ENERGY INSURANCE MUTUAL 19th ANNUAL RISK MANAGERS INFORMATION MEETING The Westin Innisbrook Golf Resort Tarpon Springs, Florida February 27 - March 1, 2005 The Westin Innisbrook Golf Resort Tarpon Springs, Florida February 27 - March 1, 2005

Jill Dominguez Vice President - Underwriting

2004 UNDERWRITING OVERVIEW

2004 IN REVIEW NEW MEMBERS 8 MEMBERS AS OF 12/31/ GROSS PREMIUM EARNED $213,843,000 $213,843,000 NEW MEMBERS 8 MEMBERS AS OF 12/31/ GROSS PREMIUM EARNED $213,843,000 $213,843,000

2004 COMPARED TO GROSS PREMIUM EARNED $213,843,000$179,010,000 CASUALTY $179,370,500$ 135,814,000 PROPERTY $34,473,000$ 43,196,000

WRITTEN/EARNED PREMIUM

Toronto Hydro Corporation01/01/2004 Alabama Electric Cooperative, Inc.04/01/2004 Massachusetts Water Resources Authority06/28/2004 National Energy & Gas Transmission, Inc.08/01/2004 Complete Energy Holdings, LLC08/23/2004 Anadarko Petroleum Corporation09/12/2004 Wolf Creek Nuclear Operating Corp.12/10/2004 Texas Genco LLC12/15/2004 NEW MEMBERS IN 2004

TOTAL MEMBERSHIP

RETENTION % % % % % % % %

EIM’S PRODUCTS - SUCCESSFUL IN MAINTAINING LARGE AMOUNT OF CAPACITY GENERAL LIABILITY  Capacity $100M as of 01/01/04  Availability Depends on Risk D&O/GENERAL PARTNER  Capacity $50M as of 01/01/04  $10M to $50M Available Depending on Risk EXCESS FIDUCIARY LIABILITY  $25M Available Depending on Risk Property  Primary and Excess Quota Share  Capacity $15M GENERAL LIABILITY  Capacity $100M as of 01/01/04  Availability Depends on Risk D&O/GENERAL PARTNER  Capacity $50M as of 01/01/04  $10M to $50M Available Depending on Risk EXCESS FIDUCIARY LIABILITY  $25M Available Depending on Risk Property  Primary and Excess Quota Share  Capacity $15M

EIM MEMBERSHIP MIX

2004 CASUALTY POLICY FORMS All Forms Have Been Updated to Include: EIM’s Change of Address 10 Day Notice of Cancellation for Nonpay One Year Discovery Period Wording NO CHANGES TO COVERAGE All Forms Have Been Updated to Include: EIM’s Change of Address 10 Day Notice of Cancellation for Nonpay One Year Discovery Period Wording NO CHANGES TO COVERAGE

UPDATE BY LINE OF BUSINESS

EXCESS GENERAL LIABILITY

EXCESS GENERAL LIABILITY OVERVIEW  $90,301,000 Gross Premium Earned (2004)  $71,530, 000 Gross Premium Earned (2003)  171 EGL Policyholders  $73M Average Limit  $38M Average Attachment Point  $90,301,000 Gross Premium Earned (2004)  $71,530, 000 Gross Premium Earned (2003)  171 EGL Policyholders  $73M Average Limit  $38M Average Attachment Point

EXCESS GENERAL LIABILITY OVERVIEW BEHIND THE NUMBERS  Eight New Members  Three Members Placed Under Parent  Pricing Adjustments  Additional Premium for Additional Limits  Additional Premium for Coverage Enhancements, e.g. EPLI, WC

EXCESS GENERAL LIABILITY EXCESS FORM CAN ALSO INCLUDE:  Excess EPLI (53% of Membership)  Excess Workers Comp. (20% of Membership)  Excess Professional Liability* (12% of Membership) $65M Max Sublimit  Drop Down Over Specific Aggregates in Underlying Policy (61% of Membership)  * Usually ISOs/RTOs EXCESS FORM CAN ALSO INCLUDE:  Excess EPLI (53% of Membership)  Excess Workers Comp. (20% of Membership)  Excess Professional Liability* (12% of Membership) $65M Max Sublimit  Drop Down Over Specific Aggregates in Underlying Policy (61% of Membership)  * Usually ISOs/RTOs

EXCESS DIRECTORS AND OFFICERS LIABILITY

EXCESS DIRECTORS AND OFFICERS/FIDUCIARY OVERVIEW  102 EDO Policies  $43M Average Limit  $46M Average Attachment Point  $89,069,000 Gross Premium Earned (2004)  $64,284,000 Gross Premium Earned (2003)  102 EDO Policies  $43M Average Limit  $46M Average Attachment Point  $89,069,000 Gross Premium Earned (2004)  $64,284,000 Gross Premium Earned (2003)

SOME GOOD NEWS IN 2004 Top Three Industries with LARGEST Numbers of Securities Class Action Lawsuits*: Food and Beverage Agricultural and Pharmaceutical Technology and Communication Top Three Industries with LEAST Exposure: Industrial Basic Materials UTILITIES *Source: PLUS 2005 D&O Symposium, Cornerstone Research and Stanford Law School

D&O ISSUES AND TRENDS POSITIVES Utilities going “back to basics” seeing positive results. UTILITIES’ CLAIM SUSCEPTIBILITY*FREQUENCY % % EIM CLAIMS FILED: *Ten year period Source: Tillinghast POSITIVES Utilities going “back to basics” seeing positive results. UTILITIES’ CLAIM SUSCEPTIBILITY*FREQUENCY % % EIM CLAIMS FILED: *Ten year period Source: Tillinghast

S&P UTILITIES (ELECTRIC, GAS, PIPELINE, WATER) UPGRADESDOWNGRADES Outlook still predominantly negative but declined dramatically in Average Rating - Mid-BBB (48%) *Source: Standard & Poor’s Research - “US Utility Downside Rating Actions Moderated Significantly in 2004”

NOW FOR SOME BAD NEWS More Institutional Investors Suing Suits Seeking Damages of More Than $100M Becoming Commonplace - EIM Coverage a “Working Layer”? Average Cost of Securities Class Action Settlements in 2004 up from $25M to $33M in in 2000, average settlement was $15M.* *Sources: William Lerach, PLUS 2005 D&O Symposium, and Advisen More Institutional Investors Suing Suits Seeking Damages of More Than $100M Becoming Commonplace - EIM Coverage a “Working Layer”? Average Cost of Securities Class Action Settlements in 2004 up from $25M to $33M in in 2000, average settlement was $15M.* *Sources: William Lerach, PLUS 2005 D&O Symposium, and Advisen

D&O ISSUES AND TRENDS STILL A LOT OF UNCERTAINTY TRENDS  Merger/acquisition activity picking up  Three mergers involving six members announced  According to Tillinghast’s 2004 D&O liability survey, six percent of D&O shareholder claims allegations are from merger/acquisitions  EIM’s experience: $16,250,000 paid in merger/acquisition activity related claims

D&O ISSUES AND TRENDS ISSUES SECTION 404 COMPLIANCE  Unclear what implications are from regulatory enforcement or private action perspective EFFECT OF SETTLEMENTS  Still in pipeline - D&O claims estimated at $10B to settle minimum; probably $25B total  EIM $256M in case reserves as of 12/31/04  At the same time, more capacity, lower rates in market  Competition on difficult D&O renewals! Source: “The Buyers Perception of D&O Realities and Latest Trends” - Towers Perrin-Tillinghast

D&O ISSUES AND TRENDS TREND? Capacity In Market Rebounding* Total Capacity In Market: (Expressed in billions of dollars) 1999$ $ $ $ $ $1.5 *Tillinghast 2004 D&O Survey Report

D&O ISSUES AND TRENDS Viable Utility Capacity $325M - $500M Source: Research by McGriff, Seibels and Williams

EXCESS FIDUCIARY LIABILITY

EXCESS FIDUCIARY LIABILITY  Maximum Limit of Liability Offered to Members: $25M  Member Must Have at Least $35M in Underlying Limits  43 Members (25%) Purchase Excess Fiduciary Liability

EXCESS FIDUCIARY LIABILITY  $6.9M Written Premium  $23M Average Limit  $38M Average Attachment Point  $5.75M Claims Paid in 2004  $6.9M Written Premium  $23M Average Limit  $38M Average Attachment Point  $5.75M Claims Paid in 2004

PROPERTY

Participation in Members’ Property Programs 12/31/ /31/ /31/ We are currently involved with 75 Programs. Participation in Members’ Property Programs 12/31/ /31/ /31/ We are currently involved with 75 Programs.

PROPERTY EIM$ 3,202,440 EIM and NEIL$29,129,409 NEIL FRONTS$ 3,321,764 EIM$ 3,202,440 EIM and NEIL$29,129,409 NEIL FRONTS$ 3,321,764

PROPERTY OPEN CLAIMS ACTIVITY LOSS RATIO % % % %

2004 HURRICANE SEASON EIM LOSSES $600,000 EIM LOSSES $600,000

PROPERTY Please consider advising your broker to send EIM your property submission. If a large portion of your property coverage is with a direct writer or one carrier, we ask that you consider EIM’s involvement.

COVERAGE CAN BE CONSIDERED ON A PRIMARY BASIS IF:  Account is a quality-engineered and maintained risk  Deductibles meet minimum guidelines for equipment at risk and coverage requested  Rates contemplate the exposures presented by the risk, claims experience, and coverage form

CAPACITY AND SUBLIMITS  Capacity Provided on a Quota Share Basis Only  Maximum Capacity is $15M  Earthquake, Flood, and Wind Exposures Will Be Monitored  Accounts with Zone A Flood and/or Catastrophe Exposures May Be Subject to Reduced Capacity and/or Limits and/or Higher Deductibles  Earthquake and Flood Must Be Written with Annual Aggregates

TERRORISM POSITION CASUALTYPROPERTY TRIA-Certified is offered. Do not exclude noncertified, but cap GL to $25M per Member, $125M EIM-wide. Non-certified is offered only for U.S. and Puerto Rico.

TERRORISM POSITION UPDATE ON TRIA MODELING  Currently evaluating EIM book to determine exposure  EIM may provide limits equal to policy limit, a sublimit, or decline to write UPDATE ON TRIA MODELING  Currently evaluating EIM book to determine exposure  EIM may provide limits equal to policy limit, a sublimit, or decline to write

INSURANCE ADVISORY COMMITTEE William R. Powell, ARM, CSP (Chairman) Manager, Risk Management Salt River Project Deborah S. Gaffney Risk and Insurance Manager Southern Company James O. Hess, Jr. Director Liability and Financial Insurance Duke Energy Michael C. Hulsey, CPU, CLU, ARM Risk Manager City of Richmond, Dept. of Public Utilities John E. Luley Manager – Corporate Insurance Pepco Holdings Donna Pedersen McGinnis Vice President, Risk Management and Insurance Dynegy Inc. George Schuitema, ARM Manager, Corporate Risk Management The Peoples Gas Light and Coke Company Robert J. Semet, CPCU, ARM, ARe Insurance Director Exelon Corporation Michael G. Whelan, CPCU Risk Services Manager TXU Business Services Michael L. Wilson Director, Risk Management Entergy Services, Inc.

HOW ARE WE DOING? 2004 RISK MANAGER SURVEY EIM follows reasonable, prudent, and sound underwriting practices: 98% Agree/Strongl y Agree 98% Agree/Strongl y Agree

EIM provides added value in form of broad coverage, price stability, consistent limits, and financial strength: HOW ARE WE DOING? 2004 RISK MANAGER SURVEY 94% Agree/Strongl y Agree 94% Agree/Strongl y Agree

HOW ARE WE DOING? 2004 RISK MANAGER SURVEY Overall, EIM meets my expectations in level of service: 100% Agree/Strongl y Agree 100% Agree/Strongl y Agree