Statutory Statement Contact Jon Ritchie (Area Code) (Telephone Number) (Extension)

Transcription

1 PROPERTY AND CASUALTY COMPANIES - ASSOCIATION EDITION * * ANNUAL STATEMENT For the Year Ended December 3, 06 of the Condition and Affairs of the NAIC Group Code... 0, 0 NAIC Company Code Employer's ID Number (Current Period) (Prior Period) Organized under the Laws of FL State of Domicile or Port of Entry FL Country of Domicile US Incorporated/Organized... July 0, 006 Commenced Business... September 3, 006 Statutory Home Office 546 Bay Center Drive, Suite Tampa... FL (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 546 Bay Center Drive, Suite Tampa... FL (Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Mail Address 546 Bay Center Drive, Suite Tampa... FL (Street and Number or P. O. Box) (City or Town, State, Country and Zip Code) Primary Location of Books and Records 546 Bay Center Drive, Suite Tampa... FL (Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Internet Web Site Address Statutory Statement Contact Jon Ritchie (Name) (Area Code) (Telephone Number) (Extension) jritchie@aiicfl.com ( Address) (Fax Number) OFFICERS Name Title Name Title. Robert Craig Ritchie President & CEO. David Lewis Clark Secretary/Treasurer/Chairman 3. Keith Douglas Martin VP & Assistant Secretary 4. OTHER DIRECTORS OR TRUSTEES David Lewis Clark Keith Douglas Martin Steven Edward Smathers Robert Craig Ritchie Ernest N Csiszar State of...florida County of...hillsborough 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. (Signature) (Signature) (Signature) Robert Craig Ritchie David Lewis Clark Keith Douglas Martin. (Printed Name). (Printed Name) 3. (Printed Name) President & CEO Secretary/Treasurer/Chairman VP & Assistant Secretary (Title) (Title) (Title) Subscribed and sworn to before me a. Is this an original filing? Yes [ X ] No [ ] This day of 07 b. If no. State the amendment number. Date filed 3. Number of pages attached

2 ASSETS Current Year Prior Year 3 4 Net Admitted Nonadmitted Assets Net Assets Assets (Cols. - ) Admitted Assets. Bonds (Schedule D) ,94, ,94, ,66,086. Stocks (Schedule D):. Preferred stocks Common stocks Mortgage loans on real estate (Schedule B): 3. First liens Other than first liens Real estate (Schedule A): 4. Properties occupied by the company (less $...0 encumbrances) Properties held for the production of income (less $...0 encumbrances) Properties held for sale (less $...0 encumbrances) Cash ($...(6,785,78), Schedule E-Part ), cash equivalents ($...3,8,3, Schedule E-Part ) and short-term investments ($...0,330,48, Schedule DA) ,76, ,76, ,759,43 6. 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 to ) ,668, ,668, ,375,57 3. Title plants less $...0 charged off (for Title insurers only) Investment income due and accrued , , ,00 5. Premiums and considerations: 5. Uncollected premiums and agents' balances in the course of collection......,83,4...36,585...,504,59...6,374,8 5. Deferred premiums, agents' balances and installments booked but deferred and not yet due (including $...0 earned but unbilled premiums)......,767, ,767, ,059, Accrued retrospective premiums ($...0) and contracts subject to redetermination ($...0) Reinsurance: 6. Amounts recoverable from reinsurers ,697, ,697, ,8, Funds held by or deposited with reinsured companies Other amounts receivable under reinsurance contracts Amounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon , , Net deferred tax asset ,36, ,36, ,597,48 9. Guaranty funds receivable or on deposit Electronic data processing equipment and software , ,85...4,686. Furniture and equipment, including health care delivery assets ($...0) Net adjustment in assets and liabilities due to foreign exchange rates Receivables from parent, subsidiaries and affiliates , ,85...,057,30 4. Health care ($...0) and other amounts receivable Aggregate write-ins for other-than-invested assets , , ,73...8,78 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines to 5)......,047, ,83...,40,064...,40,60 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts TOTAL (Lines 6 and 7)......,047, ,83...,40,064...,40,60 DETAILS OF WRITE-INS Summary of remaining write-ins for Line from overflow page Totals (Lines 0 through 03 plus 98) (Line above) Security Deposits , , , Prepaid Insurance and Expenses , , Accounts Receivable - Other , ,6...39, Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 50 through 503 plus 598) (Line 5 above) , , ,73...8,78

3 LIABILITIES, SURPLUS AND OTHER FUNDS Current Year Prior Year. Losses (Part A, Line 35, Column 8) ,566, ,656,3. Reinsurance payable on paid losses and loss adjustment expenses (Schedule F, Part, Column 6) Loss adjustment expenses (Part A, Line 35, Column 9)......,90,769...,568, Commissions payable, contingent commissions and other similar charges Other expenses (excluding taxes, licenses and fees)......,, , Taxes, licenses and fees (excluding federal and foreign income taxes)......, ,4 7. Current federal and foreign income taxes (including $...(37,867) on realized capital gains (losses)) , 7. Net deferred tax liability Borrowed money $...0 and interest thereon $ Unearned premiums (Part A, Line 38, Column 5) (after deducting unearned premiums for ceded reinsurance of $...66,83,8 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) ,3, ,589, Advance premium ,838,38...6,549,36. Dividends declared and unpaid:. Stockholders Policyholders Ceded reinsurance premiums payable (net of ceding commissions) ,438, ,999, Funds held by company under reinsurance treaties (Schedule F, Part 3, Column 9) Amounts withheld or retained by company for account of others......,455,546...,960, Remittances and items not allocated......(30,090)...747, 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 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 , ,96, Total liabilities excluding protected cell liabilities (Lines through 5) ,54, ,78, Protected cell liabilities Total liabilities (Lines 6 and 7) ,54, ,78, Aggregate write-ins for special surplus funds Common capital stock......,000..., Preferred capital stock Aggregate write-ins for other-than-special surplus funds Surplus notes ,073,59...7,485, Gross paid in and contributed surplus ,49, ,49, Unassigned funds (surplus) ,536, ,903, Less treasury stock, at cost: shares common (value included in Line 30 $...0) shares preferred (value included in Line 3 $...0) Surplus as regards policyholders (Lines 9 to 35, less 36) (Page 4, Line 39) ,859, ,638, TOTAL (Page, Line 8, Col. 3)......,40,064...,40,60 DETAILS OF WRITE-INS 50. Return Premium Payable ,6...95, Miscellaneous Liabilities ,58...6, Unearned Comm/Funds Held w/reins ,084, Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 50 through 503 plus 598) (Line 5 above) , ,96, Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 90 through 903 plus 998) (Line 9 above) Summary of remaining write-ins for Line 3 from overflow page Totals (Lines 30 through 303 plus 398) (Line 3 above)

4 STATEMENT OF INCOME UNDERWRITING INCOME Current Year Prior Year. Premiums earned (Part, Line 35, Column 4) ,03,9...08,36,369 DEDUCTIONS:. Losses incurred (Part, Line 35, Column 7) ,58, ,634,37 3. Loss adjustment expenses incurred (Part 3, Line 5, Column ) ,686,85...0,847, Other underwriting expenses incurred (Part 3, Line 5, Column ) ,640, ,897,84 5. Aggregate write-ins for underwriting deductions Total underwriting deductions (Lines through 5) ,485,84...9,380,5 7. Net income of protected cells Net underwriting gain (loss) (Line minus Line 6 plus Line 7) ,546, ,946,44 INVESTMENT INCOME 9. Net investment income earned (Exhibit of Net Investment Income, Line 7) ,033,88...,674, Net realized capital gains (losses) less capital gains tax of $...(37,867) (Exhibit of Capital Gains (Losses))......(70,35)...(7,989). Net investment gain (loss) (Lines 9 + 0) ,963,556...,646,908 OTHER INCOME. Net gain (loss) from agents' or premium balances charged off (amount recovered $...0 amount charged off $...(0,333)) ,333...(96,45) 3. Finance and service charges not included in premiums Aggregate write-ins for miscellaneous income Total other income (Lines through 4) ,333...(96,45) 6. Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines ) ,50, ,96, Dividends to policyholders Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 6 minus Line 7) ,50, ,96, Federal and foreign income taxes incurred ,38, ,74, Net income (Line 8 minus Line 9) (to Line ) ,8,70...,58,69 CAPITAL AND SURPLUS ACCOUNT. Surplus as regards policyholders, December 3 prior year (Page 4, Line 39, Column ) ,638, ,449,503. Net income (from Line 0) ,8,70...,58,69 3. Net transfers (to) from Protected Cell accounts Change in net unrealized capital gains or (losses) less capital gains tax of $ (94,655) Change in net unrealized foreign exchange capital gain (loss) Change in net deferred income tax ,906...(50,73) 7. Change in nonadmitted assets (Exhibit of Nonadmitted Assets, Line 8, Column 3)......(48,03)...68, Change in provision for reinsurance (Page 3, Line 6, Column minus Column )......(775,000) Change in surplus notes......(4,765)...(4,765) 30. Surplus (contributed to) withdrawn from Protected Cells Cumulative effect of changes in accounting principles Capital changes: 3. Paid in Transferred from surplus (Stock Dividend) Transferred to surplus Surplus adjustments: 33. 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, Lines 36. and 36., Column minus Column ) Aggregate write-ins for gains and losses in surplus Change in surplus as regards policyholders for the year (Lines through 37) ,,003...,89, Surplus as regards policyholders, December 3 current year (Line plus Line 38) (Page 3, Line 37) ,859, ,638,80 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 050 through 0503 plus 0598) (Line 5 above) Summary of remaining write-ins for Line 4 from overflow page Totals (Lines 40 through 403 plus 498) (Line 4 above) Summary of remaining write-ins for Line 37 from overflow page Totals (Lines 370 through 3703 plus 3798) (Line 37 above)

5 CASH FROM OPERATIONS CASH FLOW Current Year Prior Year. Premiums collected net of reinsurance ,08, ,9,36. Net investment income ,844,76...,509, Miscellaneous income ,333...(96,45) 4. Total (Lines through 3)......,063, ,5, Benefit and loss related payments ,76, ,099,75 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts Commissions, expenses paid and aggregate write-ins for deductions ,403,53...5,07,68 8. Dividends paid to policyholders Federal and foreign income taxes paid (recovered) net of $...0 tax on capital gains (losses) ,550, ,75,65 0. Total (Lines 5 through 9)......,680, ,959,58. Net cash from operations (Line 4 minus Line 0) ,383, ,65,44 CASH FROM INVESTMENTS. Proceeds from investments sold, matured or repaid:. Bonds ,6, ,835,58. 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. to.7) ,65,8...34,835,58 3. Cost of investments acquired (long-term only): 3. Bonds......,640,96...5,3, Stocks Mortgage loans Real estate Other invested assets Miscellaneous applications Total investments acquired (Lines 3. to 3.6)......,640,96...5,3, Net increase (decrease) in contract loans and premium notes Net cash from investments (Line.8 minus Lines 3.7 minus Line 4)......(9,375,844)...(6,485,856) 6. Cash provided (applied): CASH FROM FINANCING AND MISCELLANEOUS SOURCES 6. Surplus notes, capital notes......(4,765)...(4,765) 6. 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)......(8,68,44)...(685,4) 7. Net cash from financing and miscellaneous sources (Lines 6. to 6.4 minus Line 6.5 plus Line 6.6)......(9,040,06)...(,097,006) 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)......(0,03,653)...0,58, Cash, cash equivalents and short-term investments: 9. Beginning of year ,759, ,76, End of year (Line 8 plus Line 9.) ,76, ,759,48 Note: Supplemental disclosures of cash flow information for non-cash transactions:

6 UNDERWRITING AND INVESTMENT EXHIBIT PART - PREMIUMS EARNED 3 4 Unearned Premiums Unearned Premiums Net December 3 December 3 Premiums Premiums Prior Year- Current Year- Earned Written per per Col. 3, per Col. 5, During Year Line of Business Column 6, Part B Last Year's Part Part A (Cols ). Fire ,60,93...3,73,76...,665, ,659,939. Allied lines ,09,33...4,89, ,437,33...6,484, Farmowners multiple peril Homeowners multiple peril ,940, ,974, ,08, ,885, 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 , 9. Private passenger auto liability , 9.4 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 ,574, ,589, ,3, ,03,9 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 340 through 3403 plus 3498) (Line 34 above)

7 UNDERWRITING AND INVESTMENT EXHIBIT PART A - RECAPITULATION OF ALL PREMIUMS Reserve for Amount Unearned Amount Unearned Rate Credits Total Reserve (Running One Year (Running More Than and Retrospective for Unearned or Less from Date One Year from Earned But Adjustments Based Premiums Line of Business of Policy) (a) Date of Policy) (a) Unbilled Premium on Experience Cols Fire......,665, ,665,430. Allied lines ,437, ,437,33 3. Farmowners multiple peril Homeowners multiple peril ,08, ,08,88 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 , 9. Private passenger auto liability , 9.4 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 ,3, ,3, Accrued retrospective premiums based on experience Earned but unbilled premiums Balance (sum of Lines 35 through 37) ,3,89 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 340 through 3403 plus 3498) (Line 34 above) (a) State here basis of computation used in each case: Daily Pro Rata 7

8 UNDERWRITING AND INVESTMENT EXHIBIT PART B - PREMIUMS WRITTEN Reinsurance Assumed Reinsurance Ceded Net Premiums Direct Written Business From From To To (Cols Line of Business (a) Affiliates Non-Affiliates Affiliates Non-Affiliates - 4-5). Fire ,300, ,698,75...4,60,93. Allied lines ,544, ,54, ,09,33 3. Farmowners multiple peril Homeowners multiple peril ,493, ,55,78...8,940,77 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 , ,599..., Other liability - claims-made Excess workers' compensation Products liability - occurrence Products liability - claims-made , 9. Private passenger auto liability , 9.4 Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance - nonproportional assumed property......xxx Reinsurance - nonproportional assumed liability......xxx Reinsurance - nonproportional assumed financial lines......xxx Aggregate write-ins for other lines of business TOTALS ,360, ,785,74...3,574,69 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 340 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:. The amount of such installment premiums $ Amount at which such installment premiums would have been reported had they been recorded on an annualized basis $

9 9 Annual Statement for the year 06 of the UNDERWRITING AND INVESTMENT EXHIBIT PART - LOSSES PAID AND INCURRED Losses Paid Less Salvage Percentage of Net Losses Losses Losses Incurred Unpaid Net Losses Incurred (Col. 7, Part ) Direct Reinsurance Reinsurance Net Payments Current Year Unpaid Current Year to Premiums Earned Line of Business Business Assumed Recovered (Cols ) (Part A, Col. 8) Prior Year (Cols ) (Col. 4, Part ). Fire ,877, ,79...,48,808...,493,93...,86,9...,669,58...,685, Allied lines ,363,49...9,8...3,53, ,93, ,530,78...5,57, ,935, Farmowners multiple peril Homeowners multiple peril ,680, , ,8, ,83, ,74,646...,469, ,536, 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 , 9. Private passenger auto liability , 9.4 Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance - nonproportional assumed property......xxx Reinsurance - nonproportional assumed liability......xxx Reinsurance - nonproportional assumed financial lines......xxx Aggregate write-ins for other lines of business TOTALS ,9, , ,089,75...4,47,95...3,566, ,656,3...46,58, DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page xxx Totals (Lines 340 through 3403 plus 3498) (Line 34 above)

10 0 Annual Statement for the year 06 of the UNDERWRITING AND INVESTMENT EXHIBIT PART A - UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES Reported Losses Incurred But Not Reported Net Losses Excluding Net Incurred but Net Losses Unpaid Loss Reinsurance Deduct Reinsurance not Reported Reinsurance Reinsurance Unpaid Adjustment Line of Business Direct Assumed Recoverable (Cols ) Direct Assumed Ceded (Cols ) Expenses. Fire ,365..., , ,53...,30,98..., ,93...,86,9...78,50. Allied lines......,47, , ,5...,495, ,409, , ,456,89...6,530,78...,668, Farmowners multiple peril Homeowners multiple peril ,86,99...9, ,43,83...4,433,0...7,655, ,09...7,070,4...5,74, ,45, 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 (a) Credit accident and health (group and individual) Other accident and health (a) Workers' compensation Other liability - occurrence Other liability - claims-made Excess workers' compensation Products liability - occurrence Products liability - claims-made , 9. Private passenger auto liability , 9.4 Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance - nonproportional assumed property......xxx xxx Reinsurance - nonproportional assumed liability......xxx xxx Reinsurance - nonproportional assumed financial lines......xxx xxx Aggregate write-ins for other lines of business TOTALS ,944, , ,64, ,383, ,376, ,6...,45,44...3,566,556...,90,769 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 340 through 3403 plus 3498) (Line 34 above) (a) Including $...0 for present value of life indemnity claims.

11 . Claim adjustment services: UNDERWRITING AND INVESTMENT EXHIBIT PART 3 - EXPENSES 3 4 Other Loss Adjustment Underwriting Investment Expenses Expenses Expenses Total. Direct ,35, ,35,58. Reinsurance assumed......(73,30) (73,30).3 Reinsurance ceded ,560, ,560,373.4 Net claim adjustment services ( )......,03, ,03,844. Commission and brokerage:. Direct, excluding contingent ,53, ,53,797. Reinsurance assumed, excluding contingent Reinsurance ceded, excluding contingent ,696, ,696,79.4 Contingent - direct , ,6.5 Contingent - reinsurance assumed Contingent - reinsurance ceded Policy and membership fees ,4, ,4,85.8 Net commission and brokerage ( ) ,707, ,707,99 3. Allowances to manager and agents Advertising......,096..., , Boards, bureaus and associations ,5...56, , Surveys and underwriting reports Audit of assureds' records Salary and related items: 8. Salaries ,33,5...0,608, ,74, Payroll taxes , , , Employee relations and welfare......,583,935...,94, ,878,87 0. Insurance , , ,87. Directors' fees , ,000. Travel and travel items , , ,4,55 3. Rent and rent items , , ,349,76 4. Equipment , , ,05,64 5. Cost or depreciation of EDP equipment and software Printing and stationery ,740..., ,90 7. Postage, telephone and telegraph, exchange and express ,55...4, , Legal and auditing , ,68, ,780,97 9. Totals (Lines 3 to 8) ,663,007...,69, ,83,35 0. Taxes, licenses and fees: 0. State and local insurance taxes deducting guaranty association credits of $ ,964, ,964, Insurance department licenses and fees , , Gross guaranty association assessments All other (excluding federal and foreign income and real estate) , , Total taxes, licenses and fees ( ) ,665, ,665,47. Real estate expenses Real estate taxes Reimbursements by uninsured plans Aggregate write-ins for miscellaneous expenses (,90,)...9,408...(,68,704) 5. Total expenses incurred ,686, ,640, ,408 (a)...56,546, Less unpaid expenses - current year......,90,769...,57, ,59, Add unpaid expenses - prior year......,568, , ,779, Amounts receivable relating to uninsured plans, prior year Amounts receivable relating to uninsured plans, current year TOTAL EXPENSES PAID (Lines ) ,353, ,593, , ,66,600 DETAILS OF WRITE-INS 40. Investment Expense , , Consulting Fees , , Miscellaneous Reinsurance Recoveries (4,804,053)......(4,804,053) 498. Summary of remaining write-ins for Line 4 from overflow page ,960, ,960, Totals (Lines 40 through 403 plus 498) (Line 4 above) (,90,)...9,408...(,68,704) (a) Includes management fees of $...0 to affiliates and $...0 to non-affiliates.

12 EXHIBIT OF NET INVESTMENT INCOME Collected Earned During Year During Year. U.S. government bonds... (a)...,058...(34,953). Bonds exempt from U.S. tax... (a) Other bonds (unaffiliated)... (a)...3,864,90...4,566,930.3 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)...7, ,08 7. Derivative instruments... (f) Other invested assets Aggregate write-ins for investment income Total gross investment income ,47,88...4,96,995. Investment expenses... (g)...9,408. Investment taxes, licenses and fees, excluding federal income taxes... (g) Interest expense... (h)...43, Depreciation on real estate and other invested assets... (i) Aggregate write-ins for deductions from investment income Total deductions (Lines through 5) ,4 7. Net investment income (Line 0 minus Line 6) ,033,88 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 090 through 0903 plus 0998) (Line 9 above) Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 50 through 503 plus 598) (Line 5 above) (a) Includes $...56,33 accrual of discount less $...03,685 amortization of premium and less $...7,039 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 $...37,966 accrual of discount less $...,940 amortization of premium and less $...4,59 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) Realized Change in Gain (Loss) Other Total Realized Change in Unrealized on Sales Realized Capital Gain (Loss) Unrealized Foreign Exchange or Maturity Adjustments (Columns + ) Capital Gain (Loss) Capital Gain (Loss). U.S. government bonds , , Bonds exempt from U.S. tax Other bonds (unaffiliated)......(4,505)......(4,505)...(94,655)....3 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)......(08,9) (08,9)...(94,655)...0 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 090 through 0903 plus 0998) (Line 9 above)

13 EXHIBIT OF NONADMITTED ASSETS 3 Current Year Prior Year Change in Total Total Total Nonadmitted Assets Nonadmitted Assets Nonadmitted Assets (Col. - Col. ). Bonds (Schedule D) Stocks (Schedule D):. Preferred stocks Common stocks Mortgage loans on real estate (Schedule B): 3. First liens Other than first liens Real estate (Schedule A): 4. Properties occupied by the company Properties held for the production of income Properties held for sale Cash (Schedule E-Part ), cash equivalents (Schedule E-Part ) 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 to ) Title plants (for Title insurers only) Investment income due and accrued Premiums and considerations: 5. Uncollected premiums and agents' balances in the course of collection , ,539...(56,046) 5. Deferred premiums, agents' balances and installments booked but deferred and not yet due Accrued retrospective premiums and contracts subject to redetermination Reinsurance: 6. 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 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 , ,54...(6,57) 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines through 5) ,83...8,080...(48,03) 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts TOTALS (Lines 6 and 7) ,83...8,080...(48,03) DETAILS OF WRITE-INS Summary of remaining write-ins for Line from overflow page Totals (Lines 0 through 03 plus 98) (Line above) Prepaid Expenses , ,54...(6,57) Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 50 through 503 plus 598) (Line 5 above) , ,54...(6,57) 3

14 NOTES TO FINANCIAL STATEMENTS Note Summary of Significant Accounting Policies and Going Concern A. Accounting Practices SSAP # F/S Page F/S Line # NET INCOME () state basis (Page 4, Line 0, Columns & ) XXX XXX XXX $ 6,8,79 $,58,69 () State Prescribed Practices that increase/decrease NAIC SAP (3) State Permitted Practices that increase/decrease NAIC SAP (4) NAIC SAP ( 3 = 4) XXX XXX XXX $ 6,8,79 $,58,69 SURPLUS (5) state basis (Page 3, line 37, Columns & ) XXX XXX XXX $ 7,859,806 $ 67,638,80 (6) State Prescribed Practices that increase/decrease NAIC SAP (7) State Permitted Practices that increase/decrease NAIC SAP (8) NAIC SAP (5 6 7 = 8) XXX XXX XXX $ 7,859,806 $ 67,638,80 B. Use of Estimates in the Preparation of the Financial Statement 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 Policy Premiums are earned over the terms of the related policies and reinsurance contracts. Unearned premiums are established to cover the unexpired portion of premiums written. Such reserves are computed by daily pro rata method for direct business and are based on reports received from ceding companies for reinsurance assumed. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred. Expenses incurred are reduced for ceding allowances received or receivable. In addition, the Company uses the following accounting policies:. Short-term investments are stated at amortized value using the scientific interest method. Non-investment grade short-term investments are stated at the lower of amortized value or fair value.. Bonds not backed by other loans are stated at amortized value using the scientific interest method. Non-investment grade bonds are stated at the lower of amortized value or fair value. 3. Common stocks, other than investments in stocks of subsidiaries and affiliates, are stated at fair value. 4. Redeemable preferred stocks are stated at amortized value. Perpetual preferred stocks are stated at fair value. Non-investment grade preferred stocks are stated at the lower of amortized value or fair value. 5. First lien mortgage loans on real estate are stated at their unpaid principal balances. Mortgages other than first liens are non-admitted. 6. Loan-backed securities are stated at amortized value. The retrospective adjustment method is used to value all collateralized mortgage obligations (CMO s). The prospective adjustment method is used to value all mortgage-backed securities (MBS s). Non-investment grade loan-backed securities are stated at the lower of amortized value or fair value. 7. Investments in subsidiary and affiliated companies are not applicable to the Company. 8. The accounting for investments in joint ventures and partnerships is not applicable to the Company. 9. The accounting for derivatives is not applicable to the Company. 0. The Company does not anticipate investment as a factor in premium deficiency calculations.. Unpaid losses and loss adjustment expenses include an amount determined from individual case estimates and 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 amount is 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. In accordance with SAP 55, liabilities for unpaid loss and loss adjustment expenses are established regardless of any payments made to third party administrators, management companies or other entities.. The Company has a capitalization policy for prepaid expenses and purchases of items such as electronic data processing equipment, software, furniture, vehicles, other equipment and leasehold improvements. The predefined capitalization thresholds under this policy have not changed from those of the prior year. 3. The Company does not have pharmaceutical rebates. Note Accounting Changes and Corrections of Errors 4

15 NOTES TO FINANCIAL STATEMENTS Note 3 Business Combinations and Goodwill A. Statutory Purchase Method B. Statutory Merger C. Impairment Loss Note 4 Discontinued Operations A. Discontinued Operation Disposed of or Classified as Held for Sale B. Change in Plan of Sale of Discontinued Operation C. Nature of any Significant Continuing Involvement with Discontinued Operations After Disposal D. Equity Interest Retained in the Discontinued Operation After Disposal Note 5 Investments A. Mortgage Loans, including Mezzanine Real Estate Loans during 06 were:. B. Debt Restructuring C. Reverse Mortgages D. Loan-Backed Securities E. Repurchase Agreements and/or Securities Lending Transactions F. Real Estate G. Investments in Low-Income Housing Trade Credits (LIHTC) H. Other Disclosures and Unusual Items I. Working Capital Finance Investments J. Offsetting and Netting of Assets and Liabilities K. Structured Notes Note 6 Joint Ventures, Partnerships and Limited Liability Companies Note 7 Investment Income A. Accrued Investment Income The Company non-admits investment income due and accrued if amounts are over 90 days past due (80 days for mortgage loans or amounts on mortgage loans in default if applicable). B. Amounts Non-admitted Note 8 Derivative Instruments 4.

16 NOTES TO FINANCIAL STATEMENTS Note 9 Income Taxes A. Deferred Tax Assets/(Liabilities). Components of Net Deferred Tax Asset/(Liability) Change Ordinary Capital 3 (Col +) Total 4 Ordinary 5 Capital 6 (Col 4+5) Total 7 (Col -4) Ordinary 8 (Col -5) Capital 9 (Col 7+8) Total a. Gross deferred tax assets $ 5,03,393 $ 5,938 $ 5,56,33 $ 4,68,583 $ $ 4,68,583 $ 584,80 $ 5,938 $ 637,748 b. Statutory valuation allowance adjustment c. Adjusted gross deferred tax assets (a-b) 5,03,393 5,938 5,56,33 4,68,583 4,68, ,80 5, ,748 d. Deferred tax assets nonadmitted e. Subtotal net admitted deferred tax asset (c-d) 5,03,393 5,938 5,56,33 4,68,583 4,68, ,80 5, ,748 f. Deferred tax liabilities 9,996 9,996,55,55 (,59) (,59) g. Net admitted deferred tax assets/(net deferred tax liability) (e-f) $ 5,83,397 $ 5,938 $ 5,36,335 $ 4,597,48 $ $ 4,597,48 $ 585,969 $ 5,938 $ 638,907. Admission Calculation Components Change (Col +) (Col 4+5) (Col -4) (Col -5) Capital Total Ordinary Capital Total Ordinary Capital 9 (Col 7+8) Total Ordinary a. Federal income taxes paid in prior years recoverable through loss carrybacks $ 5,99,40 $ $ 5,99,40 $ 4,563,943 $ $ 4,563,943 $ 635,459 $ $ 635,459 b. Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from (a) above) after application of the threshold limitation. (The lesser of (b) and (b) below: 37,953 37,953 36,47 36,47,56,56 Adjusted gross deferred tax assets expected to be realized following the balance sheet date 37,953 37,953 36,47 36,47,56,56 Adjusted gross deferred tax assets allowed per limitation threshold 5,8,530 (5,8,530) c. Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from (a) and (b) above) offset by gross deferred tax liabilities 8,976 8,976 8,3 8, d. Deferred tax assets admitted as the result of application of SSAP 0. Total ((a)+(b)+(c) $ 5,56,33 $ $ 5,56,33 $ 4,68,583 $ $ 4,68,583 $ 637,748 $ $ 637,748 4.