ANNUAL STATEMENT For the Year Ending December 31, 2016 OF THE CONDITION AND AFFAIRS OF THE MOUNT BEACON INSURANCE COMPANY

Transcription

1 PROPERTY AND CASUALTY COMPANIES - ASSOCIATION EDITION Document Code: 201 ANNUAL STATEMENT For the Year Ending December 31, 2016 OF THE CONDITION AND AFFAIRS OF THE MOUNT BEACON INSURANCE COMPANY NAIC Group Code 4863, 4863 NAIC Company Code Employer's ID Number (current period) (prior period) Organized under the Laws of FLORIDA, State of Domicile or Port of Entry FL Country of Domicile United States Incorporated/Organized 09/02/2014 Commenced Business 09/02/2014 Statutory Home Office 1 S. SCHOOL AVENUE, STE 900, SARASOTA, FL, US (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 628 HEBRON AVENUE, STE 106 (Street and Number) GLASTONBURY, CT, US (860) (City or Town, State, Country and Zip Code) (Area Code)(Telephone Number) Mail Address 628 HEBRON AVENUE, STE 106, GLASTONBURY, CT, US (Street and Number) (City or Town, State, Country and Zip Code) Primary Location of Books and Records 2101 E. PRESIDENT GEORGE BUSH HWY, STE 200 (Street and Number) Internet Website Address RICHARDSON, TX, US (972) (City or Town, State, Country and Zip Code) (Area Code)(Telephone Number) Statutory Statement Contact KATHRYN C. DULANSKI (972) (Name) (Area Code)(Telephone Number) WMSFINANCE@INPOINT.COM ( Address) OFFICERS Name Title WALTER NEAL WASSERMAN PRESIDENT MICHAEL RAYMOND TERELMES TREASURER LORI M. POWERS SECRETARY OTHERS (Fax Number) WALTER NEAL WASSERMAN MICHAEL RAYMOND TERELMES ANDREW J. ROTH DIRECTORS OR TRUSTEES LORI M. POWERS SUSAN J. PATSCHAK State of Connecticut County of Hartford ss The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual except to the extent that: (1) state law may differ; or, (2) that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement. (Signature) (Signature) (Signature) WALTER NEAL WASSERMAN MICHAEL RAYMOND TERELMES LORI M. POWERS (Printed Name) (Printed Name) (Printed Name) PRESIDENT TREASURER SECRETARY (Title) (Title) (Title) Subscribed and sworn to before me this day of 2017 (Notary Public Signature) a. Is this an original filing? Yes[X] No[ ] b. If no: 1. State the amendment number 0 2. Date filed 3. Number of pages attached 0

2 2 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY ASSETS Current Year Prior Year Net Admitted Nonadmitted Assets Net Admitted Assets Assets (Cols.1-2) Assets 1. Bonds (Schedule D) 14,815, ,815, Stocks (Schedule D): 2.1 Preferred stocks Common Stocks Mortgage loans on real estate (Schedule B): 3.1 First liens Other than first liens Real estate (Schedule A): 4.1 Properties occupied by the company (less $...0 encumbrances) Properties held for the production of income (less $...0 encumbrances) Properties held for sale (less $...0 encumbrances) Cash ($...4,143,986, Schedule E Part 1), cash equivalents ($...0, Schedule E Part 2) and short-term investments ($...3,116,550, Schedule DA).. 7,260, ,260, ,816, Contract loans (including $...0 premium notes) Derivatives (Schedule DB) Other invested assets (Schedule BA) Receivables for securities Securities Lending Reinvested Collateral Assets (Schedule DL) Aggregate write-ins for invested assets Subtotals, cash and invested assets (Lines 1 to 11).. 22,076, ,076, ,816, Title plants less $...0 charged off (for Title insurers only) Investment income due and accrued 52, , Premiums and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection 2,221, ,905 2,187, , Deferred premiums, agents' balances and installments booked but deferred and not yet due (Including $...0 earned but unbilled premiums) ,100, Accrued retrospective premiums ($...0) and contracts subject to redetermination ($...0) Reinsurance: 16.1 Amounts recoverable from reinsurers. 3,185, ,185, , Funds held by or deposited with reinsured companies Other amounts receivable under reinsurance contracts , , , Amounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon... 1,827, ,827, Net deferred tax asset.... 3,920,869 3,920, ,115, Guaranty funds receivable or on deposit Electronic data processing equipment and software Furniture and equipment, including health care delivery assets ($...0) Net adjustment in assets and liabilities due to foreign exchange rates Receivables from parent, subsidiaries and affiliates Health care ($...0) and other amounts receivable Aggregate write-ins for other than invested assets , , , TOTAL Assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25) 33,389,375 3,954, ,434, ,296, From Separate Accounts, Segregated Accounts and Protected Cell Accounts TOTAL (Lines 26 and 27)... 33,389,375 3,954, ,434, ,296,877 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 11 from overflow page TOTALS (Lines 1101 through 1103 plus 1198) (Line 11 above) Co-Brokerage Commission Income Receivable , State Taxes Recoverable , , Summary of remaining write-ins for Line 25 from overflow page TOTALS (Lines 2501 through 2503 plus 2598) (Line 25 above)... 75, , ,646

3 3 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY LIABILITIES, SURPLUS AND OTHER FUNDS 1 2 Current Year Prior Year 1. Losses (Part 2A, Line 35, Column 8).... 5,407,778 5,077, Reinsurance payable on paid losses and loss adjustment expenses (Schedule F, Part 1, Column 6) Loss adjustment expenses (Part 2A, Line 35, Column 9) ,087 1,747, Commissions payable, contingent commissions and other similar charges Other expenses (excluding taxes, licenses and fees).. 690, , Taxes, licenses and fees (excluding federal and foreign income taxes). 452, , Current federal and foreign income taxes (including $...0 on realized capital gains (losses)) , Net deferred tax liability Borrowed money $...0 and interest thereon $ Unearned premiums (Part 1A, Line 38, Column 5) (after deducting unearned premiums for ceded reinsurance of $...19,173,878 and including warranty reserves of $...0 and accrued accident and health experience rating refunds including $...0 for medical loss ratio rebate per the Public Health Service Act) ,742, Advance premiums 1,209,721 1,308, Dividends declared and unpaid: 11.1 Stockholders Policyholders Ceded reinsurance premiums payable (net of ceding commissions).. 4,540,533 5,324, Funds held by company under reinsurance treaties (Schedule F, Part 3, Column 19).. 0 5,496, Amounts withheld or retained by company for account of others Remittances and items not allocated Provision for reinsurance (including ($...0 certified)) (Schedule F, Part 8) , Net adjustments in assets and liabilities due to foreign exchange rates Drafts outstanding Payable to parent, subsidiaries and affiliates.... 2,536, , Derivatives Payable for securities Payable for securities lending Liability for amounts held under uninsured plans Capital notes $...0 and interest thereon $ Aggregate write-ins for liabilities TOTAL Liabilities excluding protected cell liabilities (Lines 1 through 25) 15,801, ,745, Protected cell liabilities TOTAL Liabilities (Lines 26 and 27) ,801, ,745, Aggregate write-ins for special surplus funds Common capital stock Preferred capital stock Aggregate write-ins for other than special surplus funds Surplus notes Gross paid in and contributed surplus.. 24,999, ,999, Unassigned funds (surplus).. (11,366,509) , Less treasury stock, at cost: shares common (value included in Line 30 $...0) shares preferred (value included in Line 31 $...0) Surplus as regards policyholders (Lines 29 to 35, minus 36) (Page 4, Line 39)... 13,633, ,550, TOTALS (Page 2, Line 28, Column 3) ,434, ,296,877 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 25 from overflow page TOTALS (Lines 2501 through 2503 plus 2598) (Line 25 above) Summary of remaining write-ins for Line 29 from overflow page TOTALS (Lines 2901 through 2903 plus 2998) (Line 29 above) Summary of remaining write-ins for Line 32 from overflow page TOTALS (Lines 3201 through 3203 plus 3298) (Line 32 above)

4 4 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY STATEMENT OF INCOME 1 2 Current Prior Year Year UNDERWRITING INCOME 1. Premiums earned (Part 1, Line 35, Column 4).... 4,135, ,730,887 DEDUCTIONS 2. Losses incurred (Part 2, Line 35, Column 7).. 8,784, ,977, Loss adjustment expenses incurred (Part 3, Line 25, Column 1). (1,211,495) 6,807, Other underwriting expenses incurred (Part 3, Line 25, Column 2) 9,627,707 2,663, Aggregate write-ins for underwriting deductions TOTAL Underwriting Deductions (Lines 2 through 5). 17,200, ,449, Net income of protected cells Net underwriting gain or (loss) (Line 1 minus Line 6 plus Line 7).... (13,065,256) ,455 INVESTMENT INCOME 9. Net investment income earned (Exhibit of Net Investment Income, Line 17) 3, , Net realized capital gains (losses) less capital gains tax of $...0 (Exhibit of Capital Gains (Losses))... (76,567) Net investment gain or (loss) (Lines ).... (72,738) ,254 OTHER INCOME 12. Net gain or (loss) from agents' or premium balances charged off (amount recovered $...(72,420) amount charged off $...0).. (72,420) Finance and service charges not included in premiums.... (613) Aggregate write-ins for miscellaneous income.. 455, , TOTAL Other Income (Lines 12 through 14). 382, , Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines ).. (12,755,239) , Dividends to policyholders Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 16 minus Line 17). (12,755,239) , Federal and foreign income taxes incurred. (1,617,661) , Net income (Line 18 minus Line 19) (to Line 22).... (11,137,578) ,404 CAPITAL AND SURPLUS ACCOUNT 21. Surplus as regards policyholders, December 31 prior year (Page 4, Line 39, Column 2)... 25,550, ,338, Net income (from Line 20) (11,137,578) , Net transfers (to) from Protected Cell accounts Change in net unrealized capital gains or (losses) less capital gains tax of $ Change in net unrealized foreign exchange capital gain (loss) Change in net deferred income tax... 2,756, , Change in nonadmitted assets (Exhibit of Nonadmitted Assets Line 28, Column 3)... (3,850,042). (101,407) 28. Change in provision for reinsurance (Page 3, Line 16, Column 2 minus Column 1) ,869. (313,869) 29. Change in surplus notes Surplus (contributed to) withdrawn from protected cells Cumulative effect of changes in accounting principles Capital changes: 32.1 Paid in Transferred from surplus (Stock Dividend) Transferred to surplus Surplus adjustments: 33.1 Paid in Transferred to capital (Stock Dividend) Transferred from capital Net remittances from or (to) Home Office Dividends to stockholders Change in treasury stock (Page 3, Line 36.1 and 36.2, Column 2 minus Column 1) Aggregate write-ins for gains and losses in surplus Change in surplus as regards policyholders for the year (Lines 22 through 37).. (11,917,506) , Surplus as regards policyholders, December 31 current year (Line 21 plus Line 38) (Page 3, Line 37). 13,633, ,550,997 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 5 from overflow page TOTALS (Lines 0501 through 0503 plus 0598) (Line 5 above) Co-Brokerage Commission Income 452, , Other Income.... 3, Summary of remaining write-ins for Line 14 from overflow page TOTALS (Lines 1401 through 1403 plus 1498) (Line 14 above). 455, , Summary of remaining write-ins for Line 37 from overflow page TOTALS (Lines 3701 through 3703 plus 3798) (Lines 37 above)

5 5 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY CASH FLOW 1 2 Current Year Prior Year Cash from Operations 1. Premiums collected net of reinsurance.. (9,405,314) ,352, Net investment income (25,874) , Miscellaneous income.. 382, , TOTAL (Lines 1 through 3). (9,048,433) ,027, Benefit and loss related payments... 11,066,660 6,966, Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts Commissions, expenses paid and aggregate write-ins for deductions.. 8,590,416 7,825, Dividends paid to policyholders Federal and foreign income taxes paid (recovered) net of $...0 tax on capital gains (losses) ,747 1,574, TOTAL (Lines 5 through 9).. 19,955, ,366, Net cash from operations (Line 4 minus Line 10).... (29,004,256) 3,660,923 Cash from Investments 12. Proceeds from investments sold, matured or repaid: 12.1 Bonds... 3,363, Stocks Mortgage loans Real estate Other invested assets Net gains or (losses) on cash, cash equivalents and short-term investments Miscellaneous proceeds TOTAL Investment proceeds (Lines 12.1 to 12.7). 3,363, Cost of investments acquired (long-term only): 13.1 Bonds.. 18,278, Stocks Mortgage loans Real estate Other invested assets Miscellaneous applications TOTAL Investments acquired (Lines 13.1 to 13.6) ,278, Net increase (decrease) in contract loans and premium notes Net cash from investments (Line 12.8 minus Line 13.7 minus Line 14)... (14,914,626). 0 Cash from Financing and Miscellaneous Sources 16. Cash provided (applied): 16.1 Surplus notes, capital notes Capital and paid in surplus, less treasury stock Borrowed funds Net deposits on deposit-type contracts and other insurance liabilities Dividends to stockholders Other cash provided (applied).. (2,636,860) 2,218, Net cash from financing and miscellaneous sources (Lines 16.1 to 16.4 minus Line 16.5 plus Line 16.6).. (2,636,860) 2,218,861 RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11, plus Lines 15 and 17).... (46,555,741) 5,879, Cash, cash equivalents and short-term investments: 19.1 Beginning of year... 53,816, ,936, End of year (Line 18 plus Line 19.1).. 7,260, ,816,277 Note: Supplemental Disclosures of Cash Flow Information for Non-Cash Transactions:

6 6 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY UNDERWRITING AND INVESTMENT EXHIBIT PART 1 - PREMIUMS EARNED Net Unearned Unearned Premiums Premiums Premiums Premiums Earned Written Per Dec. 31 Prior Year - Dec. 31 During Year Column 6, per Column 3, Current Year - per (Columns Line of Business Part 1B Last Year's Part 1 Column 5, Part 1A ) 1. Fire Allied lines ,606, ,606, Farmowners multiple peril Homeowners multiple peril. (9,606,899) ,135, ,528, Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty Medical professional liability - occurrence Medical professional liability - claims-made Earthquake Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation Other liability - occurrence Other liability - claims-made Excess Workers' Compensation Products liability - occurrence Products liability - claims-made Private passenger auto liability Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-Nonproportional Assumed Property Reinsurance-Nonproportional Assumed Liability Reinsurance-Nonproportional Assumed Financial Lines Aggregate write-ins for other lines of business TOTALS.... (9,606,899) ,742, ,135,461 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page TOTALS (Lines 3401 through 3403 plus 3498) (Line 34 above)

7 7 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY UNDERWRITING AND INVESTMENT EXHIBIT PART 1A - RECAPITULATION OF ALL PREMIUMS Amount Unearned Amount Unearned Reserve for Total (Running One (Running More Rate Credits Reserve Year or Less Than One Year Earned and Retrospective For Unearned From Date From Date But Adjustments Premiums of Policy) of Policy) Unbilled Based on Columns Line of Business (a) (a) Premium Experience Fire Allied lines Farmowners multiple peril Homeowners multiple peril Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty Medical professional liability - occurrence Medical professional liability - claims-made Earthquake Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation Other liability - occurrence Other liability - claims-made Excess Workers' Compensation Products liability - occurrence Products liability - claims-made Private passenger auto liability Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-Nonproportional Assumed Property Reinsurance-Nonproportional Assumed Liability Reinsurance-Nonproportional Assumed Financial Lines Aggregate write-ins for other lines of business TOTALS Accrued retrospective premiums based on experience Earned but unbilled premiums Balance (Sum of Lines 35 through 37). 0 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page TOTALS (Lines 3401 through 3403 plus 3498) (Line 34 above) (a) State here basis of computation used in each case:

8 8 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY UNDERWRITING AND INVESTMENT EXHIBIT PART 1B - PREMIUMS WRITTEN 1 Reinsurance Assumed Reinsurance Ceded Net Premiums Direct Written Business From From To To Columns Line of Business (a) Affiliates Non-Affiliates Affiliates Non-Affiliates Fire Allied lines Farmowners multiple peril Homeowners multiple peril ,405, (18,773) ,993, (9,606,899) 5. Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty Medical professional liability - occurrence Medical professional liability - claims-made Earthquake Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation Other liability - occurrence Other liability - claims-made Excess Workers' Compensation Products liability - occurrence Products liability - claims-made Private passenger auto liability Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-Nonproportional Assumed Property. X X X Reinsurance-Nonproportional Assumed Liability.. X X X Reinsurance-Nonproportional Assumed Financial Lines... X X X Aggregate write-ins for other lines of business TOTALS.. 36,405, (18,773) ,993, (9,606,899) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page TOTALS (Lines 3401 through 3403 plus 3498) (Line 34 above) (a) Does the company's direct premiums written include premiums recorded on an installment basis? Yes[ ] No[X] If yes, (1) The amount of such installment premiums $...0. (2) Amount at which such installment premiums would have been reported had they been recorded on an annualized basis $...0

9 9 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY UNDERWRITING AND INVESTMENT EXHIBIT PART 2 - LOSSES PAID AND INCURRED Losses Paid Less Salvage Net Losses Losses Percentage of Net Unpaid Net Incurred Losses Incurred Payments Current Year Losses Current Year (Column 7, Part 2) Direct Reinsurance Reinsurance (Columns (Part 2A, Unpaid (Columns to Premiums Earned Line of Business Business Assumed Recovered ) Column 8) Prior Year ) (Column 4, Part 1) 1. Fire Allied lines ,729 (7,729). (0.48) 3. Farmowners multiple peril Homeowners multiple peril 16,840,962. 1,525,819. 9,912,875. 8,453,906. 5,407,778. 5,069,450. 8,792, Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty Medical professional liability - occurrence Medical professional liability - claims-made Earthquake Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation Other liability - occurrence Other liability - claims-made Excess Workers' Compensation Products liability - occurrence Products liability - claims made Private passenger auto liability Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-Nonproportional Assumed Property Reinsurance-Nonproportional Assumed Liability Reinsurance-Nonproportional Assumed Financial Lines Aggregate write-ins for other lines of business TOTALS. 16,840,962. 1,525,819. 9,912,875. 8,453,906. 5,407,778. 5,077,179. 8,784, DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page TOTALS (Lines 3401 through 3403 plus 3498) (Line 34 above)

10 10 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY UNDERWRITING AND INVESTMENT EXHIBIT PART 2A - UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES Reported Losses Incurred But Not Reported Net Losses Excluding Net Net Deduct Incurred But Not Losses Unpaid Unpaid Loss Reinsurance Reinsurance Reported Reinsurance Reinsurance (Columns Adjustment Line of Business Direct Assumed Recoverable (Columns ) Direct Assumed Ceded ) Expenses 1. Fire Allied Lines Farmowners multiple peril Homeowners multiple peril.. 3,837,238. 1,824,177. 1,253,637. 4,407,778. 5,667, ,667,200. 5,407, , Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty Medical professional liability - occurrence Medical professional liability - claims-made Earthquake Group accident & health (a) Credit accident & health (group & individual) Other accident & health (a) Workers' compensation Other liability - occurrence Other liability - claims-made Excess Workers' Compensation Products liability - occurrence Products liability - claims-made Private passenger auto liability Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-Nonproportional Assumed Property X X X Reinsurance-Nonproportional Assumed Liability X X X Reinsurance-Nonproportional Assumed Financial Lines X X X Aggregate write-ins for other lines of business TOTALS.... 3,837,238. 1,824,177. 1,253,637. 4,407,778. 5,667, ,667,200. 5,407, ,087 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page TOTALS (Lines 3401 through 3403 plus 3498) (Line 34 above) (a) Including $...0 for present value of life indemnity claims.

11 11 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY UNDERWRITING AND INVESTMENT EXHIBIT PART 3 - EXPENSES Loss Other Adjustment Underwriting Investment Expenses Expenses Expenses Total 1. Claim adjustment services: 1.1 Direct. 140, , Reinsurance assumed 363, , Reinsurance ceded. 1,715, ,715, Net claim adjustment services ( ). (1,211,495) (1,211,495) 2. Commission and brokerage: 2.1 Direct, excluding contingent.. 0 7,446, ,446, Reinsurance assumed, excluding contingent Reinsurance ceded, excluding contingent 0 3,989, ,989, Contingent - direct Contingent - reinsurance assumed Contingent - reinsurance ceded Policy and membership fees Net commission and brokerage ( ) 0 3,457, ,457, Allowances to manager and agents Advertising , , Boards, bureaus and associations Surveys and underwriting reports , , Audit of assureds' records Salary and related items: 8.1 Salaries. 0 1,345, ,345, Payroll taxes , , Employee relations and welfare , , Insurance , , Directors' fees Travel and travel items , , Rent and rent items , , Equipment , , Cost or depreciation of EDP equipment and software , , Printing and stationery , , Postage, telephone and telegraph, exchange and express , , Legal and auditing , , TOTALS (Lines 3 to 18). 0 4,176, ,176, Taxes, licenses and fees: 20.1 State and local insurance taxes deducting guaranty association credits of $ , , Insurance department licenses and fees , , Gross guaranty association assessments All other (excluding federal and foreign income and real estate) (75,494). 0.. (75,494) 20.5 TOTAL taxes, licenses and fees ( ) , , Real estate expenses Real estate taxes Reimbursements by uninsured plans Aggregate write-ins for miscellaneous expenses. 0 1,452, ,437 1,551, TOTAL expenses incurred.... (1,211,495) 9,627, ,437 (a).. 8,515, Less unpaid expenses - current year.. 963,087 1,139,744. 3,470 2,106, Add unpaid expenses - prior year... 1,747, , ,280, Amounts receivable relating to uninsured plans, prior year Amounts receivable relating to uninsured plans, current year TOTAL EXPENSES PAID (Lines ) (427,553) 9,021, ,967 8,689,853 DETAILS OF WRITE-INS Underwriting and Policy issue fees ,462, ,462, Fines & Penalties (14,236). 0.. (14,236) Miscellaneous Expenses 0. 4,773. 5, , Summary of remaining write-ins for Line 24 from overflow page , , TOTALS (Lines 2401 through 2403 plus 2498) (Line 24 above) ,452, ,437 1,551,975 (a) Includes management fees of $...10,152,179 to affiliates and $...0 to non-affiliates.

12 12 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY EXHIBIT OF NET INVESTMENT INCOME 1 2 Collected Earned During Year During Year 1. U.S. Government bonds (a).. 5,241. 7, Bonds exempt from U.S. tax (a) Other bonds (unaffiliated)... (a).. 2, , Bonds of affiliates.. (a) Preferred stocks (unaffiliated)... (b) Preferred stocks of affiliates (b) Common stocks (unaffiliated) Common stocks of affiliates Mortgage loans (c) Real estate (d) Contract loans Cash, cash equivalents and short-term investments. (e). 29, , Derivative instruments.. (f) Other invested assets Aggregate write-ins for investment income TOTAL Gross investment income.. 36, , Investment expenses... (g). 99, Investment taxes, licenses and fees, excluding federal income taxes. (g) Interest expense.... (h) Depreciation on real estate and other invested assets.... (i) Aggregate write-ins for deductions from investment income TOTAL Deductions (Lines 11 through 15)... 99, Net Investment income (Line 10 minus Line 16).. 3,829 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page TOTALS (Lines 0901 through 0903 plus 0998) (Line 9 above) Summary of remaining write-ins for Line 15 from overflow page TOTALS (Lines 1501 through 1503 plus 1598) (Line 15 above)... 0 (a) Includes $ accrual of discount less $...23,014 amortization of premium and less $...43,257 paid for accrued interest on purchases. (b) Includes $...0 accrual of discount less $...0 amortization of premium and less $...0 paid for accrued dividends on purchases. (c) Includes $...0 accrual of discount less $...0 amortization of premium and less $...0 paid for accrued interest on purchases. (d) Includes $...0 for company's occupancy of its own buildings; and excludes $...0 interest on encumbrances. (e) Includes $ accrual of discount less $...0 amortization of premium and less $...0 paid for accrued interest on purchases. (f) Includes $...0 accrual of discount less $...0 amortization of premium. (g) Includes $...0 investment expenses and $...0 investment taxes, licenses and fees, excluding federal income taxes, attributable to segregated and Separate Accounts. (h) Includes $...0 interest on surplus notes and $...0 interest on capital notes. (i) Includes $...0 depreciation on real estate and $...0 depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) Total Realized Change in Realized Gain Capital Gain Change in Unrealized Foreign (Loss) on Sales Other Realized (Loss) Unrealized Capital Exchange Capital or Maturity Adjustments (Columns 1 + 2) Gain (Loss) Gain (Loss) 1. U.S. Government bonds (76,567). 0.. (76,567) Bonds exempt from U.S. tax Other bonds (unaffiliated) Bonds of affiliates Preferred stocks (unaffiliated) Preferred stocks of affiliates Common stocks (unaffiliated) Common stocks of affiliates Mortgage loans Real estate Contract loans Cash, cash equivalents and short-term investments Derivative instruments Other invested assets Aggregate write-ins for capital gains (losses) TOTAL Capital gains (losses)... (76,567). 0.. (76,567) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page TOTALS (Lines 0901 through 0903 plus 0998) (Line 9 above)

13 13 ANNUAL STATEMENT FOR THE YEAR OF THE 2016 MOUNT BEACON INSURANCE COMPANY EXHIBIT OF NONADMITTED ASSETS Change in Total Current Year Total Prior Year Total Nonadmitted Assets Nonadmitted Assets Nonadmitted Assets (Col. 2 - Col. 1) 1. Bonds (Schedule D) Stocks (Schedule D): 2.1 Preferred stocks Common stocks Mortgage loans on real estate (Schedule B): 3.1 First liens Other than first liens Real estate (Schedule A): 4.1 Properties occupied by the company Properties held for the production of income Properties held for sale Cash (Schedule E-Part 1), cash equivalents (Schedule E-Part 2) and short-term investments (Schedule DA) Contract loans Derivatives (Schedule DB) Other invested assets (Schedule BA) Receivables for securities Securities lending reinvested collateral assets (Schedule DL) Aggregate write-ins for invested assets Subtotals, cash and invested assets (Lines 1 to 11) Title plants (for Title insurers only) Invested income due and accrued Premium and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection.. 33, , , Deferred premiums, agents' balances and installments booked but deferred and not yet due Accrued retrospective premiums and contracts subject to redetermination Reinsurance: 16.1 Amounts recoverable from reinsurers Funds held by or deposited with reinsured companies Other amounts receivable under reinsurance contracts Amounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon Net deferred tax asset... 3,920, , (3,871,254) 19. Guaranty funds receivable or on deposit Electronic data processing equipment and software Furniture and equipment, including health care delivery assets Net adjustment in assets and liabilities due to foreign exchange rates Receivables from parent, subsidiaries and affiliates Health care and other amounts receivable Aggregate write-ins for other than invested assets TOTAL Assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25)... 3,954, , (3,850,042) 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts TOTAL (Lines 26 and 27)... 3,954, , (3,850,042) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 11 from overflow page TOTALS (Lines 1101 through 1103 plus 1198) (Line 11 above) Summary of remaining write-ins for Line 25 from overflow page TOTALS (Lines 2501 through 2503 plus 2598) (Line 25 above)

14 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE MOUNT BEACON INSURANCE COMPANY Notes to Financial Statements 1. Summary of Significant Accounting Policies A. Accounting Practices The accompanying financial statements of Mount Beacon Insurance Company (the Company ) have been prepared in conformity with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual and the State laws of Florida. The State of Florida requires insurance companies domiciled in the State of Florida to prepare their statutory financial statements in accordance with the National Association of Insurance Commissioners (NAIC) Accounting Practices and Procedures Manual subject to any deviations prescribed or permitted by the Florida Department of Insurance. There are currently no differences between Florida prescribed practices and NAIC statutory accounting practices (NAIC SAP) which affect the Company. A reconciliation of the Company s net income and capital and surplus between NAIC SAP and practices prescribed and permitted by the State of Florida is shown below: Net Income State of Domicile Company State Basis Florida (11,137,578) 22,404 State Prescribed Practices that Florida 0 0 increase (decrease) NAIC SAP State Permitted Practice s that Florida 0 0 increase (decrease) NIAC SAP NAIC SAP Florida (11,137,578) 22,404 Surplus State of Domicile Company State Basis Florida 13,633,491 25,550,997 State Prescribed Practices that Florida 0 0 increase (decrease) NAIC SAP State Permitted practice s that Florida 0 0 increase (decrease) NIAC SAP NAIC SAP Florida 13,633,491 25,550,997 B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. It also requires estimates in the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. C. Accounting Policies (1) Short-term investments consist of securities that have original maturities of greater than three months and less than twelve months at date of purchase. Short-term investments are stated at amortized cost. Cash and cash equivalents include deposits with financial institutions, cash on hand and highly liquid debt instruments that have original maturities of three months or less at date of purchase and are stated at amortized cost. (2) Bonds are stated principally at amortized cost with bond premiums and discounts amortized using the scientific method. (3) The Company has no investments in common stocks. (4) The Company has no investments in preferred stocks. (5) The Company has no investments in mortgage loans. (6) Loan Backed Securities are stated at either amortized cost or the lower of amortized cost or fair value. (7) The Company has no investment in subsidiaries, controlled or affiliated entities during the statement periods. (8) The Company has no investment in joint ventures, partnerships or limited liability companies during the statement periods. (9) The Company has no investment in derivative instruments during the statement periods. (10) The Company does not have a premium deficiency reserve during the statement periods. The company does not anticipate future investment income as a factor in determining its premium deficiency reserve. (11) Unpaid losses and loss adjustment expenses include an amount determined from individual case estimates, loss reports and an amount based on past experience, for losses incurred but not reported. Such liabilities are necessarily based on assumptions and estimates and while management believes the amounts are adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and for establishing the resulting liabilities are continually reviewed and any adjustments are reflected in the period determined. 14

15 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE MOUNT BEACON INSURANCE COMPANY Notes to Financial Statements (12) The Company has no capital equipment. (13) The Company has no pharmaceutical rebate receivables. 2. Accounting Changes and Correction of Errors Prior to the purchase of the Company by Florida Specialty Acquisition LLC on June 3, 2016, the Company reclassified certain defense and cost containment costs to adjusting and other expenses for losses occurring prior to 12/31/2015. In addition, certain intercompany fees have been reclassified from adjusting and other expense to other underwriting expenses. 3. Business Combinations and Goodwill A. Statutory Purchase Method B. Statutory Mergers C. Disclose all accounting policies that materially affect the assets, liabilities, capital and surplus or results of operations. D. Write downs for Impairment of Investments in Affiliates 4. Discontinued Operations 5. Investments A. B. C. Mortgage Loans, including Mezzanine Real Estate Loans:. Debt Restructuring:. Reverse Mortgages:. D. Loan-Backed Securities (LBS) The Company has investments in mortgage-backed securities during the statement periods. (1) Prepayment assumptions for single-class and multi-class mortgage-backed and asset-backed securities are obtained from independent third party pricing services or internal estimates. These assumptions are consistent with the current interest rate and economic environment. (2) An interest related (i.e., non-credit related) impairment of LBS is considered to be other-than temporary impairment (OTTI) when the Company intends to sell the investment, or its cash, working capital, or other requirements indicate that the Company would be required to sell the investment before a forecasted recovery occurs. Non-credit related OTTI is measured at fair value. At December 31, 2015 and 2014, the Company did not have any impaired (fair value less than carrying value) LBS for which an other-than temporary impairment should be recognized due to the intent to sell or an inability or lack of intent to retain the security for a period of time sufficient to recover the amortized cost basis. (3) At December 31, 2016, the Company has no LBS for which it had recognized credit-related OTTI. (4) At December 31, 2016, the Company has no impaired securities (fair value is less than cost or amortized cost) for which an OTTI has not been recognized in earnings as a realized loss. (5) In its OTTI assessment, the Company considers all information relevant to the collectability of the security, including past history, current conditions and reasonable forecasts when developing an estimate of future cash flows. Relevant analyst reports and forecasts for the asset class also receive appropriate consideration. The Company also considers how credit enhancements affect the expected performance of the security. In addition, the Company also considers its cash and working capital requirements and generally considers expected cash flows in relation to its business plans and how such forecasts affect the intent and ability to hold such securities to recovery of their amortized cost. E. F. G. Repurchase Agreements and/or Securities Lending Transactions:. Real Estate:. Investments in Low Income Housing Credit (LIHTC):. 14.1

16 ANNUAL STATEMENT FOR THE YEAR 2016 OF THE MOUNT BEACON INSURANCE COMPANY Notes to Financial Statements H. Restricted Assets: The Company has no restricted assets other than state deposits. The Company s investments include a $300,000 statutory deposit as required by the State of Florida. Funds are held by the Florida Department of Financial Services and meet the requirements of Florida Statutes Sec I. J. K. L. Restricted Asset Category Total General Account Total From Prior Year Increase/ (Decrease) Total Current Year Admitted Restricted Gross Restricted to Total Assets On deposit with states: Total restricted assets 308, ,613 3, , % Admitted Restricted to Total Admitted Assets 1.05% 308, ,613 3, , % 1.05% Working Capital Finance Investments:. Offsetting and Netting of Assets and Liabilities:. Structured Notes:. 5* securities: not applicable. 6. Joint Ventures, Partnerships and Limited Liability Companies A. The Company has no investments in joint ventures or partnerships at December 31, 2016 that exceed 10% of its admitted assets. B. The Company did not recognize any impairment write down for its investments in joint ventures, partnerships and limited liability companies during the statement periods. 7. Investment Income A. Accrued Investment Income The Company has no investment income due and accrued over 90 days past due. B. Amounts Non-admitted The Company has no investment income past due over 90 days. 8. Derivative Instruments 9. Income Taxes A. Components of deferred tax assets (DTAs) and deferred tax liabilities (DTLs): 1. 12/31/2016 (a) Gross deferred tax assets (b) Statutory valuation allowance adjustment (c) Adjusted gross deferred tax assets (d) Deferred tax assets nonadmitted (e) Subtotal Net Admitted Deferred Tax Asset $ Ordinary 3,894,836 12/31/2015 Capital 26,033 Change Total $3,920,869 Ordinary $1,164,624 Capital Total $1,164,624 $ Ordinary 2,730,212 Capital $26,033 Total $2,756, $3,894,836 $26,033 $3,920,869 $1,164,624 $1,164,624 $2,730,212 $26,033 $2,756,245 3,894,836 26,033 $3,920,869 49,615 0 $49,615 $3,845,221 $26,033 $3,871,254 $1,115,009 $1,115,009 ($1,115,009) ($1,115,009) $1,115,009 $1,115,009 ($1,115,009) ($1,115,009) (f) Deferred Tax Liabilities (g) Net admitted deferred tax asset/(net Deferred Tax Liability) Admission Calculation Components: 2. 12/31/2016 Ordinary Admission calculation under 11.a.- 11.c. (a) Admitted pursuant to 11.a. Capital 0 12/31/2015 Total 0 Ordinary $1,106,257 (b) Admitted pursuant to 14.2 Capital Change Total $1,106,257 Ordinary (1,106,257) Capital Total ($1,106,257)