Incorporated/Organized 05/16/1997 Commenced Business 12/02/1997. (Street and Number) Cedar Rapids, IA 52401,

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1 PROPERTY AND CASUALTY COMPANIES - ASSOCIATION EDITION QUARTERLY STATEMENT AS OF SEPTEMBER 0, 0 OF THE CONDITION AND AFFAIRS OF THE Franklin Insurance Company NAIC Group Code NAIC Company Code 078 Employer's ID Number (Current) (Prior) Organized under the Laws of Pennsylvania, State of Domicile or Port of Entry PA Country of Domicile United States of America Incorporated/Organized 05/6/997 Commenced Business /0/997 Statutory Home Office 00 Mercer Drive, Lock Haven, PA 7745 (Street and Number) (City or Town, State and Zip Code) Main Administrative Office 8 Second Ave. SE (Street and Number) Cedar Rapids, IA 540, (City or Town, State and Zip Code) (Area Code) (Telephone Number) Mail Address P.O. Box 7909, Cedar Rapids, IA (Street and Number or P.O. Box) (City or Town, State and Zip Code) Primary Location of Books and Records 0 Route N. (Street and Number) Pennington, NJ 0854, (City or Town, State and Zip Code) (Area Code) (Telephone Number) Internet Web Site Address Statutory Statement Contact Jeffery Joseph Muller, (Name) (Area Code) (Telephone Number) jmuller@mercerins.com, ( Address) (FAX Number) OFFICERS President/CEO Randy A. Ramlo VP/Secretary Richard J. Chichester Senior VP/CFO Dianne M. Lyons OTHER Gordon A. Coleman Treasurer Lawrence J. Crawford Vice President Paul D. Ehrhardt Senior VP Raymond E. Dudonis VP/Asst. Secretary Michael T. Wilkins Executive VP DIRECTORS OR TRUSTEES Jack B. Evans Randy A. Ramlo Michael T. Wilkins Dianne M. Lyons Paul D. Ehrhardt Lawrence J. Crawford Richard J. Chichester Raymond E. Dudonis State of County of New Jersey Mercer 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: () state law may differ; or, () 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. Randy A. Ramlo Dianne M. Lyons Richard J. Chichester President/CEO Senior VP/CFO VP/Secretary a. Is this an original filing? Yes [ X ] No [ ] Subscribed and sworn to before me this b. If no, 4th day of November, 0. State the amendment number. Date filed. Number of pages attached Joanne B. Luster Financial Accountant

2 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company ASSETS Assets Current Statement Date 4 December Net Admitted Assets Prior Year Net Nonadmitted Assets (Cols. - ) Admitted Assets. Bonds. Stocks:. Preferred stocks. Common stocks. Mortgage loans on real estate:. First liens. Other than first liens 4. Real estate: 4. Properties occupied by the company (less $ encumbrances) 4. Properties held for the production of income (less $ encumbrances) 4. Properties held for sale (less $ encumbrances) 5. Cash ($ ), cash equivalents ($ ) and short-term investments ($ ) 6. Contract loans (including $ premium notes) 7. Derivatives 8. Other invested assets 9. Receivables for securities 0. Securities lending reinvested collateral assets. Aggregate write-ins for invested assets. Subtotals, cash and invested assets (Lines to ). Title plants less $ charged off (for Title insurers only) 4. Investment income due and accrued 5. Premiums and considerations: 5. Uncollected premiums and agents' balances in the course of collection 5. Deferred premiums, agents' balances and installments booked but deferred and not yet due (including $ earned but unbilled premiums) 5. Accrued retrospective premiums 6. Reinsurance: 6. Amounts recoverable from reinsurers 6. Funds held by or deposited with reinsured companies 6. Other amounts receivable under reinsurance contracts 7. Amounts receivable relating to uninsured plans 8. Current federal and foreign income tax recoverable and interest thereon 8. Net deferred tax asset 9. Guaranty funds receivable or on deposit 0. 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 4. Health care ($ ) and other amounts receivable 5. Aggregate write-ins for other than invested assets 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines to 5) 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 8. Total (Lines 6 and 7) DETAILS OF WRITE-INS Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 through 0 plus 98)(Line above) !""# Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 through 50 plus 598)(Line 5 above)

3 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company LIABILITIES, SURPLUS AND OTHER FUNDS Current Statement Date December, Prior Year. Losses (current accident year $ ). Reinsurance payable on paid losses and loss adjustment expenses. Loss adjustment expenses 4. Commissions payable, contingent commissions and other similar charges 5. Other expenses (excluding taxes, licenses and fees) 6. Taxes, licenses and fees (excluding federal and foreign income taxes) 7. Current federal and foreign income taxes (including $ on realized capital gains (losses)) 7. Net deferred tax liability 8. Borrowed money $ and interest thereon $ 9. Unearned premiums (after deducting unearned premiums for ceded reinsurance of $ and including warranty reserves of $ ) 0. Advance premium. Dividends declared and unpaid:. Stockholders. Policyholders. Ceded reinsurance premiums payable (net of ceding commissions). Funds held by company under reinsurance treaties 4. Amounts withheld or retained by company for account of others 5. Remittances and items not allocated 6. Provision for reinsurance 7. Net adjustments in assets and liabilities due to foreign exchange rates 8. Drafts outstanding 9. Payable to parent, subsidiaries and affiliates 0. Derivatives. Payable for securities. Payable for securities lending. Liability for amounts held under uninsured plans 4. Capital notes $ and interest thereon $ 5. Aggregate write-ins for liabilities 6. Total liabilities excluding protected cell liabilities (Lines through 5) 7. Protected cell liabilities 8. Total liabilities (Lines 6 and 7) 9. Aggregate write-ins for special surplus funds 0. Common capital stock. Preferred capital stock. Aggregate write-ins for other than special surplus funds. Surplus notes 4. Gross paid in and contributed surplus 5. Unassigned funds (surplus) 6. Less treasury stock, at cost: 6. shares common (value included in Line 0 $ ) 6. shares preferred (value included in Line $ ) 7. Surplus as regards policyholders (Lines 9 to 5, less 6) 8. Totals (Page, Line 8, Col. ) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 through 50 plus 598)(Line 5 above) Summary of remaining write-ins for Line 9 from overflow page 999. Totals (Lines 90 through 90 plus 998)(Line 9 above) Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 through 0 plus 98)(Line above)

4 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company STATEMENT OF INCOME Current Year to Date Prior Year to Date Prior Year Ended December UNDERWRITING INCOME. Premiums earned:. Direct (written $ ). Assumed (written $ ). Ceded (written $ ).4 Net (written $ ) DEDUCTIONS:. Losses incurred (current accident year $ ):. Direct. Assumed. Ceded.4 Net. Loss adjustment expenses incurred 4. Other underwriting expenses incurred 5. Aggregate write-ins for underwriting deductions 6. Total underwriting deductions (Lines through 5) 7. Net income of protected cells 8. Net underwriting gain or (loss) (Line minus Line 6 + Line 7) INVESTMENT INCOME 9. Net investment income earned 0. Net realized capital gains (losses) less capital gains tax of $. Net investment gain (loss) (Lines 9 + 0) OTHER INCOME. Net gain or (loss) from agents or premium balances charged off (amount recovered $ amount charged off $ ). Finance and service charges not included in premiums 4. Aggregate write-ins for miscellaneous income 5. Total other income (Lines through 4) 6. Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines ) 7. Dividends to policyholders 8. Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 6 minus Line 7) 9. Federal and foreign income taxes incurred 0. Net income (Line 8 minus Line 9)(to Line ) CAPITAL AND SURPLUS ACCOUNT. Surplus as regards policyholders, December prior year. Net income (from Line 0). Net transfers (to) from Protected Cell accounts 4. Change in net unrealized capital gains (losses) less capital gains tax of $ 5. Change in net unrealized foreign exchange capital gain (loss) 6. Change in net deferred income tax 7. Change in nonadmitted assets 8. Change in provision for reinsurance 9. Change in surplus notes 0. Surplus (contributed to) withdrawn from protected cells. Cumulative effect of changes in accounting principles. Capital changes:. Paid in. Transferred from surplus (Stock Dividend). Transferred to surplus. Surplus adjustments:. Paid in. Transferred to capital (Stock Dividend). Transferred from capital 4. Net remittances from or (to) Home Office 5. Dividends to stockholders 6. Change in treasury stock 7. Aggregate write-ins for gains and losses in surplus 8. Change in surplus as regards policyholders (Lines through 7) 9. Surplus as regards policyholders, as of statement date (Lines plus 8) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 050 through 050 plus 0598)(Line 5 above) Summary of remaining write-ins for Line 4 from overflow page 499. Totals (Lines 40 through 40 plus 498)(Line 4 above) Summary of remaining write-ins for Line 7 from overflow page 799. Totals (Lines 70 through 70 plus 798)(Line 7 above) 4

5 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company CASH FLOW Current Year To Date Prior Year To Date Prior Year Ended December Cash from Operations. Premiums collected net of reinsurance. Net investment income. Miscellaneous income 4. Total (Lines to ) 5. Benefit and loss related payments 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts 7. Commissions, expenses paid and aggregate write-ins for deductions 8. Dividends paid to policyholders 9. Federal and foreign income taxes paid (recovered) net of $ tax on capital gains (losses) 0. Total (Lines 5 through 9). Net cash from operations (Line 4 minus Line 0) Cash from Investments. Proceeds from investments sold, matured or repaid:. Bonds. Stocks. Mortgage loans.4 Real estate.5 Other invested assets.6 Net gains or (losses) on cash, cash equivalents and short-term investments.7 Miscellaneous proceeds.8 Total investment proceeds (Lines. to.7). Cost of investments acquired (long-term only):. Bonds. Stocks. Mortgage loans.4 Real estate.5 Other invested assets.6 Miscellaneous applications.7 Total investments acquired (Lines. to.6) 4. Net increase (or decrease) in contract loans and premium notes 5. Net cash from investments (Line.8 minus Line.7 and Line 4) 6. Cash provided (applied): Cash from Financing and Miscellaneous Sources 6. Surplus notes, capital notes 6. Capital and paid in surplus, less treasury stock 6. Borrowed funds 6.4 Net deposits on deposit-type contracts and other insurance liabilities 6.5 Dividends to stockholders 6.6 Other cash provided (applied) 7. Net cash from financing and miscellaneous sources (Line 6. through Line 6.4 minus Line 6.5 plus Line 6.6) RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 8. Net change in cash, cash equivalents and short-term investments (Line, plus Lines 5 and 7) 9. Cash, cash equivalents and short-term investments: 9. Beginning of year 9. End of period (Line 8 plus Line 9.) Note: Supplemental disclosures of cash flow information for non-cash transactions: 5

6 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company. Summary of Significant Accounting Policies. Accounting Changes and Corrections of Errors. Business Combinations and Goodwill 4. Discontinued Operations 5. Investments A. Mortgage Loans, including Mezzanine Real Estate Loans Not applicable. B. Debt Restructuring Not applicable. C. Reverse Mortgages Not applicable. D. Loan-Backed Securities. Prepayment assumptions for single class and multi-class mortgage-backed/asset-backed securities were derived from broker dealer information found on Bloomberg.. Securities within the scope of this statement with a recognized other-than-temporary impairment: None.. Not applicable FIC had no OTTI on structured securities during the current period. 4. Not applicable FIC had no structured securities in an unrealized loss. 5. There are a number of factors that are considered in determining if there is not an otherthan-temporary-impairment on an investment, including but not limited to: debt burden, credit ratings, sector, liquidity, financial flexibility, company management, expected earnings and cash flow stream, and economic prospects associated with the investment. All investments in an unrealized loss position are considered. As the magnitude of the loss increases, so does the degree of analysis in determining if an other-than-temporaryloss exists. E. Repurchase Agreements Not applicable. F. Real Estate Not applicable. G. Investments in Low-income Housing Tax Credits (LIHTC) Not applicable. 6. Joint Ventures Partnerships and Limited Liability Companies 7. Investment Income 8. Derivative Instruments 9. Income Taxes 6

7 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company 0. Information Concerning Parent, Subsidiaries and Affiliates On March 8, 0, United Fire & Casualty Company, an Iowa domiciled corporation, acquired all of the outstanding stock of Mercer Insurance Group, Inc., the ultimate parent of Franklin Insurance Company. Founded in 946, United Fire & Casualty Company and its subsidiaries are engaged in the business of writing property and casualty insurance and life insurance, and selling annuities.. Debt. Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences. Capital Surplus, Shareholders' Dividend Restrictions and Quasi-Reorganizations 4. Contingencies 5. Leases 6. Information About Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentrations of Credit Risk 7. Sale, Transfer and Servicing of Financial Assets and Extinguishments of Liabilities 8. Gain or Loss to the Reporting Entity from Uninsured A&H Plans and the Uninsured Portion of Partially Insured Plans 9. Direct Premiums Written by Managing General Agents / Third Party Administrators 0. Other Items. Events Subsequent No events meriting disclosure. Reinsurance. Retrospectively Rated Contracts 6.

8 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company 4. Change in Incurred Loss and Loss Adjustment Expenses The estimated cost of loss and loss adjustment expenses attributable to insured events of prior years was $0.4 million on a post-pooled basis (see Note 5), representing.8% of unpaid losses and loss adjustment expenses of $.6 million as of December, Intercompany Pooling Arrangements Effective January, 00, Franklin Insurance Company ( FIC ) and its affiliates, Mercer Insurance Company ( MIC ) and Mercer Insurance Company of New Jersey, Inc. ( MICNJ ), entered into an intercompany pooling arrangement (the Pooling ). Effective January, 006 the Pooling was amended to include Financial Pacific Insurance Company ( FinPac ). The Pooling covers all insurance business including premiums, losses, loss adjustment expenses and general expenses of the companies. Under the Pooling, MICNJ, FIC and FinPac cede 00% of their insurance business to MIC. MIC then, retrocedes a portion of the combined insurance business back to MICNJ, FIC and FinPac based on their percentage of total pooled surplus. In accordance with the contract, the balances between companies within the pool will be settled within 90 days of the end of the quarter. For 00 and 0 the participation percentages are as follows: Mercer Insurance Company 4% (NAIC # 4478) Mercer Insurance Company of New Jersey of New Jersey, Inc. % (NAIC # 4540) Franklin Insurance Company 5% (NAIC # 078) Financial Pacific Insurance Company 40% (NAIC # 45) 6. Structured Setlements 7. Health Care Receivables 8. Participating Policies 9. Premium Deficiency Reserves 0. High Deductibles. Discounting of Liabilities for Unpaid Losses or Unpaid Loss Adjustment Expenses. Asbestos/Environmental Reserves. Subscriber Savings Accounts 4. Multiple Peril Crop Insurance 6.

9 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company GENERAL INTERROGATORIES PART - COMMON INTERROGATORIES GENERAL. Did the reporting entity experience any material transactions requiring the filing of Disclosure of Material Transactions with the State of Domicile, as required by the Model Act?. If yes, has the report been filed with the domiciliary state?. Has any change been made during the year of this statement in the charter, by-laws, articles of incorporation, or deed of settlement of the reporting entity?. If yes, date of change:. Have there been any substantial changes in the organizational chart since the prior quarter end? If yes, complete the Schedule Y - Part - organizational chart. 4. Has the reporting entity been a party to a merger or consolidation during the period covered by this statement? 4. If yes, provide the name of the entity, NAIC Company Code, and state of domicile (use two letter state abbreviation) for any entity that has ceased to exist as a result of the merger or consolidation. Name of Entity NAIC Company Code State of Domicile 5. If the reporting entity is subject to a management agreement, including third-party administrator(s), managing general agent(s), attorneyin-fact, or similar agreement, have there been any significant changes regarding the terms of the agreement or principals involved? If yes, attach an explanation. 6. State as of what date the latest financial examination of the reporting entity was made or is being made. 6. State the as of date that the latest financial examination report became available from either the state of domicile or the reporting entity. This date should be the date of the examined balance sheet and not the date the report was completed or released. 6. State as of what date the latest financial examination report became available to other states or the public from either the state of domicile or the reporting entity. This is the release date or completion date of the examination report and not the date of the examination (balance sheet date). 6.4 By what department or departments? 6.5 Have all financial statement adjustments within the latest financial examination report been accounted for in a subsequent financial statement filed with Departments? 6.6 Have all of the recommendations within the latest financial examination report been complied with? 7. Has this reporting entity had any Certificates of Authority, licenses or registrations (including corporate registration, if applicable) suspended or revoked by any governmental entity during the reporting period? 7. If yes, give full information: 8. Is the company a subsidiary of a bank holding company regulated by the Federal Reserve Board? 8. If response to 8. is yes, please identify the name of the bank holding company. 8. Is the company affiliated with one or more banks, thrifts or securities firms? 8.4 If response to 8. is yes, please provide below the names and location (city and state of the main office) of any affiliates regulated by a federal regulatory services agency [i.e. the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), the Federal Deposit Insurance Corporation (FDIC) and the Securities Exchange Commission (SEC)] and identify the affiliate's primary federal regulator. Affiliate Name Location (City, State) FRB 4 OCC 5 OTS 6 FDIC 7 SEC 7

10 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company GENERAL INTERROGATORIES 9. Are the senior officers (principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) of the reporting entity subject to a code of ethics, which includes the following standards? (a) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (b) Full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the reporting entity; (c) Compliance with applicable governmental laws, rules and regulations; (d) The prompt internal reporting of violations to an appropriate person or persons identified in the code; and (e) Accountability for adherence to the code. 9. If the response to 9. is No, please explain: 9. Has the code of ethics for senior managers been amended? 9. If the response to 9. is Yes, provide information related to amendment(s). 9. Have any provisions of the code of ethics been waived for any of the specified officers? 9. If the response to 9. is Yes, provide the nature of any waiver(s). FINANCIAL 0. Does the reporting entity report any amounts due from parent, subsidiaries or affiliates on Page of this statement? 0. If yes, indicate any amounts receivable from parent included in the Page amount: $ INVESTMENT. Were any of the stocks, bonds, or other assets of the reporting entity loaned, placed under option agreement, or otherwise made available for use by another person? (Exclude securities under securities lending agreements.). If yes, give full and complete information relating thereto:. Amount of real estate and mortgages held in other invested assets in Schedule BA: $. Amount of real estate and mortgages held in short-term investments: $ 4. Does the reporting entity have any investments in parent, subsidiaries and affiliates? 4. If yes, please complete the following: Prior Year-End Book/Adjusted Carrying Value Current Quarter Book/Adjusted Carrying Value 4. Bonds $ $ 4. Preferred Stock $ $ 4. Common Stock $ $ 4.4 Short-Term Investments $ $ 4.5 Mortgage Loans on Real Estate $ $ 4.6 All Other $ $ 4.7 Total Investment in Parent, Subsidiaries and Affiliates (Subtotal Lines 4. to 4.6) $ $ 4.8 Total Investment in Parent included in Lines 4. to 4.6 above $ $ 5. Has the reporting entity entered into any hedging transactions reported on Schedule DB? 5. If yes, has a comprehensive description of the hedging program been made available to the domiciliary state? If no, attach a description with this statement. 7.

11 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company GENERAL INTERROGATORIES 6. Excluding items in Schedule E - Part - Special Deposits, real estate, mortgage loans and investments held physically in the reporting entity s offices, vaults or safety deposit boxes, were all stocks, bonds and other securities, owned throughout the current year held pursuant to a custodial agreement with a qualified bank or trust company in accordance with Section, III - General Examination Considerations, F. Outsourcing of Critical Functions, Custodial or Safekeeping Agreements of the NAIC Financial Condition Examiners Handbook? 6. For all agreements that comply with the requirements of the NAIC Financial Condition Examiners Handbook, complete the following: Name of Custodian(s) Custodian Address 6. For all agreements that do not comply with the requirements of the NAIC Financial Condition Examiners Handbook, provide the name, location and a complete explanation: Name(s) Location(s) Complete Explanation(s) 6. Have there been any changes, including name changes, in the custodian(s) identified in 6. during the current quarter? 6.4 If yes, give full information relating thereto: Old Custodian New Custodian Date of Change 4 Reason 6.5 Identify all investment advisors, brokers/dealers or individuals acting on behalf of broker/dealers that have access to the investment accounts, handle securities and have authority to make investments on behalf of the reporting entity: Central Registration Depository!" Name(s) #$% &'%( ) Address *+,+-$. */0 (. 7. Have all the filing requirements of the Purposes and Procedures Manual of the NAIC Securities Valuation Office been followed? 7. If no, list exceptions: 7.

12 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company GENERAL INTERROGATORIES PART - PROPERTY & CASUALTY INTERROGATORIES. If the reporting entity is a member of a pooling arrangement, did the agreement or the reporting entity s participation change? If yes, attach an explanation.. Has the reporting entity reinsured any risk with any other reporting entity and agreed to release such entity from liability, in whole or in part, from any loss that may occur on the risk, or portion thereof, reinsured? If yes, attach an explanation.. Have any of the reporting entity s primary reinsurance contracts been canceled?. If yes, give full and complete information thereto. 4. Are any of the liabilities for unpaid losses and loss adjustment expenses other than certain workers compensation tabular reserves (see Annual Statement Instructions pertaining to disclosure of discounting for definition of tabular reserves ) discounted at a rate of interest greater than zero? 4. If yes, complete the following schedule: Line of Business Maximum Interest Discount Rate TOTAL DISCOUNT 5 6 Unpaid LAE IBNR DISCOUNT TAKEN DURING PERIOD 0 4 Unpaid Losses 7 TOTAL 8 Unpaid Losses 9 Unpaid LAE IBNR TOTAL TOTAL 5. Operating Percentages: 5. A&H loss percent 5. A&H cost containment percent 5. A&H expense percent excluding cost containment expenses 6. Do you act as a custodian for health savings accounts? 6. If yes, please provide the amount of custodial funds held as of the reporting date $ 6. Do you act as an administrator for health savings accounts? 6.4 If yes, please provide the balance of the funds administered as of the reporting date $ 8

13 NAIC Company Code Federal ID Number STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE F - CEDED REINSURANCE Showing All New Reinsurers - Current Year to Date Name of Reinsurer 4 Domiciliary Jurisdiction 5 Is Insurer Authorized? (Yes or No) 9

14 States, etc. STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE T - EXHIBIT OF PREMIUMS WRITTEN Current Year to Date - Allocated by States and Territories Direct Premiums Written Direct Losses Paid (Deducting Salvage) Direct Losses Unpaid Current Year Prior Year Current Year Prior Year Current Year To Date To Date To Date To Date To Date Active Status 7 Prior Year To Date. Alabama AL. Alaska AK. Arizona AZ 4. Arkansas AR 5. California CA 6. Colorado CO 7. Connecticut CT 8. Delaware DE 9. District of Columbia DC 0. Florida FL. Georgia GA. Hawaii HI. Idaho ID 4. Illinois IL 5. Indiana IN 6. Iowa IA 7. Kansas KS 8. Kentucky KY 9. Louisiana LA 0. Maine ME. Maryland MD. Massachusetts MA. Michigan MI 4. Minnesota MN 5. Mississippi MS 6. Missouri MO 7. Montana MT 8. Nebraska NE 9. Nevada NV 0. New Hampshire NH. New Jersey NJ. New Mexico NM. New York NY 4. North Carolina NC 5. North Dakota ND 6. Ohio OH 7. Oklahoma OK 8. Oregon OR 9. Pennsylvania PA 40. Rhode Island RI 4. South Carolina SC 4. South Dakota SD 4. Tennessee TN 44. Texas TX 45. Utah UT 46. Vermont VT 47. Virginia VA 48. Washington WA 49. West Virginia WV 50. Wisconsin WI 5. Wyoming WY 5. American Samoa AS 5. Guam GU 54. Puerto Rico PR 55. U.S. Virgin Islands VI 56. Northern Mariana Islands MP 57. Canada CN 58. Aggregate Other Alien OT XXX 59. Totals (a) DETAILS OF WRITE-INS 580. XXX 580. XXX 580. XXX Summary of remaining write-ins for Line 58 from overflow page XXX Totals (Lines 580 through 580 plus 5898)(Line 58 above) XXX (L) Licensed or Chartered - Licensed Insurance Carrier or Domiciled RRG; (R) Registered - Non-domiciled RRGs; (Q) Qualified - Qualified or Accredited Reinsurer; (E) Eligible - Reporting Entities eligible or approved to write Surplus Lines in the state; (N) None of the above - Not allowed to write business in the state. (a) Insert the number of L responses except for Canada and Other Alien. 0

15 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE Y - INFORMATION CONCERNING ACTIVITIES OF INSURER MEMBERS OF A HOLDING COMPANY GROUP PART - ORGANIZATIONAL CHART NONE

16 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company PART - LOSS EXPERIENCE Direct Premiums Earned Current Year to Date 4 Prior Year to Date Direct Losses Direct Loss Direct Loss Incurred Percentage Percentage Line of Business. Fire. Allied Lines. Farmowners multiple peril 4. Homeowners multiple peril 5. Commercial multiple peril 6. Mortgage guaranty 8. Ocean marine 9. Inland marine 0. Financial guaranty. Medical professional liability - occurrence. Medical professional liability - claims-made. Earthquake. Group accident and health 4. Credit accident and health 5. Other accident and health 6. Workers compensation 7. Other liability - occurrence 7. Other liability - claims-made 7. Excess workers compensation 8. Products liability - occurrence 8. Products liability - claims-made 9.,9. Private passenger auto liability 9.,9.4 Commercial auto liability. Auto physical damage. Aircraft (all perils). Fidelity 4. Surety 6. Burglary and theft 7. Boiler and machinery 8. Credit 9. International 0. Warranty. Reinsurance - Nonproportional Assumed Property XXX XXX XXX XXX. Reinsurance - Nonproportional Assumed Liability XXX XXX XXX XXX. Reinsurance - Nonproportional Assumed Financial Lines XXX XXX XXX XXX 4. Aggregate write-ins for other lines of business 5. Totals DETAILS OF WRITE-INS Summary of remaining write-ins for Line 4 from overflow page 499. Totals (Lines 40 through 40 plus 498)(Line 4 above) PART - DIRECT PREMIUMS WRITTEN Current Year to Date Prior Year Year to Date Line of Business Current Quarter. Fire. Allied Lines. Farmowners multiple peril 4. Homeowners multiple peril 5. Commercial multiple peril 6. Mortgage guaranty 8. Ocean marine 9. Inland marine 0. Financial guaranty. Medical professional liability - occurrence. Medical professional liability - claims-made. Earthquake. Group accident and health 4. Credit accident and health 5. Other accident and health 6. Workers compensation 7. Other liability - occurrence 7. Other liability - claims-made 7. Excess workers compensation 8. Products liability - occurrence 8. Products liability - claims-made 9.,9. Private passenger auto liability 9.,9.4 Commercial auto liability. Auto physical damage. Aircraft (all perils). Fidelity 4. Surety 6. Burglary and theft 7. Boiler and machinery 8. Credit 9. International 0. Warranty. Reinsurance - Nonproportional Assumed Property XXX XXX XXX. Reinsurance - Nonproportional Assumed Liability XXX XXX XXX. Reinsurance - Nonproportional Assumed Financial Lines XXX XXX XXX 4. Aggregate write-ins for other lines of business 5. Totals DETAILS OF WRITE-INS Summary of remaining write-ins for Line 4 from overflow page 499. Totals (Lines 40 through 40 plus 498)(Line 4 above)

17 Years in Which Losses Occurred Prior Year-End Known Case Loss and LAE Reserves Prior Year- End IBNR Loss and LAE Reserves STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company PART (000 omitted) Total Prior Year-End Loss and LAE Reserves (Cols. +) LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES SCHEDULE Loss and LAE Payments on Claims Reported as of Prior Year-End 0 Loss and LAE Payments on Claims Unreported as of Prior Year-End Total 0 Loss and LAE Payments (Cols. 4+5) Q.S. Date Known Case Loss and LAE Reserves on Claims Reported and Open as of Prior Year End Q.S. Date Known Case Loss and LAE Reserves on Claims Reported or Reopened Subsequent to Prior Year End 9 Q.S. Date IBNR Loss and LAE Reserves 0 Total Q.S. Loss and LAE Reserves (Cols.7+8+9) Prior Year-End Known Case Loss and LAE Reserves Developed (Savings)/ Deficiency (Cols.4+7 minus Col. ) Prior Year-End IBNR Loss and LAE Reserves Developed (Savings)/ Deficiency (Cols minus Col. ) Prior Year-End Total Loss and LAE Reserve Developed (Savings)/ Deficiency (Cols. +) Prior Subtotals Prior Subtotals 00 + Prior 6. 0 XXX XXX XXX XXX XXX XXX XXX XXX 7. Totals 8. Prior Year-End Surplus As Regards Policyholders Col., Line 7 As % of Col. Line 7 Col., Line 7 As % of Col. Line (7.6)..8 Col., Line 7 As % of Col. Line 7 Col., Line 7 As a % of Col. Line

18 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SUPPLEMENTAL EXHIBITS AND SCHEDULES INTERROGATORIES The following supplemental reports are required to be filed as part of your statement filing. However, in the event that your company does not transact the type of business for which the special report must be filed, your response of NO to the specific interrogatory will be accepted in lieu of filing a NONE report and a bar code will be printed below. If the supplement is required of your company but is not being filed for whatever reason enter SEE EXPLANATION and provide an explanation following the interrogatory questions. Response. Will the Trusteed Surplus Statement be filed with the state of domicile and the NAIC with this statement?. Will Supplement A to Schedule T (Medical Professional Liability Supplement) be filed with this statement?. Will the Medicare Part D Coverage Supplement be filed with the state of domicile and the NAIC with this statement? 4. Will the Director and Officer Supplement be filed with the state of domicile and the NAIC with this statement?. Explanations:.. 4. Bar Codes:. Trusteed Surplus Statement [Document Identifier 490]. Supplement A to Schedule T [Document Identifier 455]. Medicare Part D Coverage Supplement [Document Identifier 65] 4. Director and Officer Supplement [Document Identifier 505] 4

19 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company OVERFLOW PAGE FOR WRITE-INS 5

20 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE A - VERIFICATION Real Estate. Book/adjusted carrying value, December of prior year. Cost of acquired:. Actual cost at time of acquisition. Additional investment made after acquisition NONE. Current year change in encumbrances 4. Total gain (loss) on disposals 5. Deduct amounts received on disposals 6. Total foreign exchange change in book/adjusted carrying value 7. Deduct current year s other than temporary impairment recognized 8. Deduct current year s depreciation 9. Book/adjusted carrying value at the end of current period (Lines ) 0. Deduct total nonadmitted amounts. Statement value at end of current period (Line 9 minus Line 0) Year to Date Prior Year Ended December SCHEDULE B - VERIFICATION Mortgage Loans. Book value/recorded investment excluding accrued interest, December of prior year. Cost of acquired:. Actual cost at time of acquisition. Additional investment made after acquisition. Capitalized deferred interest and other 4. Accrual of discount NONE 5. Unrealized valuation increase (decrease) 6. Total gain (loss) on disposals 7. Deduct amounts received on disposals 8. Deduct amortization of premium and mortgage interest points and commitment fees 9. Total foreign exchange change in book value/recorded investment excluding accrued interest 0. Deduct current year s other than temporary impairment recognized. Book value/recorded investment excluding accrued interest at end of current period (Lines ). Total valuation allowance. Subtotal (Line plus Line ) 4. Deduct total nonadmitted amounts 5. Statement value at end of current period (Line minus Line 4) Year to Date Prior Year Ended December. Book/adjusted carrying value, December of prior year SCHEDULE BA - VERIFICATION Other Long-Term Invested Assets. Cost of acquired:. Actual cost at time of acquisition. Additional investment made after acquisition NONE. Capitalized deferred interest and other 4. Accrual of discount 5. Unrealized valuation increase (decrease) 6. Total gain (loss) on disposals 7. Deduct amounts received on disposals 8. Deduct amortization of premium and depreciation 9. Total foreign exchange change in book/adjusted carrying value 0. Deduct current year s other than temporary impairment recognized. Book/adjusted carrying value at end of current period (Lines ). Deduct total nonadmitted amounts. Statement value at end of current period (Line minus Line ) Year to Date Prior Year Ended December SCHEDULE D - VERIFICATION Bonds and Stocks Prior Year Ended Year to Date December. Book/adjusted carrying value of bonds and stocks, December of prior year. Cost of bonds and stocks acquired. Accrual of discount 4. Unrealized valuation increase (decrease) 5. Total gain (loss) on disposals 6. Deduct consideration for bonds and stocks disposed of 7. Deduct amortization of premium 8. Total foreign exchange change in book/adjusted carrying value 9. Deduct current year s other than temporary impairment recognized 0. Book/adjusted carrying value at end of current period (Lines ). Deduct total nonadmitted amounts. Statement value at end of current period (Line 0 minus Line ) SI0

21 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE D - PART B Showing the Acquisitions, Dispositions and Non-Trading Activity During the Current Quarter for all Bonds and Preferred Stock by Rating Class Book/Adjusted Carrying Value Beginning of Current Quarter Acquisitions During Current Quarter Dispositions During Current Quarter 4 Non-Trading Activity During Current Quarter 5 Book/Adjusted Carrying Value End of First Quarter 6 Book/Adjusted Carrying Value End of Second Quarter 7 Book/Adjusted Carrying Value End of Third Quarter 8 Book/Adjusted Carrying Value December Prior Year BONDS. Class (a). Class (a). Class (a) 4. Class 4 (a) 5. Class 5 (a) 6. Class 6 (a) 7. Total Bonds SI0 PREFERRED STOCK 8. Class 9. Class 0. Class. Class 4. Class 5. Class 6 4. Total Preferred Stock 5. Total Bonds and Preferred Stock (a) Book/Adjusted Carrying Value column for the end of the current reporting period includes the following amount of non-rated short-term and cash equivalent bonds by NAIC designation: NAIC $ ; NAIC $ ; NAIC $ ; NAIC 4 $ ; NAIC 5 $ ; NAIC 6 $

22 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE DA - PART Short-Term Investments Book/Adjusted Carrying Value Par Value Actual Cost 4 Interest Collected Year-to-Date 5 Paid for Accrued Interest Year-to-Date Totals XXX SCHEDULE DA - VERIFICATION Short-Term Investments Year To Date Prior Year Ended December. Book/adjusted carrying value, December of prior year. Cost of short-term investments acquired. Accrual of discount 4. Unrealized valuation increase (decrease) 5. Total gain (loss) on disposals 6. Deduct consideration received on disposals 7. Deduct amortization of premium 8. Total foreign exchange change in book/adjusted carrying value 9. Deduct current year s other than temporary impairment recognized 0. Book/adjusted carrying value at end of current period (Lines ). Deduct total nonadmitted amounts. Statement value at end of current period (Line 0 minus Line ) SI0

23 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company Schedule DB - Part A - Verification - Options, Caps, Floors, Collars, Swaps and Forwards Schedule DB - Part B - Verification - Futures Contracts Schedule DB - Part C - Section - Replication (Synthetic Asset) Transactions (RSATs) Open Schedule DB-Part C-Section -Reconciliation of Replication (Synthetic Asset) Transactions Open Schedule DB - Verification - Book/Adjusted Carrying Value, Fair Value and Potential Exposure of Derivatives SI04, SI05, SI06, SI07

24 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE E - VERIFICATION (Cash Equivalents) Year To Date Prior Year Ended December. Book/adjusted carrying value, December of prior year. Cost of cash equivalents acquired. Accrual of discount 4. Unrealized valuation increase (decrease) 5. Total gain (loss) on disposals 6. Deduct consideration received on disposals 7. Deduct amortization of premium 8. Total foreign exchange change in book/adjusted carrying value 9. Deduct current year s other than temporary impairment recognized 0. Book/adjusted carrying value at end of current period (Lines ). Deduct total nonadmitted amounts. Statement value at end of current period (Line 0 minus Line ) SI08

25 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company Schedule A - Part - Real Estate Acquired and Additions Made Schedule A - Part - Real Estate Disposed Schedule B - Part - Mortgage Loans Acquired Schedule B - Part - Mortgage Loans Disposed, Transferred or Repaid Schedule BA - Part - Other Long-Term Invested Assets Acquired Schedule BA - Part - Other Long-Term Invested Assets Disposed, Transferred or Repaid E0, E0, E0

26 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE D - PART Show All Long-Term Bonds and Stock Acquired During the Current Quarter Number of Shares of Stock Paid for Accrued Interest and Dividends CUSIP Identification Description Foreign Date Acquired Name of Vendor Actual Cost Par Value Bonds - Industrial and Miscellaneous (Unaffiliated) XXX Total - Bonds - Part XXX Total - Bonds - Part 5 XXX XXX XXX XXX Total - Bonds XXX Total - Preferred Stocks - Part XXX XXX Total - Preferred Stocks - Part 5 XXX XXX XXX XXX Total - Preferred Stocks XXX XXX Total - Common Stocks - Part XXX XXX Total - Common Stocks - Part 5 XXX XXX XXX XXX Total - Common Stocks XXX XXX Total - Preferred and Common Stocks XXX XXX 0 NAIC Designation or Market Indicator (a) E Totals XXX XXX (a) For all common stock bearing the NAIC market indicator "U" provide: the number of such issues

27 E05 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE D - PART 4 Show All Long-Term Bonds and Stock Sold, Redeemed or Otherwise Disposed of During the Current Quarter Change In Book/Adjusted Carrying Value Current Year's Total Change in Book/ Total Foreign Exchange Book/ Bond NAIC Designation Prior Year Current Other Than Adjusted Change in Adjusted Foreign Interest/ or CUSIP Identification Description Foreign Disposal Date Name of Purchaser Number of Shares of Stock Consideration Par Value Actual Cost Book/ Adjusted Carrying Value Unrealized Valuation Increase/ (Decrease) Year's (Amortization)/ Accretion Temporary Impairment Recognized Carrying Value ( + - ) Book /Adjusted Carrying Value Carrying Value at Disposal Date Exchange Gain (Loss) on Disposal Realized Gain (Loss) on Disposal Total Gain (Loss) on Disposal Stock Dividends Received DuringYear Maturity Date Market Indicator (a)!! " ## $ ##!% ## & ' ## & ' ## &' & ## &' ( ## &' ( ## &'!! ## &' # ## &' ' ## &' '( ## &'!( #'#) & ' Bonds - U.S. Special Revenues XXX XXX ) ## "* ) ## +,-..,/ Bonds - Industrial and Miscellaneous (Unaffiliated) XXX XXX Total - Bonds - Part 4 XXX XXX Total - Bonds - Part 5 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX Total - Bonds XXX XXX Total - Preferred Stocks - Part 4 XXX XXX XXX Total - Preferred Stocks - Part 5 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX Total - Preferred Stocks XXX XXX XXX Total - Common Stocks - Part 4 XXX XXX XXX Total - Common Stocks - Part 5 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX Total - Common Stocks XXX XXX XXX Total - Preferred and Common Stocks XXX XXX XXX Totals XXX XXX XXX (a) For all common stock bearing the NAIC market indicator "U" provide: the number of such issues

28 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company Schedule DB - Part A - Section - Options, Caps, Floors, Collars, Swaps and Forwards Open Schedule DB - Part B - Section - Futures Contracts Open Schedule DB - Part B - Section B - Brokers with whom cash deposits have been made Schedule DB - Part D - Counterparty Exposure for Derivative Instruments Open Schedule DL - Part - Reinvested Collateral Assets Owned Schedule DL - Part - Reinvested Collateral Assets Owned E06, E07, E08, E09, E0

29 STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE E - PART - CASH Month End Depository Balances 4 5 Book Balance at End of Each Month Rate of Interest Amount of Interest Received During Current Quarter Amount of Interest Accrued at Current Statement Date 6 During Current Quarter 7 Depository Code First Month Second Month Third Month *!" #$ % XXX Deposits in... 0 depositories that do not exceed the allowable limit in any one depository (See instructions) - Open Depositories XXX XXX XXX Totals - Open Depositories XXX XXX!" #$ % XXX Deposits in... 0 depositories that do not exceed the allowable limit in any one depository (See instructions) - Suspended Depositories XXX XXX XXX Totals - Suspended Depositories XXX XXX XXX Total Cash on Deposit XXX XXX!" #$ % XXX Cash in Company's Office XXX XXX XXX XXX XXX Total - Cash XXX XXX!" #$ % XXX E

30 Description STATEMENT AS OF SEPTEMBER 0, 0 OF THE Franklin Insurance Company SCHEDULE E - PART - CASH EQUIVALENTS Show Investments Owned End of Current Quarter 4 Code Date Acquired Rate of Interest 5 Maturity Date 6 Book/Adjusted Carrying Value 7 Amount of Interest Due and Accrued 8 Amount Received During Year E NONE Total Cash Equivalents