2. WELCOME TO PROFIT 2001

3. YOU ARE THE KEY TO IMPROVING OUR RESULTS

4. TEXAS COMBINED RATIO November 2000 LINE OF BUSINESS NOVEMBER COMBINED RATIOGOAL AUTO 118.73 103.73 FIRE153.11106.04

5. 2001 COMBINED RATIO GOALS LINE OF BUSINESSGOAL AUTO 110.2 FIRE 105.0

6. Everyone Must be Committed To Improving Our Results!

7. Where Can We Make a Difference??? Rate Class Administration VIN Numbers New Business Property Inspections Incorrect Replacement Cost Data Misapplied Discounts Risk Selection

8. Rate Class Administration 350,000 premium was lost in 2000 due to misapplied 1A rate class vs. 1B. 4,080,000 premium was lost in 2000 due to misapplied 2A rate class vs. 2C. Total premium lost was $4,430,000. $443,000 Lost in Auto Commissions.

9. VIN Number Currently 120,000 incorrect VIN numbers Estimated lost premium is $4,000,000 Estimated lost renewal commission is $400,000.

10. New Business Inspections PHOTOS OF POOR DWELLINGS

11. “You should have seen me in My prime!”

12. “OK, so I haven’t picked things up in a while!”

13. If this house could talk…

14. “Paint job – No problem!”

15. Replacement Cost Data How many of you this year have had an insured complain about the replacement cost value or rate for a property risk? How many of you believe that homes in Texas shrink in size in cold weather?… Would you believe that over 15,000 homes have shrunk, lost bathrooms, or moved to another county? Using a state-wide sample, an estimated 3,135,000 in premium has already been lost because of incorrect replacement cost data. $438,900 in loss commissions.

16. Application of Discounts Renovation Discount Burglar Alarm Discount New Home Discount Prior Insurance Discount Defensive Driving Anti-Theft

17. These Things Are in Our Control

18. By Doing the Right Thing, We Can Add $16,565,000 in Premium Back to the Books. This represents $2,319,000 in Agent’s Commissions.

19. You are the Key to Improving Our Results.

20. Let’s Start Now!