* * PROPERTY AND CASUALTY COMPANIES ASSOCIATION EDITION QUARTERLY STATEMENT

Transcription

1 * * PROPERTY AND CASUALTY COMPANIES ASSOCIATION EDITION QUARTERLY STATEMENT AS OF JUNE 30, 009 OF THE CONDITION AND AFFAIRS OF THE Avatar Property & Casualty Insurance Company NAIC Group Code, NAIC Company Code 339 Employer s ID Number (Current Period) (Prior Period) Organized under the Laws of Florida, State of Domicile or Port of Entry Florida Country of Domicile United States Incorporated/Organized 0/30/008 Commenced Business 04/4/008 Statutory Home Office 408 N. Westshore Blvd., Suite 805, Tampa, FL (Street and Number) (City or Town, State and Zip Code) Main Administrative Office 408 N. Westshore Blvd., Suite 805 Tampa, FL (Street and Number) (City or Town, State and Zip Code) (Area Code) (Telephone Number) Mail Address 408 N. Westshore Blvd., Suite 805, Tampa, FL (Street and Number or P.O. Box) (City or Town, State and Zip Code) Primary Location of Books and Records 408 N. Westshore Blvd., Suite 805 Tampa, FL (Street and Number) (City or Town, State and Zip Code) (Area Code) (Telephone Number Internet Web Site Address avatarins.com Statutory Statement Contact Carol McAllister (Name) (Area Code) (Telephone Number) (Extension) carolm@adhiafunds.com ( Address) (FAX Number) OFFICERS Name Title Name Title Hitesh Prabhudas Adhia, President Carol Kim McAllister, Chief Financial Officer Nancy Hagerman Kent, V.P. - Marketing, OTHER OFFICERS,, DIRECTORS OR TRUSTEES Hitesh Prabhudas Adhia Mark Cecil Shealy Carol Kim McAllister Kiranbhai Chhotbhai Patel Dr. Manubhai Chhotubhai Karia Sandip Indravadan Patel Stuart Thomas Wheeler State of County of Florida Hillsborough 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. Hitesh Prabhudas Adhia Carol Kim McAllister Nancy Hagerman Kent President Chief Financial Officer V.P. - Marketing a. Is this an original filing? Yes [ X ] No [ ] Subscribed and sworn to before me this b. If no: th day of August, 009. State the amendment number. Date filed 3. Number of pages attached Christine Mellon, Notary Public 06/6/03

2 ASSETS Assets Current Statement Date 4 3 Nonadmitted Assets Net Admitted Assets (Cols. - ) December 3 Prior Year Net Admitted Assets. Bonds 3,397,50 3,397,50 5,677,889. Stocks:. Preferred stocks 0 0. Common stocks 69,50 69,50 4, Mortgage loans on real estate: 3. First liens Other than first liens Real estate: 4. Properties occupied by the company (less $ encumbrances) Properties held for the production of income (less $ encumbrances) Properties held for sale (less $ 0 encumbrances) Cash ($ 5,37,666 ), cash equivalents ($,346,87 ) and short-term investments ($ 0 ) 6,584,538 6,584,538,465, Contract loans (including $ premium notes) Other invested assets Receivables for securities Aggregate write-ins for invested assets Subtotals, cash and invested assets (Lines to 9) 0,5, ,5,558 7,57,767. Title plants less $ charged off (for Title insurers only) 0 0. Investment income due and accrued 8,60 8,60 93,67 3. Premiums and considerations: 3. Uncollected premiums and agents balances in the course of collection Deferred premiums, agents balances and installments booked but deferred and not yet due (including $ earned but unbilled premiums) Accrued retrospective premiums Reinsurance: 4. 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 0 0. Receivables from parent, subsidiaries and affiliates 0 0. Health care ($ ) and other amounts receivable Aggregate write-ins for other than invested assets 809,73 40,47 769,96 46, Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 0 to 3),04,53 40,47,00,4 7,777,43 5. From Separate Accounts, Segregated Accounts and Protected Cell Accounts Total (Lines 4 and 5),04,53 40,47,00,4 7,777,43 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) Prepaid Expenses 40,47 40, Accounts Receivable, net of allowance for doubtful accts of $5,507 60,96 60,96 46, Reinsurance receivable 68,000 68, Summary of remaining write-ins for Line 3 from overflow page Totals (Lines 30 through 303 plus 398) (Line 3 above) 809,73 40,47 769,96 46,037

3 LIABILITIES, SURPLUS AND OTHER FUNDS Current Statement Date December 3, Prior Year. Losses (current accident year $ 490,000 ) 78,64 69,466. Reinsurance payable on paid losses and loss adjustment expenses 0 3. Loss adjustment expenses 6,500, Commissions payable, contingent commissions and other similar charges 34,0 60, Other expenses (excluding taxes, licenses and fees) 0,75 6. Taxes, licenses and fees (excluding federal and foreign income taxes) 5,43 54,088 7.Current federal and foreign income taxes (including $ on realized capital gains (losses)) 67,68 57, Net deferred tax liability 0 8. Borrowed money $ and interest thereon $ 0 9. Unearned premiums (after deducting unearned premiums for ceded reinsurance of $ 8,783 and including warranty reserves of $ 0 ) 6,9,35 4,579, Advance premium 0. Dividends declared and unpaid:. Stockholders 0. Policyholders 0. Ceded reinsurance premiums payable (net of ceding commissions) 0 3. Funds held by company under reinsurance treaties 0 4. Amounts withheld or retained by company for account of others 0 5. Remittances and items not allocated 0 6. Provision for reinsurance 506,07 66, Net adjustments in assets and liabilities due to foreign exchange rates 0 8. Drafts outstanding 0 9. Payable to parent, subsidiaries and affiliates 85,695 0,37 0. Payable for securities 0. Liability for amounts held under uninsured plans 0. Capital notes $ and interest thereon $ 0 3. Aggregate write-ins for liabilities 446,93,88, Total liabilities excluding protected cell liabilities (Lines through 3) 9,67,903 7,996, Protected cell liabilities 0 6. Total liabilities (Lines 4 and 5) 9,67,903 7,996, Aggregate write-ins for special surplus funds Common capital stock 0,000,000 0,000, Preferred capital stock Aggregate write-ins for other than special surplus funds Surplus notes 0 3. Gross paid in and contributed surplus Unassigned funds (surplus),384, (44,5) 34. Less treasury stock, at cost: 34. shares common (value included in Line 8 $ ) shares preferred (value included in Line 9 $ ) Surplus as regards policyholders (Lines 7 to 33, less 34),384, 9,755, Totals,00,4 7,75,43 DETAILS OF WRITE-INS 30. Due to Citizens (owed to Citizens for unsettled opt-out policies) 350,05 880, Accrued opt-outs for Citizens take out policies 7,77 98, Options written (premiums rec'd of $930) 0 8, Summary of remaining write-ins for Line 3 from overflow page 4, Totals (Lines 30 through 303 plus 398) (Line 3 above) 446,93,88, Summary of remaining write-ins for Line 7 from overflow page Totals (Lines 70 through 703 plus 798) (Line 7 above) Summary of remaining write-ins for Line 30 from overflow page Totals (Lines 300 through 3003 plus 3098) (Line 30 above) 0 0 3

4 STATEMENT OF INCOME Current Year to Date Prior Year to Date 3 Prior Year Ended December 3 UNDERWRITING INCOME. Premiums earned:. Direct (written $ 8,95,34 ) 5,434,059 78,87 3,304,3. Assumed (written $ ).3 Ceded (written $ ) 0.4 Net (written $ 8,95,34 ) 5,434,059 78,87 3,304,3 DEDUCTIONS:. Losses incurred (current accident year $ ):. Direct,705,47 5,000,074,03. Assumed.3 Ceded 0.4 Net,705,47 5,000,074,03 3. Loss adjustment expenses incurred 87, ,03 4. Other underwriting expenses incurred,34, ,69,64,70 5. Aggregate write-ins for underwriting deductions 4,860 65,099 6,67 6. Total underwriting deductions (Lines through 5) 4,49, ,969 3,34,57 7. Net income of protected cells Net underwriting gain or (loss) (Line minus Line 6 + Line 7),84,66 (0,5) (0,359) INVESTMENT INCOME 9. Net investment income earned 897,769 93,78 43, Net realized capital gains (losses) less capital gains tax of $ 7,937 0 (6,695). Net investment gain (loss) (Lines 9 + 0) 905,706 93,78 45,7 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 6, ,59 4. Aggregate write-ins for miscellaneous income Total other income (Lines through 4) 6, ,59 6. Net income before dividends to policyholders after capital gains tax and before all other federal and foreign income taxes (Lines ),70,355 (6,045) 549, 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),70,355 (6,045) 549, Federal and foreign income taxes incurred 736, , Net income (Line 8 minus Line 9)(to Line ),966,3 (6,045) (,449) CAPITAL AND SURPLUS ACCOUNT. Surplus as regards policyholders, December 3 prior year 9,755, Net income (from Line 0),966,3 (6,045) (,449) 3. Net transfers (to) from Protected Cell accounts Change in net unrealized capital gains or (losses) less capital gains tax of $,05 (93,90) (35,43) 5. Change in net unrealized foreign exchange capital gain (loss) Change in net deferred income tax Change in nonadmitted assets (9,584) (74,694) (0,833) 8. Change in provision for reinsurance (339,507) (3,05) (66,600) 9. Change in surplus notes Surplus (contributed to) withdrawn from protected cells Cumulative effect of changes in accounting principles Capital changes: 3. Paid in 0,000,000 0,000, 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 Aggregate write-ins for gains and losses in surplus Change in surplus as regards policyholders (Lines through 37),68,336 9,49,308 9,755, Surplus as regards policyholders, as of statement date (Lines plus 38),384, 9,49,308 9,755,875 DETAILS OF WRITE-INS 050. Miscellaneous 7,443 4,0, Amortization of prepaid expenses 5,47,364 5, Marketing expense, Summary of remaining write-ins for Line 5 from overflow page TOTALS (Lines 050 through 0503 plus 0598) (Line 5 above) 4,860 65,099 6, 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 FLOW Current Year To Date Prior Year Ended December 3 Cash from Operations. Premiums collected net of reinsurance 7,775,67 7,883,996. Net investment income 47,74 338, Miscellaneous income 6,383 34,59 4. Total (Lines to 3) 8,859,84 8,357, Benefit and loss related payments,606, , Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts Commissions, expenses paid and aggregate write-ins for deductions,837,04,568,3 8. Dividends paid to policyholders Federal and foreign income taxes paid (recovered) net of $ tax on capital gains (losses) 679, Total (Lines 5 through 9) 5,3,45 3,0,868. Net cash from operations (Line 4 minus Line 0) 3,735,83 5,334,500 Cash from Investments. Proceeds from investments sold, matured or repaid:. Bonds 5,3,08 77,955. Stocks Mortgage loans Real estate Other invested assets Net gains or (losses) on cash, cash equivalents and short-term investments Miscellaneous proceeds 7, Total investment proceeds (Lines. to.7) 5,30,00 77, Cost of investments acquired (long-term only): 3. Bonds,59,598 6,384, Stocks 34,3 49, Mortgage loans Real estate Other invested assets Miscellaneous applications 0 6, Total investments acquired (Lines 3. to 3.6),66,99 6,540, Net increase (or decrease) in contract loans and premium notes Net cash from investments (Line.8 minus Line 3.7 and Line 4),693,0 (5,83,034) Cash from Financing and Miscellaneous Sources 6. Cash provided (applied): 6. Surplus notes, capital notes Capital and paid in surplus, less treasury stock 0 0,000, Borrowed funds Net deposits on deposit-type contracts and other insurance liabilities Dividends to stockholders Other cash provided (applied) (,30,87),944,36 7. Net cash from financing and miscellaneous sources (Line 6. through Line 6.4 minus Line 6.5 plus Line 6.6) (,30,87),944,36 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) 5,8,746,465,79 9. Cash, cash equivalents and short-term investments: 9. Beginning of year,465, End of period (Line 8 plus Line 9.) 6,584,538,465,79 5

6 NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. Accounting Practices The accompanying financial statements of Avatar Property & Casualty Insurance Company (the Company ) have been prepared in accordance with accounting practices prescribed by the Florida Office of Insurance Regulation (the FLOIR ). 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 (the NAIC ) Accounting Practices and Procedures Manual subject to any deviations prescribed or permitted by the FLOIR. Many changes were made to this NAIC manual effective January, 00. 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 amounts reported in the financial statements and notes. Actual results could differ from these estimates. C. Accounting Policies Direct and assumed premiums are earned over the terms of the related policies. Unearned premiums are established to cover the unexpired portion of premiums written. Such reserves are computed by pro rata methods for direct and assumed business and for reinsurance ceded. 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. Net investment income earned consists primarily of interest, dividends less investment related expense. Interest is recognized on an accrual basis and dividends are recognized on an exdividend basis. Net realized capital gains (losses) are recognized on a specific identification basis when securities are sold, redeemed or otherwise disposed. Realized capital losses include write downs for impairments considered to be other than temporary. In addition, the Company uses the following accounting policies: Short-term investments are stated at amortized cost using the interest method. Noninvestment grad short-term investments are stated at the lower of amortized cost or fair value. Investment grade bonds not backed by other loans are stated at amortized value using the interest method. Non-investment grade bonds with NAIC designations of 3 through 6 are stated at the lower of amortized cost of fair value. Common stock are carried at market value. The Company holds no preferred stock. The Company holds no mortgage loans. Investment grade single class and multi-class mortgage-backed securities are reported at amortized cost using the bond pay down method. The Company holds no investment in subsidiaries. The Company holds no joint ventures, partnerships, & limited liability companies. Derivative instruments are carried at market value. 6

7 NOTES TO FINANCIAL STATEMENTS 0. The Company does not anticipate investment income when evaluating the need for premium deficiency reserves.. Unpaid losses and loss adjustment expenses include amounts determined from individual case estimates, loss reports and amounts, based on past experience, for losses incurred but not reported. Such liabilities are based on assumptions and estimates, and while management believes the amounts are adequate, the ultimate liabilities may be in excess of or less than the amounts provided. Any adjustments are reflected in the period determined.. The Company has a written 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 its initial establishment.. ACCOUNTING CHANGES AND CORRECTIONS OF ERRORS: A. Accounting Changes Other than Codification and Correction of Errors N/A 3. BUSINESS COMBINATIONS AND GOODWILL A. Statutory Purchase Method N/A B. Statutory Merger N/A C. Impairment Loss N/A 4. DISCONTINUED OPERATIONS N/A 5. INVESTMENTS A. Mortgage Loans N/A B. Debt Restructuring N/A C. Reverse Mortgages N/A D. Loan Backed Securities N/A E. Repurchase Agreements N/A F. G. Real Estate N/A Low Income Housing Tax Credits N/A 6. JOINT VENTURES, PARTNERSHIPS AND LIMITED LIABILITY COMPANIES A. Detail for Those Greater than 0% of Admitted Assets N/A B. Write downs for Impairment of Joint Ventures, Partnerships and LLCs N/A 7. INVESTMENT INCOME A. Accrued Investment Income The Company non-admits investment income due and accrued if amounts are over 90 days past due. B. Amounts Non-admitted N/A 6.

8 NOTES TO FINANCIAL STATEMENTS 8. DERIVATIVE INSTRUMENTS N/A 9. INCOME TAXES A. Deferred Tax Asset/(Liability) - N/A B. C. Unrecognized Deferred Tax Liabilities N/A Current Tax and Change in Deferred Tax Income per book $,70,355 Temporary Differences: Earned premiums (65,499) IBNR (94,398) (745,897) Income per tax $,956,458 Provision for income tax (736,033) Net Income per tax $,0,45 D. E. F. Reconciliation of Federal Income Tax Rate to Actual Effective Rate N/A Operating Loss and Tax Credit Carryforwards N/A Consolidated Federal Income Tax Return N/A 0. INFORMATION CONCERNING PARENT, SUBSIDIARIES AND AFFILIATES A. Nature of Relationships The Company is a wholly owned subsidiary of Avatar Partners, LP, a privately owned Delaware partnership. Avatar Management, LLC is affiliated with the Company through common ownership. Adhia Investment Advisors, Inc. ( Advisor ) serves as the investment advisor for the Company s investment portfolio. The owner of the Advisor is an officer of the Company. B. Detail of Transactions Greater than ½% of Admitted Assets Avatar Management, LLC ( MGA ) serves as a managing general agent for the Company responsible for underwriting, policy processing, premium collection, and binding services for business placed with the Company by independent agents. The MGA is also responsible for providing claims processing. Company is responsible for Claims adjusting and payments on claims. During the six months ended June 30, 009, the MGA received management fees of $96,879. C. Change in Terms of Intercompany Arrangements - None D. Amounts Due to or from Related Parties at June 30, 009 Payable due to MGA $ 84,86 Payable due to Advisor $ 869 E. Guarantees or Contingencies for Related Parties None F. Management, Service Contracts, Cost Sharing Arrangements Management contract between the Company and the MGA is discussed in B above. 6.

9 NOTES TO FINANCIAL STATEMENTS. DEBT G. Nature of Relationships that Could Affect Operations The stock of the Company and its affiliates are under common control. H. Amount deducted for Investment in Upstream Company N/A I. Detail of Investments in Affiliates Greater than 0% of Admitted Assets None J. Writedown for Impairments of Investments in Subsidiary, Controlled or Affiliated Companies N/A A. B. Capital Notes N/A All Other Debt N/A. RETIREMENT PLANS, DEFERRED COMPENSATION, POSTEMPLOYMENT BENEFITS, AND COMPENSATED ABSENCES AND OTHER POSTRETIREMENT BENEFITS PLANS A. B. C. D. E. Defined Benefit Plans N/A Defined Contribution Plans N/A Multiemployer Plans N/A Consolidated/Holding Company Plans N/A Postemployment Benefits and Compensated Absences N/A F. Impact of Medicare Modernization Act on Postretirement Benefits (INT 04-7) N/A 3. CAPITAL AND SURPLUS, SHAREHOLDERS DIVIDEND RESTRICTIONS AND QUASI- REORGANIZATION A. Outstanding Shares The Company has,000 shares of $.00 par value common stock authorized and outstanding which is owned by Avatar Partners, LP. The Company has no preferred stock authorized, issued or outstanding. B. Dividend Rate of Preferred Stock N/A C., D. and E. Dividend Restrictions N/A F. Mutual Surplus Advances N/A G. Company Stock Held for Special Purposes N/A H. Changes in Special Surplus Funds N/A I. Changes in Unassigned Funds Beginning Balance, /3/08 $ (44,5) Net Income,966,3 Change in non-admitted assets (9,584) Change in provision for reinsurance (339,507) Change in unrealized capital gains,05 Ending Balance, 06/30/09 $,384, 6.3

10 NOTES TO FINANCIAL STATEMENTS J. Surplus Notes N/A K. and L. Quasi Reorganization N/A 4. CONTINGENCIES A. Contingent Commitments N/A B. Assessments N/A C. Gain Contingencies N/A D. All Other Contingencies 5. LEASES A. B. Lessee Leasing Arrangements N/A Lessor Leasing Arrnagements N/A 6. INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK A. B. Financial Instruments with Off-Balance Sheet Risk N/A Financial Instruments with Concentration of Credit Risk N/A 7. SALE, TRANSFER AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES A. B. C. Transfers of Receivables Reported as Sales N/A Transfers and Servicing of Financial Assets N/A Wash Sales N/A 8. GAIN OR LOSS OF THE REPORTING ENTITY FROM UNINSURED A & H PLANS AND THE UNINSURED PORTION OF PARTIALLY INSURED PLANS N/A 9. DIRECT PREMIUM WRITTEN/PRODUCED B MANAGING AGENTS/THIRD PARTY ADMINISTRATORS The Company is under contract with Avatar Management, LLC to act as its managing general agent. See 0. B. above. The direct premiums written by the MGA was $8,95,34 for the six months ended June 30, 009. The Company retains underwriting authority for all policies issued under the agreement. 0. SEPTEMBER EVENTS N/A. OTHER ITEMS A. Extraordinary Items N/A B. Troubled Debt Restructuring for Debtors N/A C. Other Disclosures Assets in the amount of $3,96 at June 30, 009 were on deposit with government authorities as required by law. 6.4

11 NOTES TO FINANCIAL STATEMENTS D. Uncollected Premiums Receivable N/A E. Business Interruption Insurance Recoveries N/A F. State Transferable Tax Credits N/A. EVENTS SUBSEQUENT None 3. REINSURANCE A. Unsecured Reinsurance Recoverables None B. Reinsurance Recoverables in Dispute - None C. Reinsurance Assumed and Ceded The following summarizes the Company's reinsurance arrangements: Total Premiums Unearned Florida Hurricane Catastrophe Fund $,60,800 $ - All other 3,40,000 79,583 Total $ 5,760,800 $,56,383 D. Uncollectible Reinsurance - None E. Commutation of Ceded Reinsurance - None F. Retroactive Reinsurance - None G. Reinsurance Accounted for as a Deposit - None 4. RETROSPECTIVELY RATED CONTRACTS AND CONTRACTS SUBJECT TO REDETERMINATION N/A 5. CHANGES IN INCURRED LOSSES AND LOSS ADJUSTMENT EXPENSES Balance Balance /3/08 Incurred Paid 06/30/09 Losses $ 69,466 $,705,47 $,606,449 $ 78,64 Loss Adjustment Expenses,350 87,078 8,98 6,500 Total $ 64,86 $,89,35 $,789,377 $ 744, INTERCOMPANY POOLING ARRNAGEMENTS N/A 7. STRUCTURED SETTLEMENTS N/A 8. HEALTH CARE RECEIVABLES N/A 9. PARTICIPATING POLICIES 6.5

12 NOTES TO FINANCIAL STATEMENTS N/A 30. PREMIUM DEFICIENCY RESERVES N/A 3. HIGH DEDUCTIBLES N/A 3. DISCOUNTING OF LIABILITIES FOR UNPAID LOSSES OR UNPAID LOSS ADJUSTMENT EXPENSES N/A 33. ASBESTOS AND ENVIRONMENTAL RESERVES N/A 34. SUBSCRIBER SAVINGS ACCOUNTS N/A 35. MULTIPLE PERIL CROP INSURANCE N/A 6.6

13 GENERAL INTERROGATORIES (Responses to these interrogatories should be based on changes that have occurred since prior-year, end unless otherwise noted.) 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? Yes [ ] No [X]. If yes, has the report been filed with the domiciliary state? Yes [ ] No [ ]. 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? Yes [ ] No [X]. If yes, date of change: 3. Have there been any substantial changes in the organizational chart since the prior quarter end? Yes [ ] No [X] 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? Yes [ ] No [X] 4. If yes, provide the name of 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 3 State of Domicile 5. If the reporting entity is subject to a management agreement, including third-party administrator(s), managing general agent(s), attorney-infact, or similar agreement, have there been any significant changes regarding the terms of the agreement or principals involved? Yes [ ] No [X] NA [ ] 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. 6.3 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? Yes [ ] No [ ] NA [X] 6.6 Have all of the recommendations within the latest financial examination report been complied with? Yes [ ] No [ ] NA [X] 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? Yes [ ] No [X] 7. If yes, give full information: 8. Is the company a subsidiary of a bank holding company regulated by the Federal Reserve Board? Yes [ ] No [X] 8. If response to 8. is yes, please identify the name of the bank holding company. 8.3 Is the company affiliated with one or more banks, thrifts or securities firms? Yes [ ] No [X] 8.4 If response to 8.3 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) 3 FRB 4 OCC 5 OTS 6 FDIC 7 SEC 7

14 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? Yes [X] No [ ] (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? Yes [ ] No [X] 9. If the response to 9. is Yes, provide information related to amendment(s). 9.3 Have any provisions of the code of ethics been waived for any of the specified officers? Yes [ ] No [X] 9.3 If the response to 9.3 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? Yes [ ] No [X] 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.) Yes [ ] No [X]. If yes, give full and complete information relating thereto:. Amount of real estate and mortgages held in other invested assets in Schedule BA: $ 0 3. Amount of real estate and mortgages held in short-term investments: $ 0 4. Does the reporting entity have any investments in parent, subsidiaries and affiliates? Yes [ ] No [X] 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 $ $ 4.3 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) $ 0 $ 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? Yes [ ] No [X] 5. If yes, has a comprehensive description of the hedging program been made available to the domiciliary state? Yes [ ] No [ ] If no, attach a description with this statement. 7.

15 GENERAL INTERROGATORIES 6. Excluding items in Schedule E Part 3 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 3, III Conducting Examinations, F - Custodial or Safekeeping Agreements of the NAIC Financial Condition Examiners Handbook? Yes [X] No [ ] 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 MF Global Inc. 440 South LaSalle Street, Chicago, IL Fidelity Investments 8 Devonshire, Boston, MA Interactive Brokers, LLC Pickwick Plaza, Greenwich, CT 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) 3 Complete Explanation(s) 6.3 Have there been any changes, including name changes, in the custodian(s) identified in 6. during the current quarter? Yes [ ] No [ ] 6.4 If yes, give full and complete information relating thereto: Old Custodian New Custodian 3 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) 3 Address 7. Have all the filing requirements of the Purposes and Procedures Manual of the NAIC Securities Valuation Office been followed? Yes [X] No [ ] 7. If no, list exceptions: 7.

16 GENERAL INTERROGATORIES (Responses to these interrogatories should be based on changes that have occurred since prior year end unless otherwise noted.) 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? Yes [ ] No [ ] NA [X] 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? Yes [ ] No [X] If yes, attach an explanation. 3. Have any of the reporting entity's primary reinsurance contracts been canceled? Yes [ ] No [X] 3. 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? Yes [ ] No [X] 4. If yes, complete the following schedule: Line of Business Maximum Interest 3 Discount Rate 4 Unpaid Losses TOTAL DISCOUNT 5 6 Unpaid LAE IBNR 7 TOTAL DISCOUNT TAKEN DURING PERIOD Unpaid Unpaid Losses LAE IBNR TOTAL TOTAL

17 NAIC Company Code Federal ID Number SCHEDULE F CEDED REINSURANCE Showing All New Reinsurers - Current Year to Date Is Insurer Authorized? (Yes or No) Name of Reinsurer Location AFFILIATES US INSURERS American Agricultural Insurance Company Indianna Yes Everest Reinsurance Company Delaware Yes Odyssey America Reinsurance Corporation Connecticut Yes QBE Reinsurance Corporation Pennsylvania Yes POOLS AND ASSOCIATIONS ALL OTHER INSURERS AA ACE Tempest Reinsurance, Ltd. BMU No AA-394 DaVinci Reinsurance Ltd. BMU No AA Flagstone Reassurance Suisse, SA CHE No AA Harbor Point Re, Limited (Bermuda) BMU No AA-394 Montpelier Reinsurance Limited, Bermuda BMU No AA-3947 Platinum Underwriters Bermuda, Ltd. BMU No AA Renaissance Reinsurance Ltd. BMU No AA XL Re Ltd. BMU No AA Converium AG Zurich CHE No 9

18 States, etc. 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 Active Status Current Year To Date Prior Year To Date Current Year To Date Prior Year To Date Current Year To Date Prior Year To Date. Alabama AL N Alaska AK N Arizona AZ N Arkansas AR N California CA N Colorado CO N Connecticut CT N Delaware DE N District of Columbia DC N Florida FL L 8,95,34 5,5,606, ,64 0. Georgia GA N Hawaii HI N Idaho ID N Illinois IL N Indiana IN N Iowa IA N Kansas KS N Kentucky KY N Louisiana LA N Maine ME N Maryland MD N Massachusetts MA N Michigan MI N Minnesota MN N Mississippi MS N Missouri MO N Montana MT N Nebraska NE N Nevada NV N New Hampshire NH N New Jersey NJ N New Mexico NM N New York NY N North Carolina NC N North Dakota ND N Ohio OH N Oklahoma OK N Oregon OR N Pennsylvania PA N Rhode Island RI N South Carolina SC N South Dakota SD N Tennessee TN N Texas TX N Utah UT N Vermont VT N Virginia VA N Washington WA N West Virginia WV N Wisconsin WI N Wyoming WY N American Samoa AS N Guam GU N Puerto Rico PR N U.S. Virgin Islands VI N Northern Mariana Islands MP N Canada CN N Aggregate Other Alien OT XXX Totals (a) 8,95,34 5,5,606, ,64 0 DETAILS OF WRITE-INS 580. XXX XXX XXX Summary of remaining writeins for Line 58 from overflow page XXX Totals (Lines 580 through 5803 plus 5898) (Line 58 above) XXX (a) Insert the number of L responses except for Canada and Other Alien. 0

19 SCHEDULE Y - INFORMATION CONCERNING ACTIVITIES OF INSURER MEMBERS OF A HOLDING COMPANY GROUP PART - ORGANIZATIONAL CHART

20 PART - LOSS EXPERIENCE Direct Premiums Earned Current Year to Date 4 3 Direct Losses Direct Loss Incurred Percentage Prior Year to Date Direct Loss Percentage Line of Business. Fire Allied lines Farmowners multiple peril Homeowners multiple peril 5,434,059,705, 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 Other accident and health Workers compensation Other liability occurrence Other liability-claims made 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 XXX XXX 3. Reinsurance - Nonproportional Assumed Liability XXX XXX XXX XXX 33. Reinsurance - Nonproportional Assumed Financial Lines XXX XXX XXX XXX 34. Aggregate write-ins for other lines of business TOTALS 5,434,059,705, DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 340 through 3403 plus 3498) (Line 34) PART - DIRECT PREMIUMS WRITTEN Current Quarter Current Year to Date 3 Prior Year Year to Date Line of Business. Fire 0 0. Allied Lines Farmowners multiple peril Homeowners multiple peril 3,893,739 8,95,34 5,5 5. Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty 0 0. Medical professional liability -occurrence 0 0. Medical professional liability -claims made 0 0. Earthquake Group accident and health Credit accident and health Other accident and health Workers compensation Other liability occurrence Other liability-claims made Products liability-occurrence Products liability-claims made ,9. Private passenger auto liability ,9.4 Commercial auto liability 0 0. Auto physical damage 0 0. Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance - Nonproportional Assumed Property XXX XXX XXX 3. Reinsurance - Nonproportional Assumed Liability XXX XXX XXX 33. Reinsurance - Nonproportional Assumed Financial Lines XXX XXX XXX 34. Aggregate write-ins for other lines of business TOTALS 3,893,739 8,95,34 5,5 DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 340 through 3403 plus 3498) (Line 34) 0 0 0

21 PART 3 (000 omitted) 3 LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES SCHEDULE Years in Which Losses Occurred Prior Year-End Known Case Loss and LAE Reserves Prior Year-End IBNR Loss and LAE Reserves Total Prior Year-End Loss and LAE Reserves (Cols. + ) 009 Loss and LAE Payments on Claims Reported as of Prior Year-End 009 Loss and LAE Payments on Claims Unreported as of Prior Year-End Total 009 Loss and LAE Payments (Cols ) 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 Q.S. Date IBNR Loss and LAE Reserves Total Q.S. Loss and LAE Reserves (Cols ) Prior Year-End Known Case Loss and LAE Reserves Developed (Savings)/ Deficiency (Cols 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 (33) (305) 5. Subtotals prior (33) (305) XXX XXX XXX XXX,477,477 XXX XXX XXX XXX 7. Totals ,477, (33) (305) 8. Prior Year-End Surplus As Regards Policyholders 9,756 Col., Line 7 As % of Col., Line 7 Col., Line 7 As % of Col., Line 7 Col. 3, Line 7 As % of Col. 3, Line (93.0) 3. (47.5) Col. 3, Line 7 Line 8 4. (3.)

22 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 on 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? NO. Will Supplement A to Schedule T (Medical Professional Liability Supplement) be filed with this statement? NO 3. Will the Medicare Part D Coverage Supplement be filed with the state of domicile and the NAIC with this statement? NO Explanation:.. 3. Bar Code:. * *. * * 3. * * 4

23 OVERFLOW PAGE FOR WRITE-INS PQ003 Additional Aggregate Lines for Page 03 Line 3. *LIAB Current Statement Date December 3, Prior Year 304. Accrued Legal Fees 9, Accrued Audit Fees 4, Summary of remaining write-ins for Line 3 from Page 03 4,8 0 5

24 SCHEDULE A VERIFICATION Real Estate Prior Year Ended Year To Date December 3. Book/adjusted carrying value, December 3 of prior year 0 0. Cost of acquired:. Actual cost at time of acquisition 0. Additional investment made after acquisition 0 3. Current year change in encumbrances 0 4. Total gain (loss) on disposals 0 5. Deduct amounts received on disposals 0 6. Total foreign exchange change in book/adjusted carrying value 0 7. Deduct current year s other than temporary impairment recognized 0 8. Deduct current year s depreciation 0 9. Book/adjusted carrying value at the end of current period (Lines ) Deduct total nonadmitted amounts 0 0. Statement value at end of current period (Line 9 minus Line 0) 0 0 SCHEDULE B VERIFICATION Mortgage Loans Prior Year Ended Year To Date December 3. Book value/recorded investment excluding accrued interest, December 3 of prior year 0 0. Cost of acquired:.. Actual cost at time of acquisition 0.. Additional investment made after acquisition 0 3. Capitalized deferred interest and other 0 4. Accrual of discount 0 5. Unrealized valuation increase (decrease) 0 6. Total gain (loss) on disposals 0 7. Deduct amounts received on disposals 0 8. Deduct amortization of premium and mortgage interest points and commitment fees 0 9. Total foreign exchange change in book value/recorded investment excluding accrued interest 0 0. Deduct current year s other than temporary impairment recognized 0. Book value/recorded investment excluding accrued interest at end of current period (Lines ) 0 0. Total valuation allowance 0 3. Subtotal (Line plus Line ) Deduct total nonadmitted accounts Statement value at end of current period (Line 3 minus Line 4) 0 0 SCHEDULE BA VERIFICATION Other Long-Term Invested Assets Prior Year Ended Year To Date December 3. Book/adjusted carrying value, December 3 of prior year 0 0. Cost of acquired:.. Actual cost at time of acquisition 0.. Additional investment made after acquisition 0 3. Capitalized deferred interest and other 0 4. Accrual of discount 0 5. Unrealized valuation increase (decrease) 0 6. Total gain (loss) on disposals 0 7. Deduct amounts received on disposals 0 8. Deduct amortization of premium and depreciation 0 9. Total foreign exchange change in book/adjusted carrying value 0 0. Deduct current year s other than temporary impairment recognized 0. Book/adjusted carrying value at end of current period (Lines ) 0 0. Deduct total nonadmitted amounts Statement value at end of current period (Line minus Line ) 0 0 SCHEDULE D VERIFICATION Bonds and Stocks Prior Year Ended Year To Date December 3. Book/adjusted carrying value of bonds and stocks, December 3 of prior year 5,79,97 0. Cost of bonds and stocks acquired,67,63 6,534,94 3. Accrual of discount 0 4. Unrealized valuation increase (decrease),04 (35,43) 5. Total gain (loss) on disposals 0 6. Deduct consideration for bonds and stocks disposed of 5,3,080 77, Deduct amortization of premium (438,86) (0,875) 8. Total foreign exchange change in book/adjusted carrying value 0 9. Deduct current year s other than temporary impairment recognized 0 0. Book/adjusted carrying value at end of current period (Lines ) 3,567,00 5,79,97. Deduct total nonadmitted amounts 0 0. Statement value at end of current period (Line 0 minus Line ) 3,567,00 5,79,97 SI0

25 Book/Adjusted Carrying Value Beginning of Current Quarter 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 3 4 Non-Trading Acquisitions Dispositions Activity During During During Current Quarter Current Quarter 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 3 Prior Year BONDS. Class (a) 5,477,805,54,893 3,643,84 408,636 5,477,805 3,397,50 0 5,677,889. Class (a) Class 3 (a) Class 4 (a) Class 5 (a) Class 6 (a) Total Bonds 5,477,805,54,893 3,643,84 408,636 5,477,805 3,397,50 0 5,677,889 PREFERRED STOCK 8. Class Class Class Class Class Class Total Preferred Stock Total Bonds & Preferred Stock 5,477,805,54,893 3,643,84 408,636 5,477,805 3,397,50 0 5,677,889 (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 3 $ ; NAIC 4 $ ; NAIC 5 $ ; NAIC 6 $

26 SCHEDULE DA - PART Short-Term Investments NONE Book/Adjusted Carrying Value Par Value 3 Actual Cost 4 Interest Collected Year To Date 5 Paid for Accrued Interest Year To Date XXX SCHEDULE DA - VERIFICATION Short-Term Investments Year To Date Prior Year Ended December 3. Book/adjusted carrying value, December 3 of prior year 0 0. Cost of short-term investments acquired 0 3. Accrual of discount 0 4. Unrealized valuation increase (decrease) 0 5. Total gain (loss) on disposals 0 6. Deduct consideration received on disposals 0 7. Deduct amortization of premium 0 8. Total foreign exchange change in book/adjusted carrying value 0 9. Deduct current year s other than temporary impairment recognized 0 0. Book/adjusted carrying value at end of current period (Lines ) 0 0. Deduct total nonadmitted amounts 0. Statement value at end of current period (Line 0 minus Line ) 0 0 SI03