1. California Self-Insurers’ Security Fund Alternative Security Program Overview November 10, 2010

2. 1 Disclosure  Securities or investments are offered through MMC Securities Corp (“MMCSC”), a registered broker-dealer, and member of FINRA/SIPC. Main office: 1166 avenue of the Americas, New York, NY 10036. Phone: 212.345.5000. MMCSC, Oliver Wyman, and Marsh Inc. are affiliated entities that are owned and operated by Marsh & McLennan Companies, Inc. MMCSC or any of its affiliates may have an independent business relationship with any of the companies described herein. Trademarks and service marks are the property of their respective owners.  This material has been prepared for informational purposes only. It is not an offer to buy or sell any security or commodity or other financial instrument or to participate in any trading strategy. The implementation of or investment in the Alternative Security Program (“ASP”) involves a high degree of risk and should be considered only by institutional investors who can bear the economic risks of replacing collateral with a portfolio based approach utilizing synthetic collateralized debt obligations and credit default swaps (“credit derivatives”). Certain inherent risks of credit derivatives include, but are not limited to the following: counterparty default risk; correlation may exist between reference entities and counterparties not assumed in risk models; reference entities may exhibit greater correlation than assumed in risk models; estimated recovery rates may greatly differ from actual recovery rates; reference entities may default on their worker’s compensation payments without triggering an ISDA default; and depending on future market conditions, credit protection may not be available at renewal of the ASP or may only be available at excessive cost. ASP sponsors/Investors should not rely on rating agency ratings and should conduct their own analysis or due diligence – identical ratings for different financial products do not guarantee identical risk characteristics since default rates may vastly differ.  Certain of the information contained herein concerning credit ratings and default rates is based upon or derived from information provided by third-parties and other industry sources as indicated herein. Results from simulations are for illustrative purposes only and certain assumptions have been made regarding simulations because some models are proprietary to their respective owners and cannot be replicated. No representation or warranty, express or implied, is made by MMCSC as to the accuracy or completeness of the information set forth herein, and nothing contained in this presentation is, or shall be relied upon as, a promise or representation, whether as to the past or the future. MMCSC has not independently verified any such information and assumes no responsibility for its accuracy or completeness. In addition, this presentation includes certain estimates and assumptions made by MMCSC which may or may not prove accurate. Certain assumptions have been made for modeling purposes only to simplify the presentation and/or calculation and are for illustrative purpose only; this does not reflect the performance of any specific scenario. Simulated performance is hypothetical and may not take into account material economic and market factors. Accordingly, there can be no assurance that estimated returns will be realized or that actual returns or performance results will not materially differ from those estimated herein. Therefore, recipients should not place undue reliance on these results. Past performance is not indicative of future results, which may vary.  No person has been authorized to make any representation or give any information with respect to the ASP, other than the information contained herein. Prospective institutional investors should not rely on any information other than that contained in this presentation or any supplement to this presentation.  Neither MMCSC nor any of its registered representatives, is making any representation regarding the legality of an investment herein by institutional investors. Prospective institutional investors are not to construe the contents of this presentation as legal, tax or business advice. Each institutional investor should consult with its own advisors as to legal, tax business, financial, and related aspects of investing in the ASP.  This material may not be redistributed without the prior written consent of MMCSC.

3. 2 Contents  Self-Insurers’ Security Fund  Alternative Security Program (“ASP”)  Assessments  Financial Strength

4. Self Insurers’ Security Fund

5. 4 Self-Insurers’ Security Fund Overview Mission Statement: "To provide continuity of workers' compensation benefits to injured workers of insolvent, private self-insured companies at the lowest overall long-term cost, equitably distributed to the self-insurance community." Source: California Self-Insurers Security Fund 2010, http://securityfund.org Purpose:Ensure the timely payment of workers compensation (“WC”) claims to injured workers in the event of default by a member Founded: Organization: Authority: July 6, 1984 by the State of California 501(c)(6) non-profit CA Labor Code Sections 3740-3747 Governance:Board of Trustees 6 elected by member companies 1 ex-officio from CA Department of Industrial Relations (“DIR”) Membership:All CA employers self-insured for WC 588 self insured entities $6.6 billion exposure

6. 5 Self-Insurers’ Security Fund Board composition and staff Tim East, Chair The Walt Disney Corporation Sean McNally Grimmway Farms Janice Murphy Kaiser Permanente Jill Dulich Marriott International Theresa Muir Southern California Edison William Zachry Safeway Inc. Board of Trustees: Staff: Jeff Pettegrew, Executive Director Ming Kan, Controller Cathy Aguilar, Claims Manager Regulator: James Ware, Chief, Office of Self Insurance Plans (“OSIP”) Source: California Self-Insurers Security Fund 2010, http://securityfund.org

7. 6 Self-Insurers’ Security Fund Structure Office of Self Insured Plans (“OSIP”) Audits and regulatory enforcement Assessments Defaulted estate Self insured employers Department of Industrial Relations (“DIR”) Self Insurers’ Security Fund (“SISF”) Annual reporting requirements Defaulted estate Defaulted self insured employer Risk takers Credit fees Default protection Collateral ASPExcluded Claimants Defaulted claim payments Ongoing claim payments Self insured employers Claimants Legal authority Self insured employers

8. Alternative Security Program

9. 8 Self-Insured Employer Security Fund Injured workers Regulator Bank / Surety WC Obligation Additional Assessment Security Fees/Premium Security Assessment Fees/Premium Alternative Security Program Structure

10. 9 Alternative Security Program Participation requirements Source: California Code of Regulations, Title 8, Subchapter 2, Article 3 - §15220 Full net worth net income (5 year average) credit rating ≥ $5,000,000 ≥ $500,000 ≥ B3/B- Partial as for Full, but either ­ downgraded for “cause,” OR ­ revoked Excluded new self insured – 3 year wait defaulted failure to post (60+ days) revoked (minimum or no claims) at the Board’s request e.g. one ineligible rating

11. 10 ASP participation expanded in 2010 due to improved credit ratings… Sources: Office of Self Insurance Plans, CA Self Insurers’ Security Fund 6/28/10 $ in millions 1. The following were not assessed - Employers revoked prior to 2003 - Partial deposits posted to OSIP - the first $220,000 of each Excluded deposit Alternative Security Program Summary

12. 11 Source: Moody’s Analytics Industry Groups, Office of Self Insurance Plans, Factiva, Company financial statements Industry concentrations remain primarily in Medical Services, Food & Beverage and Utilities… 2010/11 2009/10 Alternative Security Program Industry distribution

13. 12 Ratings improved with the economic outlook, raising the weighted average rating (WARF)… Baa3 WARF 488 619 Source: OSIP, Bloomberg, Moody’s, S&P, Moody’s KMV CreditEdge & RiskCalc at 5/15/10 Alternative Security Program Rating distribution

14. Assessments

15. 14 Although the ELP fee increased reflecting higher risk transfer costs, the DLF declined significantly… 2003/042004/052005/062006/072007/082008/092009/102010/11 Aggregate fees66.559.453.246.831.938.746.844.2 ASP Size4,6755,2015,8935,5165,3185,5965,5455,870 %1.421.140.900.850.600.690.840.75 $ millions 30% 29% 27% 30% 65% 52% 50% 51% 55% 61%70% 35% 48% 50% 19% 16% 12% 57% 43% Assessments Total

16. 15 Assessments Rates Although 2010 rates increased on average 5.5%, they remain significantly below those at ASP inception… 1. Moody’s equivalent Source: CA Self Insurers’ Security Fund Past performance does not guarantee future results -34% -57% -33% -38% -40%

17. Financial Strength

18. 17 … and gross assets have increased 629% since ASP inception… 1. Unaudited Sep 30, 2010 Past performance does not guarantee future results. 1 Financial Strength Assets Capital Target (Net Assets)

19. 18 Financial Strength Recent defaults A summary of the Fund’s claim reserves is as follows… Source: CA Self Insurers’ Security Fund Independent Actuarial Report and Estate Financial Data Report 6/30/2010 Past performance does not guarantee future results. The Fund has been carefully following the ongoing conservation of Contractors Access Program, and has sufficient financial resources to address any liabilities that may be assumed from this situation.