Risk (deductibles, retentions, etc.) Self Insure or self assume (Pre-funding a loss relating to a specific risk) Risk Transfer By contract Insurance policies Loss Reduction – Responding proactively to reduce loss amount Different risks require different risk management approaches.

Assumption of Risk Exposure Casualty – WC, Auto Liability - $ - MM per claim/incident General Liability – $ - MM per claim/incident Directors & Officers – $ - MM per claim Business Interruption – various “per day” deductibles Other Deductibles Retention of risk lowers premiums.

Current Market Environment

Discussion Topics Impact of SOX 404 certifications on D&O program Trend of directors making personal restitution in a D&O claim Severability under D&O Severability of the application Warranty questions Inclusion of public documents as part of application Severability of the policy exclusions (i.e. fraud) Terrorism Separate Terrorism program – Onshore Program TRIA (Terrorism Risk Insurance Act) – All coverages