1. Washington State Transit Insurance Pool Preliminary Discussion Funding Strategies and Metrics www.pwc.com

2. PwC Review of Pool Solvency Metrics (How a pool evaluates its funding adequacy) Metrics have not kept pace with member expectations Industry advances are not being fully taken advantage of Common theme was an understatement of capital requirements 2

3. PwC Your business model (objective) defines the surplus requirement 3 Risk Cash Call Risk SurplusCash Call Risk Surplus to timeline

4. PwC Pools are Different than Insurance Companies 1.Goal is not to make money for investors 2.Oversight is done by Board of Directors made up of members 3.Members have voting privileges 4.Policies and business practices are focused on serving the members 5.Lower cost structure 4

5. PwC Pool Solvency Standards Illustration 5

6. PwC Leveraging Effectively 1.How much capital do insurance companies that look like us hold? 2.Capital Adequacy Ratio 3.Economic Capital Modeling 6

7. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2010 [insert legal name of the PwC firm]. All rights reserved. In this document, “PwC” refers to [insert legal name of the PwC firm] which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.