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2006 UNDERWRITING REVIEW

2006 UNDERWRITING REVIEW. JILL DOMINGUEZ VICE PRESIDENT-UNDERWRITING. 2005 IN REVIEW. NEW MEMBERS 9 MEMBERS AS OF 12/31/2005 175 GROSS PREMIUM EARNED $ 208.8 M. NEW MEMBERS IN 2005. Chugach Electric Association, Inc. 01/01/2005 Titan Propane LLC 01/31/2005

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2006 UNDERWRITING REVIEW

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  1. 2006 UNDERWRITING REVIEW JILL DOMINGUEZ VICE PRESIDENT-UNDERWRITING

  2. 2005 IN REVIEW NEW MEMBERS 9 MEMBERS AS OF 12/31/2005 175 GROSS PREMIUM EARNED $ 208.8 M

  3. NEW MEMBERS IN 2005 Chugach Electric Association, Inc. 01/01/2005 Titan Propane LLC 01/31/2005 British Columbia Transmission Corporation 04/01/2005 Tennessee Valley Authority 05/20/2005 Enterprise Products Partners, L. P. 07/14/2005 South Mississippi Electric Power Association 08/29/2005 Mountaineer Gas Company 09/30/2005 RGC Resources, Inc. 10/01/2005 Targa Resources Investment Inc. 10/31/2005

  4. TOTAL MEMBERSHIP

  5. RETENTION 2005 96% 2004 99% 2003 96% 2002 99% 2001 99%

  6. EIM MEMBERSHIP MIX

  7. 2005 COMPARED TO 2004

  8. EPIC • New computer system for all casualty business • New ability to e-mail indications, quotes, and binders • Effective January 1, 2006, updated all casualty forms. All have 01/01/06 edition dates.

  9. CASUALTY POLICY FORMS • No changes to coverage provided • All forms worded to clarify EIM policy is following form unless EIM terms are more specific • Definition of application modified to include underlying applications EFFECTIVE JANUARY 1, 2006

  10. EIM’S PRODUCTS SUCCESSFUL INMAINTAINING LARGE AMOUNT OF CAPACITY GENERAL LIABILITY • Capacity $100M • Availability Depends on Risk D&O/GENERAL PARTNER • Capacity $50M • $10M to $50M Available Depending on Risk FIDUCIARY LIABILITY • $25M Available Depending on Risk PROPERTY • Primary and Excess Quota Share • Capacity $20M

  11. EXCESS GENERAL LIABILITY UPDATE BY LINE OF BUSINESS

  12. EXCESS GENERAL LIABILITY2005 OVERVIEW • $89,533,000 Gross Premium Earned 2005 • $90,301,000 Gross Premium Earned 2004 • 169 EGL Policyholders • $74M Average Limit • $39M Average Attachment Point

  13. EXCESS GENERAL LIABILITY EXCESS FORM CAN ALSO INCLUDE: • Excess EPLI • Excess Workers’ Compensation • Excess Professional Liability* ($65M Maximum Sublimit) • Drop Down Over Specific Aggregates in Underlying Policy • Drop Down Joint Venture * Usually ISOs/RTOs

  14. 2005 HURRICANE SEASON FIRST TIME EIM HAS GL NOTICES DUE TO HURRICANES KATRINA Notice of Circumstance letters are due to spills/releases in area; no third party claims directly related to spills RITA Five Notices of Circumstance due to spills/releases NO FORMAL CLAIMS

  15. UPDATE BY LINE OF BUSINESS EXCESS DIRECTORS AND OFFICERS LIABILITY AND FIDUCIARY LIABILITY

  16. EXCESS DIRECTORS AND OFFICERS2005 OVERVIEW • 99 EDO Policyholders • 37M Average Limit • $46.5M Average Attachment Point • $89,069,000 Gross Premium Earned (2004) • $84,555,000 Gross Premium Earned (2005) D&O pricing lower in first half of year; saw stabilization of rates in last two quarters.

  17. EXCESS FIDUCIARY LIABILITY2005 OVERVIEW • Maximum Limit of Liability Offered to Members: $25M • Member Must Have at Least $35M in Underlying Limits • 41 Members Purchase Excess Fiduciary Liability

  18. EXCESS FIDUCIARY LIABILITY • $8,257,000 Gross Premium Earned • $23M Average Limit • $38M Average Attachment Point • $5.9M Claims Paid Through 2005 Fiduciary pricing showed increasing trend in market; EIM pricing up slightly.

  19. UPDATE BY LINE OF BUSINESS PROPERTY

  20. PARTICIPATION IN MEMBERS’ PROPERTY PROGRAMS

  21. 2005 PROPERTY LOSSES Three Hurricane Losses: Katrina, Rita, Wilma $12,650,000 Gross Loss Reported MPL Loss on Machinery/Equipment Dam Failure

  22. PROPERTY LOSS RATIO 113% Excluding Hurricane Losses

  23. TRIA AND TRIEA PROPERTY • TRIA-certified is offered • No individual cap • Noncertified is offered only for United States and Puerto Rico CASUALTY • TRIA-certified is offered • Noncertified not excluded, but cap GL to $25M per Member, $125M EIM-wide

  24. TERRORISM POSITION CASUALTY • No Changes PROPERTY • $60M Annual Member-Wide Cap on EIM’s Participation • EIM Maximum Net Capacity $20M • No Sublimits on Individual Policies

  25. TRIA TASK FORCE

  26. HOW ARE WE DOING?2005 RISK MANAGER SURVEY EIM follows reasonable, prudent, and sound underwriting practices: 99% Agree/Strongly Agree

  27. HOW ARE WE DOING?2005 RISK MANAGER SURVEY EIM provides added value in form of broad coverage, price stability, consistent limits, and financial strength: 96% Agree/Strongly Agree

  28. HOW ARE WE DOING?2005 RISK MANAGER SURVEY Overall, EIM meets my expectations in level of service: 99% Agree/Strongly Agree

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