1 Insurance Specialty Group LLC Asset Protection Program (“APP”) for General Contractors 4501 Circle 75 Parkway, Suite F6200 | Atlanta, GA | (678)

2 Overview of the Asset Protection Program

3 Asset Protection Program Insurance Specialty Group, formed in 1998, has underwritten over $700 million of CGL and Builders premiums for residential general contractors Insurance Specialty Group LLC (“ISG”) is a MGA underwriting residential contractors on behalf of: –AmTrust Financial Group (A : XII) for CGL (AmTrust has Shareholder Equity of over $1.1 billion) –AXIS Insurance Company (A+ XV) for Builders Risk. The CGL policies are either admitted (Wesco Insurance Company) or non-admitted (AmTrust Int’l Underwriters Ltd) ISG underwrites builders from 10 annual homes to over 2,000 +.

4 Asset Protection Program The APP combines the risk management of a Structural Home Warranty or 3 rd Party Peer Review, strong sales and subcontractor agreements with broad form CGL and Builders Risk insurance ISG’s inception to date CGL ultimate loss ratio is 45% proving the APP’s risk management and loss control features protect the builder against frivolous construction defect losses ISG’s inception to date Builders Risk loss ratio is less than 35% These favorable loss ratios allow ISG to offer creative and competitive terms and conditions

5 Asset Protection Program The APP can provide comprehensive CGL and Builders Risk Insurance for the following types of construction subject to a maximum $20 million value per foundation: –Single Family –Multi-family - fee simple or condo –Mixed Use – commercial on 1 st floor and residential above –Small Commercial –Apartments

6 The Asset Protection Program Features and Benefits of APP Written warranty contract between builder and purchaser defines the builders construction defect obligations Homebuyer accepts warranty in lieu of implied warranty laws which are very dangerous Maintains insured's construction defect liabilities in contract law vs. tort law (litigation) Builder conciliation/arbitration for 10 years 3 rd Party Peer Review Proven Sales and Subcontractor agreements provided to insured Insured Structural Defect coverage either through the Warranty (first dollar) or the CGL policy subject to CGL deductible

7 Review of Insurance Products

88 Insurance Product Overview General Liability: –Annual Practice Policies: Admitted & Non-Admitted –Project-Specific Policies: Issued with Extended P/CO. –Project/WRAP Policies: Issued with Extended P/CO. Builders Risk: –Standard & Modified Blanket –New Starts Reporting –Single-shot

9 CGL Coverage Limits Available Bodily Injury & Property Damage Liability – Up to $5 million per occurrence, $5 million general aggregate, $5million products completed operations aggregate Personal Advertising Injury Liability - $5 million per occurrence, $5 million general aggregate Medical Expenses - $5,000 any one person SIR’s from 10,000 to $1 million for larger builders are available

10 APP General Liability Annual Practice Policy: Admitted & Non-Admitted: 12-Month Policy Term Competitive rates ISO Coverage form with ISO-based endorsements No endorsed coverage limitations related to construction defect coverage or work preformed by a subcontractor Warranty requirement – Various options available No endorsed exclusions for uninsured/underinsured subcontractors

11 APP General Liability Project-Specific & WRAP Policies: Non-Admitted Designated coverage locations, typically used for construction projects with more than three homes within a single location. Multiple projects may be scheduled to a single policy. 12 to 36 month Policy Term Endorsement providing construction defect coverage for homes sold during policy term for 10 years or the applicable Statue of Limitation, whichever is less. Warranty requirement – Various options available Available with a Pay-As-You-Sell Policy Structure Advantage of Project Policies: A single policy covers premise liability for the policy term and construction defect exposure up to ten years. Renewal coverage is not required for continued projection to the builders and other named insured.

12 APP CGL Forms Use of CG Blanket Additional Insured's – Premise only Subcontractors Endorsement – Charge premium Exclusion - Exterior Insulation and Finish System Increase in SIR for homes sold without Approved Warranty Defense inside limits for projects and wrap Cross Suits Exclusions Use of Designated Work Exclusion – Define policy Punitive Damage Limitation Continuous & Progressive Exclusion - Practice Policies High Minimum earned on non admitted

13 Builders Risk Coverage Standard & Modified Blanket Policy Structures No reporting of New Starts Deposit paid at inception based on forecasted New Starts and current Existing Inventory Audit completed at policy expiration Provides Wind Coverage Maximum limits of $1.5M per structure & $5M per occ. Modified Blanket Policy Structure: –Deposit premium for New Starts is pro-rated based upon average amount of months each structure requires coverage –Audited premium for New Starts & Existing Inventory is calculated on a pro-rata basis, based on number of months covered. –Significant reduction in annual premium due to proration of premium

14 Builders Risk Coverage New-Starts Reporting Policy Structure Provides 12-months of coverage for each home reported, starting from the date in which materials are dropped on the site Admitted in most states Available in Florida Provides Wind Coverage Monthly Reporting of New Starts Broad Coverage Competitive Rates Able to write coastal exposure

15 Review of Risk Management and Loss Control

16 The Asset Protection Program Risk Management ISG works with the agent/builder to design and implement the following risk management tools: Written Warranty Contract Sales and Purchase Agreement Subcontractor Agreements Subcontractor insurance Additional insured endorsements

17 The Asset Protection Program Loss Control Reviews Confirm use of approved Sales and Subcontractor Agreements Compliance with ISG’s Subcontractor Endorsement Certificate review Use of Quality Control Checklists Initial evaluation (including a jobsite visit) – any project/contractor with $50,000 or greater in total premium.

18 Review of Warranty Products

19 Warranty Products HBW is the leading provider of new home structural warranties in the country The HBW warranty offers the broadest warranty protection to the home builder and is fair to the homeowner The HBW warranty defines the builders legal liability of the residential contractor to the homeowner: –One Year Workmanship – (Surety) –Two Years of Systems – HVAC, Electrical, Plumbing (Surety) –Ten Years of Framing and Foundation – ( Fully Insured)

20 Warranty Products HBW has over 50 Sales Representatives throughout the country. Agent is responsible for embracing and discussing with the builder the risk management features of the warranty. The HBW Sales Rep is responsible for selling and servicing the warranty. HBW Sales Reps are available to make joint calls to the builder either before or during the presentation of the CGL quote.

21 Approved Warranty Products Full 2-10 Warranty –Surety Coverage for 1-year workmanship & 2 year systems –Full risk transfer for Framing and Foundation Structural Coverage for 10 years 10-Year Structural-Only Warranty –Full risk transfer for Framing and Foundation Structural Coverage for 10 years Builder Backed Warranty –Uninsured and cannot be used for homes over $1M in total value or homes located in CO, TX and MS)* –Coverage for framing and foundation construction defects normally insured by the warranty may be insured by the APP CGL policy; subject to policy terms and conditions –Typically used on new business only.

22 State Availability Admitted and Non Admitted

23 State Availability –CGL Admitted Product Offered in AL, AZ, FL, GA, KS, MO, NM, OR, UT & WA. –CGL Non-Admitted Product Offered in all states except NY, HI, AK and NV –Builders Risk Offered in AL, AZ, CA, CO, FL, GA, IL, IN, KS, LA, MD, MI, MN, MS, MO, NJ, NM, NC, NV, OH, OR, PA, SC, TN, TX, UT, VA, WA

24 Conclusion

25 Conclusion APP offers the comprehensive protection against construction defect claims and litigation Under the APP, the homebuilders legal construction defect obligations are captured in a contract (contract law) versus tort law. The residential homebuilder is protected against costly construction defect litigation by conciliation and the Federal Arbitration Act. APP provides tested sales and subcontractor agreements APP provides broad and competitive CGL and Builders Risk insurance

26 Contact Information Underwriters: Liz Davis – WA, AZ, UT, NM & S. CA – (678) Stephen Harrell – Eastern US, KS, MO, FL, GA & N. CA – (678) Bruce Harrell – (678)