1. Detroit Rims Day 2012 1.Company Data: Limited 2.Actuarial Information / Statistics: Limited 3.Industry / Peer Information: Available 4.Coverage Features - Frequency / Severity Combinations: High/Low 5.Program Features: Low Retention 6.Industry Segment: Stable 7.Company Type: Public 8.Company Qualitative Information: Limited 9.Financial Rating / Data: Available

2. Detroit Rims Day 2012 Sample Program Agreements  Different approaches  Different goals

3. Detroit Rims Day 2012 Timing of Adjustments:  annually, Company shall review collateral  collateral will be reviewed periodically  at any time We deem necessary  at the time of each collateral adjustment

4. Detroit Rims Day 2012 Amount of Collateral:  in an amount acceptable to the Company  sufficient to secure Your financial obligations

5. Detroit Rims Day 2012 Calculation of Collateral:  calculated by Us  in accordance with Our actuarial standards

6. Detroit Rims Day 2012 Calculation of Collateral:  whether now existing or hereafter arising  statistically expected development  on Losses and ALAE reported to us  obligations as You and we may agree

7. Detroit Rims Day 2012 Calculation of Collateral:  based on our actuarial evaluation  of relevant statistical data including  available and credible data of Your losses

8. Detroit Rims Day 2012 Calculation of Collateral:  Losses plus applicable incurred ALAE  times the applicable LDF  times the LCF

9. Detroit Rims Day 2012 Calculation of Collateral:  plus the TPAF billed by Us  plus applicable LBA

10. Detroit Rims Day 2012 Calculation of Collateral: LDF used to compute the Security:  12 mo post policy – 1.35 Incurred Loss  24 mo post policy – 1.25 Incurred Loss  36 mo post policy – 1.10 Incurred Loss  and subsequent

11. Detroit Rims Day 2012 Calculation of Collateral: required security, by line of coverage, subtracting actual paid amounts from estimated ultimate loss figures adding additional estimated loss exposure for the next 12 month

12. Detroit Rims Day 2012 Calculation of Collateral:  subtracting future expected paid amounts associated with all exposure years  as of the end of the next 12 month prospective exposure period

13. Detroit Rims Day 2012 Calculation of Collateral:  consideration may be given to financial strength metrics to account for credit risk  explicit detail must be provided on the financial metrics and the affect on collateral

14. Detroit Rims Day 2012 Components of the collateral:  incurred losses within the Loss Limits  any other fees, charges, or obligations  accrued interest on any unpaid balances

15. Detroit Rims Day 2012 Components of collateral:  this Agreement and any similar primary casualty insurance policies with Us  costs Company incurs enforcing its rights  regulatory or court fine or penalty related to the Applicable Policies

16. Detroit Rims Day 2012 Form of letter of credit:  a clean,  irrevocable letter of credit  subject to a cross collateral agreement

17. Detroit Rims Day 2012 Form of letter of credit:  negotiation credit (multiple partial draws permitted)  by sight draft  without notation

18. Detroit Rims Day 2012 Form of letter of credit:  Company as the beneficiary  contain an evergreen clause  be issued for a term of at least 12 months  by a bank “satisfactory” to Company

19. Detroit Rims Day 2012 Form of letter of credit:  To be “satisfactory,” a bank must be:  rated “C” or better  approved by the NAIC, and  otherwise acceptable to the Company in its sole and unreviewable discretion

20. Detroit Rims Day 2012 Form of letter of credit:  90 days from receipt of written notice  to provide a replacement Letter of Credit

21. Detroit Rims Day 2012  Questions ??