TWIN CITY FIRE INSURANCE COMPANY ASSETS

Transcription

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2 ASSETS Current Year Prior Year Net Admitted Nonadmitted Assets Net Assets Assets (Cols. 1-2) Admitted Assets 1. Bonds (Schedule D) ,649, ,649, ,035, Stocks (Schedule D): 2.1 Preferred stocks , Common stocks , , , Mortgage loans on real estate (Schedule B): 3.1 First liens Other than first liens Real estate (Schedule A): 4.1 Properties occupied by the company (less $...0 encumbrances) Properties held for the production of income (less $...0 encumbrances) Properties held for sale (less $...0 encumbrances) Cash ($...9,188, Sch. E-Part 1), cash equivalents ($...0, Sch. E-Part 2) and short-term investments ($...22,105,479, Sch. DA) ,114, ,114, ,005, Contract loans (including $...0 premium notes) Other invested assets (Schedule BA) Receivables for securities Aggregate write-ins for invested assets Subtotals, cash and invested assets (Lines 1 to 9) ,841, ,841, ,078, Title plants less $...0 charged off (for Title insurers only) Investment income due and accrued ,060, ,060, ,261, Premiums and considerations: 13.1 Uncollected premiums and agents' balances in course of collection ,982, ,982, ,179, Deferred premiums, agents' balances and installments booked but deferred and not yet due (including $...0 earned but unbilled premiums) Accrued retrospective premiums , , , , Reinsurance: 14.1 Amounts recoverable from reinsurers Funds held by or deposited with reinsured companies Other amounts receivable under reinsurance contracts Amounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon Net deferred tax asset ,543, ,659, ,884, ,855, Guaranty funds receivable or on deposit , , , Electronic data processing equipment and software ,566, ,566, ,852, Furniture and equipment, including health care delivery assets ($...0) , , Net adjustment in assets and liabilities due to foreign exchange rates Receivables from parent, subsidiaries and affiliates ,086, ,086, ,498, Health care ($...0) and other amounts receivable Aggregate write-ins for other than invested assets , , , Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 10 to 23) ,150, ,785, ,364, ,947, From Separate Accounts, Segregated Accounts and Protected Cell Accounts TOTALS (Lines 24 and 25) ,150, ,785, ,364, ,947,671 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above) Surcharges/assessments receivable , , , Summary of remaining write-ins for Line 23 from overflow page Totals (Lines 2301 thru 2303 plus 2398) (Line 23 above) , , ,888 2

3 LIABILITIES, SURPLUS AND OTHER FUNDS 1 2 Current Year Prior Year 1. Losses (Part 2A, Line 35, Column 8) ,286, ,352, Reinsurance payable on paid losses and loss adjustment expenses (Schedule F, Part 1, Column 6) ,527, ,637, Loss adjustment expenses (Part 2A, Line 35, Column 9) ,898, ,873, Commissions payable, contingent commissions and other similar charges ,811, ,058, Other expenses (excluding taxes, licenses and fees) ,225, ,139, Taxes, licenses and fees (excluding federal and foreign income taxes) ,293, ,480, Current federal and foreign income taxes (including $...23,196 on realized capital gains (losses)) , ,354, Net deferred tax liability Borrowed money $...0 and interest thereon $ Unearned premiums (Part 1A, Line 38, Column 5) (after deducting unearned premiums for ceded reinsurance of $...716,414,369 and including warranty reserves of $...0) ,975, ,325, Advance premium Dividends declared and unpaid: 11.1 Stockholders Policyholders , ,339, Ceded reinsurance premiums payable (net of ceding commissions) Funds held by company under reinsurance treaties (Schedule F, Part 3, Column 19) Amounts withheld or retained by company for account of others , , Remittances and items not allocated , Provision for reinsurance (Schedule F, Part 7) Net adjustments in assets and liabilities due to foreign exchange rates Drafts outstanding Payable to parent, subsidiaries and affiliates Payable for securities Liability for amounts held under uninsured plans Capital notes $...0 and interest thereon $ Aggregate write-ins for liabilities , Total liabilities excluding protected cell liabilities (Lines 1 through 23) ,125, ,731, Protected cell liabilities Total liabilities (Lines 24 and 25) ,125, ,731, Aggregate write-ins for special surplus funds ,601, Common capital stock ,200, ,200, Preferred capital stock Aggregate write-ins for other than special surplus funds Surplus notes Gross paid in and contributed surplus ,562, ,562, Unassigned funds (surplus) ,875, ,454, Less treasury stock, at cost: shares common (value included in Line 28 $...0) shares preferred (value included in Line 29 $...0) Surplus as regards policyholders (Lines 27 to 33, less 34) (Page 4, Line 39) ,238, ,216, TOTALS (Page 2, Line 26, Col. 3) ,364, ,947,671 DETAILS OF WRITE-INS Retro premium payable , Summary of remaining write-ins for Line 23 from overflow page Totals (Lines 2301 thru 2303 plus 2398) (Line 23 above) , Additional admitted deferred tax asset ,601, Summary of remaining write-ins for Line 27 from overflow page Totals (Lines 2701 thru 2703 plus 2798) (Line 27 above) ,601, Summary of remaining write-ins for Line 30 from overflow page Totals (Lines 3001 thru 3003 plus 3098) (Line 30 above)

4 STATEMENT OF INCOME 1 2 UNDERWRITING INCOME Current Year Prior Year 1. Premiums earned (Part 1, Line 35, Column 4) ,705, ,778,186 DEDUCTIONS 2. Losses incurred (Part 2, Line 35, Column 7) ,420, ,836, Loss adjustment expenses incurred (Part 3, Line 25, Column 1) ,377, ,437, Other underwriting expenses incurred (Part 3, Line 25, Column 2) ,172, ,700, Aggregate write-ins for underwriting deductions Total underwriting deductions (Lines 2 through 5) ,970, ,974, Net income of protected cells Net underwriting gain (loss) (Line 1 minus Line 6 plus Line 7) ,734, ,803,677 INVESTMENT INCOME 9. Net investment income earned (Exhibit of Net Investment Income, Line 17) ,997, ,756, Net realized capital gains (losses) less capital gains tax of $...23,196 (Exhibit of Capital Gains (Losses))......(728,692)...(233,860) 11. Net investment gain (loss) (Lines ) ,268, ,522,240 OTHER INCOME 12. Net gain (loss) from agents' or premium balances charged off (amount recovered $...0 amount charged off $...0) Finance and service charges not included in premiums ,788, ,048, Aggregate write-ins for miscellaneous income......(68,827) Total other income (Lines 12 through 14) ,719, ,048, Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines ) ,722, ,374, Dividends to policyholders......(54,340)...764, Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 16 minus Line 17) ,777, ,610, Federal and foreign income taxes incurred ,599, ,813, Net income (Line 18 minus Line 19) (to Line 22) ,177, ,796,759 CAPITAL AND SURPLUS ACCOUNT 21. Surplus as regards policyholders, December 31 prior year (Page 4, Line 39, Column 2) ,216, ,215, Net income (from Line 20) ,177, ,796, Net transfers (to) from Protected Cell accounts Change in net unrealized capital gains or (losses) less capital gains tax of $...487, ,546,328...(815,942) 25. Change in net unrealized foreign exchange capital gain (loss) Change in net deferred income tax......(3,833,604)...31, Change in nonadmitted assets (Exhibit of Nonadmitted Assets, Line 26 Column 3) ,762,694...(2,873,664) 28. Change in provision for reinsurance (Page 3, Line 16, Column 2 minus Column 1) Change in surplus notes Surplus (contributed to) withdrawn from protected cells Cumulative effect of changes in accounting principles......(131,145) Capital changes: 32.1 Paid in Transferred from surplus (Stock Dividend) Transferred to surplus Surplus adjustments: 33.1 Paid in ,937, Transferred to capital (Stock Dividend) Transferred from capital Net remittances from or (to) Home Office Dividends to stockholders......(38,000,000)...(39,500,000) 36. Change in treasury stock (Page 3, Lines 34.1 and 34.2, Column 2 minus Column 1) Aggregate write-ins for gains and losses in surplus ,500,309...(1,574,502) 38. Change in surplus as regards policyholders for the year (Lines 22 through 37) ,022,274...(1,998,409) 39. Surplus as regards policyholders, December 31 current year (Line 21 plus Line 38) (Page 3, Line 35) ,238, ,216,621 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 0501 thru 0503 plus 0598) (Line 5 above) Miscellaneous......(68,827) Summary of remaining write-ins for Line 14 from overflow page Totals (Lines 1401 thru 1403 plus 1498) (Line 14 above)......(68,827) Additional admitted deferred tax asset ,601, Write-off of intercompany balances ,685...(1,574,502) Valuation adjustment for securities , Summary of remaining write-ins for Line 37 from overflow page Totals (Lines 3701 thru 3703 plus 3798) (Line 37 above) ,500,309...(1,574,502) 4

5 CASH FROM OPERATIONS CASH FLOW 1 2 Current Year Prior Year 1. Premiums collected net of reinsurance ,766, ,881, Net investment income ,882, ,342, Miscellaneous income ,719, ,048, Total (Lines 1 through 3) ,368, ,272, Benefit and loss related payments ,596, ,828, Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts Commissions, expenses paid and aggregate write-ins for deductions ,860, ,948, Dividends paid to policyholders , , Federal and foreign income taxes paid (recovered) net of $...0 tax on capital gains (losses) ,284, ,747, Total (Lines 5 through 9) ,687, ,759, Net cash from operations (Line 4 minus Line 10) ,681, ,513,778 CASH FROM INVESTMENTS 12. Proceeds from investments sold, matured or repaid: 12.1 Bonds ,159, ,091, Stocks ,703, Mortgage loans Real estate Other invested assets Net gains or (losses) on cash, cash equivalents and short-term investments (147,059) 12.7 Miscellaneous proceeds Total investment proceeds (Lines 12.1 to 12.7) ,862, ,944, Cost of investments acquired (long-term only): 13.1 Bonds ,966, ,380, Stocks Mortgage loans Real estate Other invested assets Miscellaneous applications Total investments acquired (Lines 13.1 to 13.6) ,966, ,380, Net increase (decrease) in contract loans and premium notes Net cash from investments (Line 12.8 minus Lines 13.7 minus Line 14)......(3,104,000)...8,563, Cash provided (applied): CASH FROM FINANCING AND MISCELLANEOUS SOURCES 16.1 Surplus notes, capital notes Capital and paid in surplus, less treasury stock (0) 16.3 Borrowed funds Net deposits on deposit-type contracts and other insurance liabilities Dividends to stockholders ,000, ,500, Other cash provided (applied) ,532, ,915, Net cash from financing and miscellaneous sources (Lines 16.1 to 16.4 minus Line 16.5 plus Line 16.6)......(33,467,780)...(34,584,714) RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11 plus Line 15 plus Line 17)......(890,696)...17,492, Cash, cash equivalents and short-term investments: 19.1 Beginning of year ,005, ,512, End of year (Line 18 plus Line 19.1) ,114, ,005,363 Note: Supplemental disclosures of cash flow information for non-cash transactions: EDP equipment & software: intercompany non-cash contribution of EDP equipment ,937, Receivable from parent, subsidiaries and affiliates: non-cash settling of intercompany receivables ,685...(1,574,502) 5

6 UNDERWRITING AND INVESTMENT EXHIBIT PART 1 - PREMIUMS EARNED Unearned Premiums Unearned Premiums Net December 31 December 31 Premiums Premiums Prior Year- Current Year- Earned Written per per Col. 3, per Col. 5, During Year Line of Business Column 6, Part 1B Last Year's Part 1 Part 1A (Cols ) 1. Fire , , , , Allied lines , , , , Farmowners multiple peril , , , , Homeowners multiple peril ,615, ,482, ,695, ,402, Commercial multiple peril ,334, ,659, ,859, ,134, Mortgage guaranty Ocean marine , , , , Inland marine ,676, ,755, ,225, ,207, 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 ,251, ,763, ,038, ,976, Other liability - occurrence ,630, ,953, ,777, ,806, Other liability - claims-made ,278, ,958, ,251, ,984, Excess workers' compensation , , , , Products liability - occurrence ,046, , , ,086, Products liability - claims-made , , , , , 19.2 Private passenger auto liability ,996, ,999, ,445, ,550, , 19.4 Commercial auto liability ,373, ,409, ,061, ,721, Auto physical damage ,173, ,062, ,864, ,370, Aircraft (all perils) , , Fidelity , , , , Surety ,580, ,631, ,441, ,770, 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 ,421, ,624, ,340, ,705,169 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above)

7 UNDERWRITING AND INVESTMENT EXHIBIT PART 1A - 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 , , Allied lines , , Farmowners multiple peril , , Homeowners multiple peril ,695, ,695, Commercial multiple peril ,859, ,859, Mortgage guaranty Ocean marine , , , Inland marine ,111, , ,225, 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 ,607, , (571,170)...16,038, Other liability - occurrence ,767, , (4,500)...2,777, Other liability - claims-made ,249, , ,251, Excess workers' compensation , , Products liability - occurrence , , , Products liability - claims-made , , , , 19.2 Private passenger auto liability ,445, ,445, , 19.4 Commercial auto liability ,116, , (59,445)...3,061, Auto physical damage ,864, ,864, Aircraft (all perils) Fidelity , , , Surety , , ,441, 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 ,116, , (635,115)...71,340, Accrued retrospective premiums based on experience , Earned but unbilled premiums Balance (sum of Lines 35 through 37) ,975,947 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above) (a) State here basis of computation used in each case: Semi-monthly pro rata except Marine Risks not terminated: 100% 7

8 UNDERWRITING AND INVESTMENT EXHIBIT PART 1B - PREMIUMS WRITTEN 1 Reinsurance Assumed Reinsurance Ceded Net Premiums Direct Written Business (Cols Line of Business (a) From Affiliates From Non-Affiliates To Affiliates To Non-Affiliates - 4-5) 1. Fire , , , , Allied lines , , , , Farmowners multiple peril , , Homeowners multiple peril ,805, ,615, ,805, ,615, Commercial multiple peril ,916, ,334, ,916, ,334, Mortgage guaranty Ocean marine , , , , Inland marine ,647, ,676, ,647, ,676, 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 ,831, ,251, ,831, ,251, Other liability - occurrence ,228, ,630, ,228, ,630, Other liability - claims-made ,758, ,278, ,758, ,278, Excess workers' compensation , , Products liability - occurrence ,993, ,046, ,993, ,046, Products liability - claims-made , , , , , 19.2 Private passenger auto liability ,785, ,996, ,785, ,996, , 19.4 Commercial auto liability ,579, ,373, ,579, ,373, Auto physical damage ,526, ,173, ,526, ,173, Aircraft (all perils) , , Fidelity ,214, , ,214, , Surety , ,580, , ,580, Burglary and theft ,990, , ,990, , 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 ,448,115, ,421, ,448,115, ,421,825 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above) (a) Does the company's direct premiums written include premiums recorded on an installment basis? Yes [ ] No [ X ] If yes: 1. The amount of such installment premiums $ 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 2009 of the UNDERWRITING AND INVESTMENT EXHIBIT PART 2 - LOSSES PAID AND INCURRED Losses Paid Less Salvage Percentage of Net Losses Losses Losses Incurred Unpaid Net Losses Incurred (Col. 7, Part 2) Direct Reinsurance Reinsurance Net Payments Current Year Unpaid Current Year to Premiums Earned Line of Business Business Assumed Recovered (Cols ) (Part 2A, Col. 8) Prior Year (Cols ) (Col. 4, Part 1) 1. Fire , , , , , , , Allied lines , , , , , , , Farmowners multiple peril , , , , , Homeowners multiple peril ,763, ,643, ,763, ,643, ,063, ,914, ,793, Commercial multiple peril ,303, ,092, ,303, ,092, ,670, ,067, ,695, Mortgage guaranty Ocean marine , , , , , , , Inland marine ,261, ,669, ,261, ,669, , , ,337, Financial guaranty Medical professional liability - occurrence , , , Medical professional liability - claims-made ,293...(3,744) Earthquake (75)...(0.0) 13. Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation ,526, ,673, ,526, ,673, ,506, ,321, ,858, Other liability - occurrence ,258, ,717, ,258, ,717, ,205, ,699,748...(776,841)...(13.4) 17.2 Other liability - claims-made ,747, ,063, ,747, ,063, ,982, ,208, ,837, Excess workers' compensation , , , , ,220, ,064, , Products liability - occurrence ,039, , ,039, , ,784, ,352,689...(1,034,135)...(95.2) 18.2 Products liability - claims-made , , , , , , , , 19.2 Private passenger auto liability ,168, ,506, ,168, ,506, ,869, ,929, ,447, , 19.4 Commercial auto liability ,332, ,512, ,332, ,512, ,431, ,557, ,386, Auto physical damage ,899, ,593, ,899, ,593, , , ,478, Aircraft (all perils) (17,755) (17,755)...(90,903)...(133,298)...24, Fidelity ,427, , ,427, , , , , Surety , , , , ,563, ,836, ,090, Burglary and theft , , , , , Boiler and machinery , , , , , Credit International , , , , , , Warranty Reinsurance - nonproportional assumed property......xxx , , , , , , Reinsurance - nonproportional assumed liability......xxx , , ,437, ,934, ,035, , Reinsurance - nonproportional assumed financial lines......xxx , , , , , , Aggregate write-ins for other lines of business TOTALS ,850, ,486, ,850, ,486, ,286, ,352, ,420, DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page xxx Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above)

10 10 Annual Statement for the year 2009 of the UNDERWRITING AND INVESTMENT EXHIBIT PART 2A - UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES Reported Losses Incurred But Not Reported Deduct Reinsurance Net Losses Excluding Net Recoverable from Incurred but Net Losses Unpaid Loss Authorized and not Reported Reinsurance Reinsurance Unpaid Adjustment Line of Business Direct Reinsurance Assumed Unauthorized Companies (Cols ) Direct Assumed Ceded (Cols ) Expenses 1. Fire , , , , , , , , , Allied lines , , , , , , , , , Farmowners multiple peril , , , , Homeowners multiple peril ,477, ,546, ,477, ,546, ,056, ,517, ,056, ,063, , Commercial multiple peril ,088, ,926, ,088, ,926, ,041, ,744, ,041, ,670, ,353, Mortgage guaranty Ocean marine , , , , Inland marine , , , , ,470, , ,470, , , 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 ,382, ,266, ,382, ,266, ,075,016, ,239, ,075,016, ,506, ,361, Other liability - occurrence ,994, ,722, ,994, ,722, ,196, ,482, ,196, ,205, ,710, Other liability - claims-made ,263, ,424, ,263, ,424, ,770, ,558, ,770, ,982, ,484, Excess workers' compensation , , , , , ,576, , ,220, , Products liability - occurrence ,633, ,588, ,633, ,588, ,497, ,196, ,497, ,784, ,125, Products liability - claims-made , , , , , , , , , , 19.2 Private passenger auto liability ,275, ,937, ,275, ,937, ,939, ,931, ,939, ,869, ,105, , 19.4 Commercial auto liability ,514, ,463, ,514, ,463, ,801, ,968, ,801, ,431, ,369, Auto physical damage ,010, , ,010, ,706...(1,188,579)...(330,077)...(1,188,579)...305, , Aircraft (all perils) (102,289) (102,289) , (90,903)...(21,182) 23. Fidelity , , , , ,770, , ,770, , , Surety , , , ,822, , ,563, , Burglary and theft , , ,201, , ,201, , , Boiler and machinery , , ,756...(1,260)...38, , , Credit International , , , , , Warranty Reinsurance - nonproportional assumed property......xxx , ,131...xxx , , , Reinsurance - nonproportional assumed liability......xxx ,477, ,477,267...xxx ,960, ,437, , Reinsurance - nonproportional assumed financial lines......xxx , ,054...xxx , , Aggregate write-ins for other lines of business TOTALS ,070,196, ,482, ,070,196, ,482, ,145,314, ,804, ,145,314, ,286, ,898,922 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above) (a) Including $...0 for present value of life indemnity claims.

11 1. Claim adjustment services: UNDERWRITING AND INVESTMENT EXHIBIT PART 3 - EXPENSES Other Loss Adjustment Underwriting Investment Expenses Expenses Expenses Total 1.1 Direct ,284, ,284, Reinsurance assumed ,985, ,985, Reinsurance ceded ,284, ,284, Net claim adjustment services ( ) ,985, ,985, Commission and brokerage: 2.1 Direct, excluding contingent ,734, ,734, Reinsurance assumed, excluding contingent ,943, ,943, Reinsurance ceded, excluding contingent ,734, ,734, Contingent - direct (90,919) (90,919) 2.5 Contingent - reinsurance assumed , , Contingent - reinsurance ceded (90,919) (90,919) 2.7 Policy and membership fees Net commission and brokerage ( ) ,965, ,965, Allowances to manager and agents......(986)...1,758, ,757, Advertising......(7,126)...1,003, , Boards, bureaus and associations , , , Surveys and underwriting reports , , , Audit of assureds' records......(149) Salary and related items: 8.1 Salaries ,926, ,201, , ,611, Payroll taxes ,342, , , ,222, Employee relations and welfare ,057, ,230, , ,324, Insurance , , , , Directors' fees Travel and travel items , , , , Rent and rent items , ,086, , ,483, Equipment , , , Cost or depreciation of EDP equipment and software ,370...(267,573)...49, , Printing and stationery , , , Postage, telephone and telegraph, exchange and express , ,484, , ,775, Legal and auditing......(625)...197, , , Totals (Lines 3 to 18) ,619, ,801, , ,045, Taxes, licenses and fees: 20.1 State and local insurance taxes deducting guaranty association credits of $...90, ,888, ,888, Insurance department licenses and fees , , Gross guaranty association assessments , , All other (excluding federal and foreign income and real estate) , , Total taxes, licenses and fees ( ) ,415, ,415, Real estate expenses Real estate taxes Reimbursements by uninsured plans Aggregate write-ins for miscellaneous expenses , ,990, , ,825, Total expenses incurred ,377, ,172, ,232 (a)...63,237, Less unpaid expenses - current year ,898, ,763, , ,860, Add unpaid expenses - prior year ,873, ,082, , ,092, Amounts receivable relating to uninsured plans, prior year Amounts receivable relating to uninsured plans, current year TOTAL EXPENSES PAID (Lines ) ,351, ,491, , ,469,866 DETAILS OF WRITE-INS Miscellaneous , ,988, , ,823, Donations , , Summary of remaining write-ins for Line 24 from overflow page Totals (Lines 2401 thru 2403 plus 2498) (Line 24 above) , ,990, , ,825,415 (a) Includes management fees of $...527,418 to affiliates and $...0 to non-affiliates. 11

12 EXHIBIT OF NET INVESTMENT INCOME 1 2 Collected Earned During Year During Year 1. U.S. government bonds... (a)...430, , Bonds exempt from U.S. tax... (a)...24,312, ,873, Other bonds (unaffiliated)... (a)...2,818, ,105, Bonds of affiliates... (a) Preferred stocks (unaffiliated)... (b)...194, , 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)...111, , Derivative instruments... (f) Other invested assets Aggregate write-ins for investment income , , Total gross investment income ,885, ,684, Investment expenses... (g)...687, Investment taxes, licenses and fees, excluding federal income taxes... (g) Interest expense... (h) Depreciation on real estate and other invested assets... (i) Aggregate write-ins for deductions from investment income Total deductions (Lines 11 through 15) , Net investment income (Line 10 minus Line 16) ,997,543 DETAILS OF WRITE-INS Miscellaneous interest , , Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above) , , Summary of remaining write-ins for Line 15 from overflow page Totals (Lines 1501 thru 1503 plus 1598) (Line 15 above) (a) Includes $...1,193,450 accrual of discount less $...2,817,795 amortization of premium and less $...107,940 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 $...0 accrual of discount less $...0 amortization of premium and less $...0 paid for accrued interest on purchases. (f) Includes $...0 accrual of discount less $...0 amortization of premium. (g) Includes $...0 investment expenses and $...0 investment taxes, licenses and fees, excluding federal income taxes, attributable to Segregated and Separate Accounts. (h) Includes $...0 interest on surplus notes and $...0 interest on capital notes. (i) Includes $...0 depreciation on real estate and $...0 depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) Realized Change in Gain (Loss) Other Total Realized Change in Unrealized on Sales Realized Capital Gain (Loss) Unrealized Foreign Exchange or Maturity Adjustments (Columns 1 + 2) Capital Gain (Loss) Capital Gain (Loss) 1. U.S. government bonds Bonds exempt from U.S. tax ,616, ,616,579...(586,093) Other bonds (unaffiliated)......(14,177)...(1,405,856)...(1,420,033)...974, Bonds of affiliates Preferred stocks (unaffiliated)......(830,966) (830,966)...1,544, Preferred stocks of affiliates Common stocks (unaffiliated) (71,077)...(71,077)...101, 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) ,436...(1,476,933)...(705,497)...2,033, DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above)

13 EXHIBIT OF NONADMITTED ASSETS Current Year Prior Year Change in Total Total Total Nonadmitted Assets Nonadmitted Assets Nonadmitted Assets (Col. 2 - Col. 1) 1. Bonds (Schedule D) Stocks (Schedule D): 2.1 Preferred stocks Common stocks Mortgage loans on real estate (Schedule B): 3.1 First liens Other than first liens Real estate (Schedule A): 4.1 Properties occupied by the company Properties held for the production of income Properties held for sale Cash (Schedule E-Part 1), cash equivalents (Schedule E-Part 2) and short-term investments (Schedule DA) Contract loans Other invested assets (Schedule BA) Receivables for securities Aggregate write-ins for invested assets Subtotals, cash and invested assets (Lines 1 to 9) Title plants (for Title insurers only) Investment income due and accrued Premiums and considerations: 13.1 Uncollected premiums and agents' balances in the course of collection Deferred premiums, agents' balances and installments booked but deferred and not yet due Accrued retrospective premiums , , , Reinsurance: 14.1 Amounts recoverable from reinsurers Funds held by or deposited with reinsured companies Other amounts receivable under reinsurance contracts Amounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon Net deferred tax asset ,659, ,338, ,678, Guaranty funds receivable or on deposit Electronic data processing equipment and software Furniture and equipment, including health care delivery assets , , , Net adjustment in assets and liabilities due to foreign exchange rates Receivables from parent, subsidiaries and affiliates Health care and other amounts receivable Aggregate write-ins for other than invested assets Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 10 through 23) ,785, ,548, ,762, From Separate Accounts, Segregated Accounts and Protected Cell Accounts TOTALS (Lines 24 and 25) ,785, ,548, ,762,694 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above) Summary of remaining write-ins for Line 23 from overflow page Totals (Lines 2301 thru 2303 plus 2398) (Line 23 above)

14 NOTES TO FINANCIAL STATEMENTS Annual Statement for the year 2009 of the 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Accounting Practices The accompanying statutory-basis financial statements of Twin City Fire Insurance Company (the Company or Twin City ) have been prepared in conformity with statutory accounting practices prescribed or permitted by the State of Indiana Insurance Department ( the Department ). The Department recognizes only statutory accounting practices prescribed or permitted by the State of Indiana for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under the State of Indiana Insurance Law. The National Association of Insurance Commissioners Accounting Practices and Procedures manual ( NAIC SAP ) has been adopted as a component of prescribed practices by the State of Indiana. There are no material differences between the accounting practices and procedures by the Department and NAIC SAP. During 2009 and 2008, the Company did not have any permitted practices. B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with the National Association of Insurance Commissioners ( NAIC ) Annual Statement Instructions and NAIC SAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. C. Accounting Policy Premiums are earned principally on a pro-rata basis over the lives of the policies and include accruals for ultimate premium revenue anticipated under auditable and retrospectively rated policies. Unearned premium reserves are established to cover the unexpired portion of the premiums written. Such reserves are computed by pro rata methods for direct business. Expenses incurred in connection with acquiring insurance business, including such acquisition costs as 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: 1. Short-term investments include all investments whose maturities, at the time of acquisition, are one year or less and are stated at amortized cost. 2. Investments in unaffiliated bonds rated in NAIC classes 1 and 2 are carried at amortized cost. Unaffiliated bonds rated in NAIC classes 3-6 are carried at the lower of amortized cost or fair value. 3. Unaffiliated common stocks are carried at fair value. 4. Unaffiliated preferred stocks are carried at cost, lower of cost or amortized cost, or NAIC market values depending on the assigned credit rating and whether the preferred stock is redeemable or non-redeemable. 5. The Company has no investments in mortgage loans. 6. Loan-backed bonds and structured securities are carried at amortized cost. Significant changes in estimated cash flows from the original purchase assumptions are accounted for using the prospective method, except for highly rated fixed rate securities, which use the retrospective method. 7. The Company has no investments in subsidiaries, controlled and affiliated ( SCA ) companies. 8. The Company has no investments in joint ventures, partnerships and limited liability companies. 9. The Company has no investments in derivative instruments. 10. The Company did not consider anticipated investment income as a factor in the premium reserve deficiency calculation. 11. The Hartford Financial Services Group, Inc. ( The Hartford ) establishes property and casualty reserves to provide for the estimated costs of paying claims under insurance policies written by The Hartford. These reserves include estimates for both claims that have been reported and those that have been incurred but not reported to The Hartford and include estimates of all losses and loss adjustment expenses associated with processing and settling these claims. These reserve estimates are based on known facts and interpretations of circumstances, and consideration of various internal factors including The Hartford s experience with similar cases, historical trends involving claim payment patterns, loss payments, pending levels of unpaid claims, loss control programs and product mix. In addition the reserve estimates are influenced by consideration of various external factors including court decisions, economic conditions and public attitudes. The effects of inflation are implicitly considered in the reserving process. Estimating the ultimate cost of future losses and loss adjustment expenses is an uncertain and complex process. This estimation process is based significantly on the assumption that past developments are an appropriate predictor of future events and involves a variety of actuarial techniques that analyze experience, trends and other relevant factors. The uncertainties involved with the reserving process have become increasingly difficult due to a number of complex factors including social and economic trends and changes in the concepts of legal liability and damage awards. Accordingly, final claim settlements may vary from the present estimates, particularly when those payments may not occur until well into the future. The establishment of appropriate reserves, including reserves for catastrophes and asbestos and environmental claims, is inherently uncertain. The Hartford regularly updates its reserve estimates as new information becomes available and events unfold that may have an impact on unsettled claims. Changes in prior year reserve estimates, which may be material, are reflected in the results of operations in the period such changes are determined to be necessary. The reserves recorded for The Hartford property and casualty businesses represent The Hartford s best estimate of its ultimate liability for claims and claim adjustment expenses related to losses covered by policies written by The Hartford. Because of the significant uncertainties surrounding environmental and particularly asbestos exposures, it is possible that management s estimate of the ultimate liabilities for these claims may change and that the required adjustment to recorded reserves could exceed the currently recorded reserves by an amount that could be material to The Hartford s results of operations, financial condition and liquidity. Asbestos/Environmental Reserves Significant uncertainty limits the ability of insurers and reinsurers to estimate the ultimate reserves necessary for unpaid losses and expenses related to environmental and particularly asbestos claims. The degree of variability of reserve estimates for these exposures is significantly greater than for other more traditional exposures. In the case of the reserves for asbestos exposures, factors contributing to the high degree of uncertainty include inadequate loss development patterns, plaintiffs expanding theories of liability, the risks inherent in major litigation, and inconsistent emerging legal doctrines. Furthermore, over time, insurers, including The Hartford, have experienced significant changes in the rate at which asbestos claims are brought, the claims experience of particular insureds, and the value of claims, making predictions of future exposure from past experience uncertain. Plaintiffs and insureds have also sought to use bankruptcy proceedings, including pre-packaged bankruptcies, to accelerate and increase loss payments by insurers. In addition, some policyholders have asserted new classes of claims for coverages to which an aggregate limit of liability may not apply. Further uncertainties include insolvencies of other carriers and unanticipated developments pertaining to The Hartford s ability to recover reinsurance for asbestos and environmental claims. Management believes these issues are not likely to be resolved in the near future. 14