1. 2003 FINANCIAL REVIEW Samuel M. Garvin, Jr. Vice President and Chief Financial Officer

2. SIMPLIFIED BALANCE SHEET (MILLIONS OF DOLLARS) 12/31/03 12/31/02CHANGE ASSETS Invested assets873.2 680.5(192.7) Reinsurance recoverable361.3 331.929.4 Deferred taxes0.0 24.1(24.1) Other 43.3 34.7 8.6 TOTAL1,277.8 1,071.2125.3 LIABILITIES AND SURPLUS Loss reserves688.1 595.093.1 Unearned premiums113.9 82.631.3 Payable for investments4.0 0.33.7 Deferred Taxes4.5 0.04.5 Other6.1 7.2(1.1) Policyholders’ surplus 461.2 386.1 75.1 TOTAL1,277.8 1,071.2206.6

3. SIMPLIFIED BALANCE SHEET (MILLIONS OF DOLLARS) 12/31/03 12/31/02CHANGE ASSETS Invested assets873.2 680.5(192.7) Reinsurance recoverable361.3 331.929.4 Deferred taxes0.0 24.1(24.1) Other 43.3 34.7 8.6 TOTAL1,277.8 1,071.2125.3 LIABILITIES AND SURPLUS Loss reserves688.1 595.093.1 Unearned premiums113.9 82.631.3 Payable for investments4.0 0.33.7 Deferred taxes4.5 0.04.5 Other6.1 7.2(1.1) Policyholders’ surplus 461.2 386.1 75.1 TOTAL1,277.8 1,071.2206.6

4. INVESTMENT MANAGEMENT FIXED INCOME MANAGERS §Fidelity Management Trust §Morgan Stanley EQUITY MANAGERS §SSgA State Street Global Advisors INVESTMENT ADVISORS §Frank Russell Company

5. INVESTMENT MANAGERS ALLOCATION (MILLIONS OF DOLLARS) 12/31/03 12/31/02 Fidelity$211.724.6% $180.826.9% Morgan Stanley$210.024.5% $179.426.7% SSgA – US$346.440.3% $248.536.9% SSgA -Non-US$ 91.1 10.6% $ 63.7 9.5% Total With Managers$859.2100% $672.4100% Cash $10.0 $7.8 Total$869.2 $680.2

6. ASSET ALLOCATION Asset ClassTargetDrift Range US Equity 40%35% - 50 % Non-US Equity10% 5% - 15% Fixed Income 50%40% - 55%

7. SIMPLIFIED BALANCE SHEET (MILLIONS OF DOLLARS) 12/31/03 12/31/02CHANGE ASSETS Invested assets873.2 680.5(192.7) Reinsurance recoverable361.3 331.929.4 Deferred taxes0.0 24.1(24.1) Other 43.3 34.7 8.6 TOTAL1,277.8 1,071.2125.3 LIABILITIES AND SURPLUS Loss reserves688.1 595.093.1 Unearned premiums113.9 82.631.3 Payable for investments4.0 0.33.7 Deferred taxes4.5 0.04.5 Other6.1 7.2(1.1) Policyholders’ surplus 461.2 386.1 75.1 TOTAL1,277.8 1,071.2206.6

8. NET CLAIM RESERVES (MILLIONS OF DOLLARS) 12/31/03 12/31/02Change Loss Reserves82.5 91.6(9.1) IBNR241.8 169.971.9 LAE Reserves 2.5 1.6 0.9 Total326.8 263.163.7

9. SIMPLIFIED BALANCE SHEET (MILLIONS OF DOLLARS) 12/31/03 12/31/02CHANGE ASSETS Invested assets873.2 680.5(192.7) Reinsurance recoverable361.3 331.929.4 Deferred taxes0.0 24.1(24.1) Other 43.3 34.7 8.6 TOTAL1,277.8 1,071.2125.3 LIABILITIES AND SURPLUS Loss reserves688.1 595.093.1 Unearned premiums113.9 82.631.3 Payable for investments4.0 0.33.7 Deferred taxes4.5 0.04.5 Other6.1 7.2(1.1) Policyholders’ surplus 461.2 386.1 75.1 TOTAL1,277.8 1,071.2206.6

10. UNEARNED PREMIUM RESERVES (MILLIONS OF DOLLARS) 12/31/03 12/31/02Change General Liability46.7 34.412.3 Directors and Officers50.5 22.028.5 Property16.7 26.2(9.5) Total113.9 82.631.3

11. 2003 2002CHANGE PREMIUMS EARNED: Gross premiums written210.4 141.868.6 Unearned premiums – change(31.4) (21.1)(10.3) Gross premiums earned179.0 120.7(58.3) Reinsurance premiums ceded 60.4 (53.6)(6.8) NET PREMIUMS EARNED118.6 67.151.5 EXPENSES Gross losses and LAEs178.3 187.39.0 Reinsurance recoverable(59.8) (139.9) (80.1) Net losses and LAEs118.5 47.4(71.1) Administrative expenses 6.0 4.7 (1.3) TOTAL EXPENSES124.5 52.1(72.4) (LOSS) INCOME FROM UNDERWRITING(5.9) 15.0(20.9) STATEMENT OF OPERATIONS (MILLIONS OF DOLLARS)

12. 2003 2002CHANGE PREMIUMS EARNED: Gross premiums written210.4 141.868.6 Unearned premiums – change(31.4) (21.1)(10.3) Gross premiums earned179.0 120.7(58.3) Reinsurance premiums ceded 60.4 (53.6)(6.8) NET PREMIUMS EARNED118.6 67.151.5 EXPENSES Gross losses and LAEs178.3 187.39.0 Reinsurance recoverable(59.8) (139.9) (80.1) Net losses and LAEs118.5 47.4(71.1) Administrative expenses 6.0 4.7 (1.3) TOTAL EXPENSES124.5 52.1(72.4) (LOSS) INCOME FROM UNDERWRITING(5.9) 15.0(20.9) STATEMENT OF OPERATIONS (MILLIONS OF DOLLARS)

13. NET PREMIUMS EARNED (MILLIONS OF DOLLARS) 12/31/03 12/31/02Change General Liability58.9 42.316.6 Directors and Officers53.7 16.936.8 Property6.0 7.9(1.9) 118.6 67.151.5

14. 2003 2002CHANGE PREMIUMS EARNED: Gross premiums written210.4 141.868.6 Unearned premiums – change(31.4) (21.1)(10.3) Gross premiums earned179.0 120.7(58.3) Reinsurance premiums ceded 60.4 (53.6)(6.8) NET PREMIUMS EARNED118.6 67.151.5 EXPENSES Gross losses and LAEs178.3 187.39.0 Reinsurance recoverable(59.8) (139.9) (80.1) Net losses and LAEs118.5 47.4(71.1) Administrative expenses 6.0 4.7 (1.3) TOTAL EXPENSES124.5 52.1(72.4) (LOSS) INCOME FROM UNDERWRITING(5.9) 15.0(20.9) STATEMENT OF OPERATIONS (MILLIONS OF DOLLARS)

15. NET LOSSES AND LAEs (MILLIONS OF DOLLARS) 12/31/03 12/31/02Change 200359.6 - 200260.6 103.1(42.5) Prior(3.8) (53.6)49.8 Tail 2.1 (2.1) 4.2 118.5 47.471.1

16. STATEMENT OF OPERATIONS (MILLIONS OF DOLLARS) 2003 2002CHANGE (Loss) Income from underwriting(5.9) 15.0(20.9) Miscellaneous income0.1 0.0 Net investment income19.0 18.0 (1.0) Income before income taxes13.2 33.1(19.9) Income taxes (0.8) (7.6) 6.8 NET INCOME12.4 25.5 (13.1)

17. NET INVESTMENT INCOME (MILLIONS OF DOLLARS) 12/31/03 12/31/02Change Interest and Dividends22.6 21.80.8 Realized (Losses) - Equities(6.6) (3.1)(3.5) Realized Gains (Losses) - Fixed Income3.0 (0.7)3.7 19.0 18.01.0

18. INVESTMENT PERFORMANCE EIM ANNUAL RETURN 2003............ 18.0% 2002............ (6.1%) 2001............ (1.1%) 2000............ 1.7% 1999............ 7.7% 1998............ 14.4% 1997............ 15.4% 1996............ 10.1% 1995............ 19.0% 1994............ (0.6%)

19. TAX ADJUSTED PERFORMANCE VS. BENCHMARKS BY MANAGER ONE YEAR RETURNS PerformanceBenchmark Combined Fund 18.0 18.0 Fixed Income Fidelity 7.6 7.4 Morgan Stanley 5.7 3.8 Equity SSgA S&P 500 27.9 28.7 SSgA Non-US 38.7 39.2

20. LONG TERM INVESTMENT PERFORMANCE AS OF DECEMBER 31, 2003 7 Years6.1% 5 Years3.1% 3 Years2.2%

21. CHANGE IN POLICYHOLDERS’ SURPLUS (MILLIONS OF DOLLARS) BEGINNING SURPLUS 386.1 Plus: Net income 12.4 Unrealized gain of investments 62.7 Change 75.1 ENDING SURPLUS 461.2

22. ENERGY INSURANCE MUTUAL LIMITED