SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR

Transcription

1 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Filing at a Glance Companies: Product Name: State: TOI: Sub-TOI: Filing Type: Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Automobile Rhode Island 19.0 Personal Auto Personal Auto Combinations Rate Date Submitted: 10/16/2013 SERFF Tr Num: SERFF Status: State Tr Num: State Status: Co Tr Num: Effective Date Requested (New): Effective Date Requested (Renewal): Author(s): Reviewer(s): LBPM Closed-(02) Approved (08) Closed - Approved With Review 14-RI-P-AO-RR-LEG-ASR 03/30/2014 Emily Overstreet Disposition Date: 03/03/2014 Disposition Status: Effective Date (New): Rachel Chester (primary), Debra Stein, Ronald Make, Augustine Park, Paula Pallozzi (02) Approved Effective Date (Renewal): 03/30/2014 PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

2 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR General Information Project Name: 14-RI-P-AO-RR-LEG-ASR Project Number: 14-RI-P-AO-RR-LEG-ASR Reference Organization: Reference Title: Filing Status Changed: 03/03/2014 State Status Changed: 03/03/2014 Created By: Emily Overstreet Corresponding Filing Tracking Number: Status of Filing in Domicile: Domicile Status Comments: Reference Number: Advisory Org. Circular: Deemer Date: Submitted By: Emily Overstreet Filing Description: In accordance with Rhode Island's "file and use" filing provision, Liberty Insurance Corporation and Liberty Mutual Fire Insurance Company request permission to revise our Automobile base rates for renewal business. Both companies do not write new business. The base rate revision will have an overall rate impact of 7.0% and a written premium change of $1,997,982. If you should have any further questions or concerns please do not hesitate to reach out to me either by phone at (857) or by at Emily.Overstreet@LibertyMutual.com. Thank you for your consideration. Company and Contact Filing Contact Information Emily Overstreet, Sr. Associate, Product 175 Berkeley Street Mailstop J04H Boston, MA Filing Company Information Liberty Insurance Corporation 175 Berkeley Street Boston, MA (617) ext. [Phone] Emily.Overstreet@LibertyMutual.com [Phone] [Ext] [FAX] CoCode: Group Code: 111 Group Name: Liberty Mutual Group FEIN Number: State of Domicile: Illinois Company Type: State ID Number: Liberty Mutual Fire Insurance Company 175 Berkeley Street Boston, MA (617) ext. [Phone] CoCode: Group Code: 111 Group Name: Liberty Mutual Group FEIN Number: State of Domicile: Wisconsin Company Type: State ID Number: Filing Fees Fee Required? Yes Fee Amount: $25.00 Retaliatory? No Fee Explanation: $25.00 for revised rates PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

3 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Per Company: Yes Company Amount Date Processed Transaction # Liberty Insurance Corporation $ /16/ State Specific This is a rate filing and I have completed the Rate Data fields on the Rate/Rule Schedule (Yes/No).: Yes PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

4 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Correspondence Summary Dispositions Status Created By Created On Date Submitted (02) Approved Rachel Chester 03/03/ /03/2014 Objection Letters and Response Letters Objection Letters Response Letters Status Created By Created On Date Submitted Responded By Created On Date Submitted (02) Awaits Debra Stein 01/24/ /24/2014 Emily Overstreet 01/30/ /30/2014 Company Response (02) Awaits Debra Stein 12/11/ /11/2013 Emily Overstreet 12/31/ /31/2013 Company Response (02) Awaits Augustine Park 11/07/ /07/2013 Emily Overstreet 11/14/ /14/2013 Company Response (02) Awaits Company Response Candy Casala, CIC 10/18/ /18/2013 Emily Overstreet 02/07/ /07/2014 Filing Notes Subject Note Type Created By Created On Date Submitted Status Update Note To Reviewer Emily Overstreet 03/03/ /03/2014 Re: Status Update Note To Filer Rachel Chester 02/19/ /19/2014 Status Update Note To Reviewer Emily Overstreet 02/19/ /19/2014 UM Coverage Information Note To Reviewer Emily Overstreet 02/13/ /13/2014 1/24/14 Objection Response Revision Note To Reviewer Emily Overstreet 02/07/ /07/2014 Teleconference Note To Filer Debra Stein 02/04/ /04/2014 Teleconference Request with Liberty Mutual Actuary Note To Reviewer Emily Overstreet 02/03/ /03/2014 Teleconference Confirmation Note To Filer Debra Stein 02/03/ /03/2014 Teleconference Request Note To Filer Debra Stein 01/31/ /31/2014 Inquiry Regarding Question #1, #3 from 1/24/14 Note To Reviewer Emily Overstreet 01/27/ /27/2014 Objection Status update Note To Filer Debra Stein 01/10/ /10/2014 PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

5 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Filing Notes Subject Note Type Created By Created On Date Submitted Status Update Note To Reviewer Emily Overstreet 01/09/ /09/ /11/13 Objection Response Documents Note To Reviewer Emily Overstreet 12/31/ /31/2013 RI Deemer Provisions Note To Reviewer Emily Overstreet 10/22/ /22/2013 PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

6 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Disposition Disposition Date: 03/03/2014 Effective Date (New): Effective Date (Renewal): 03/30/2014 Status: (02) Approved Comment: Company Name: Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Overall % Indicated Overall % Rate Written Premium Change for Number of Policy Holders Affected Written Premium for Maximum % Change Minimum % Change Change: Impact: this Program: for this Program: this Program: (where req'd): (where req'd): % 6.900% $17, $284, % 4.680% % 7.000% $1,758,299 12,846 $26,936, % 3.870% Overall Rate Information for Multiple Company Filings Overall Percentage Rate Indicated For This Filing % Overall Percentage Rate Impact For This Filing 7.000% Effect of Rate Filing-Written Premium Change For This Program $1,776,126 Effect of Rate Filing - Number of Policyholders Affected 12,950 Schedule Schedule Item Schedule Item Status Public Access Supporting Document (revised) Actuarial Support- RI Rate Procedural Informational (06) Closed- Approved with Yes Summary Form required for all New (including startups) and revisions to existing rates Review Supporting Document Uninsured Motorist Mandatory Form (06) Closed- Approved with Yes Review Supporting Document (revised) Actuarial Justification (06) Closed- Approved with Yes Review Supporting Document Actuarial Certification (06) Closed- Approved with Yes Review Supporting Document R Pages Mock-Ups (06) Closed- Approved with Yes Review Supporting Document 11/07/13 Objection Response (06) Closed- Approved with Review Yes PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

7 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Schedule Schedule Item Schedule Item Status Public Access Supporting Document 12/11/13 Objection Response (06) Closed- Approved with Yes Review Supporting Document 1/24/2014 Objection Response (06) Closed- Approved with Yes Review Supporting Document 1/24/2014 Objection Response Revised 2/07/14 (06) Closed- Approved with Yes Review Supporting Document Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates (06) Closed- Approved with Review Yes Supporting Document Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates (06) Closed- Approved with Review Supporting Document Actuarial Justification (06) Closed- Approved with Review Supporting Document Actuarial Justification (06) Closed- Approved with Review Rate R Pages (06) Closed- Approved with Review Rate R Pages (06) Closed- Approved with Review Rate R Pages (06) Closed- Approved with Review Rate R Pages (06) Closed- Approved with Review Yes Yes Yes Yes Yes Yes Yes PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

8 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Objection Letter Objection Letter Status (02) Awaits Company Response Objection Letter Date 01/24/2014 Submitted Date 01/24/2014 Respond By Date Dear Emily Overstreet, Introduction: The following issues must be addressed before the review of your filing can be completed. Please see attached. Conclusion: Please address the above issues presented as soon as possible to avoid a delay in completing the review of your filing. Sincerely, Debra Stein PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

9 Ted Zubulake Oliver Wyman 1166 Avenue of the Americas, 28 th Floor New York, NY Fax January 24, 2014 VIA SERFF Ms. Emily Overstreet Sr. Associate, Product Development Liberty Mutual Insurance Group 175 Berkeley Street Mailstop J04H Boston, MA Subject: Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Private Passenger Automobile Rate Filing SERFF No.: LBPM Dear Ms. Overstreet: We have completed our review of your December 31, 2013 response to our inquiries of December 11, 2013, and find that responses to the attached additional inquiries will assist in our continuing review of this filing. Please provide the information as described in the attached request. The response to these questions should be submitted via SERFF. If any questions should arise concerning the requested information, please submit a Note to Reviewer via SERFF. Sincerely, Ted J. Zubulake, FCAS, MAAA Robin V. Fitzgerald, FCAS, MAAA TJZ:RVF Copy: Rachel Chester, Senior Insurance Analyst, DBR g:\active\rhc\rhc03\rhc03599\requestc doc

10 Page 2 January 24, 2014 Ms. Emily Overstreet Liberty Mutual Insurance Group Request for Additional Information Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Private Passenger Automobile Rate Filing SERFF No.: LBPM Provide an alternate rate indication with the following modifications: a) Adjust the complement of credibility to reflect the trend period from the midpoint of the current rates to the midpoint of the proposed rates. b) Utilize only historical data from LMFIC and LIC. In doing so, revisit premium trend selections if warranted. c) Utilize the updated LAE provision that was included with the December 31, 2013 response. d) Provide one scenario with the profit provision as submitted in the initial filing, and another scenario based on a 12.0% expected return on statutory surplus. 2. Does the selected provision for Acquisition Expense include any adjustment to reflect the lower expenses associated with a renewal-only book of business? If yes, provide details. If no, explain why no adjustment is necessary. 3. Explain what is driving the sharp increase in countrywide auto fixed expense, and explain if the factors driving this trend are applicable to a renewal-only book of business. 4. Explain the process used to update the Model Year Symbol table, and provide support for the offset to comprehensive and collision base rates. (We note that is a repeat question from our December 11, 2013 request, since we find the response submitted on December 31, 2013 to be incomplete.)

11 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Objection Letter Objection Letter Status (02) Awaits Company Response Objection Letter Date 12/11/2013 Submitted Date 12/11/2013 Respond By Date Dear Emily Overstreet, Introduction: The following issues must be addressed before the review of your filing can be completed. Please see attached. Conclusion: Please address the above issues presented as soon as possible to avoid a delay in completing the review of your filing. Sincerely, Debra Stein PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

12 Ted Zubulake Oliver Wyman 1166 Avenue of the Americas, 28 th Floor New York, NY Fax December 11, 2013 VIA SERFF Ms. Emily Overstreet Sr. Associate, Product Development Liberty Mutual Insurance Group 175 Berkeley Street Mailstop J04H Boston, MA Subject: Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Private Passenger Automobile Rate Filing SERFF No.: LBPM Dear Ms. Overstreet: We have completed our review of your November 14, 2013 response to our inquiries of November 7, 2013, and find that responses to the attached additional inquiries will assist in our continuing review of this filing. Please provide the information as described in the attached request. The response to these questions should be submitted via SERFF. If any questions should arise concerning the requested information, please call Ms. Candace Casala at the Department of Business Regulation ( ). Sincerely, Ted J. Zubulake, FCAS, MAAA Robin V. Fitzgerald, FCAS, MAAA TJZ:RVF Copy: Candace A. Casala, CIC, Senior Insurance Rate Analyst, DBR g:\active\rhc\rhc03\rhc03599\requestb doc

13 Page 2 December 11, 2013 Ms. Emily Overstreet Liberty Mutual Insurance Group Request for Additional Information Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Private Passenger Automobile Rate Filing SERFF No.: LBPM According to Exhibit VIII, LMGIC/LM-IC has not had the same rate changes in 2013 as LMFIC/TFLIC/LIC. a) Explain how the on-level factors on Exhibit II were developed, considering the varying rate history associated with the data included in the base years. b) Reconcile the varying rate changes with the statement LMFIC and LIC are subject to the same rating programs as are LMGIC/LM-IC from Item 3 of your November 14, 2013 response. c) Explain if TFLIC data is included in the filing as well as data from LMFIC/LIC and LMGIC/LM-IC. 2. Refine the table provided in Item 3 of your November 14, 2013 response to show a breakdown by company (LMFIC vs. LIC vs. TFLIC if applicable) of the premium, loss and claim count data within the indication. 3. Provide alternate rate indications using only the historical data from LMFIC and LIC (it is not necessary to submit supporting exhibits). Include scenarios using the following premium trend assumptions: a) The historical and prospective premium trends selected in the submitted rate indication; b) 0% liability premium trend.

14 Page 3 December 11, 2013 Ms. Emily Overstreet Liberty Mutual Insurance Group 4. With respect to the support for the premium trend selections provided in Item 6 of your November 14, 2013 response: a) Explain how the trend figures in the chart are calculated. b) Explain why Liberty believes that items such as endorsements, not-taken renewals and mid-term cancellations are a significant contributor to negative liability trend, given that the decrease in premium is accompanied by a commensurate decrease in exposure. 5. Explain the reason for the sharp decline in LAE ratios since In doing so, explain why Liberty believes that 2010 LAE ratios are still predictive of LAE ratios in future periods, given the much lower ratios observed in 2011 and Provide alternate dislocation statistics in response to Items 12 and 13 of the Rhode Island Rate Procedural Informational Summary Form to reflect the cumulative impact of the proposed rate change and the prior rate increase effective 7/12/2013. In doing so, reflect the rate impacts that insureds would experience in a single annual period as a result of both rate changes. 7. Explain the process used to update the Model Year Symbol table, and provide support for the offset to comprehensive and collision base rates.

15 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Objection Letter Objection Letter Status (02) Awaits Company Response Objection Letter Date 11/07/2013 Submitted Date 11/07/2013 Respond By Date Dear Emily Overstreet, Introduction: Attached is the Request (A) submission. Conclusion: Sincerely, Augustine Park PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

16 Ted Zubulake Oliver Wyman 1166 Avenue of the Americas, 28 th Floor New York, NY Fax November 7, 2013 VIA SERFF Ms. Emily Overstreet Sr. Associate, Product Development Liberty Mutual Insurance Group 175 Berkeley Street Mailstop J04H Boston, MA Subject: Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Private Passenger Automobile Rate Filing SERFF No. LBPM Dear Ms. Overstreet: Oliver Wyman Actuarial Consulting, Inc. has been retained by the Rhode Island Department of Business Regulation to conduct a review of the above captioned filing. In order that we may complete our review, please provide the information as described in the attached request. The response to these questions should be submitted via SERFF. If any questions should arise concerning the requested information, please call Ms. Candace Casala at the Department of Business Regulation ( ). Sincerely, Ted J. Zubulake, FCAS, MAAA Debra R. Stein, ACAS, MAAA TJZ:DRS:ap Copy: Candace A. Casala, CIC, Senior Insurance Rate Analyst, DBR g:\active\rhc\rhc03\rhc03599\requesta.doc

17 Page 2 November 7, 2013 Ms. Emily Overstreet Liberty Mutual Insurance Group Request for Additional Information Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Private Passenger Automobile Rate Filing SERFF No. LBPM The proposed base rates by territory for comprehensive and collision listed on Page R-1 of the company manual do not appear to be calculated by adjusting the current rates for the proposed rate level change. Please reconcile. 2. Provide the overall proposed rate level change separately for each company (based on the distribution of business for each company in Rhode Island) that result in an all-company combined rate level change of +7.0%. 3. Provide the breakdown of the earned premium, incurred losses, and number of claims by company and coverage for each year reflected in the all-company combined rate level indication calculation. In doing so, explain why Liberty does not calculate rate level change indications separately for each company. 4. Expand Exhibit III, Sheet 1 and Exhibit III, Sheet 2 to include all components of the indicated change by coverage and the derivation of the total indicated change by coverage. 5. Explain why Liberty is proposing a rate level change higher than indicated for collision. In doing so, confirm that an insured may not purchase collision coverage alone. 6. Regarding the premium trend rates, a) explain what is causing the negative premium trend rates for liability, and b) provide the resulting overall indicated rate level change reflecting a premium trend rate of 0.0% for each of the liability coverages and leaving all other components of the indication unchanged (it is not necessary to submit supporting exhibits). 7. Regarding the loss development triangle for Rhode Island medical payments, expand Exhibit IV, Sheet 3 to include the calculated factors as was submitted for the other coverages.

18 Page 3 November 7, 2013 Ms. Emily Overstreet Liberty Mutual Insurance Group 8. Provide the rationale for the selected loss trend rate of 5% for PD, UMPD, and collision based on the fits of data shown in the exhibit. In doing so, explain how Liberty has considered the credibility of its data in making the selection. We note also that Industry Fast Track data is available through 2Q13 (data through 1Q13 is reflected in the filing). 9. Regarding the annual fixed expense ratio trend (Exhibit VII, Sheet 1): a) Provide support for the countrywide auto PIF growth of +3.4%. b) Provide support for the countrywide auto fixed expense change of +6.7% (increased from +4.9% in Liberty s prior fling). c) Provide support for the countrywide auto premium trend rate of -2.7%. 10. Provide the derivation of Row 11, Exhibit I, Sheet 1 and Exhibit I, Sheet 2 by coverage. 11. Provide support for the overall proposed rate level change for towing and labor of +61.3%.

19 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Objection Letter Objection Letter Status (02) Awaits Company Response Objection Letter Date 10/18/2013 Submitted Date 10/18/2013 Respond By Date Dear Emily Overstreet, Introduction: The following issues must be addressed before the review of your filing can be completed. The above-captioned filing has been sent to our consulting actuary for review. Kindly mark your records that we are extending the deemer provisions beyond the thirty (30) days as allowed under Rhode Island rating laws. This will allow us sufficient time to make a comprehensive review of the filing. Please submit a Note to Reviewer acknowledging the insurer will not implement the filing until we have an opportunity to conclude our review. Otherwise, we may have no other alternative than to disapprove the above-captioned filing and offer the insurer the right to a hearing to resolve our actuarial concerns. Thank you. Conclusion: Please address the above issues presented as soon as possible to avoid a delay in completing the review of your filing. Sincerely, Candy Casala, CIC PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

20 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Response Letter Response Letter Status Submitted to State Response Letter Date 01/30/2014 Submitted Date 01/30/2014 Dear Rachel Chester, Introduction: Thank you for this opportunity to respond to your 1/24 objection letter. Response 1 Comments: Attached please find a document containing our responses labeled "1/24/14 Objection Response." Changed Items: Supporting Document Schedule Item Changes Satisfied - Item: 1/24/2014 Objection Response Comments: Attachment(s): AO SR 1 24 Objection Response.pdf No Form Schedule items changed. No Rate/Rule Schedule items changed. Conclusion: Thank you. Emily Please feel free to contact me with any further questions or concerns. Sincerely, Emily Overstreet PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

21 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Response Letter Response Letter Status Submitted to State Response Letter Date 12/31/2013 Submitted Date 12/31/2013 Dear Rachel Chester, Introduction: Thank you for the opportunity to respond to your objection dated 12/11/13. Response 1 Comments: Attached please find a document containing our responses labeled "12/11/13 Objection Response." Changed Items: Supporting Document Schedule Item Changes Satisfied - Item: 12/11/13 Objection Response Comments: Attachment(s): AO SR Objection Response R2.pdf No Form Schedule items changed. No Rate/Rule Schedule items changed. Conclusion: Thank you. Emily Please do not hesitate to contact me with any further questions or concerns. Sincerely, Emily Overstreet PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

22 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Response Letter Response Letter Status Submitted to State Response Letter Date 11/14/2013 Submitted Date 11/14/2013 Dear Rachel Chester, Introduction: Response 1 Comments: Thank you for the opportunity to respond to your objection dated 11/07/13. Attached please find a document containing our responses to your inquiries as well as a revised Rate Procedural Summary Form and Actuarial Justification. Feel free to contact me with any further questions or concerns. Thank you. Emily Changed Items: Supporting Document Schedule Item Changes Satisfied - Item: 11/07/13 Objection Response Comments: Attachment(s): AO SR Objection Response R1.pdf PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

23 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Supporting Document Schedule Item Changes Satisfied - Item: 11/07/13 Objection Response Comments: Attachment(s): AO SR Objection Response R1.pdf Satisfied - Item: Comments: Attachment(s): Previous Version Satisfied - Item: Comments: Attachment(s): Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Rate Procedure Summary -LMFIC LIC.pdf Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Rate Procedure Summary -LMFIC LIC.pdf PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

24 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Supporting Document Schedule Item Changes Satisfied - Item: 11/07/13 Objection Response Comments: Attachment(s): AO SR Objection Response R1.pdf Satisfied - Item: Comments: Attachment(s): Previous Version Satisfied - Item: Comments: Attachment(s): Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Rate Procedure Summary -LMFIC LIC.pdf Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Rate Procedure Summary -LMFIC LIC.pdf Satisfied - Item: Comments: Attachment(s): Previous Version Satisfied - Item: Comments: Attachment(s): Actuarial Justification LMFIC LIC Actuarial Justification.pdf Actuarial Justification LMFIC LIC Actuarial Justification.pdf No Form Schedule items changed. No Rate/Rule Schedule items changed. Conclusion: Sincerely, Emily Overstreet PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

25 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Response Letter Response Letter Status Submitted to State Response Letter Date 02/07/2014 Submitted Date 02/07/2014 Dear Rachel Chester, Introduction: Response 1 Comments: Please see Note to Reviewer Changed Items: Supporting Document Schedule Item Changes Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Previous Version Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Previous Version Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

26 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Supporting Document Schedule Item Changes Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Previous Version Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Previous Version Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Satisfied - Item: Comments: Attachment(s): Previous Version Satisfied - Item: Comments: Attachment(s): Previous Version Satisfied - Item: Comments: Attachment(s): Actuarial Justification LMFIC LIC Actuarial Justification.pdf Actuarial Justification LMFIC LIC Actuarial Justification.pdf Actuarial Justification LMFIC LIC Actuarial Justification.pdf PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

27 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Supporting Document Schedule Item Changes Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Previous Version Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Previous Version Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Satisfied - Item: Comments: Attachment(s): Previous Version Satisfied - Item: Comments: Attachment(s): Previous Version Satisfied - Item: Comments: Attachment(s): Actuarial Justification LMFIC LIC Actuarial Justification.pdf Actuarial Justification LMFIC LIC Actuarial Justification.pdf Actuarial Justification LMFIC LIC Actuarial Justification.pdf Satisfied - Item: 1/24/2014 Objection Response Revised 2/07/14 Comments: Objection 3 AO LMFIC_LIC - Revised pdf Attachment(s): Attachment A.pdf Attachment B.pdf PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

28 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR No Form Schedule items changed. No Rate/Rule Schedule items changed. Conclusion: Sincerely, Emily Overstreet PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

29 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 03/03/ :37 AM Last Edited By: Emily Overstreet Submitted On: 03/03/ :38 AM Subject: Status Update Comments: Good morning, We just wanted to again inquire about the status of this filing. Any updates would be much appreciated. Thank you. Emily PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

30 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Filer Created By: Rachel Chester on 02/19/ :42 PM Last Edited By: Rachel Chester Submitted On: 02/19/ :42 PM Subject: Re: Status Update Comments: Dear Ms. Overstreet, Associate Director Paula Pallozzi was assigned to this fliing for manager review on Friday 2/14. She is aware of the expedited review request, however, has been away from the office the last couple of days. I anticipate her completed review by the end of the week. Respectfully, Rachel Chester Senior Insurance Analyst PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

31 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 02/19/ :15 PM Last Edited By: Emily Overstreet Submitted On: 02/19/ :15 PM Subject: Status Update Comments: Good afternoon, We would like to inquire on the status of this filing. We are pushing up against our system deadline, so any updates you have would be much appreciated. Thank you. Emily Overstreet PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

32 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 02/13/ :15 AM Last Edited By: Emily Overstreet Submitted On: 02/13/ :15 AM Subject: UM Coverage Information Comments: Good morning, As discused in our phone call this morning, the information you requested for UM is as follows: UM cannot be purchased as standalone coverage. UM must be purchased with liability. Please let us know if you have any further questions or concerns. Thank you. Emily PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

33 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 02/07/ :16 PM Last Edited By: Emily Overstreet Submitted On: 02/07/ :45 PM Subject: 1/24/14 Objection Response Revision Comments: Good afternoon, As per our phone call this morning, Liberty Mutual has revised our 1/24/14 objection response. Please find our updated response and exhibits under supporting documentation tab labeled "1/24/14 Objection Response Revised 2/07/14." Please let me know if you have any questions or concerns. Thank you. Emily PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

34 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Filer Created By: Debra Stein on 02/04/ :18 AM Last Edited By: Debra Stein Submitted On: 02/04/ :18 AM Subject: Teleconference Comments: This is to confirm that a teleconference is scheduled for 11:30 am on Friday 2/7. Dial in information: # PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

35 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 02/03/ :14 PM Last Edited By: Emily Overstreet Submitted On: 02/03/ :14 PM Subject: Teleconference Request with Liberty Mutual Actuary Comments: Good afternoon, Based on my phone conversation with Robin Fitzergerald this afternoon, we would like to request another teleconference with Robin that would include our actuary. Wednesday or Friday of this week works best for a call. Please let me know. Thank you. Emily PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

36 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Filer Created By: Debra Stein on 02/03/ :08 PM Last Edited By: Debra Stein Submitted On: 02/03/ :08 PM Subject: Teleconference Confirmation Comments: This is to confirm that a teleconference was held today (2/3) to discuss outstanding issues on this filing. The company will provide additional information via SERFF. PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

37 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Filer Created By: Debra Stein on 01/31/ :20 PM Last Edited By: Debra Stein Submitted On: 01/31/ :20 PM Subject: Teleconference Request Comments: Please call Robin Fitzgerald at to discuss your 1/27 inquiry and 1/30 objection response. Robin has tried calling you at both numbers you have provided ( and ext ) and has been unable to get through. Thank you. PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

38 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 01/27/ :11 AM Last Edited By: Emily Overstreet Submitted On: 01/27/ :12 AM Subject: Inquiry Regarding Question #1, #3 from 1/24/14 Objection Comments: Good morning, After reviewing the objection questions sent on 1/24, we just wanted to get some clarification on Question #1. For Question #1, would you like us to provide a full complement of actuarial exhibits to support the scenarios requested? For Part a) of Question #1, would you please provide some clarification on what time period the "midpoint of current rates" represents? And lastly, can you please confirm that you want to see parts a), b), and c) of Question #1 in conjunction and not in isolation? Please let me know if you have any questions. We look forward to addressing your concerns. Thank you. Emily PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

39 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Filer Created By: Debra Stein on 01/10/ :27 AM Last Edited By: Debra Stein Submitted On: 01/10/ :27 AM Subject: Status update Comments: The response submitted on 12/31 is still under review. We will advise if there are any follow-up questions. PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

40 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 01/09/ :41 AM Last Edited By: Emily Overstreet Submitted On: 01/09/ :41 AM Subject: Status Update Comments: Good morning, We just wanted to inquire about the status of this filing. Any updates would be much appreciated. Please feel free to contact me by phone at (857) or by at Thank you for your assistance. Emily Overstreet PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

41 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 12/31/ :55 AM Last Edited By: Emily Overstreet Submitted On: 12/31/ :55 AM Subject: 12/11/13 Objection Response Documents Comments: Good morning, In our initial objection response submitted this morning (12/31), we mistakenly left out the revised actuarial justification and rate procedural summary. Both are included in supporting documentation and attached to this . Thank you and feel free to contact me with any further questions or concerns. Sincerely, Emily PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

42 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Liberty Mutual Fire Insurance Company (LMFIC) The First Liberty Insurance Corporation (TFLIC) Liberty Insurance Corporation (LIC) Summary of Rate Indications Narrative The most current rate level indication for Rhode Island Automobile is +16.7% with a renewal business effective date of March 30, 2014 for all companies. Past and Prospective Experience Within and Outside the State Calendar year earned premiums and accident year losses (incurred losses for Liability and paid losses for Physical Damage) are utilized in the indication. Three years of experience are used for both Liability and Physical Damage coverages beginning July 1, 2010 and ending June 30, Losses are evaluated as of June 30, The credibility weighted indications are +24.5% for Liability (See Exhibit I, Sheet 1) and +4.2% for Physical Damage (See Exhibit I, Sheet 2). The overall indication is +16.7%. Liability and Physical Damage premiums are brought to current level by means of the parallelogram method. Liability premium is adjusted to reflect a reduction in the average onleveled earned premium. Physical Damage premium is also adjusted to reflect the effects of Symbol Trend, Model Year and Deductible shift. Exhibit IV shows the development of losses by accident year. Countrywide loss development factors were utilized for because Medical Payments loss development patterns based on Rhode Island data exhibit a high amount of volatility in the historical period. For all other coverages, Rhode Island loss data was used to select loss development factors. For each coverage, two annual trend factors are selected. The historical trend factor brings losses from the midpoint of each accident year used in the experience period to the midpoint of the latest accident year in the experience period. In this case, the midpoint of the latest accident year is January 1, The loss projection factor brings losses from the midpoint of the latest accident year to one year beyond the proposed effective date (i.e. average accident date of the proposed policy effective period). In this case, losses are trended to March 30, The loss trend selections are based on both Liberty and Industry Fast Track data and are shown in Exhibit V. Fixed expense ratios of 21.0% and 22.0%, as a percent of Earned Premium, were calculated for Liability and Physical Damage, respectively (See Exhibit VII) and then added to the developed and trended loss ratio to determine the overall indicated loss, fixed expense and loss adjustment expense ratio Liberty Mutual Group. All Rights Reserved.

43 A catastrophe load factor of is selected based on the long-term catastrophe experience in Rhode Island (See Exhibit VI). Catastrophe losses are removed from the Comprehensive loss experience and the data is then adjusted by including the selected catastrophe load. Insurer Operating Expenses Both Liability and Physical Damage incurred losses are adjusted to include all loss adjustment expenses. Based on Liberty Mutual Rhode Island projections we have selected the LAE factors of for non-medpay Liability, for MedPay and for Physical Damage. The projected permissible loss, fixed expense and loss adjustment expense ratio for Liability is +89.2%. The projected permissible loss, fixed expense, and loss adjustment expense ratio for Physical Damage is +84.7% (see Exhibit VII). Index of Exhibits Exhibit I II III IV V VI VII VIII Appendix A Description Liability and Physical Damage Rate Level Indications Premium Exhibit Loss Exhibit Loss Development Triangles Trend Analysis Catastrophe Provision Calculation Permissible Loss Ratio Calculation Rate Change History Automobile Profit Provision 2013 Liberty Mutual Group. All Rights Reserved.

44 Liberty Mutual Insurance Rhode Island Combined Combined Coverages Rate Level Indication A) 1-Year Total Liability Earned Premium at Current Level and at Total Limits 22,757,170 B) 1-Year Total Physical Damage Earned Premium at Current Level 14,333,350 C) Total Earned Premium at Current Level: (A) + (B) 37,090,520 D) Total Liability Rate Indication (See Exhibit I, Sheet 1) 24.5% E) Total Physical Damage Rate Indication (See Exhibit I, Sheet 2) 4.3% F) Overall Rate Indication 16.7% 2013 Liberty Mutual Insurance. All Rights Reserved.

45 Exhibit I Sheet 1 Liberty Mutual Insurance Rhode Island Combined Total Limits Liability Rate Level Indication Accident Period: 07/01/2010 to 06/30/ Year Total 1) Total Limits Earned Premium at Collected Level (See Exhibit II) Bodily Injury/Property Damage 51,854,819 Medical Payments 1,251,281 UM/UIM 11,605,556 Total Liability 64,711,656 2) Earned Premium at Current Level Including Premium Trend (See Exhibit II) Bodily Injury/Property Damage 53,849,346 Medical Payments 1,209,289 UM/UIM 10,093,639 Total Liability 65,152,274 3) Total Limits Incurred Loss as of 06/13 (See Exhibit III) Bodily Injury 16,531,486 Property Damage 13,088,743 Medical Payments 1,919,907 UM/UIM 3,467,315 Total Liability 35,011,192 4) Total Limits Ultimate Loss and LAE (See Exhibit III) Bodily Injury 25,855,287 Property Damage 16,431,847 Medical Payments 2,287,539 UM/UIM 5,118,960 Total Liability 49,698,171 5) Total Limits Ultimate and Trended Loss and LAE (See Exhibit III) Bodily Injury 29,316,430 Property Damage 19,193,807 Medical Payments 2,357,642 UM/UIM 5,850,119 Total Liability 56,722,536 6) Fixed Expenses (See Exhibit VII) Bodily Injury 21.0% Medical Payments 21.0% UM/UIM 21.0% 7) Indicated Loss, LAE and Fixed Expense Ratio [(5)/(2)+(6)] Bodily Injury/Property Damage 111.1% Medical Payments 216.0% UM/UIM 79.0% 8) Permissible Loss, LAE, and Fixed Expense Ratio (See Exhibit VII) 89.2% 9) Indicated Rate Change [(7) /(8) - 1] Bodily Injury/Property Damage 24.5% Medical Payments 142.0% UM/UIM -11.5% 10) Credibility Bodily Injury/Property Damage: Full Credibility Based on 3,000 PD Claims 100.0% Medical Payments: Full Credibility Based on 3,000 MP Claims 54.2% UM/UIM: Full Credibility Based on 3,000 UM Claims 33.9% 11) Complement of Credibility (Average Loss Ratio Trend) Bodily Injury/Property Damage 19.2% Medical Payments 14.7% UM/UIM 31.9% 12) Credibility Weighted Rate Indication {(9)*(10) + (11)*[1-(10)]} Bodily Injury/Property Damage 24.5% Medical Payments 83.8% UM/UIM 17.2% Total Liability (Weighted Average of Coverages. Weights = (2), Year Ending 06/30/2013) 24.5% 2013 Liberty Mutual Insurance. All Rights Reserved.

46 Exhibit I Sheet 2 Liberty Mutual Insurance Rhode Island Combined Physical Damage Rate Level Indication Accident Period: 07/01/2010 to 06/30/ Year Total 1) Earned Premium at Collected Level (See Exhibit II) Comprehensive 7,325,236 Collision 26,839,201 Total 34,164,436 2) Earned Premium at Current Level Including Premium Trend (See Exhibit II) Comprehensive 8,918,792 Collision 32,237,660 Total 41,156,452 3) Paid Loss as of 06/13 (See Exhibit III) Comprehensive 4,617,755 Collision 15,096,629 Total 19,714,384 4) Ultimate Loss and LAE (See Exhibit III) Comprehensive 5,968,696 Collision 17,658,996 Total 23,627,693 5) Ultimate and Trended Loss and LAE (See Exhibit III) Comprehensive 6,746,196 Collision 20,614,444 Total 27,360,640 6) Fixed Expenses (See Exhibit VII) Comprehensive 22.0% Collision 22.0% 7) Indicated Loss, LAE and Fixed Expense Ratio [(5)/(2)+(6)] Comprehensive 97.7% Collision 86.0% 8) Permissible Loss, LAE, and Fixed Expense Ratio (See Exhibit VII) 84.7% 9) Indicated Rate Change [(7) /(8) - 1] Comprehensive 15.3% Collision 1.5% 10) Credibility Comprehensive: Full Credibility Based on 3,000 Collision Claims 93.6% Collision: Full Credibility Based on 3,000 Collision Claims 100.0% 11) Complement of Credibility (Average Loss Ratio Trend) Comprehensive 4.4% Collision 6.7% 12) Credibility Weighted Rate Indication {(9)*(10) + (11)*[1-(10)]} Comprehensive 14.6% Collision 1.5% Total Physical Damage (Weighted Average of Coverages. Weights = (2), Year Ending 06/30/2013) 4.3% 2013 Liberty Mutual Insurance. All Rights Reserved.

47 Exhibit II Liberty Mutual Insurance Private Passenger Automobile Rhode Island Earned Premium Accident Period: 07/01/2010 to 06/30/2013 Data Evaluated as of: 06/30/2013 Calculation of Trended Earned Premium at Current Rate Level Combined Bodily Injury/Property Damage Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 16,261, ,202, ,367, /01/11 to 06/30/12 16,901, ,810, ,648, /01/12 to 06/30/13 18,692, ,398, ,833, Total 51,854,819 60,411,841 53,849,346 MedPay Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 399, , , /01/11 to 06/30/12 416, , , /01/12 to 06/30/13 435, , , Total 1,251,281 1,427,724 1,209,289 UM Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 3,718, ,284, ,206, /01/11 to 06/30/12 3,904, ,290, ,380, /01/12 to 06/30/13 3,982, ,226, ,506, Total 11,605,556 12,800,864 10,093,639 Comprehensive Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 2,224, ,694, ,901, /01/11 to 06/30/12 2,374, ,750, ,918, /01/12 to 06/30/13 2,726, ,964, ,098, Total 7,325,236 8,408,711 8,918,792 Collision Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 8,177, ,602, ,444, /01/11 to 06/30/12 8,749, ,901, ,558, /01/12 to 06/30/13 9,911, ,747, ,234, Total 26,839,201 30,251,142 32,237, Liberty Mutual Insurance. All Rights Reserved.

48 Exhibit III Sheet 1 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Loss Experience Accident Period: 07/01/2010 to 06/30/2013 Data Evaluated as of: 06/30/2013 Combined Incurred Loss Method Losses Developed to Ultimate Bodily Injury Total Limits Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 6,013, ,851, ,273, /01/11 to 06/30/12 6,088, ,790, ,983, /01/12 to 06/30/13 4,430, ,212, ,059, Total 16,531,486 25,855,287 29,316,430 Property Damage Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 4,086, ,919, ,051, /01/11 to 06/30/12 4,445, ,362, ,282, /01/12 to 06/30/13 4,556, ,149, ,860, Total 13,088,743 16,431,847 19,193,807 UMBI/UIM Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 1,122, ,466, ,731, /01/11 to 06/30/12 1,300, ,877, ,132, /01/12 to 06/30/13 568, ,182, ,291, Total 2,991,819 4,526,220 5,155,148 UMPD Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 154, , , /01/11 to 06/30/12 185, , , /01/12 to 06/30/13 136, , , Total 475, , ,971 Medical Payments Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 507, , , /01/11 to 06/30/12 547, , , /01/12 to 06/30/13 865, ,070, ,094, Total 1,919,907 2,287,539 2,357, Liberty Mutual Insurance. All Rights Reserved.

49 Exhibit III Sheet 2 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Loss Experience Accident Period: 07/01/2010 to 06/30/2013 Data Evaluated as of: 06/30/2013 Combined Paid Loss Method Losses Developed to Ultimate Comprehensive xcat Loss Trended Experience Paid Development Developed Trend Developed Period Loss Factor LAE Load CAT Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 1,311, ,655, ,955, /01/11 to 06/30/12 1,467, ,857, ,109, /01/12 to 06/30/13 1,838, ,455, ,680, Total 4,617,755 5,968,696 6,746,196 Collision Loss Trended Experience Paid Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 4,416, ,238, ,444, /01/11 to 06/30/12 4,760, ,632, ,598, /01/12 to 06/30/13 5,919, ,787, ,571, Total 15,096,629 17,658,996 20,614, Liberty Mutual Insurance. All Rights Reserved.

50 Liberty Mutual Insurance Rhode Island Bodily Injury/UM Bodily Injury/UIM Bodily Injury - Total Limits Incurred Losses Acc Year/ Maturity Age Jul2003-Jun2004 5,034,696 5,994,336 6,483,745 6,939,297 6,902,591 6,864,066 6,944,719 6,977,636 6,988,136 6,988,136 Jul2004-Jun2005 4,464,762 5,965,722 6,494,840 7,410,155 7,624,602 7,588,938 7,586,360 7,635,872 7,630,772 Jul2005-Jun2006 4,559,655 6,226,478 6,377,107 6,445,907 6,518,182 6,591,324 6,645,699 6,813,373 Jul2006-Jun2007 4,814,223 6,065,929 6,653,217 6,879,489 6,977,929 7,053,001 7,068,653 Jul2007-Jun2008 4,808,348 6,807,301 7,245,068 7,464,826 7,800,390 8,076,824 Jul2008-Jun2009 4,105,616 5,817,779 7,034,894 7,431,797 7,571,354 Jul2009-Jun2010 4,117,747 6,202,588 7,682,506 8,187,794 Jul2010-Jun2011 3,900,994 6,777,725 7,136,177 Jul2011-Jun2012 5,196,061 7,388,413 Jul2012-Jun2013 4,998,715 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Selected To Ultimate Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

51 Liberty Mutual Insurance Rhode Island Property Damage/UM Property Damage/UIM Property Damage - Incurred Losses Acc Year/ Maturity Age Jul2003-Jun2004 2,920,273 3,095,182 3,079,772 3,072,430 3,063,258 3,062,521 3,060,052 3,060,049 3,058,488 3,058,488 Jul2004-Jun2005 3,750,461 4,129,915 4,100,546 4,085,365 4,080,241 4,075,630 4,073,417 4,065,079 4,065,078 Jul2005-Jun2006 3,671,282 4,030,081 4,028,152 3,996,033 3,998,354 3,990,184 3,989,217 3,989,847 Jul2006-Jun2007 4,069,351 4,479,292 4,494,321 4,505,760 4,491,366 4,482,981 4,478,100 Jul2007-Jun2008 4,139,496 4,550,740 4,541,517 4,522,049 4,513,542 4,509,208 Jul2008-Jun2009 3,577,969 3,988,717 3,985,105 3,974,890 3,971,007 Jul2009-Jun2010 3,648,067 4,253,361 4,283,370 4,266,080 Jul2010-Jun2011 3,715,120 4,190,056 4,240,917 Jul2011-Jun2012 4,093,773 4,630,225 Jul2012-Jun2013 4,693,097 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Selected To Ultimate Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

52 Liberty Mutual Insurance Rhode Island Medical Payments - Incurred Losses Acc Year/ Maturity Age Jul2003-Jun , , , , , , , , , ,386 Jul2004-Jun , , , , , , , , ,338 Jul2005-Jun , , , , , , , ,059 Jul2006-Jun , , , , , , ,766 Jul2007-Jun , , , , , ,576 Jul2008-Jun , , , , ,895 Jul2009-Jun , , , ,628 Jul2010-Jun , , ,674 Jul2011-Jun , ,041 Jul2012-Jun ,192 Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

53 Liberty Mutual Insurance Rhode Island Comprehensive Excluding Catastrophes - Paid Loss, Including R/R Acc Year/ Maturity Age Jul2003-Jun , , , , , , , , , ,253 Jul2004-Jun2005 1,054,790 1,114,789 1,118,028 1,118,160 1,118,160 1,118,160 1,118,160 1,118,090 1,118,090 Jul2005-Jun2006 1,041,905 1,086,886 1,089,098 1,089,098 1,079,735 1,079,735 1,079,388 1,079,388 Jul2006-Jun2007 1,045,858 1,088,013 1,101,136 1,100,236 1,091,629 1,091,629 1,091,629 Jul2007-Jun2008 1,300,598 1,600,901 1,593,482 1,593,625 1,593,543 1,616,208 Jul2008-Jun2009 1,262,699 1,322,737 1,318,083 1,318,971 1,318,971 Jul2009-Jun2010 1,255,659 1,301,863 1,300,432 1,300,449 Jul2010-Jun2011 1,216,387 1,295,843 1,311,355 Jul2011-Jun2012 1,376,200 1,467,540 Jul2012-Jun2013 1,838,860 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Selected To Ultimate Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

54 Liberty Mutual Insurance Rhode Island Collision - Paid Losses Acc Year/ Maturity Age Jul2003-Jun2004 3,518,418 3,378,892 3,372,432 3,368,639 3,367,139 3,363,454 3,363,221 3,363,475 3,363,475 3,363,475 Jul2004-Jun2005 4,046,015 3,800,018 3,770,328 3,769,603 3,765,379 3,765,279 3,765,329 3,765,222 3,765,222 Jul2005-Jun2006 4,005,281 3,854,481 3,849,537 3,843,811 3,839,365 3,838,247 3,833,745 3,833,078 Jul2006-Jun2007 4,228,113 4,120,930 4,112,267 4,100,111 4,095,751 4,095,168 4,094,711 Jul2007-Jun2008 4,153,614 4,090,795 4,079,955 4,079,869 4,081,266 4,080,599 Jul2008-Jun2009 4,143,450 3,953,572 3,926,017 3,926,712 3,924,448 Jul2009-Jun2010 4,408,077 4,264,669 4,250,808 4,239,491 Jul2010-Jun2011 4,653,553 4,426,126 4,416,501 Jul2011-Jun2012 4,858,012 4,760,621 Jul2012-Jun2013 5,919,506 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Selected To Ultimate Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

55 Exhibit IV Sheet 6 Liberty Mutual Insurance Countrywide Tort (Includes AK, AL, AZ, AR, CA, CT, GA, ID, IL, IN, IA, LA, ME, MS, MO, MT, NE, NV, NH, NM, NC, OH, OK, RI, SD, TN, VT, VA, WV, WI, WY) PIP and Medical Payments - Incurred Losses Acc Half Yr/ Maturity Age Jul2003-Jun ,728,650 15,612,457 15,632,863 15,567,928 15,562,705 15,561,507 15,550,325 15,550,182 15,548,697 15,546,365 Jul2004-Jun ,079,720 21,739,056 21,513,531 21,444,144 21,375,477 21,336,163 21,335,934 21,335,083 21,321,709 Jul2005-Jun ,629,530 22,810,661 22,341,756 22,327,119 22,321,720 22,251,446 22,231,148 22,228,440 Jul2006-Jun ,437,866 22,541,822 22,725,800 22,667,090 22,611,705 22,590,562 22,579,248 Jul2007-Jun ,891,846 23,107,187 23,132,490 22,978,886 22,924,119 22,906,723 Jul2008-Jun ,487,796 25,359,487 25,330,465 25,391,962 25,306,953 Jul2009-Jun ,552,521 27,797,417 28,011,498 27,990,479 Jul2010-Jun ,807,838 29,200,518 29,533,058 Jul2011-Jun ,032,658 31,032,627 Jul2012-Jun ,325,175 Age to Age Factors Jul2002-Jun Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 3 periods Selected To Ultimate Liberty Mutual Insurance. All Rights Reserved.

56 Exhibit V Sheet 1 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Calculation of Loss Trend Factors Combined Historical Loss Trend Factors BI PD MP UMBI UMPD COMP COLL Selected Annual Historical Pure Premium Trend : 4.0% 5.0% 1.0% 4.0% 5.0% 4.0% 5.0% Experience Trend Trend Trend BI Loss PD Loss MP Loss UMBI Loss UMPD Loss Comp Loss Coll Loss Period From To Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor 07/01/10 to 06/30/11 1/1/2011 1/1/ /01/11 to 06/30/12 1/1/2012 1/1/ /01/12 to 06/30/13 1/1/2013 1/1/ Loss Projection Factors BI PD MP UMBI UMPD COMP COLL Selected Annual Projected Pure Premium Trend : 4.0% 5.0% 1.0% 4.0% 5.0% 4.0% 5.0% Experience Trend Trend Trend BI Loss PD Loss MP Loss UMBI Loss UMPD Loss Comp Loss Coll Loss Period From To Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor All 1/1/2013 3/30/ Combined Loss Trend Factors Experience BI Loss PD Loss MP Loss UMBI Loss UMPD Loss Comp Loss Coll Loss Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor 07/01/10 to 06/30/ /01/11 to 06/30/ /01/12 to 06/30/ Liberty Mutual Insurance. All Rights Reserved.

57 Exhibit V Sheet 2 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Calculation of Premium Trend Factors Combined Historical Premium Trend Factors BIPD MP UM Comp Collision Selected Annual Historical Premium Trend: -3.5% -5.0% -5.0% 1.5% 2.0% BIPD MP UM Comp Coll Experience Trend Trend Trend Premium Premium Premium Premium Premium Period From To Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor 07/01/10 to 06/30/11 1/1/2011 1/1/ /01/11 to 06/30/12 1/1/2012 1/1/ /01/12 to 06/30/13 1/1/2013 1/1/ Premium Projection Factors BIPD MP UM Comp Collision Selected Annual Projected Premium Trend: -3.5% -5.0% -8.0% 2.0% 2.0% BIPD MP UM Comp Coll Experience Trend Trend Trend Premium Premium Premium Premium Premium Period From To Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor All 1/1/2013 3/30/ Combined Premium Trend Factors BIPD MP UM Comp Coll Experience Premium Premium Premium Premium Premium Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor 07/01/10 to 06/30/ /01/11 to 06/30/ /01/12 to 06/30/ Liberty Mutual Insurance. All Rights Reserved.

58 Exhibit V Sheet 3 Rhode Island INDUSTRY Fast Track Trend Data ACTUAL DATA Prior 4 Qtrs. Bodily Injury Property Damage Personal Injury Protection Collision Comprehensive Ending Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Paid Paid Pure Year Qtr. Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Premium , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , ***** ***** ***** ***** 3, , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , FITTED TREND 1-Yr (5 pts) ***** ***** ***** ***** Yr (9 pts) ***** ***** ***** ***** Yr (13 pts) ***** ***** ***** ***** Yr (17 pts) ***** ***** ***** ***** Rhode Island LIBERTY MUTUAL Fast Track Trend Data ACTUAL DATA Prior 4 Qtrs. Bodily Injury Property Damage Personal Injury Protection Collision Comprehensive Ending Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Paid Paid Pure Year Qtr. Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Premium , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , FITTED TREND 1-Yr (5 pts) ***** ***** ***** ***** Yr (9 pts) ***** ***** ***** ***** Yr (13 pts) ***** ***** ***** ***** Yr (17 pts) ***** ***** ***** ***** Liberty Mutual Insurance. All Rights Reserved.

59 Exhibit V Sheet 4 New England x CT, MA INDUSTRY Fast Track Trend Data ACTUAL DATA Prior 4 Qtrs. Bodily Injury Property Damage Personal Injury Protection Collision Comprehensive Ending Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Arising Paid aid Pure Paid Paid Paid Pure Paid Paid Paid Pure Year Qtr. Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Premium , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, Yr (5 pts) ***** ***** ***** ***** Yr (9 pts) ***** ***** ***** ***** Yr (13 pts) ***** ***** ***** ***** Yr (17 pts) ***** ***** ***** ***** New England x CT, MA LIBERTY MUTUAL Fast Track Trend Data ACTUAL DATA Prior 4 Qtrs. Bodily Injury Property Damage Personal Injury Protection Collision Comprehensive Ending Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Arising Paid aid Pure Paid Paid Paid Pure Paid Paid Paid Pure Year Qtr. Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Premium , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 3, Yr (5 pts) ***** ***** ***** ***** Yr (9 pts) ***** ***** ***** ***** Yr (13 pts) ***** ***** ***** ***** Yr (17 pts) ***** ***** ***** ***** Liberty Mutual Insurance. All Rights Reserved.

60 Exhibit V Sheet 5 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Combined Premium Trend Rolling 4 Quarters Average On-leveled Earned Premium YRQTR BI/PD MedPay UM Comprehensive Collision 2010Q3 $670 $17 $153 $108 $ Q4 $667 $17 $153 $108 $ Q1 $665 $17 $153 $108 $ Q2 $663 $17 $153 $108 $ Q3 $657 $16 $152 $109 $ Q4 $652 $16 $152 $109 $ Q1 $646 $16 $151 $110 $ Q2 $639 $16 $149 $110 $ Q3 $632 $16 $147 $110 $ Q4 $626 $15 $143 $111 $ Q1 $620 $15 $139 $111 $ Q2 $614 $15 $135 $112 $ pt. -3.3% -4.7% -4.1% 1.3% 2.0% 10 pt. -3.6% -5.4% -5.2% 1.5% 2.1% 8 pt. -3.9% -6.1% -6.7% 1.6% 2.0% 6 pt. -4.0% -7.0% -8.7% 1.7% 1.9% 4 pt. -3.8% -7.5% -10.1% 2.1% 2.1% Historical Selection -3.5% -5.0% -5.0% 1.5% 2.0% Projected Selection -3.5% -5.0% -8.0% 2.0% 2.0% 2013 Liberty Mutual Insurance. All Rights Reserved.

61 Exhibit VI Liberty Mutual Insurance Private Passenger Automobile Rhode Island All Companies Comprehensive Catastrophe Load Calculation Accident Total Paid XCat Paid Total/XCat Year Ending Comp Loss Comp Loss Ratio Jul2003-Jun , , Jul2004-Jun2005 1,120,915 1,118, Jul2005-Jun2006 1,174,155 1,079, Jul2006-Jun2007 1,149,425 1,091, Jul2007-Jun2008 1,642,990 1,616, Jul2008-Jun2009 1,376,540 1,318, Jul2009-Jun2010 1,426,300 1,300, Jul2010-Jun2011 1,386,086 1,311, Jul2011-Jun2012 1,711,743 1,467, Jul2012-Jun2013 1,985,521 1,838, Year Cat Provision Year Cat Provision Selected Cat Provision Liberty Mutual Insurance. All Rights Reserved.

62 Exhibit VII Liberty Mutual Insurance Private Passenger Automobile Rhode Island Permissible Loss Ratio Calculation Projected Expenses (As a Percentage of Earned Premium) Liability Total Variable Fixed Other Acquisition 17.3% 3.7% 13.6% General 3.3% 0.0% 3.3% Tax 2.2% 2.2% 0.0% Profit 4.9% 4.9% 0.0% Contingency 0.0% 0.0% 0.0% Involuntary Load 0.0% 0.0% 0.0% Total Expense Ratio 27.7% 10.8% 16.9% Total Trended Expense Ratio 31.8% 10.8% 21.0% Target Loss & Fixed Exp Ratio 89.2% Physical Damage Total Variable Fixed Other Acquisition 18.5% 4.1% 14.4% General 3.3% 0.0% 3.3% Tax 2.2% 2.2% 0.0% Profit 9.0% 9.0% 0.0% Contingency 0.0% 0.0% 0.0% Involuntary Load 0.0% 0.0% 0.0% Total Expense Ratio 33.0% 15.3% 17.7% Total Trended Expense Ratio 37.3% 15.3% 22.0% Target Loss & Fixed Exp Ratio 84.7% Calculation of Annual Fixed Expense Ratio Trend Selected Trend 6.0% Trend From Date 7/1/2011 Trend To Date 3/30/2015 Fixed Expense Trend Length 3.75 Derivation Fixed Expense Trend Countrywide Auto PIF Growth 3.4% Countrywide Auto Fixed Expense Change 6.7% Countrywide Auto Premium Trend -2.7% Calculated Fixed Expense Trend 6.1% Fixed Expense Trend Selected 6.0% 2013 Liberty Mutual Insurance. All Rights Reserved.

63 Exhibit VII Sheet 2 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Derivation of Expense Provisions Liability Physical Damage Acquistion Expenses $3,174,818 $3,894,941 $4,222,822 Acquistion Expenses $1,849,261 $2,195,036 $2,373,810 Written Premium $20,401,322 $21,171,049 $23,406,370 Written Premium $10,503,023 $11,186,245 $12,907,350 Ratio 15.6% 18.4% 18.0% Ratio 17.6% 19.6% 18.4% Selected 17.3% Selected 18.5% General Expenses $614,841 $642,017 $807,495 General Expenses $316,012 $341,063 $438,289 Earned Premium $20,126,512 $20,723,181 $22,204,936 Earned Premium $10,335,514 $10,821,886 $11,991,410 Ratio 3.1% 3.1% 3.6% Ratio 3.1% 3.2% 3.7% Selected 3.3% Selected 3.3% Premium Tax $450,018 $454,546 $502,335 Premium Tax $231,475 $239,805 $276,623 Written Premium $20,401,322 $21,171,049 $23,406,370 Written Premium $10,503,023 $11,186,245 $12,907,350 Ratio 2.2% 2.1% 2.1% Ratio 2.2% 2.1% 2.1% Selected 2.2% Selected 2.2% ALAE $640,620 $650,021 $746,582 ALAE $13,385 $10,409 $13,610 Incurred Losses $11,576,390 $11,807,639 $14,222,262 Incurred Losses $5,456,472 $6,769,861 $7,125,242 Ratio 5.5% 5.5% 5.2% Ratio 0.2% 0.2% 0.2% Selected 5.4% Selected 0.2% ULAE $2,505,572 $1,877,056 $2,259,300 ULAE $1,535,350 $1,265,977 $1,193,289 Incurred Losses $11,576,390 $11,807,639 $14,222,262 Incurred Losses $5,456,472 $6,769,861 $7,125,242 Ratio 21.6% 15.9% 15.9% Ratio 28.1% 18.7% 16.7% Selected 15.9% Selected 18.7% 2013 Liberty Mutual Insurance. All Rights Reserved.

64 Exhibit VIII Liberty Mutual Insurance Private Passenger Automobile Rhode Island LMFIC/LIC Rate History Eff. Date BIPD MedPay UM Comp Coll Total 3/30/ % 6.3% 6.6% 4.0% 3.7% 5.6% 3/30/ % 6.3% 4.2% 4.5% 3.6% 5.6% 10/24/ % 0.0% 0.0% 0.0% 0.1% 0.0% 3/30/ % 5.4% 2.8% 5.7% 3.3% 5.9% 3/30/ % 4.6% 5.1% 5.1% 5.1% 5.1% 7/12/ % 2.0% 0.7% 3.4% 3.4% 2.9% 1/0/ % 0.0% 0.0% 0.0% 0.0% 0.0% 1/0/1900 LMGIC/LM-IC Rate History Eff. Date BIPD MedPay UM Comp Coll Total 2/20/ % 3.8% 3.8% 3.1% 3.8% 3.8% 1/0/ % 0.0% 0.0% 0.0% 0.0% 0.0% 2013 Liberty Mutual Insurance. All Rights Reserved.

65 Appendix A Liberty Mutual Insurance Private Passenger Automobile Countrywide Profit Provision As Liberty Mutual Insurance is organized under a mutual holding company system, our company has limited recourse to stock market capitalization to generate needed surplus funds, unlike a publiclytraded insurance company or an insurance company with a publicly-traded parent. Any increase in surplus must come from (1) underwriting profit, (2) investment income, (3) realized capital gains, or (4) unrealized capital gains. In the following analysis, Liberty Mutual selects provisions for underwriting profit which will ensure that anticipated income from all sources produces net income after taxes that is commensurate with the risk assumed in the business of property/casualty insurance. Furthermore, these provisions ensure that projected changes in policyholder surplus are sufficiently similar (in direction and magnitude) to changes in premium accounts so that confidence in the Companies' financial integrity can be maintained. Exhibit A shows a history of calendar year rates of return for investment income expressed as a percentage of mean invested assets. The primary source is interest, dividends, and real estate income shown in column (3). Based on the current market yield, it is reasonable to anticipate before tax returns of 3.7% from interest, dividends, and real estate income during the time rates are effective. Historically, realized capital gains have contributed very little to earnings. For the prospective period, we select 0.2% from this source. In total, our anticipated pre-tax return is 3.9%. We believe this a reasonable return given the current interest rate environment. After federal income taxes, the total anticipated rate of return is 2.8% of invested assets. Exhibit B presents the investment income derived from unearned premium reserves. The model uses historical information, modified for the current tax rate. This income is separated into two categories. First, there are premium finance charges [Line 10] collected by allowing policyholders to pay their premiums in installments over the 12-month policy term. Line 3 is the corresponding portion of the unearned premium reserve representing the premium which is being financed by the company. Second, there is the remaining reserve, after prepaid expense and taxes, [Line 7] which develops income based on the anticipated rate of return. Exhibit C applies the rate of return to mean loss and loss adjustment expense reserves. These exhibits relate investment income to premium earned. Exhibit D provides pertinent expense data to calculate the Permissible Loss Ratio. Exhibit E deals with the calculation of federal income taxes applicable to unearned premium and loss reserves Liberty Mutual Insurance. All Rights Reserved.

66 Income from all of the above sources is combined with our selected underwriting profit provisions in the following 2 to 1 premium-to-surplus model: Let Premium = $100; Surplus = $50 Memo Exhibit Liability Physical Damage 1) Investment Income on Unearned Premium Reserves $100 x (Exhibit B, Table 1, Item 12) ($0.15) ($0.15) 2) Investment Income on Loss Reserves $100 x (Exhibit C, Table 1, Item 5) $2.33 $0.06 3) Investment Income on Surplus $50 x (Exhibit A, Table 1, Column 7) $1.40 $1.40 4) Underwriting Income After Tax $100 x (1-.35) x Profit Provision (Exhibit D, Item 4) $3.90 $6.18 5) Total Expected Return [1]+[2]+[3]+[4] $7.48 $7.49 Average Total Expected Return (Based on earned 60.2%/39.8% premium distribution) $7.48 6) Expected Return on Surplus [5]/Premium:Surplus Ratio x 100% 15.0% 7) GAAP Adjusted Return [6]/GAAP Adj. Factor (Exhibit F, Item 6) 12.0% While we believe that 15.0% is a fair rate of return for property-casualty insurers in comparison with other industries given the variability in the overall return, to comply with the Department s request we have modified our target return to yield 12.0% on GAAP adjusted surplus. The pre-tax profit provisions of 6.0% for liability and 9.5% for physical damage are derived using an iterative method to yield an anticipated return of 7.5% on earned premium after tax. However, we have selected lower target profit provisions of 4.9% for liability and 9.0% for physical damage as a percentage of premium Liberty Mutual Insurance. All Rights Reserved.

67 Exhibit A: Effective Rate of Return on Investable Assets Table 1: Historical Investments Returns (1) (2) (3) (4) (5) (6) (7) Net Mean Net Net Net Realized Realized Calendar Invested Investment Inv. Inc. Capital Cap. Gains Total Year Assets (a) Income (b) % of (2) Gains (c) % of (2) Return ,118,335, ,231, ,142, ,808,729, ,126, ,222, ,272,895, ,278, ,851, ,415,308, ,013, ,991, ,727,246,565 1,040,182, ,141, ,085,608,244 1,084,863, ,195, ,872,603,927 1,078,372, ,556, ,380,644,905 1,019,000, ,575, ,728,080,374 1,000,703, ,091, ,644,320,729 1,004,243, ,061, ,754,458,149 1,024,976, ,172, ,051,878,513 1,049,458, ,763, ,008,196,638 1,114,613, ,016, ,692,869,206 1,259,013, ,579, ,097,086,037 1,249,282, ,548, ,316,155,306 1,180,115, ,996, ,117,700,188 1,149,160, ,186, ,593,328,553 1,213,180, ,183, ,362,100,873 1,278,067, ,926, ,616,013,191 1,277,698, ,728, ,560,878,142 1,370,600, ,166, ,342,136,927 1,668,935, ,655, ,670,013,186 2,071,514, (48,560,181) ,693,589,467 1,792,955, (28,910,232) ,579,139,343 1,721,410, ,759, ,838,643,778 1,760,105, ,773, ,513,908,048 1,648,452, ,234, Latest 10 Years 405,769,751,508 15,802,923, ,692,958, Latest 5 Years 245,295,293,822 8,994,439, ,297, Anticipated Returns (Before Tax) Federal Tax Rate (Exhibit A, Table 2) Anticipated Returns (After Tax) (a) Mean of current and prior year Annual Statements: Page 2, Line 12 Less Page SI04, Column (2), Lines 12, 18 and 24. (b) 2012 Annual Statement: Page 4, Line 9 less Page 12, Part 1, Column (2), Lines 1.3, 2.11, 2.21, and 8. (c) 2012 Annual Statement: Page 4, Line Liberty Mutual Insurance. All Rights Reserved.

68 Exhibit A: Effective Rate of Return on Investable Assets Table 2: Effective Federal Tax Rate Federal Earned Tax Income Distribution Rate BONDS (Ex Tax Exempt) $1,227,153,033 (a) BONDS (Tax Exempt) Acquired Before 8/7/86 $644, Acquired After 8/7/86 $443,787, STOCKS Acquired Before 8/7/86 Non-Affiliated $527, Foreign $ Total $527,265 Acquired After 8/7/86 Non-Affiliated $48,254, Foreign $8,201, Total $56,455,322 All Other Investment Income (b) ($80,114,847) (c) Net Investment Income Gain/(Loss) $1,648,452,923 (d) (e) (a) 2012 Annual Statement: Page 12, Part 1, Column (2), Lines (Excludes bonds of affiliates) (b) Reduced by investment expenses and depreciation on real estate (c) 2012 Annual Statement: Page 12, Part 1, Column (2), lines 3, 4, 6, 7, and 9 less line 16 (d) Exhibit A, Table 1, Column 3 (e) Weighted average rate using "Distribution" column 2013 Liberty Mutual Insurance. All Rights Reserved.

69 Exhibit B: Investment Income from Unearned Premium Reserves Table 1: Investment Income from Unearned Premium Reserves as Factor of Earned Premium Auto Auto Liability Physical Damage 1) Earned Premium $ $ ) Mean Unearned Premium Reserve Ratio of Mean Direct Unearned Premium Reserve to Direct Earned Premium x [1] $50.60 $ ) Mean Premium Subject to Installment Payment Finance Plan Ratio of Mean Premium Financed to Mean Direct Unearned Reserve x [2] $41.09 $ ) Funds Available for Prepaid Expense, Tax, and Investment [2] - [3] $9.51 $9.51 5) Prepaid Expense Sum of Acquision, Taxes, and One-Half General Expenses x (2) $13.61 $ ) Federal Tax Reform Act Ratio of Tax Payable to Mean Net Unearned Premium Reserve x [2] $0.35 $0.35 7) Funds Available for Investment [4] - [5] - [6] ($4.45) ($4.35) 8) Rate of Return, After Tax 2.8% 2.8% 9) Income on Invested Reserve [7] x [8] ($0.12) ($0.12) 10) Income from Installment Payment Premium Finance Plan Ratio of Investment Income to Mean Premium Financed x (3) ($0.03) ($0.03) 11) Total Investment Income [9] + [10] ($0.15) ($0.15) 12) Investment Income as a Factor of Earned Premium [11] / [1] Notes Lines [2], [3], and [10]: Exhibit B, Table 2, Columns [9], [10] and [6], 'Selected' Line [5]: Exhibit D - Acquisition, 50% of General, and Taxes Line [6]: Exhibit E, Section A, Line [5] Line [8]: Exhibit A, Table Liberty Mutual Insurance. All Rights Reserved.

70 Exhibit B: Investment Income from Unearned Premium Reserves Table 2: Investment Income from Installment Payment Premium Finance Plan ($000) (Private Passenger Automobile) [1] [2] [3]=[1]-[2] Premium Net Finance Premium Investment Year Charges Charged-Off Income 2003 $49,268 $12,652 $36, $48,445 $16,747 $31, $42,895 $19,260 $23, $40,612 $19,181 $21, $40,188 $24,083 $16, $39,993 $27,252 $12, $35,612 $32,098 $3, $32,800 $29,300 $3, $30,492 $33,231 -$2, $28,101 $35,013 -$6,912 [4]=[3]*0.65 [5] [6]=[4]/[5] After-Tax Mean Ratio of Investment Investment Premium Income to Mean Year Income Financed Premium Financed 2003 $23,801 $1,072, $20,604 $1,248, $15,362 $1,375, $13,930 $1,410, $10,468 $1,483, $8,282 $1,558, $2,284 $1,625, $2,275 $1,725, ($1,780) $1,860, ($4,493) $2,045, Selected [7] [8] [9]=[8]/[7] [10]=[5]/[8] Direct Mean Direct Unearned Premium to Premium Financed to Earned Unearned Earned Premium Unearned Premium Year Premium Premium Reserve Ratio Reserve Ratio 2003 $3,066,448 $1,463, $3,831,290 $1,735, $3,822,920 $1,921, $3,794,629 $1,912, $3,844,079 $1,938, $3,926,622 $1,984, $4,048,548 $2,055, $4,279,658 $2,156, $4,527,884 $2,295, $4,897,160 $2,480, Selected Liberty Mutual Insurance. All Rights Reserved.

71 Exhibit C: Investment Income from Loss Reserves Table 1: Investment Income from Loss Reserves as a Factor of Premium Auto Liability Auto Physical Damage 1) Ratio of Loss & LAE Reserves to Incurred Loss & LAE ) Ratio of Federal Tax Payable to Incurred Loss & LAE ) Permissible Loss & LAE Ratio ) Net Effective Rate of Return After Tax ) Investment Income as a Factor of Premium {[(1) - (2)] * (3) * (4)} Notes Line [1]: Exhibit C, Table 2, Column [9] Line [2]: Exhibit E, Section B, Line [11] Line [3]: Exhibit D Line [4]: Exhibit A, Table Liberty Mutual Insurance. All Rights Reserved.

72 Table 2: Ratio of Loss and LAE Reserves to Loss and LAE Incurred Private Passenger Automobile - Liability ($000) [1] [2] [3] [4] [5] [6] [7] [8] [9] Net Net Ratio of Year-End Net Prior Year Net Mean Net Year End Net Prior Year Net Mean Net Incurred Incurred Reserves Year Loss Reserve Loss Reserve Loss Reserve LAE Reserve LAE Reserve LAE Reserve Losses LAE to Incurred ,691,914 1,640,452 1,666, , , ,678 1,222, , ,387,188 1,691,914 2,039, , , ,186 1,485, , ,390,298 2,387,188 2,388, , , ,173 1,395, , ,198,306 2,390,298 2,294, , , ,841 1,221, , ,896,699 2,198,306 2,047, , , ,714 1,333, , ,135,874 1,896,699 2,016, , , ,186 1,678, , ,288,787 2,135,874 2,212, , , ,306 1,585, , ,410,821 2,288,787 2,349, , , ,969 1,647, , ,352,808 2,410,821 2,381, , , ,719 1,759, , ,398,879 2,352,808 2,375, , , ,387 1,841, , Selected Table 2: Ratio of Loss and LAE Reserves to Loss and LAE Incurred Private Passenger Automobile - Physical Damage ($000) [1] [2] [3] [4] [5] [6] [7] [8] [9] Net Net Ratio of Year-End Net Prior Year Net Mean Net Year End Net Prior Year Net Mean Net Incurred Incurred Reserves Year Loss Reserve Loss Reserve Loss Reserve LAE Reserve LAE Reserve LAE Reserve Losses LAE to Incurred 2003 (36,133) (36,750) (36,441) 27,711 28,378 28, , , (26,143) (36,133) (31,138) 48,220 27,711 37, , , (30,501) (26,143) (28,322) 62,598 48,220 55, , , (20,146) (30,501) (25,324) 42,365 62,598 52, , , (2,397) (20,146) (11,272) 52,907 42,365 47, , , ,492 (2,397) ,248 52,907 47, , , (6,350) 3,492 (1,429) 45,553 42,248 43, , , (7,542) (6,350) (6,946) 52,544 45,553 49, , , ,521 (7,542) (1,510) 46,543 52,544 49,543 1,058, , (16,929) 4,521 (6,204) 36,119 46,543 41,331 1,214, , Selected Note: Beginning in 2000, Liberty Mutual no longer holds Physical Damage Case Loss Reserves Exhibit C: Investment Income from Loss Reserves 2013 Liberty Mutual Insurance. All Rights Reserved.

73 Exhibit D: Expense Ratios Auto Liability Auto Physical Damage 1) Acquisition 21.5% 21.4% 2) General 5.7% 5.8% 3) Taxes 2.5% 2.4% 4a) Indicated Profit 6.0% 9.5% 4b) Selected Profit 4.9% 9.0% 5) Indicated Total 35.7% 39.2% 6) Permissible Loss and LAE Ratio 64.3% 60.8% Notes Data from 2012 Insurance Expense Exhibit (Direct) 2013 Liberty Mutual Insurance. All Rights Reserved.

74 Exhibit E: Federal Income Tax Payable Due to Tax Reform Act of 1986 A. Tax on Unearned Premium Reserves ($000,000) Private Passenger Auto 1) Net Unearned Premium Reserve 12/31/11 $3,602 (a) 2) Net Unearned Premium Reserve 12/31/12 $3,992 (a) 3) Mean Net Unearned Premium Reserve {[1] + [2]} / 2 $3,797 4) Federal Tax Payable on Change in Net Unearned Premium Reserve {[2]-[1]} x 20% x 0.35 $27 5) Ratio of Tax Payable to Mean Net Unearned Premium Reserve [4] / [3] (a) Insurance Expense Exhibit, Part II, Columns B. Loss & LAE Reserve Discounting ($000,000) Liability Phyiscal Damage 1) Net Reserve at 12/31/11 $4, $92.87 (a) 2) Net Reserve at 12/31/12 $4, $74.19 (a) 3) Discounted Net Reserve at 12/31/11 $3, $89.29 (b) 4) Discounted Net Reserve at 12/31/12 $3, $72.55 (b) 5) Change in Net Reserve [2]-[1] $67.48 ($18.68) 6) Change in Discounted Net Reserve [4]-[3] $94.29 ($16.73) 7) Additional Taxable Income [5]-[6] ($26.81) ($1.95) 8) Federal Tax Payable [7] x 0.35 ($9.38) ($0.68) 9) 2012 Incurred Loss & LAE (Insurance Expense Exhibit) $3, $1, (c) 10) Ratio of Federal Tax Payable to Incurred Loss & LAE [8] / [9] ) Selected (a) Insurance Expense Exhibit, Part II, Columns (b) Discount ratios are provided internally by the Financial Department (c) Insurance Expense Exhibit, Part II, Columns 7, 9 and 11 divided by 1, Liberty Mutual Insurance. All Rights Reserved.

75 Exhibit F: Expected Total Return - Adjustment to GAAP Expected Total Return - Adjustment to GAAP Amounts in Millions Item Source (1) Policyholders Surplus 16,039 15,701 16,521 Annual Statement: Page 3, Column (1), line 37 (2) Non-Admitted Assests 1,119 1,626 1,490 Annual Statement: Page 2, Column (2), line 26 (3) Equity in the UPR [ = (h) calculated below] 2,441 2,574 2,888 calculated field (4) Total Adjustments (2)+(3) 3,560 4,200 4,378 calculated field (5) GAAP Surplus Adjustment Factor [(4)+(1)]/(1) calculated field (6) Selected GAAP Surplus Adjustment Factor Calculation of Equity in UPR Item Source (a) Commissions and Brokerage Expense Incd 2,473 2,452 2,624 IEE: Page 7, Part 3, Column (23), Totals (b) Taxes, License & Fees IEE: Page 7, Part 3, Column (25), Totals (c) Other Acquisition Expenses Incd 2,112 2,178 2,495 IEE: Page 7, Part 3, Column (27), Totals (d) General Expense Incd 1,803 2,101 2,531 IEE: Page 7, Part 3, Column (29), Totals (e) Total of (a) + (b) + (c) + 0.5(d) 6,263 6,469 7,217 calculated field (f) Written Premium 25,318 26,659 28,298 IEE: Page 6, Part 3, Column (1), Totals (g) Ending UPR 9,868 10,609 11,323 IEE: Page 6, Part 3, Column (19), Totals (h) Equity in UPR (g)*(e)/(f) 2,441 2,574 2,888 calculated field 2013 Liberty Mutual Insurance. All Rights Reserved.

76 Liberty Mutual Insurance Liberty Mutual Fire Insurance Company The First Liberty Insurance Corporation Liberty Insurance Corporation Private Passenger Automobile RB Rhode Island Rate Procedural Information Summary Insurers must provide a reply to the following interrogatories for all new and revised rate filings in accordance with the instructions provided below. While the insurer may attach/link exhibits to respective interrogatories, referring the Department to other exhibits to "find" information is not proper protocol for form completion. Further, if a question is not applicable, please so indicate and provide the basis for such position. Wherever the word proposed rate appears, the requirements also apply to all new or revised rate filings where applicable. 1. Provide a general description of the filing; i.e., list all factors and proposed rates or proposed changes to rates and rating factors. In doing so, include the current and proposed territory base rates for each coverage for which a rate level change is being proposed, the current and proposed territory definitions for each rating territory for which a change in definition is being proposed, and the current and proposed rating factors for each set of rating factors for which a new factor or change is being proposed. Please see the tables below for our liability, medical payments, comprehensive, collision, uninsured motorist, uninsured motorist/physical damage and towing and labor base rate changes. Liability, Medical Payments, Comprehensive and Collision Base Rate Changes: Territory Liability Current Liability Proposed Med Pay Current Med Pay Proposed Comp Current Comp Proposed Coll Current Coll Proposed 10 $1,564 $1,675 $47 $50 $461 $537 $1,610 $1, $1,186 $1,270 $43 $46 $186 $217 $1,168 $1, $1,046 $1,120 $30 $32 $194 $226 $1,107 $1, $1,046 $1,120 $29 $31 $218 $254 $1,086 $1, $961 $1,029 $36 $39 $154 $179 $921 $1, $914 $979 $27 $29 $201 $234 $1,025 $1, $942 $1,009 $35 $37 $177 $206 $1,058 $1, $1,008 $1,080 $37 $40 $201 $234 $1,157 $1, $957 $1,025 $27 $29 $196 $228 $1,086 $1, $933 $999 $28 $30 $161 $188 $932 $1, $1,279 $1,370 $44 $47 $346 $403 $1,393 $1, $1,260 $1,349 $41 $44 $247 $288 $1,301 $1,558 Rate Procedure Summary Page 1 of 8

77 Uninsured Motorist Bodily Injury Base Rate Changes: Limit Current Rate Proposed Rate 75, , , , MIL / / / / / / Uninsured Motorist Property Damage Base Rate Changes: Current Territory Vehicle Cost New $25,000 $50,000 $75,000 $100,000 $300,000 $500,000 1MIL 010 7, , , , , , , , , , , , , , , , , , , , , , , , Rate Procedure Summary Page 2 of 8

78 Proposed Territory Vehicle Cost New $25,000 $50,000 $75,000 $100,000 $300,000 $500,000 1MIL 010 7, , , , , , , , , , , , , , , , , , , , , , , , Towing and Labor: Limit Current Rate Proposed Rate Provide the indicated rate level changes (where applicable), proposed rate level changes, and premium weights using premiums adjusted to current rate level for each coverage (e.g. bodily injury, property damage), subline (e.g. liability, physical damage), and all coverages combined. Coverage Indicated Proposed Projected Earned Premium at Current Weights Change Change Level Bodily Injury/Property Damage 24.5% 7.1% $18,833, % Medical Payments 83.8% 7.5% $417, % Uninsured Motorist 17.2% 7.0% $3,506, % Total Liability 24.5% 7.1% $22,757,170 Comprehensive & Rental 14.6% 7.4% $3,098, % Collision 1.5% 6.3% $11,234, % Towing/Labor N/A 61.3% $93, % Total Physical Damage 4.3% 6.9% $14,426,806 Total 16.7% 7.0% $37,183,976 *Describe components of proposed change, e.g., class, increased limits, deductibles, age and symbols, territories, policy coverage, rules, etc. Rate Procedure Summary Page 3 of 8

79 3. Provide actuarially based rate level indications to support the proposed rate or proposed rate level changes by coverage. In so doing, provide the underlying data, assumptions, and derivation of each of the following components of the indications: a) premiums adjusted to the current rate level; b) premium trend; c) losses and allocated loss adjustment expense (ALAE, which is now referred to as defense and cost containment expense) developed to an ultimate basis including the loss development triangles and the selected loss development factors; d) losses and ALAE adjusted to reflect prospective cost levels, including selected trend factors; e) any adjustments made for large, catastrophic, or weather related losses; f) any adjustments made to reflect the credibility of the experience; g) expense provisions Support should include five years of expense history for each expense provision including unallocated loss adjustment expense (ULAE, which is now referred to as claim adjustment service) with an explanation if the expenses underlying the expected loss ratio or expense multiplier vary from the company s historical expenses; recognition should be given to fixed and variable expense components; and h) profit & contingency provision Support should include rationale for the target rate of return (if applicable), and an explanation (including underlying calculations, data, and assumptions) of how investment income was considered. Data used should be the most recent available to the company. Please see the actuarial justification which addressed all of the above items except for g). Please see below for historical expense provisions for (2008 expense data is not readily available): Liability Year Acquisition Expenses General Expenses Loss Adjustment Expenses % 2.9% 28.9% % 3.1% 27.2% % 3.1% 21.4% % 3.6% 21.1% Physical Damage Year Acquisition Expenses General Expenses Loss Adjustment Expenses % 2.9% 26.0% % 3.1% 28.4% % 3.2% 18.9% % 3.7% 16.9% To be more responsive to recent experience, we have selected expense provisions based on the average of the latest three years of expense ratios. Please see Exhibit VII in the actuarial justification for the split between fixed and variable expenses. Rate Procedure Summary Page 4 of 8

80 4. Provide actuarial support and any other considerations for any proposed factors or proposed changes in rating factors or class definitions; i.e., territory definitions or relativities, class plan definitions or relativities, increased limit factors, deductible factors, discounts, surcharges, etc. Actuarial support should reflect your company s experience. If credit history is utilized in the rating or underwriting process, for homeowner s insurance or personal motor vehicle insurance, the insurer must demonstrate the predictive nature of its insurance scoring process to the Department. Question 5 and 6 enumerates additional filing requirements to support the insurer s use of credit. In addition, a) all motor vehicle filings must include the information requested in Question 15, b) all filings for territory changes must be supported pursuant to Rhode Island Insurance Regulation 62 and c) all property insurance filings must include the information requested in Question 16. If you are proposing rates, rating factors, discounts/surcharges, class/territory definitions, etc. that are based on those currently in effect in Rhode Island for another insurance company(ies) or rating organization, provide the rates, rating factors, discounts/surcharges, class/territory definitions, etc. of that other company(ies), and explain how you have considered possible differences in coverage offered, underwriting standards, claim practices, expenses, etc. between your company and the referenced company(ies). N/A 5. In order to demonstrate the predictive nature of insurance scoring, the insurer must provide an analysis that confirms the statistical correlation between insurance score and loss experience. The analysis should be performed in such a manner that adjusts for any potential distributional biases, such as among states (if multi-state data is used) with different levels of rate adequacy, or among vehicle use risk classes with different levels of rate adequacy. In addition: N/A a) The source of the data must be identified, e.g., number of years of data; whether the data is by accident year or policy year; whether the data is from Rhode Island or other states; if a sample of states or a sample of risks is used, a description of how the data was collected, including data verification procedures; the percentage of the overall business that is used in the sample; etc. b) All data adjustments must be explained and supported, e.g., loss development; adjustments for the effect of large losses; how credibility was considered in the analysis; etc. c) The data underlying the analysis must be relatively recent. 6. Appropriate support for the rates/rating factors that reflect the use of insurance score should include an analysis that supports the appropriateness of each proposed rate/rating factor as opposed to any other rate/rating factor. As above, the source of the data must be identified, all data adjustments must be explained and supported, and the data underlying the analysis must be relatively recent. In addition, a) An explanation must be provided as to how risks with insufficient or no credit history will be treated. Rate Procedure Summary Page 5 of 8

81 N/A b) An explanation must be provided as to how risks that refuse to allow access to their credit score will be treated. c) The company's timing and procedure for updating credit scores must be provided, e.g., at each renewal; only on the customer's request; etc. d) The rationale behind any grouping of credit scores for rating or underwriting purposes must be provided i.e., how the beginning and end points of any ranges of insurance score were selected. 7. In providing the information in (3), (4), (5) and (6) above: a) Explain all differences from the ratemaking procedures employed in your last rate filing in Rhode Island. Experience periods have been divided by accident years as opposed to six month accident periods to internally align ratemaking methodology. b) Clearly describe or label the type of information used; e.g., calendar year, policy year, or accident year; basic limits or total limits; Rhode Island or countrywide; by coverage or all coverages combined; etc. The actuarial justification addresses all the items. 8. Provide rationale for any proposed rate or proposed rate level change, by coverage or overall, that differs from your indicated change. Though our rate indication is +18.1%, Liberty Mutual proposes an overall rate increase of +7.0%. The remainder of the indicated rate need will be re-evaluated and addressed in Liberty Mutual s future filings. 9. Provide the derivation of the estimated overall premium effect of any proposed rate or proposed changes to a rating factor or definition. Explain how you have considered each of these effects in calculating the overall proposed rate level change. N/A 10. Provide any additional information that you feel may be helpful to the Department of Business Regulation in its review of this filing. For example, if the company has undergone changes in its operations that affect its expense provision, then this information should be provided. Any information applicable is included in actuarial justification. 11. Provide the length of time the proposed rates are expected to remain in effect. The proposed rates are expected to remain in effect until the effective date of Liberty Mutual s next rate filing. Rate Procedure Summary Page 6 of 8

82 12. Provide a description of the risk that will receive the largest rate increase and a description of the risk that will receive the largest rate decrease as a result of the changes proposed in this filing. Include the amount of the rate change for each risk described. Highest Increase: 27.3% Company: LMFIC Territory: 23 BIPD: No Coverage Med Pay: No Coverage Comprehensive: 500 Collision: No Coverage Uninsured Motorist: No Coverage Uninsured Motorist/Physical Damage: No Coverage Towing and Labor: 50 Class: 011 Tier: 90 Number of Vehicles: 1 Current Premium: $33 Proposed Premium: $42 Smallest Increase: 3.9% Company: LMFIC Territory: 23 BIPD: 250/500/100 Med Pay: 2500 Comprehensive: 100 Collision: 500 Uninsured Motorist: 250/500 Uninsured Motorist/Physical Damage: 100,000 Towing and Labor: 50 Class: 048 Tier: 90 Number of Vehicles: 1 Current Premium: $1,887 Proposed Premium: $1, Provide an estimate of the number and percent of exposures that will receive a rate increase in excess of 15% due to the changes proposed in this filing. There are an estimated number of 25 policies, or 0.2% of exposures, which will receive a rate increase in excess of 15% as a result of this filing. 14. Provide a statement signed by an actuary or an officer of the company to certify that the data submitted in the filing is accurate and reliable. This has been included with the submission. Rate Procedure Summary Page 7 of 8

83 15. For all motor vehicle filings provide a copy of the relevant pages (and cite the manual page number and rule number) from your company s rating manual that confirm that your company is in compliance with: a) RI Gen. Laws & Insurance Regulation 25 (8), Motor Vehicle Insurance Rate Increases Relating to Violations and Accidents. b) RI Gen. Laws , Consideration in Making of Rates: (4)(a)(1)(i), (4)(d), (4)(e), and Section , Operation of Emergency Vehicles Accidents. c) RI Gen. Laws , Payment of Premium Cancellation d) Insurance Regulation 25(5)&(6), Additive and Reductive Amounts for Policy Credits, Regulation 25(7), Chargeable Accident e) RI Gen. Laws , Premium Reduction for Completing a Motor Vehicle Accident Prevention Course f) RI Gen. Laws , Premium Reduction for Anti-theft Devices, and Regulation 84 g) RI Gen. Laws , Use of Credit Rating h) Insurance Regulation 98, Rhode Island Automobile Insurance Plan As with our prior Rhode Island rate filing, we remain in compliance with these Laws. 16. For all property insurance filings provide a copy of the relevant pages (and cite the manual page number and rule number) from your company s rating manual that confirm that your company is in compliance with: a) RI Gen. Laws , and Bulletin , Use of Credit b) RI Gen. Laws , Refusal to Issue or Increased Premium Due to Nonoccupancy. c) RI Gen. Laws (7) (i,ii,iii), Unfair Competition and Practices, and Insurance Bulletin # Underwriting Restriction Based on Age/Location of Property. d) RI Gen. Laws and Insurance Regulation 110, Hurricane Deductibles, triggers and Policyholder Notices N/A 17. For all Title Insurance Filings, insurers must confirm that it offers a reduced mortgage refinance rate based upon actuarially supported rates, filed and approved for use in RI. as of 4/21/2008 N/A Rate Procedure Summary Page 8 of 8

84 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Note To Reviewer Created By: Emily Overstreet on 10/22/ :35 AM Last Edited By: Emily Overstreet Submitted On: 10/22/ :35 AM Subject: RI Deemer Provisions Comments: Good morning Ms. Casala, In response to your 10/18/13 correspondence, Liberty Mutual acknowledges that we will not implement this filing until you have the opportunity to conclude your review of the materials. Please let us know if we can be of any further assistance. Thank you for your consideration of our filing. Sincerely, Emily Overstreet PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

85 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Rate Information Rate data applies to filing. Filing Method: File & Use Rate Change Type: Increase Overall Percentage of Last Rate Revision: 5.000% Effective Date of Last Rate Revision: 02/23/2013 Filing Method of Last Filing: File & Use Company Rate Information Company Name: Liberty Insurance Corporation Liberty Mutual Fire Insurance Company Overall % Indicated Change: Overall % Rate Impact: Written Premium Change for this Program: Number of Policy Holders Affected for this Program: Written Premium for this Program: Maximum % Change (where req'd): Minimum % Change (where req'd): % 6.900% $17, $284, % 4.680% % 7.000% $1,758,299 12,846 $26,936, % 3.870% PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

86 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Rate/Rule Schedule Item Schedule Item Previous State No. Status Exhibit Name Rule # or Page # Rate Action Filing Number Attachments 1 (06) Closed- R Pages R-1 Replacement R1_Proof.pdf Approved with Review 03/03/ (06) Closed- R Pages R-3 Replacement R3_Proof.pdf Approved with Review 03/03/ (06) Closed- R Pages R-4 Replacement R4_Proof.pdf Approved with Review 03/03/ (06) Closed- R Pages R-9 Replacement R9_Proof.pdf Approved with Review 03/03/2014 PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

87 RHODE ISLAND Automobile Rating Manual Territorial Base Rates Territory $75,000 Liability $2,500 Med Pay $50 Deductible Comprehensive $200 Deductible Collision 010 $1,675 $50 $ $1,270 $46 $ $1,120 $32 $ $1,120 $31 $ $1,029 $39 $ $979 $29 $ $1,009 $37 $ $1,080 $40 $ $1,025 $29 $ $999 $30 $ $1,370 $47 $ $1,349 $44 $ Effective 02/23/14 LIBERTY MUTUAL INSURANCE GROUP Page R-1

88 RHODE ISLAND Automobile Rating Manual Uninsured Motorists & UMPD Uninsured Motorists Limits Limit Rate 75, , , , MIL / / / / / / UMPD with Collision Rate 2 UMPD Territory Vehicle Cost New $25,000 $50,000 $75,000 $100,000 $300,000 $500,000 1MIL 010 7, , , , , , , , , , , , , , , , , , , , , , , , Effective 02/23/2014 LIBERTY MUTUAL INSURANCE GROUP Page R-3

89 RHODE ISLAND Automobile Rating Manual Comprehensive and Collision Options Deductible Comprehensive Factor Full , Deductible Collision Factor , Towing Limit Rate Rental Rental Rate 30/ / / Effective 02/23/2014 LIBERTY MUTUAL INSURANCE GROUP Page R-4

90 RHODE ISLAND Automobile Rating Manual Model Year & Symbol Factors Comprehensive Collision Symbol & Prior Symbol & Prior n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Effective 02/23/2014 LIBERTY MUTUAL INSURANCE GROUP Page R-9

91 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: 19.0 Personal Auto/ Personal Auto Combinations Product Name: Automobile Project Name/Number: 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Supporting Document Schedules Satisfied - Item: Actuarial Support- RI Rate Procedural Informational Summary Form required for all New (including startups) and revisions to existing rates Comments: Attachment(s): Rate Procedure Summary -LMFIC LIC.pdf Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 Bypassed - Item: Uninsured Motorist Mandatory Form Bypass Reason: n/a Attachment(s): Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 Satisfied - Item: Actuarial Justification Comments: Attachment(s): LMFIC LIC Actuarial Justification.pdf Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 Satisfied - Item: Actuarial Certification Comments: Attachment(s): Actuarial Certification - LMFIC LIC.pdf Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 Satisfied - Item: R Pages Mock-Ups Comments: R1_Mock.pdf Attachment(s): R3_Mock.pdf R4_Mock.pdf R9_Mock.pdf Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 Satisfied - Item: Comments: 11/07/13 Objection Response PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

92 SERFF Tracking #: LBPM State Tracking #: Company Tracking #: 14-RI-P-AO-RR-LEG-ASR State: Rhode Island First Filing Company: Liberty Insurance Corporation,... TOI/Sub-TOI: Product Name: Project Name/Number: 19.0 Personal Auto/ Personal Auto Combinations Automobile 14-RI-P-AO-RR-LEG-ASR/14-RI-P-AO-RR-LEG-ASR Attachment(s): AO SR Objection Response R1.pdf Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 Satisfied - Item: 12/11/13 Objection Response Comments: Attachment(s): AO SR Objection Response R2.pdf Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 Satisfied - Item: 1/24/2014 Objection Response Comments: Attachment(s): AO SR 1 24 Objection Response.pdf Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 Satisfied - Item: 1/24/2014 Objection Response Revised 2/07/14 Comments: Objection 3 AO LMFIC_LIC - Revised pdf Attachment(s): Attachment A.pdf Attachment B.pdf Item Status: (06) Closed- Approved with Review Status Date: 03/03/2014 PDF Pipeline for SERFF Tracking Number LBPM Generated 03/21/ :42 AM

93 Liberty Mutual Insurance Liberty Mutual Fire Insurance Company The First Liberty Insurance Corporation Liberty Insurance Corporation Private Passenger Automobile RB Rhode Island Rate Procedural Information Summary Insurers must provide a reply to the following interrogatories for all new and revised rate filings in accordance with the instructions provided below. While the insurer may attach/link exhibits to respective interrogatories, referring the Department to other exhibits to "find" information is not proper protocol for form completion. Further, if a question is not applicable, please so indicate and provide the basis for such position. Wherever the word proposed rate appears, the requirements also apply to all new or revised rate filings where applicable. 1. Provide a general description of the filing; i.e., list all factors and proposed rates or proposed changes to rates and rating factors. In doing so, include the current and proposed territory base rates for each coverage for which a rate level change is being proposed, the current and proposed territory definitions for each rating territory for which a change in definition is being proposed, and the current and proposed rating factors for each set of rating factors for which a new factor or change is being proposed. Please see the tables below for our liability, medical payments, comprehensive, collision, uninsured motorist, uninsured motorist/physical damage and towing and labor base rate changes. Liability, Medical Payments, Comprehensive and Collision Base Rate Changes: Territory Liability Current Liability Proposed Med Pay Current Med Pay Proposed Comp Current Comp Proposed Coll Current Coll Proposed 10 $1,564 $1,675 $47 $50 $461 $537 $1,610 $1, $1,186 $1,270 $43 $46 $186 $217 $1,168 $1, $1,046 $1,120 $30 $32 $194 $226 $1,107 $1, $1,046 $1,120 $29 $31 $218 $254 $1,086 $1, $961 $1,029 $36 $39 $154 $179 $921 $1, $914 $979 $27 $29 $201 $234 $1,025 $1, $942 $1,009 $35 $37 $177 $206 $1,058 $1, $1,008 $1,080 $37 $40 $201 $234 $1,157 $1, $957 $1,025 $27 $29 $196 $228 $1,086 $1, $933 $999 $28 $30 $161 $188 $932 $1, $1,279 $1,370 $44 $47 $346 $403 $1,393 $1, $1,260 $1,349 $41 $44 $247 $288 $1,301 $1,558 Rate Procedure Summary Page 1 of 8

94 Uninsured Motorist Bodily Injury Base Rate Changes: Limit Current Rate Proposed Rate 75, , , , MIL / / / / / / Uninsured Motorist Property Damage Base Rate Changes: Current Territory Vehicle Cost New $25,000 $50,000 $75,000 $100,000 $300,000 $500,000 1MIL 010 7, , , , , , , , , , , , , , , , , , , , , , , , Rate Procedure Summary Page 2 of 8

95 Proposed Territory Vehicle Cost New $25,000 $50,000 $75,000 $100,000 $300,000 $500,000 1MIL 010 7, , , , , , , , , , , , , , , , , , , , , , , , Towing and Labor: Limit Current Rate Proposed Rate Provide the indicated rate level changes (where applicable), proposed rate level changes, and premium weights using premiums adjusted to current rate level for each coverage (e.g. bodily injury, property damage), subline (e.g. liability, physical damage), and all coverages combined. Coverage Indicated Proposed Projected Earned Premium at Current Weights Change Change Level Bodily Injury/Property Damage 24.5% 7.1% $18,833, % Medical Payments 83.8% 7.5% $417, % Uninsured Motorist 17.2% 7.0% $3,506, % Total Liability 24.5% 7.1% $22,757,170 Comprehensive & Rental 14.6% 7.4% $3,098, % Collision 1.5% 6.3% $11,234, % Towing/Labor N/A 61.3% $93, % Total Physical Damage 4.3% 6.9% $14,426,806 Total 16.7% 7.0% $37,183,976 *Describe components of proposed change, e.g., class, increased limits, deductibles, age and symbols, territories, policy coverage, rules, etc. Rate Procedure Summary Page 3 of 8

96 3. Provide actuarially based rate level indications to support the proposed rate or proposed rate level changes by coverage. In so doing, provide the underlying data, assumptions, and derivation of each of the following components of the indications: a) premiums adjusted to the current rate level; b) premium trend; c) losses and allocated loss adjustment expense (ALAE, which is now referred to as defense and cost containment expense) developed to an ultimate basis including the loss development triangles and the selected loss development factors; d) losses and ALAE adjusted to reflect prospective cost levels, including selected trend factors; e) any adjustments made for large, catastrophic, or weather related losses; f) any adjustments made to reflect the credibility of the experience; g) expense provisions Support should include five years of expense history for each expense provision including unallocated loss adjustment expense (ULAE, which is now referred to as claim adjustment service) with an explanation if the expenses underlying the expected loss ratio or expense multiplier vary from the company s historical expenses; recognition should be given to fixed and variable expense components; and h) profit & contingency provision Support should include rationale for the target rate of return (if applicable), and an explanation (including underlying calculations, data, and assumptions) of how investment income was considered. Data used should be the most recent available to the company. Please see the actuarial justification which addressed all of the above items except for g). Please see below for historical expense provisions for (2008 expense data is not readily available): Liability Year Acquisition Expenses General Expenses Loss Adjustment Expenses % 2.9% 28.9% % 3.1% 27.2% % 3.1% 21.4% % 3.6% 21.1% Physical Damage Year Acquisition Expenses General Expenses Loss Adjustment Expenses % 2.9% 26.0% % 3.1% 28.4% % 3.2% 18.9% % 3.7% 16.9% To be more responsive to recent experience, we have selected expense provisions based on the average of the latest three years of expense ratios. Please see Exhibit VII in the actuarial justification for the split between fixed and variable expenses. Rate Procedure Summary Page 4 of 8

97 4. Provide actuarial support and any other considerations for any proposed factors or proposed changes in rating factors or class definitions; i.e., territory definitions or relativities, class plan definitions or relativities, increased limit factors, deductible factors, discounts, surcharges, etc. Actuarial support should reflect your company s experience. If credit history is utilized in the rating or underwriting process, for homeowner s insurance or personal motor vehicle insurance, the insurer must demonstrate the predictive nature of its insurance scoring process to the Department. Question 5 and 6 enumerates additional filing requirements to support the insurer s use of credit. In addition, a) all motor vehicle filings must include the information requested in Question 15, b) all filings for territory changes must be supported pursuant to Rhode Island Insurance Regulation 62 and c) all property insurance filings must include the information requested in Question 16. If you are proposing rates, rating factors, discounts/surcharges, class/territory definitions, etc. that are based on those currently in effect in Rhode Island for another insurance company(ies) or rating organization, provide the rates, rating factors, discounts/surcharges, class/territory definitions, etc. of that other company(ies), and explain how you have considered possible differences in coverage offered, underwriting standards, claim practices, expenses, etc. between your company and the referenced company(ies). N/A 5. In order to demonstrate the predictive nature of insurance scoring, the insurer must provide an analysis that confirms the statistical correlation between insurance score and loss experience. The analysis should be performed in such a manner that adjusts for any potential distributional biases, such as among states (if multi-state data is used) with different levels of rate adequacy, or among vehicle use risk classes with different levels of rate adequacy. In addition: N/A a) The source of the data must be identified, e.g., number of years of data; whether the data is by accident year or policy year; whether the data is from Rhode Island or other states; if a sample of states or a sample of risks is used, a description of how the data was collected, including data verification procedures; the percentage of the overall business that is used in the sample; etc. b) All data adjustments must be explained and supported, e.g., loss development; adjustments for the effect of large losses; how credibility was considered in the analysis; etc. c) The data underlying the analysis must be relatively recent. 6. Appropriate support for the rates/rating factors that reflect the use of insurance score should include an analysis that supports the appropriateness of each proposed rate/rating factor as opposed to any other rate/rating factor. As above, the source of the data must be identified, all data adjustments must be explained and supported, and the data underlying the analysis must be relatively recent. In addition, a) An explanation must be provided as to how risks with insufficient or no credit history will be treated. Rate Procedure Summary Page 5 of 8

98 N/A b) An explanation must be provided as to how risks that refuse to allow access to their credit score will be treated. c) The company's timing and procedure for updating credit scores must be provided, e.g., at each renewal; only on the customer's request; etc. d) The rationale behind any grouping of credit scores for rating or underwriting purposes must be provided i.e., how the beginning and end points of any ranges of insurance score were selected. 7. In providing the information in (3), (4), (5) and (6) above: a) Explain all differences from the ratemaking procedures employed in your last rate filing in Rhode Island. Experience periods have been divided by accident years as opposed to six month accident periods to internally align ratemaking methodology. b) Clearly describe or label the type of information used; e.g., calendar year, policy year, or accident year; basic limits or total limits; Rhode Island or countrywide; by coverage or all coverages combined; etc. The actuarial justification addresses all the items. 8. Provide rationale for any proposed rate or proposed rate level change, by coverage or overall, that differs from your indicated change. Though our rate indication is +18.1%, Liberty Mutual proposes an overall rate increase of +7.0%. The remainder of the indicated rate need will be re-evaluated and addressed in Liberty Mutual s future filings. 9. Provide the derivation of the estimated overall premium effect of any proposed rate or proposed changes to a rating factor or definition. Explain how you have considered each of these effects in calculating the overall proposed rate level change. N/A 10. Provide any additional information that you feel may be helpful to the Department of Business Regulation in its review of this filing. For example, if the company has undergone changes in its operations that affect its expense provision, then this information should be provided. Any information applicable is included in actuarial justification. 11. Provide the length of time the proposed rates are expected to remain in effect. The proposed rates are expected to remain in effect until the effective date of Liberty Mutual s next rate filing. Rate Procedure Summary Page 6 of 8

99 12. Provide a description of the risk that will receive the largest rate increase and a description of the risk that will receive the largest rate decrease as a result of the changes proposed in this filing. Include the amount of the rate change for each risk described. Highest Increase: 27.3% Company: LMFIC Territory: 23 BIPD: No Coverage Med Pay: No Coverage Comprehensive: 500 Collision: No Coverage Uninsured Motorist: No Coverage Uninsured Motorist/Physical Damage: No Coverage Towing and Labor: 50 Class: 011 Tier: 90 Number of Vehicles: 1 Current Premium: $33 Proposed Premium: $42 Smallest Increase: 3.9% Company: LMFIC Territory: 23 BIPD: 250/500/100 Med Pay: 2500 Comprehensive: 100 Collision: 500 Uninsured Motorist: 250/500 Uninsured Motorist/Physical Damage: 100,000 Towing and Labor: 50 Class: 048 Tier: 90 Number of Vehicles: 1 Current Premium: $1,887 Proposed Premium: $1, Provide an estimate of the number and percent of exposures that will receive a rate increase in excess of 15% due to the changes proposed in this filing. There are an estimated number of 25 policies, or 0.2% of exposures, which will receive a rate increase in excess of 15% as a result of this filing. 14. Provide a statement signed by an actuary or an officer of the company to certify that the data submitted in the filing is accurate and reliable. This has been included with the submission. Rate Procedure Summary Page 7 of 8

100 15. For all motor vehicle filings provide a copy of the relevant pages (and cite the manual page number and rule number) from your company s rating manual that confirm that your company is in compliance with: a) RI Gen. Laws & Insurance Regulation 25 (8), Motor Vehicle Insurance Rate Increases Relating to Violations and Accidents. b) RI Gen. Laws , Consideration in Making of Rates: (4)(a)(1)(i), (4)(d), (4)(e), and Section , Operation of Emergency Vehicles Accidents. c) RI Gen. Laws , Payment of Premium Cancellation d) Insurance Regulation 25(5)&(6), Additive and Reductive Amounts for Policy Credits, Regulation 25(7), Chargeable Accident e) RI Gen. Laws , Premium Reduction for Completing a Motor Vehicle Accident Prevention Course f) RI Gen. Laws , Premium Reduction for Anti-theft Devices, and Regulation 84 g) RI Gen. Laws , Use of Credit Rating h) Insurance Regulation 98, Rhode Island Automobile Insurance Plan As with our prior Rhode Island rate filing, we remain in compliance with these Laws. 16. For all property insurance filings provide a copy of the relevant pages (and cite the manual page number and rule number) from your company s rating manual that confirm that your company is in compliance with: a) RI Gen. Laws , and Bulletin , Use of Credit b) RI Gen. Laws , Refusal to Issue or Increased Premium Due to Nonoccupancy. c) RI Gen. Laws (7) (i,ii,iii), Unfair Competition and Practices, and Insurance Bulletin # Underwriting Restriction Based on Age/Location of Property. d) RI Gen. Laws and Insurance Regulation 110, Hurricane Deductibles, triggers and Policyholder Notices N/A 17. For all Title Insurance Filings, insurers must confirm that it offers a reduced mortgage refinance rate based upon actuarially supported rates, filed and approved for use in RI. as of 4/21/2008 N/A Rate Procedure Summary Page 8 of 8

101 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Liberty Mutual Fire Insurance Company (LMFIC) The First Liberty Insurance Corporation (TFLIC) Liberty Insurance Corporation (LIC) Summary of Rate Indications Narrative The most current rate level indication for Rhode Island Automobile is +16.7% with a renewal business effective date of March 30, 2014 for all companies. Past and Prospective Experience Within and Outside the State Calendar year earned premiums and accident year losses (incurred losses for Liability and paid losses for Physical Damage) are utilized in the indication. Three years of experience are used for both Liability and Physical Damage coverages beginning July 1, 2010 and ending June 30, Losses are evaluated as of June 30, The credibility weighted indications are +24.5% for Liability (See Exhibit I, Sheet 1) and +4.2% for Physical Damage (See Exhibit I, Sheet 2). The overall indication is +16.7%. Liability and Physical Damage premiums are brought to current level by means of the parallelogram method. Liability premium is adjusted to reflect a reduction in the average onleveled earned premium. Physical Damage premium is also adjusted to reflect the effects of Symbol Trend, Model Year and Deductible shift. Exhibit IV shows the development of losses by accident year. Countrywide loss development factors were utilized for because Medical Payments loss development patterns based on Rhode Island data exhibit a high amount of volatility in the historical period. For all other coverages, Rhode Island loss data was used to select loss development factors. For each coverage, two annual trend factors are selected. The historical trend factor brings losses from the midpoint of each accident year used in the experience period to the midpoint of the latest accident year in the experience period. In this case, the midpoint of the latest accident year is January 1, The loss projection factor brings losses from the midpoint of the latest accident year to one year beyond the proposed effective date (i.e. average accident date of the proposed policy effective period). In this case, losses are trended to March 30, The loss trend selections are based on both Liberty and Industry Fast Track data and are shown in Exhibit V. Fixed expense ratios of 21.0% and 22.0%, as a percent of Earned Premium, were calculated for Liability and Physical Damage, respectively (See Exhibit VII) and then added to the developed and trended loss ratio to determine the overall indicated loss, fixed expense and loss adjustment expense ratio Liberty Mutual Group. All Rights Reserved.

102 A catastrophe load factor of is selected based on the long-term catastrophe experience in Rhode Island (See Exhibit VI). Catastrophe losses are removed from the Comprehensive loss experience and the data is then adjusted by including the selected catastrophe load. Insurer Operating Expenses Both Liability and Physical Damage incurred losses are adjusted to include all loss adjustment expenses. Based on Liberty Mutual Rhode Island projections we have selected the LAE factors of for non-medpay Liability, for MedPay and for Physical Damage. The projected permissible loss, fixed expense and loss adjustment expense ratio for Liability is +89.2%. The projected permissible loss, fixed expense, and loss adjustment expense ratio for Physical Damage is +84.7% (see Exhibit VII). Index of Exhibits Exhibit I II III IV V VI VII VIII Appendix A Description Liability and Physical Damage Rate Level Indications Premium Exhibit Loss Exhibit Loss Development Triangles Trend Analysis Catastrophe Provision Calculation Permissible Loss Ratio Calculation Rate Change History Automobile Profit Provision 2013 Liberty Mutual Group. All Rights Reserved.

103 Liberty Mutual Insurance Rhode Island Combined Combined Coverages Rate Level Indication A) 1-Year Total Liability Earned Premium at Current Level and at Total Limits 22,757,170 B) 1-Year Total Physical Damage Earned Premium at Current Level 14,333,350 C) Total Earned Premium at Current Level: (A) + (B) 37,090,520 D) Total Liability Rate Indication (See Exhibit I, Sheet 1) 24.5% E) Total Physical Damage Rate Indication (See Exhibit I, Sheet 2) 4.3% F) Overall Rate Indication 16.7% 2013 Liberty Mutual Insurance. All Rights Reserved.

104 Exhibit I Sheet 1 Liberty Mutual Insurance Rhode Island Combined Total Limits Liability Rate Level Indication Accident Period: 07/01/2010 to 06/30/ Year Total 1) Total Limits Earned Premium at Collected Level (See Exhibit II) Bodily Injury/Property Damage 51,854,819 Medical Payments 1,251,281 UM/UIM 11,605,556 Total Liability 64,711,656 2) Earned Premium at Current Level Including Premium Trend (See Exhibit II) Bodily Injury/Property Damage 53,849,346 Medical Payments 1,209,289 UM/UIM 10,093,639 Total Liability 65,152,274 3) Total Limits Incurred Loss as of 06/13 (See Exhibit III) Bodily Injury 16,531,486 Property Damage 13,088,743 Medical Payments 1,919,907 UM/UIM 3,467,315 Total Liability 35,011,192 4) Total Limits Ultimate Loss and LAE (See Exhibit III) Bodily Injury 25,855,287 Property Damage 16,431,847 Medical Payments 2,287,539 UM/UIM 5,118,960 Total Liability 49,698,171 5) Total Limits Ultimate and Trended Loss and LAE (See Exhibit III) Bodily Injury 29,316,430 Property Damage 19,193,807 Medical Payments 2,357,642 UM/UIM 5,850,119 Total Liability 56,722,536 6) Fixed Expenses (See Exhibit VII) Bodily Injury 21.0% Medical Payments 21.0% UM/UIM 21.0% 7) Indicated Loss, LAE and Fixed Expense Ratio [(5)/(2)+(6)] Bodily Injury/Property Damage 111.1% Medical Payments 216.0% UM/UIM 79.0% 8) Permissible Loss, LAE, and Fixed Expense Ratio (See Exhibit VII) 89.2% 9) Indicated Rate Change [(7) /(8) - 1] Bodily Injury/Property Damage 24.5% Medical Payments 142.0% UM/UIM -11.5% 10) Credibility Bodily Injury/Property Damage: Full Credibility Based on 3,000 PD Claims 100.0% Medical Payments: Full Credibility Based on 3,000 MP Claims 54.2% UM/UIM: Full Credibility Based on 3,000 UM Claims 33.9% 11) Complement of Credibility (Average Loss Ratio Trend) Bodily Injury/Property Damage 19.2% Medical Payments 14.7% UM/UIM 31.9% 12) Credibility Weighted Rate Indication {(9)*(10) + (11)*[1-(10)]} Bodily Injury/Property Damage 24.5% Medical Payments 83.8% UM/UIM 17.2% Total Liability (Weighted Average of Coverages. Weights = (2), Year Ending 06/30/2013) 24.5% 2013 Liberty Mutual Insurance. All Rights Reserved.

105 Exhibit I Sheet 2 Liberty Mutual Insurance Rhode Island Combined Physical Damage Rate Level Indication Accident Period: 07/01/2010 to 06/30/ Year Total 1) Earned Premium at Collected Level (See Exhibit II) Comprehensive 7,325,236 Collision 26,839,201 Total 34,164,436 2) Earned Premium at Current Level Including Premium Trend (See Exhibit II) Comprehensive 8,918,792 Collision 32,237,660 Total 41,156,452 3) Paid Loss as of 06/13 (See Exhibit III) Comprehensive 4,617,755 Collision 15,096,629 Total 19,714,384 4) Ultimate Loss and LAE (See Exhibit III) Comprehensive 5,968,696 Collision 17,658,996 Total 23,627,693 5) Ultimate and Trended Loss and LAE (See Exhibit III) Comprehensive 6,746,196 Collision 20,614,444 Total 27,360,640 6) Fixed Expenses (See Exhibit VII) Comprehensive 22.0% Collision 22.0% 7) Indicated Loss, LAE and Fixed Expense Ratio [(5)/(2)+(6)] Comprehensive 97.7% Collision 86.0% 8) Permissible Loss, LAE, and Fixed Expense Ratio (See Exhibit VII) 84.7% 9) Indicated Rate Change [(7) /(8) - 1] Comprehensive 15.3% Collision 1.5% 10) Credibility Comprehensive: Full Credibility Based on 3,000 Collision Claims 93.6% Collision: Full Credibility Based on 3,000 Collision Claims 100.0% 11) Complement of Credibility (Average Loss Ratio Trend) Comprehensive 4.4% Collision 6.7% 12) Credibility Weighted Rate Indication {(9)*(10) + (11)*[1-(10)]} Comprehensive 14.6% Collision 1.5% Total Physical Damage (Weighted Average of Coverages. Weights = (2), Year Ending 06/30/2013) 4.3% 2013 Liberty Mutual Insurance. All Rights Reserved.

106 Exhibit II Liberty Mutual Insurance Private Passenger Automobile Rhode Island Earned Premium Accident Period: 07/01/2010 to 06/30/2013 Data Evaluated as of: 06/30/2013 Calculation of Trended Earned Premium at Current Rate Level Combined Bodily Injury/Property Damage Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 16,261, ,202, ,367, /01/11 to 06/30/12 16,901, ,810, ,648, /01/12 to 06/30/13 18,692, ,398, ,833, Total 51,854,819 60,411,841 53,849,346 MedPay Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 399, , , /01/11 to 06/30/12 416, , , /01/12 to 06/30/13 435, , , Total 1,251,281 1,427,724 1,209,289 UM Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 3,718, ,284, ,206, /01/11 to 06/30/12 3,904, ,290, ,380, /01/12 to 06/30/13 3,982, ,226, ,506, Total 11,605,556 12,800,864 10,093,639 Comprehensive Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 2,224, ,694, ,901, /01/11 to 06/30/12 2,374, ,750, ,918, /01/12 to 06/30/13 2,726, ,964, ,098, Total 7,325,236 8,408,711 8,918,792 Collision Trended Experience Earned Premium On-Level Earned Premium Premium Trend Capping Earned Premium Collected Level Current Level Factor Current Level Weights 07/01/10 to 06/30/11 8,177, ,602, ,444, /01/11 to 06/30/12 8,749, ,901, ,558, /01/12 to 06/30/13 9,911, ,747, ,234, Total 26,839,201 30,251,142 32,237, Liberty Mutual Insurance. All Rights Reserved.

107 Exhibit III Sheet 1 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Loss Experience Accident Period: 07/01/2010 to 06/30/2013 Data Evaluated as of: 06/30/2013 Combined Incurred Loss Method Losses Developed to Ultimate Bodily Injury Total Limits Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 6,013, ,851, ,273, /01/11 to 06/30/12 6,088, ,790, ,983, /01/12 to 06/30/13 4,430, ,212, ,059, Total 16,531,486 25,855,287 29,316,430 Property Damage Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 4,086, ,919, ,051, /01/11 to 06/30/12 4,445, ,362, ,282, /01/12 to 06/30/13 4,556, ,149, ,860, Total 13,088,743 16,431,847 19,193,807 UMBI/UIM Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 1,122, ,466, ,731, /01/11 to 06/30/12 1,300, ,877, ,132, /01/12 to 06/30/13 568, ,182, ,291, Total 2,991,819 4,526,220 5,155,148 UMPD Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 154, , , /01/11 to 06/30/12 185, , , /01/12 to 06/30/13 136, , , Total 475, , ,971 Medical Payments Loss Trended Experience Incurred Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 507, , , /01/11 to 06/30/12 547, , , /01/12 to 06/30/13 865, ,070, ,094, Total 1,919,907 2,287,539 2,357, Liberty Mutual Insurance. All Rights Reserved.

108 Exhibit III Sheet 2 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Loss Experience Accident Period: 07/01/2010 to 06/30/2013 Data Evaluated as of: 06/30/2013 Combined Paid Loss Method Losses Developed to Ultimate Comprehensive xcat Loss Trended Experience Paid Development Developed Trend Developed Period Loss Factor LAE Load CAT Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 1,311, ,655, ,955, /01/11 to 06/30/12 1,467, ,857, ,109, /01/12 to 06/30/13 1,838, ,455, ,680, Total 4,617,755 5,968,696 6,746,196 Collision Loss Trended Experience Paid Development Developed Trend Developed Period Loss Factor LAE Load Loss & LAE Factor Loss & LAE Weights 07/01/10 to 06/30/11 4,416, ,238, ,444, /01/11 to 06/30/12 4,760, ,632, ,598, /01/12 to 06/30/13 5,919, ,787, ,571, Total 15,096,629 17,658,996 20,614, Liberty Mutual Insurance. All Rights Reserved.

109 Liberty Mutual Insurance Rhode Island Bodily Injury/UM Bodily Injury/UIM Bodily Injury - Total Limits Incurred Losses Acc Year/ Maturity Age Jul2003-Jun2004 5,034,696 5,994,336 6,483,745 6,939,297 6,902,591 6,864,066 6,944,719 6,977,636 6,988,136 6,988,136 Jul2004-Jun2005 4,464,762 5,965,722 6,494,840 7,410,155 7,624,602 7,588,938 7,586,360 7,635,872 7,630,772 Jul2005-Jun2006 4,559,655 6,226,478 6,377,107 6,445,907 6,518,182 6,591,324 6,645,699 6,813,373 Jul2006-Jun2007 4,814,223 6,065,929 6,653,217 6,879,489 6,977,929 7,053,001 7,068,653 Jul2007-Jun2008 4,808,348 6,807,301 7,245,068 7,464,826 7,800,390 8,076,824 Jul2008-Jun2009 4,105,616 5,817,779 7,034,894 7,431,797 7,571,354 Jul2009-Jun2010 4,117,747 6,202,588 7,682,506 8,187,794 Jul2010-Jun2011 3,900,994 6,777,725 7,136,177 Jul2011-Jun2012 5,196,061 7,388,413 Jul2012-Jun2013 4,998,715 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Selected To Ultimate Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

110 Liberty Mutual Insurance Rhode Island Property Damage/UM Property Damage/UIM Property Damage - Incurred Losses Acc Year/ Maturity Age Jul2003-Jun2004 2,920,273 3,095,182 3,079,772 3,072,430 3,063,258 3,062,521 3,060,052 3,060,049 3,058,488 3,058,488 Jul2004-Jun2005 3,750,461 4,129,915 4,100,546 4,085,365 4,080,241 4,075,630 4,073,417 4,065,079 4,065,078 Jul2005-Jun2006 3,671,282 4,030,081 4,028,152 3,996,033 3,998,354 3,990,184 3,989,217 3,989,847 Jul2006-Jun2007 4,069,351 4,479,292 4,494,321 4,505,760 4,491,366 4,482,981 4,478,100 Jul2007-Jun2008 4,139,496 4,550,740 4,541,517 4,522,049 4,513,542 4,509,208 Jul2008-Jun2009 3,577,969 3,988,717 3,985,105 3,974,890 3,971,007 Jul2009-Jun2010 3,648,067 4,253,361 4,283,370 4,266,080 Jul2010-Jun2011 3,715,120 4,190,056 4,240,917 Jul2011-Jun2012 4,093,773 4,630,225 Jul2012-Jun2013 4,693,097 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Selected To Ultimate Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

111 Liberty Mutual Insurance Rhode Island Medical Payments - Incurred Losses Acc Year/ Maturity Age Jul2003-Jun , , , , , , , , , ,386 Jul2004-Jun , , , , , , , , ,338 Jul2005-Jun , , , , , , , ,059 Jul2006-Jun , , , , , , ,766 Jul2007-Jun , , , , , ,576 Jul2008-Jun , , , , ,895 Jul2009-Jun , , , ,628 Jul2010-Jun , , ,674 Jul2011-Jun , ,041 Jul2012-Jun ,192 Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

112 Liberty Mutual Insurance Rhode Island Comprehensive Excluding Catastrophes - Paid Loss, Including R/R Acc Year/ Maturity Age Jul2003-Jun , , , , , , , , , ,253 Jul2004-Jun2005 1,054,790 1,114,789 1,118,028 1,118,160 1,118,160 1,118,160 1,118,160 1,118,090 1,118,090 Jul2005-Jun2006 1,041,905 1,086,886 1,089,098 1,089,098 1,079,735 1,079,735 1,079,388 1,079,388 Jul2006-Jun2007 1,045,858 1,088,013 1,101,136 1,100,236 1,091,629 1,091,629 1,091,629 Jul2007-Jun2008 1,300,598 1,600,901 1,593,482 1,593,625 1,593,543 1,616,208 Jul2008-Jun2009 1,262,699 1,322,737 1,318,083 1,318,971 1,318,971 Jul2009-Jun2010 1,255,659 1,301,863 1,300,432 1,300,449 Jul2010-Jun2011 1,216,387 1,295,843 1,311,355 Jul2011-Jun2012 1,376,200 1,467,540 Jul2012-Jun2013 1,838,860 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Selected To Ultimate Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

113 Liberty Mutual Insurance Rhode Island Collision - Paid Losses Acc Year/ Maturity Age Jul2003-Jun2004 3,518,418 3,378,892 3,372,432 3,368,639 3,367,139 3,363,454 3,363,221 3,363,475 3,363,475 3,363,475 Jul2004-Jun2005 4,046,015 3,800,018 3,770,328 3,769,603 3,765,379 3,765,279 3,765,329 3,765,222 3,765,222 Jul2005-Jun2006 4,005,281 3,854,481 3,849,537 3,843,811 3,839,365 3,838,247 3,833,745 3,833,078 Jul2006-Jun2007 4,228,113 4,120,930 4,112,267 4,100,111 4,095,751 4,095,168 4,094,711 Jul2007-Jun2008 4,153,614 4,090,795 4,079,955 4,079,869 4,081,266 4,080,599 Jul2008-Jun2009 4,143,450 3,953,572 3,926,017 3,926,712 3,924,448 Jul2009-Jun2010 4,408,077 4,264,669 4,250,808 4,239,491 Jul2010-Jun2011 4,653,553 4,426,126 4,416,501 Jul2011-Jun2012 4,858,012 4,760,621 Jul2012-Jun2013 5,919,506 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Selected To Ultimate Exhibit IV Sheet Liberty Mutual Insurance. All Rights Reserved.

114 Exhibit IV Sheet 6 Liberty Mutual Insurance Countrywide Tort (Includes AK, AL, AZ, AR, CA, CT, GA, ID, IL, IN, IA, LA, ME, MS, MO, MT, NE, NV, NH, NM, NC, OH, OK, RI, SD, TN, VT, VA, WV, WI, WY) PIP and Medical Payments - Incurred Losses Acc Half Yr/ Maturity Age Jul2003-Jun ,728,650 15,612,457 15,632,863 15,567,928 15,562,705 15,561,507 15,550,325 15,550,182 15,548,697 15,546,365 Jul2004-Jun ,079,720 21,739,056 21,513,531 21,444,144 21,375,477 21,336,163 21,335,934 21,335,083 21,321,709 Jul2005-Jun ,629,530 22,810,661 22,341,756 22,327,119 22,321,720 22,251,446 22,231,148 22,228,440 Jul2006-Jun ,437,866 22,541,822 22,725,800 22,667,090 22,611,705 22,590,562 22,579,248 Jul2007-Jun ,891,846 23,107,187 23,132,490 22,978,886 22,924,119 22,906,723 Jul2008-Jun ,487,796 25,359,487 25,330,465 25,391,962 25,306,953 Jul2009-Jun ,552,521 27,797,417 28,011,498 27,990,479 Jul2010-Jun ,807,838 29,200,518 29,533,058 Jul2011-Jun ,032,658 31,032,627 Jul2012-Jun ,325,175 Age to Age Factors Jul2002-Jun Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 3 periods Selected To Ultimate Liberty Mutual Insurance. All Rights Reserved.

115 Exhibit V Sheet 1 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Calculation of Loss Trend Factors Combined Historical Loss Trend Factors BI PD MP UMBI UMPD COMP COLL Selected Annual Historical Pure Premium Trend : 4.0% 5.0% 1.0% 4.0% 5.0% 4.0% 5.0% Experience Trend Trend Trend BI Loss PD Loss MP Loss UMBI Loss UMPD Loss Comp Loss Coll Loss Period From To Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor 07/01/10 to 06/30/11 1/1/2011 1/1/ /01/11 to 06/30/12 1/1/2012 1/1/ /01/12 to 06/30/13 1/1/2013 1/1/ Loss Projection Factors BI PD MP UMBI UMPD COMP COLL Selected Annual Projected Pure Premium Trend : 4.0% 5.0% 1.0% 4.0% 5.0% 4.0% 5.0% Experience Trend Trend Trend BI Loss PD Loss MP Loss UMBI Loss UMPD Loss Comp Loss Coll Loss Period From To Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor All 1/1/2013 3/30/ Combined Loss Trend Factors Experience BI Loss PD Loss MP Loss UMBI Loss UMPD Loss Comp Loss Coll Loss Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor 07/01/10 to 06/30/ /01/11 to 06/30/ /01/12 to 06/30/ Liberty Mutual Insurance. All Rights Reserved.

116 Exhibit V Sheet 2 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Calculation of Premium Trend Factors Combined Historical Premium Trend Factors BIPD MP UM Comp Collision Selected Annual Historical Premium Trend: -3.5% -5.0% -5.0% 1.5% 2.0% BIPD MP UM Comp Coll Experience Trend Trend Trend Premium Premium Premium Premium Premium Period From To Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor 07/01/10 to 06/30/11 1/1/2011 1/1/ /01/11 to 06/30/12 1/1/2012 1/1/ /01/12 to 06/30/13 1/1/2013 1/1/ Premium Projection Factors BIPD MP UM Comp Collision Selected Annual Projected Premium Trend: -3.5% -5.0% -8.0% 2.0% 2.0% BIPD MP UM Comp Coll Experience Trend Trend Trend Premium Premium Premium Premium Premium Period From To Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor All 1/1/2013 3/30/ Combined Premium Trend Factors BIPD MP UM Comp Coll Experience Premium Premium Premium Premium Premium Period Trend Factor Trend Factor Trend Factor Trend Factor Trend Factor 07/01/10 to 06/30/ /01/11 to 06/30/ /01/12 to 06/30/ Liberty Mutual Insurance. All Rights Reserved.

117 Exhibit V Sheet 3 Rhode Island INDUSTRY Fast Track Trend Data ACTUAL DATA Prior 4 Qtrs. Bodily Injury Property Damage Personal Injury Protection Collision Comprehensive Ending Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Paid Paid Pure Year Qtr. Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Premium , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , ***** ***** ***** ***** 3, , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , FITTED TREND 1-Yr (5 pts) ***** ***** ***** ***** Yr (9 pts) ***** ***** ***** ***** Yr (13 pts) ***** ***** ***** ***** Yr (17 pts) ***** ***** ***** ***** Rhode Island LIBERTY MUTUAL Fast Track Trend Data ACTUAL DATA Prior 4 Qtrs. Bodily Injury Property Damage Personal Injury Protection Collision Comprehensive Ending Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Paid Paid Pure Year Qtr. Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Premium , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , , , ***** ***** ***** ***** 3, , FITTED TREND 1-Yr (5 pts) ***** ***** ***** ***** Yr (9 pts) ***** ***** ***** ***** Yr (13 pts) ***** ***** ***** ***** Yr (17 pts) ***** ***** ***** ***** Liberty Mutual Insurance. All Rights Reserved.

118 Exhibit V Sheet 4 New England x CT, MA INDUSTRY Fast Track Trend Data ACTUAL DATA Prior 4 Qtrs. Bodily Injury Property Damage Personal Injury Protection Collision Comprehensive Ending Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Arising Paid aid Pure Paid Paid Paid Pure Paid Paid Paid Pure Year Qtr. Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Premium , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, Yr (5 pts) ***** ***** ***** ***** Yr (9 pts) ***** ***** ***** ***** Yr (13 pts) ***** ***** ***** ***** Yr (17 pts) ***** ***** ***** ***** New England x CT, MA LIBERTY MUTUAL Fast Track Trend Data ACTUAL DATA Prior 4 Qtrs. Bodily Injury Property Damage Personal Injury Protection Collision Comprehensive Ending Paid Arising Paid Paid Pure Paid Paid Paid Pure Paid Arising Paid aid Pure Paid Paid Paid Pure Paid Paid Paid Pure Year Qtr. Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Freq. Premium Severity Freq. Premium Severity Freq. Premium , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 2, , , ***** ***** ***** ***** 3, Yr (5 pts) ***** ***** ***** ***** Yr (9 pts) ***** ***** ***** ***** Yr (13 pts) ***** ***** ***** ***** Yr (17 pts) ***** ***** ***** ***** Liberty Mutual Insurance. All Rights Reserved.

119 Exhibit V Sheet 5 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Combined Premium Trend Rolling 4 Quarters Average On-leveled Earned Premium YRQTR BI/PD MedPay UM Comprehensive Collision 2010Q3 $670 $17 $153 $108 $ Q4 $667 $17 $153 $108 $ Q1 $665 $17 $153 $108 $ Q2 $663 $17 $153 $108 $ Q3 $657 $16 $152 $109 $ Q4 $652 $16 $152 $109 $ Q1 $646 $16 $151 $110 $ Q2 $639 $16 $149 $110 $ Q3 $632 $16 $147 $110 $ Q4 $626 $15 $143 $111 $ Q1 $620 $15 $139 $111 $ Q2 $614 $15 $135 $112 $ pt. -3.3% -4.7% -4.1% 1.3% 2.0% 10 pt. -3.6% -5.4% -5.2% 1.5% 2.1% 8 pt. -3.9% -6.1% -6.7% 1.6% 2.0% 6 pt. -4.0% -7.0% -8.7% 1.7% 1.9% 4 pt. -3.8% -7.5% -10.1% 2.1% 2.1% Historical Selection -3.5% -5.0% -5.0% 1.5% 2.0% Projected Selection -3.5% -5.0% -8.0% 2.0% 2.0% 2013 Liberty Mutual Insurance. All Rights Reserved.

120 Exhibit VI Liberty Mutual Insurance Private Passenger Automobile Rhode Island All Companies Comprehensive Catastrophe Load Calculation Accident Total Paid XCat Paid Total/XCat Year Ending Comp Loss Comp Loss Ratio Jul2003-Jun , , Jul2004-Jun2005 1,120,915 1,118, Jul2005-Jun2006 1,174,155 1,079, Jul2006-Jun2007 1,149,425 1,091, Jul2007-Jun2008 1,642,990 1,616, Jul2008-Jun2009 1,376,540 1,318, Jul2009-Jun2010 1,426,300 1,300, Jul2010-Jun2011 1,386,086 1,311, Jul2011-Jun2012 1,711,743 1,467, Jul2012-Jun2013 1,985,521 1,838, Year Cat Provision Year Cat Provision Selected Cat Provision Liberty Mutual Insurance. All Rights Reserved.

121 Exhibit VII Liberty Mutual Insurance Private Passenger Automobile Rhode Island Permissible Loss Ratio Calculation Projected Expenses (As a Percentage of Earned Premium) Liability Total Variable Fixed Other Acquisition 17.3% 3.7% 13.6% General 3.3% 0.0% 3.3% Tax 2.2% 2.2% 0.0% Profit 4.9% 4.9% 0.0% Contingency 0.0% 0.0% 0.0% Involuntary Load 0.0% 0.0% 0.0% Total Expense Ratio 27.7% 10.8% 16.9% Total Trended Expense Ratio 31.8% 10.8% 21.0% Target Loss & Fixed Exp Ratio 89.2% Physical Damage Total Variable Fixed Other Acquisition 18.5% 4.1% 14.4% General 3.3% 0.0% 3.3% Tax 2.2% 2.2% 0.0% Profit 9.0% 9.0% 0.0% Contingency 0.0% 0.0% 0.0% Involuntary Load 0.0% 0.0% 0.0% Total Expense Ratio 33.0% 15.3% 17.7% Total Trended Expense Ratio 37.3% 15.3% 22.0% Target Loss & Fixed Exp Ratio 84.7% Calculation of Annual Fixed Expense Ratio Trend Selected Trend 6.0% Trend From Date 7/1/2011 Trend To Date 3/30/2015 Fixed Expense Trend Length 3.75 Derivation Fixed Expense Trend Countrywide Auto PIF Growth 3.4% Countrywide Auto Fixed Expense Change 6.7% Countrywide Auto Premium Trend -2.7% Calculated Fixed Expense Trend 6.1% Fixed Expense Trend Selected 6.0% 2013 Liberty Mutual Insurance. All Rights Reserved.

122 Exhibit VII Sheet 2 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Derivation of Expense Provisions Liability Physical Damage Acquistion Expenses $3,174,818 $3,894,941 $4,222,822 Acquistion Expenses $1,849,261 $2,195,036 $2,373,810 Written Premium $20,401,322 $21,171,049 $23,406,370 Written Premium $10,503,023 $11,186,245 $12,907,350 Ratio 15.6% 18.4% 18.0% Ratio 17.6% 19.6% 18.4% Selected 17.3% Selected 18.5% General Expenses $614,841 $642,017 $807,495 General Expenses $316,012 $341,063 $438,289 Earned Premium $20,126,512 $20,723,181 $22,204,936 Earned Premium $10,335,514 $10,821,886 $11,991,410 Ratio 3.1% 3.1% 3.6% Ratio 3.1% 3.2% 3.7% Selected 3.3% Selected 3.3% Premium Tax $450,018 $454,546 $502,335 Premium Tax $231,475 $239,805 $276,623 Written Premium $20,401,322 $21,171,049 $23,406,370 Written Premium $10,503,023 $11,186,245 $12,907,350 Ratio 2.2% 2.1% 2.1% Ratio 2.2% 2.1% 2.1% Selected 2.2% Selected 2.2% ALAE $640,620 $650,021 $746,582 ALAE $13,385 $10,409 $13,610 Incurred Losses $11,576,390 $11,807,639 $14,222,262 Incurred Losses $5,456,472 $6,769,861 $7,125,242 Ratio 5.5% 5.5% 5.2% Ratio 0.2% 0.2% 0.2% Selected 5.4% Selected 0.2% ULAE $2,505,572 $1,877,056 $2,259,300 ULAE $1,535,350 $1,265,977 $1,193,289 Incurred Losses $11,576,390 $11,807,639 $14,222,262 Incurred Losses $5,456,472 $6,769,861 $7,125,242 Ratio 21.6% 15.9% 15.9% Ratio 28.1% 18.7% 16.7% Selected 15.9% Selected 18.7% 2013 Liberty Mutual Insurance. All Rights Reserved.

123 Exhibit VIII Liberty Mutual Insurance Private Passenger Automobile Rhode Island LMFIC/LIC Rate History Eff. Date BIPD MedPay UM Comp Coll Total 3/30/ % 6.3% 6.6% 4.0% 3.7% 5.6% 3/30/ % 6.3% 4.2% 4.5% 3.6% 5.6% 10/24/ % 0.0% 0.0% 0.0% 0.1% 0.0% 3/30/ % 5.4% 2.8% 5.7% 3.3% 5.9% 3/30/ % 4.6% 5.1% 5.1% 5.1% 5.1% 7/12/ % 2.0% 0.7% 3.4% 3.4% 2.9% 1/0/ % 0.0% 0.0% 0.0% 0.0% 0.0% 1/0/1900 LMGIC/LM-IC Rate History Eff. Date BIPD MedPay UM Comp Coll Total 2/20/ % 3.8% 3.8% 3.1% 3.8% 3.8% 1/0/ % 0.0% 0.0% 0.0% 0.0% 0.0% 2013 Liberty Mutual Insurance. All Rights Reserved.

124 Appendix A Liberty Mutual Insurance Private Passenger Automobile Countrywide Profit Provision As Liberty Mutual Insurance is organized under a mutual holding company system, our company has limited recourse to stock market capitalization to generate needed surplus funds, unlike a publiclytraded insurance company or an insurance company with a publicly-traded parent. Any increase in surplus must come from (1) underwriting profit, (2) investment income, (3) realized capital gains, or (4) unrealized capital gains. In the following analysis, Liberty Mutual selects provisions for underwriting profit which will ensure that anticipated income from all sources produces net income after taxes that is commensurate with the risk assumed in the business of property/casualty insurance. Furthermore, these provisions ensure that projected changes in policyholder surplus are sufficiently similar (in direction and magnitude) to changes in premium accounts so that confidence in the Companies' financial integrity can be maintained. Exhibit A shows a history of calendar year rates of return for investment income expressed as a percentage of mean invested assets. The primary source is interest, dividends, and real estate income shown in column (3). Based on the current market yield, it is reasonable to anticipate before tax returns of 3.7% from interest, dividends, and real estate income during the time rates are effective. Historically, realized capital gains have contributed very little to earnings. For the prospective period, we select 0.2% from this source. In total, our anticipated pre-tax return is 3.9%. We believe this a reasonable return given the current interest rate environment. After federal income taxes, the total anticipated rate of return is 2.8% of invested assets. Exhibit B presents the investment income derived from unearned premium reserves. The model uses historical information, modified for the current tax rate. This income is separated into two categories. First, there are premium finance charges [Line 10] collected by allowing policyholders to pay their premiums in installments over the 12-month policy term. Line 3 is the corresponding portion of the unearned premium reserve representing the premium which is being financed by the company. Second, there is the remaining reserve, after prepaid expense and taxes, [Line 7] which develops income based on the anticipated rate of return. Exhibit C applies the rate of return to mean loss and loss adjustment expense reserves. These exhibits relate investment income to premium earned. Exhibit D provides pertinent expense data to calculate the Permissible Loss Ratio. Exhibit E deals with the calculation of federal income taxes applicable to unearned premium and loss reserves Liberty Mutual Insurance. All Rights Reserved.

125 Income from all of the above sources is combined with our selected underwriting profit provisions in the following 2 to 1 premium-to-surplus model: Let Premium = $100; Surplus = $50 Memo Exhibit Liability Physical Damage 1) Investment Income on Unearned Premium Reserves $100 x (Exhibit B, Table 1, Item 12) ($0.15) ($0.15) 2) Investment Income on Loss Reserves $100 x (Exhibit C, Table 1, Item 5) $2.33 $0.06 3) Investment Income on Surplus $50 x (Exhibit A, Table 1, Column 7) $1.40 $1.40 4) Underwriting Income After Tax $100 x (1-.35) x Profit Provision (Exhibit D, Item 4) $3.90 $6.18 5) Total Expected Return [1]+[2]+[3]+[4] $7.48 $7.49 Average Total Expected Return (Based on earned 60.2%/39.8% premium distribution) $7.48 6) Expected Return on Surplus [5]/Premium:Surplus Ratio x 100% 15.0% 7) GAAP Adjusted Return [6]/GAAP Adj. Factor (Exhibit F, Item 6) 12.0% While we believe that 15.0% is a fair rate of return for property-casualty insurers in comparison with other industries given the variability in the overall return, to comply with the Department s request we have modified our target return to yield 12.0% on GAAP adjusted surplus. The pre-tax profit provisions of 6.0% for liability and 9.5% for physical damage are derived using an iterative method to yield an anticipated return of 7.5% on earned premium after tax. However, we have selected lower target profit provisions of 4.9% for liability and 9.0% for physical damage as a percentage of premium Liberty Mutual Insurance. All Rights Reserved.

126 Exhibit A: Effective Rate of Return on Investable Assets Table 1: Historical Investments Returns (1) (2) (3) (4) (5) (6) (7) Net Mean Net Net Net Realized Realized Calendar Invested Investment Inv. Inc. Capital Cap. Gains Total Year Assets (a) Income (b) % of (2) Gains (c) % of (2) Return ,118,335, ,231, ,142, ,808,729, ,126, ,222, ,272,895, ,278, ,851, ,415,308, ,013, ,991, ,727,246,565 1,040,182, ,141, ,085,608,244 1,084,863, ,195, ,872,603,927 1,078,372, ,556, ,380,644,905 1,019,000, ,575, ,728,080,374 1,000,703, ,091, ,644,320,729 1,004,243, ,061, ,754,458,149 1,024,976, ,172, ,051,878,513 1,049,458, ,763, ,008,196,638 1,114,613, ,016, ,692,869,206 1,259,013, ,579, ,097,086,037 1,249,282, ,548, ,316,155,306 1,180,115, ,996, ,117,700,188 1,149,160, ,186, ,593,328,553 1,213,180, ,183, ,362,100,873 1,278,067, ,926, ,616,013,191 1,277,698, ,728, ,560,878,142 1,370,600, ,166, ,342,136,927 1,668,935, ,655, ,670,013,186 2,071,514, (48,560,181) ,693,589,467 1,792,955, (28,910,232) ,579,139,343 1,721,410, ,759, ,838,643,778 1,760,105, ,773, ,513,908,048 1,648,452, ,234, Latest 10 Years 405,769,751,508 15,802,923, ,692,958, Latest 5 Years 245,295,293,822 8,994,439, ,297, Anticipated Returns (Before Tax) Federal Tax Rate (Exhibit A, Table 2) Anticipated Returns (After Tax) (a) Mean of current and prior year Annual Statements: Page 2, Line 12 Less Page SI04, Column (2), Lines 12, 18 and 24. (b) 2012 Annual Statement: Page 4, Line 9 less Page 12, Part 1, Column (2), Lines 1.3, 2.11, 2.21, and 8. (c) 2012 Annual Statement: Page 4, Line Liberty Mutual Insurance. All Rights Reserved.

127 Exhibit A: Effective Rate of Return on Investable Assets Table 2: Effective Federal Tax Rate Federal Earned Tax Income Distribution Rate BONDS (Ex Tax Exempt) $1,227,153,033 (a) BONDS (Tax Exempt) Acquired Before 8/7/86 $644, Acquired After 8/7/86 $443,787, STOCKS Acquired Before 8/7/86 Non-Affiliated $527, Foreign $ Total $527,265 Acquired After 8/7/86 Non-Affiliated $48,254, Foreign $8,201, Total $56,455,322 All Other Investment Income (b) ($80,114,847) (c) Net Investment Income Gain/(Loss) $1,648,452,923 (d) (e) (a) 2012 Annual Statement: Page 12, Part 1, Column (2), Lines (Excludes bonds of affiliates) (b) Reduced by investment expenses and depreciation on real estate (c) 2012 Annual Statement: Page 12, Part 1, Column (2), lines 3, 4, 6, 7, and 9 less line 16 (d) Exhibit A, Table 1, Column 3 (e) Weighted average rate using "Distribution" column 2013 Liberty Mutual Insurance. All Rights Reserved.

128 Exhibit B: Investment Income from Unearned Premium Reserves Table 1: Investment Income from Unearned Premium Reserves as Factor of Earned Premium Auto Auto Liability Physical Damage 1) Earned Premium $ $ ) Mean Unearned Premium Reserve Ratio of Mean Direct Unearned Premium Reserve to Direct Earned Premium x [1] $50.60 $ ) Mean Premium Subject to Installment Payment Finance Plan Ratio of Mean Premium Financed to Mean Direct Unearned Reserve x [2] $41.09 $ ) Funds Available for Prepaid Expense, Tax, and Investment [2] - [3] $9.51 $9.51 5) Prepaid Expense Sum of Acquision, Taxes, and One-Half General Expenses x (2) $13.61 $ ) Federal Tax Reform Act Ratio of Tax Payable to Mean Net Unearned Premium Reserve x [2] $0.35 $0.35 7) Funds Available for Investment [4] - [5] - [6] ($4.45) ($4.35) 8) Rate of Return, After Tax 2.8% 2.8% 9) Income on Invested Reserve [7] x [8] ($0.12) ($0.12) 10) Income from Installment Payment Premium Finance Plan Ratio of Investment Income to Mean Premium Financed x (3) ($0.03) ($0.03) 11) Total Investment Income [9] + [10] ($0.15) ($0.15) 12) Investment Income as a Factor of Earned Premium [11] / [1] Notes Lines [2], [3], and [10]: Exhibit B, Table 2, Columns [9], [10] and [6], 'Selected' Line [5]: Exhibit D - Acquisition, 50% of General, and Taxes Line [6]: Exhibit E, Section A, Line [5] Line [8]: Exhibit A, Table Liberty Mutual Insurance. All Rights Reserved.

129 Exhibit B: Investment Income from Unearned Premium Reserves Table 2: Investment Income from Installment Payment Premium Finance Plan ($000) (Private Passenger Automobile) [1] [2] [3]=[1]-[2] Premium Net Finance Premium Investment Year Charges Charged-Off Income 2003 $49,268 $12,652 $36, $48,445 $16,747 $31, $42,895 $19,260 $23, $40,612 $19,181 $21, $40,188 $24,083 $16, $39,993 $27,252 $12, $35,612 $32,098 $3, $32,800 $29,300 $3, $30,492 $33,231 -$2, $28,101 $35,013 -$6,912 [4]=[3]*0.65 [5] [6]=[4]/[5] After-Tax Mean Ratio of Investment Investment Premium Income to Mean Year Income Financed Premium Financed 2003 $23,801 $1,072, $20,604 $1,248, $15,362 $1,375, $13,930 $1,410, $10,468 $1,483, $8,282 $1,558, $2,284 $1,625, $2,275 $1,725, ($1,780) $1,860, ($4,493) $2,045, Selected [7] [8] [9]=[8]/[7] [10]=[5]/[8] Direct Mean Direct Unearned Premium to Premium Financed to Earned Unearned Earned Premium Unearned Premium Year Premium Premium Reserve Ratio Reserve Ratio 2003 $3,066,448 $1,463, $3,831,290 $1,735, $3,822,920 $1,921, $3,794,629 $1,912, $3,844,079 $1,938, $3,926,622 $1,984, $4,048,548 $2,055, $4,279,658 $2,156, $4,527,884 $2,295, $4,897,160 $2,480, Selected Liberty Mutual Insurance. All Rights Reserved.

130 Exhibit C: Investment Income from Loss Reserves Table 1: Investment Income from Loss Reserves as a Factor of Premium Auto Liability Auto Physical Damage 1) Ratio of Loss & LAE Reserves to Incurred Loss & LAE ) Ratio of Federal Tax Payable to Incurred Loss & LAE ) Permissible Loss & LAE Ratio ) Net Effective Rate of Return After Tax ) Investment Income as a Factor of Premium {[(1) - (2)] * (3) * (4)} Notes Line [1]: Exhibit C, Table 2, Column [9] Line [2]: Exhibit E, Section B, Line [11] Line [3]: Exhibit D Line [4]: Exhibit A, Table Liberty Mutual Insurance. All Rights Reserved.

131 Table 2: Ratio of Loss and LAE Reserves to Loss and LAE Incurred Private Passenger Automobile - Liability ($000) [1] [2] [3] [4] [5] [6] [7] [8] [9] Net Net Ratio of Year-End Net Prior Year Net Mean Net Year End Net Prior Year Net Mean Net Incurred Incurred Reserves Year Loss Reserve Loss Reserve Loss Reserve LAE Reserve LAE Reserve LAE Reserve Losses LAE to Incurred ,691,914 1,640,452 1,666, , , ,678 1,222, , ,387,188 1,691,914 2,039, , , ,186 1,485, , ,390,298 2,387,188 2,388, , , ,173 1,395, , ,198,306 2,390,298 2,294, , , ,841 1,221, , ,896,699 2,198,306 2,047, , , ,714 1,333, , ,135,874 1,896,699 2,016, , , ,186 1,678, , ,288,787 2,135,874 2,212, , , ,306 1,585, , ,410,821 2,288,787 2,349, , , ,969 1,647, , ,352,808 2,410,821 2,381, , , ,719 1,759, , ,398,879 2,352,808 2,375, , , ,387 1,841, , Selected Table 2: Ratio of Loss and LAE Reserves to Loss and LAE Incurred Private Passenger Automobile - Physical Damage ($000) [1] [2] [3] [4] [5] [6] [7] [8] [9] Net Net Ratio of Year-End Net Prior Year Net Mean Net Year End Net Prior Year Net Mean Net Incurred Incurred Reserves Year Loss Reserve Loss Reserve Loss Reserve LAE Reserve LAE Reserve LAE Reserve Losses LAE to Incurred 2003 (36,133) (36,750) (36,441) 27,711 28,378 28, , , (26,143) (36,133) (31,138) 48,220 27,711 37, , , (30,501) (26,143) (28,322) 62,598 48,220 55, , , (20,146) (30,501) (25,324) 42,365 62,598 52, , , (2,397) (20,146) (11,272) 52,907 42,365 47, , , ,492 (2,397) ,248 52,907 47, , , (6,350) 3,492 (1,429) 45,553 42,248 43, , , (7,542) (6,350) (6,946) 52,544 45,553 49, , , ,521 (7,542) (1,510) 46,543 52,544 49,543 1,058, , (16,929) 4,521 (6,204) 36,119 46,543 41,331 1,214, , Selected Note: Beginning in 2000, Liberty Mutual no longer holds Physical Damage Case Loss Reserves Exhibit C: Investment Income from Loss Reserves 2013 Liberty Mutual Insurance. All Rights Reserved.

132 Exhibit D: Expense Ratios Auto Liability Auto Physical Damage 1) Acquisition 21.5% 21.4% 2) General 5.7% 5.8% 3) Taxes 2.5% 2.4% 4a) Indicated Profit 6.0% 9.5% 4b) Selected Profit 4.9% 9.0% 5) Indicated Total 35.7% 39.2% 6) Permissible Loss and LAE Ratio 64.3% 60.8% Notes Data from 2012 Insurance Expense Exhibit (Direct) 2013 Liberty Mutual Insurance. All Rights Reserved.

133 Exhibit E: Federal Income Tax Payable Due to Tax Reform Act of 1986 A. Tax on Unearned Premium Reserves ($000,000) Private Passenger Auto 1) Net Unearned Premium Reserve 12/31/11 $3,602 (a) 2) Net Unearned Premium Reserve 12/31/12 $3,992 (a) 3) Mean Net Unearned Premium Reserve {[1] + [2]} / 2 $3,797 4) Federal Tax Payable on Change in Net Unearned Premium Reserve {[2]-[1]} x 20% x 0.35 $27 5) Ratio of Tax Payable to Mean Net Unearned Premium Reserve [4] / [3] (a) Insurance Expense Exhibit, Part II, Columns B. Loss & LAE Reserve Discounting ($000,000) Liability Phyiscal Damage 1) Net Reserve at 12/31/11 $4, $92.87 (a) 2) Net Reserve at 12/31/12 $4, $74.19 (a) 3) Discounted Net Reserve at 12/31/11 $3, $89.29 (b) 4) Discounted Net Reserve at 12/31/12 $3, $72.55 (b) 5) Change in Net Reserve [2]-[1] $67.48 ($18.68) 6) Change in Discounted Net Reserve [4]-[3] $94.29 ($16.73) 7) Additional Taxable Income [5]-[6] ($26.81) ($1.95) 8) Federal Tax Payable [7] x 0.35 ($9.38) ($0.68) 9) 2012 Incurred Loss & LAE (Insurance Expense Exhibit) $3, $1, (c) 10) Ratio of Federal Tax Payable to Incurred Loss & LAE [8] / [9] ) Selected (a) Insurance Expense Exhibit, Part II, Columns (b) Discount ratios are provided internally by the Financial Department (c) Insurance Expense Exhibit, Part II, Columns 7, 9 and 11 divided by 1, Liberty Mutual Insurance. All Rights Reserved.

134 Exhibit F: Expected Total Return - Adjustment to GAAP Expected Total Return - Adjustment to GAAP Amounts in Millions Item Source (1) Policyholders Surplus 16,039 15,701 16,521 Annual Statement: Page 3, Column (1), line 37 (2) Non-Admitted Assests 1,119 1,626 1,490 Annual Statement: Page 2, Column (2), line 26 (3) Equity in the UPR [ = (h) calculated below] 2,441 2,574 2,888 calculated field (4) Total Adjustments (2)+(3) 3,560 4,200 4,378 calculated field (5) GAAP Surplus Adjustment Factor [(4)+(1)]/(1) calculated field (6) Selected GAAP Surplus Adjustment Factor Calculation of Equity in UPR Item Source (a) Commissions and Brokerage Expense Incd 2,473 2,452 2,624 IEE: Page 7, Part 3, Column (23), Totals (b) Taxes, License & Fees IEE: Page 7, Part 3, Column (25), Totals (c) Other Acquisition Expenses Incd 2,112 2,178 2,495 IEE: Page 7, Part 3, Column (27), Totals (d) General Expense Incd 1,803 2,101 2,531 IEE: Page 7, Part 3, Column (29), Totals (e) Total of (a) + (b) + (c) + 0.5(d) 6,263 6,469 7,217 calculated field (f) Written Premium 25,318 26,659 28,298 IEE: Page 6, Part 3, Column (1), Totals (g) Ending UPR 9,868 10,609 11,323 IEE: Page 6, Part 3, Column (19), Totals (h) Equity in UPR (g)*(e)/(f) 2,441 2,574 2,888 calculated field 2013 Liberty Mutual Insurance. All Rights Reserved.

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136 RHODE ISLAND Automobile Rating Manual Territorial Base Rates Territory $75,000 Liability $2,500 Med Pay $50 Deductible Comprehensive $200 Deductible Collision Territory $75,000 Liability $2,500 Med Pay $50 Deductible Comprehensive $200 Deductible Collision 010 $1,675 $50 $ $1,270 $46 $ $1,120 $32 $ $1,120 $31 $ $1,029 $39 $ $979 $29 $ $1,009 $37 $ $1,080 $40 $ $1,025 $29 $ $999 $30 $ $1,370 $47 $ $1,349 $44 $ Effective 06/07/13 02/23/14 LIBERTY MUTUAL INSURANCE GROUP Page R-1

137 RHODE ISLAND Automobile Rating Manual Uninsured Motorists & UMPD Uninsured Motorists Limits Uninsured Motorists Limits Limit Rate Limit Rate 75, , , , , , , , MIL 470 1MIL / / / / / / / / / / / / UMPD with Collision Rate 2 UMPD Territory Vehicle Cost New $25,000 $50,000 $75,000 $100,000 $300,000 $500,000 1MIL 010 7, , , , , , , , , , , , , , , , , , , , , , , , UMPD Territory Vehicle Cost New $25,000 $50,000 $75,000 $100,000 $300,000 $500,000 1MIL 010 7, , , , , , , , , , , , , , , , , , , , , , , , Effective 06/07/ /23/2014 LIBERTY MUTUAL INSURANCE GROUP Page R-3

138 RHODE ISLAND Automobile Rating Manual Comprehensive and Collision Options Deductible Comprehensive Factor Full , Deductible Collision Factor , Towing Limit Rate Rental Rental Rate 30/ / / Effective 01/17/ /23/2014 LIBERTY MUTUAL INSURANCE GROUP Page R-4

139 RHODE ISLAND Automobile Rating Manual Model Year & Symbol Factors Comprehensive Collision Symbol /Prior Symbol n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a * For model years that are subsequent to the latest model year currently displayed, a rating factor of 1.05 should be applied to the latest model year/symbol factor, and each year thereafter (up to the model year of the vehicle being rated) in order to develop the factor for the subsequent model year. Effective 02/24/2012 LIBERTY MUTUAL INSURANCE GROUP Page R-9

140 Liberty Mutual Insurance Liberty Mutual Fire Insurance Company Liberty Insurance Corporation Rhode Island Private Passenger Automobile SERFF No. LBPM Objection Responses: 1. The proposed base rates by territory for comprehensive and collision listed on Page R-1 of the company manual do not appear to be calculated by adjusting the current rates for the proposed rate level change. Please reconcile. Response The proposed base rates by territory for comprehensive and collision listed on Page R-1 of the manual do not take into account the addition of 2014 and 2015 factors to the Model Year Symbol table. For this reason, it may appear as if the base rates by territory are higher than the proposed rate level change. However, the shift in Model Year Symbol decreases rates for older vehicles, resulting in a total rate level change of 6.5% for comprehensive and 6.3% for collision. 2. Provide the overall proposed rate level change separately for each company (based on the distribution of business for each company in Rhode Island) that result in an all-company combined rate level change of +7.0%. Response Refer to the table below for the proposed rate level change for each company. Please note that this information is also included in the Rate/Rule Schedule section of this filing. Company Name Overall % Rate Impact Liberty Insurance Corporation 6.9% Liberty Mutual Fire Insurance Company 7.0% 3. Provide the breakdown of the earned premium, incurred losses, and number of claims by company and coverage for each year reflected in the all-company combined rate level indication calculation. In doing so, explain why Liberty does not calculate rate level change indications separately for each company. Response Liberty does not analyze profitability by company because there is not sufficient volume of experience to reasonably forecast profitability for the underwriting companies (LMGIC/LM-IC) that began writing new business in None of the coverage indications in a standalone LMGIC/LM-IC would even be considered half credible, so we don t believe an independent assessment of profitability can be made on this book of business. Therefore, we believe it s both prudent and consistent to combine the experience data when evaluating our position in the state 1

141 of Rhode Island. Furthermore, since LMFIC and LIC are subject to the same rating program as are LMGIC/LM-IC, it is natural to group these two sets of companies together. Accordingly, the experience is shown by rating program in the table below: LMFIC/LIC LMGIC/LM-IC Coverage Metric/Experience Year 7/1/2010-6/30/2011 7/1/2011-6/30/2012 7/1/2012-6/30/2013 7/1/2010-6/30/2011 7/1/2011-6/30/2012 7/1/2012-6/30/2013 Earned Premium $16,261,032 $16,616,523 $15,099,417 $0 $284,498 $3,593,350 BI/PD Incurred Loss $10,099,936 $10,394,159 $7,101,079 $0 $139,192 $1,885,863 Reported Claim Counts 1,870 1,918 1, Med Pay UM/UIM Comp. Collision Earned Premium $399,309 $411,248 $373,231 $0 $4,986 $62,507 Incurred Loss $507,674 $541,285 $637,013 $0 $5,756 $228,179 Reported Claim Counts Earned Premium $3,718,737 $3,866,112 $3,491,020 $0 $38,053 $491,635 Incurred Loss $1,277,157 $1,484,634 $483,226 $0 $653 $221,645 Reported Claim Counts Earned Premium $2,224,216 $2,334,573 $2,194,302 $0 $40,138 $532,006 Paid Loss xcat $1,311,355 $1,448,486 $1,441,238 $0 $19,055 $397,622 Paid Claim Counts xcat Earned Premium $8,177,907 $8,618,927 $8,144,558 $0 $130,858 $1,766,952 Paid Loss $4,416,501 $4,722,030 $4,643,626 $0 $38,592 $1,275,880 Paid Claim Counts 1,363 1,347 1, Expand Exhibit III, Sheet 1 and Exhibit III, Sheet 2 to include all components of the indicated change by coverage and the derivation of the total indicated change by coverage. Response Please see the chart below which summarizes the rate level indication into one table. Projected EP Projected Fixed Projected Loss, Premissible Loss, LAE, CRL (See Expense Ratio LAE, and Fixed and Fixed Expense Rate Credibility Complement Credibility Projected Ultimate Loss Weighted Rate & LAE (See Exhibit III) of Credibility Coverage Exhibit II) (See Exhibit VII) Expense Ratio Ratio (See Exhibit VII) Change Indication (1) (2) (3) (4) = (2) / (1) + (3) (5) (6) = (4) / (5) -1 (7) (8) (8) = (6) x (7) + (8) x [1-(7)] $53,849,346 BI $29,778, % 112.5% 89.2% 26.1% 100% 19.2% 26.1% BI/PD PD $19,496,260 Med Pay $1,209,289 $2,396, % 219.2% 89.2% 145.6% 54% 14.7% 85.7% $10,093,639 UM/UIMBI $5,236, % 79.9% 89.2% -10.5% 34% 31.9% 17.5% UM/UIM UM/UIMPD $705,922 Liability (Weighted upon Latest Year Projected CRL) 25.9% Comp. $8,918,792 $6,887, % 99.2% 84.7% 17.2% 94% 4.4% 16.4% Collison $32,237,660 $21,047, % 87.3% 84.7% 3.1% 100% 6.7% 3.1% Phys. Dam. (Weighted upon Latest Year Projected CRL) 5.9% Total (Weighted upon Latest Year Projected CRL) 18.2% 5. Explain why Liberty is proposing a rate level change higher than indicated for collision. In doing so, confirm that an insured may not purchase collision coverage alone. Response We are proposing to uniformly increase our base rates across all coverages, including collision. Our strategy is to move towards rate adequacy over time while minimizing customer disruption. The proposed increase of 7% across all coverages is in-line with this strategy. This change 2

142 balances our indicated rate need with the goal to minimize disruption while the uniformity across coverages minimizes disruption across different customer groups. Collision cannot be purchased as standalone coverage. Collision must be purchased with liability. There are currently no policies with collision that do not also have liability and comprehensive. 6. Regarding the premium trend rates, a) explain what is causing the negative premium trend rates for liability, and b) provide the resulting overall indicated rate level change reflecting a premium trend rate of 0.0% for each of the liability coverages and leaving all other components of the indication unchanged (it is not necessary to submit supporting exhibits). Response a) We have experienced consistent negative premium trend over time in our liability coverages. To see this, consider an excerpt from a current Rhode Island operational report on liability premium trend with the data grouped by policy inception month presented below. The major drivers of the negative premium trend are mid-term cancellations, non-renewals (Not Taken effect), and customer-initiated endorsements upon renewal (Day 1 Endorsement). On average, the cumulative effect of these three effects have contributed -3.7% points to the liability premium trend over the past twelve policy inception months. Policy Inception Day 1 Mid-Term Month Endorsement Not Taken Cancellation 2011_7-0.1% -0.5% -2.9% 2011_8 0.0% -0.7% -2.5% 2011_9-0.3% -0.7% -2.6% 2011_10-0.3% -0.9% -2.5% 2011_11-0.2% -0.2% -2.8% 2011_12-0.6% -0.4% -3.0% 2012_1 0.2% -0.4% -3.0% 2012_2 0.0% -0.7% -3.5% 2012_3 0.0% -0.9% -3.0% 2012_4-0.4% -0.4% -2.6% 2012_5-0.3% -0.4% -3.2% 2012_6-0.2% -0.7% -2.4% 2012_7 0.2% -0.7% -3.8% 2012_8 0.1% -0.3% -3.2% 2012_9-0.3% -0.5% -3.2% 2012_10-0.2% -0.2% -3.2% 2012_11-0.2% -0.8% -3.2% 2012_12 0.0% -0.4% -3.2% 2013_1-0.2% -0.4% -3.2% 2013_2 0.5% -0.6% -3.2% 2013_3-0.2% -0.4% -3.2% 2013_4-0.3% -0.7% -3.2% 2013_5 0.1% -0.4% -3.2% 2013_6-0.2% -0.3% -3.2% 3

143 b) Setting both the historical and projected premium trend factors to for the liability coverages yields an overall rate level indication of +12.3%. 7. Regarding the loss development triangle for Rhode Island medical payments, expand Exhibit IV, Sheet 3 to include the calculated factors as was submitted for the other coverages. Response Please see the triangle below with computed age-to-age factors and the medial average of the last six diagonals (where available) displayed. Liberty Mutual Insurance Rhode Island Medical Payments - Incurred Losses Acc Year/ Maturity Age Jul2003-Jun , , , , , , , , , ,386 Jul2004-Jun , , , , , , , , ,338 Jul2005-Jun , , , , , , , ,059 Jul2006-Jun , , , , , , ,766 Jul2007-Jun , , , , , ,576 Jul2008-Jun , , , , ,895 Jul2009-Jun , , , ,628 Jul2010-Jun , , ,674 Jul2011-Jun , ,041 Jul2012-Jun ,192 Age to Age Factors Jul2003-Jun Jul2004-Jun Jul2005-Jun Jul2006-Jun Jul2007-Jun Jul2008-Jun Jul2009-Jun Jul2010-Jun Jul2011-Jun av. 6 ex hilo Provide the rationale for the selected loss trend rate of 5% for PD, UMPD, and collision based on the fits of data shown in the exhibit. In doing so, explain how Liberty has considered the credibility of its data in making the selection. We note also that Industry Fast Track data is available through 2Q13 (data through 1Q13 is reflected in the filing). Response Liberty selects loss trends based on a review of state-specific calendar year trends for both Liberty and Industry as well as regional-specific calendar year trends for both Liberty and the Industry. While credibility is not expressly applied to the loss trend selections, judgment and insight into the volume and stability is considered. The Property Damage loss trend selection was based primarily off the Rhode Island-specific data where it was noted that Liberty s trend data showed more unfavorable trends than the Industry. In consideration of the relative information contained 4

144 in these two sets of data, a selection that split the difference between the indicated selections seemed reasonable. We also noted that Liberty s New England regional trend data supported this selection. Liberty s Uninsured/Underinsured Property Damage loss trend selections are typically set equal to the Property Damage as we do not believe there is enough signal contained in the least-square regression fits for a coverage with such low claim activity and industry data is not readily available to supplement this selection. Similar to Property Damage, the Collision loss trend selection was informed by Liberty s Rhode Island trend data and the Industry s Rhode Island trend data. Here again, we noted that it seemed reasonable to select between the two, especially considering Liberty s New England regional regression fits. Finally, we think it s reasonable to expect a similar projected loss trend for Property Damage and Collision which further confirmed our projected loss trend selections for these two coverages. While we note that Industry Fast Track Data has been updated through 2Q2013, we see very minimal shifts in the regression fits for Property Damage and more unfavorable Collision trends for Rhode Island, and therefore, we do not believe a reevaluation of our selections is warranted for these coverages. 9. Regarding the annual fixed expense ratio trend (Exhibit VII, Sheet 1): a) Provide support for the countrywide auto PIF growth of +3.4%. b) Provide support for the countrywide auto fixed expense change of +6.7% (increased from +4.9% in Liberty s prior fling). c) Provide support for the countrywide auto premium trend rate of -2.7%. Response a) Please see the table below which supports the Policies in Force growth assumption. b) Please see the table below which supports the Fixed Expense change assumption. Policies In 12/31/XXXX Fixed Expense Dollars ,646,304 $750,741, ,749,325 $767,610, ,837,780 $824,284, ,948,126 $915,311,834 Expon. Regression Fit 4 pt. 3.6% 6.9% 3 pt. 3.6% 9.2% 2 pt. 3.9% 11.0% Selected: 3.4% 6.7% c) Our selection of the countrywide projected premium trend was based on a review of our premium operational report with policy inception months through year-end 2012 to align with the dates used for the other inputs. Please see the table below which displays the combined coverage year-over-year premium change, excluding rate changes, by inception month of the policy. 5

145 Policy Year-over-Year Inception Premium Month Change % % % % % % % % % % % % 12 mos. avg. -3.1% 6 mos. avg. -2.8% 3 mos. avg. -2.4% Selected: -2.7% 10. Provide the derivation of Row 11, Exhibit I, Sheet 1 and Exhibit I, Sheet 2 by coverage. Response In the process of addressing this concern, we noticed that the complement of credibility was not being calculated as intended in our indication exhibits for BI/PD and UM/UIM coverages. As a result, we respectfully wish to resubmit the Actuarial Justification and the Rate Procedural Summary with this error corrected. As a result of this revision, the UM/UIM indication has increased from 16.3% to 17.5%. The BI/PD indication was unaffected as it is considered to be fully credible. Our complement of credibility methodology is similar to the Trended Present Rates method outlined in Werner & Modlin s discussion in Chapter 12 of Basic Ratemaking 1. This methodology assumes rate levels are adequate as of the midpoint of the latest experience period and calculates the indicated rate change complement as (1 + Projected Loss Trend) / (1 + Projected Premium Trend) Trend Period. For BI/PD and UM/UIM coverages the Projected Loss Trend is calculated as a weighted average of the three-year ultimate loss and LAE that underlies the indication. The trend period is from the midpoint of the latest accident year experience period (1/1/2013) to the average loss/average earning date of the prospective policy year (3/30/15). Please see the table below for the complete calculation: BI/PD MedPay UM/UIM Comp Coll Credibility Complement (Row 11 of Exhibit 1) 19.2% 14.7% 31.9% 4.4% 6.7% Proj. Prem. Trend (Exhibit V, Sheet 2) -3.5% -5.0% -8.0% 2.0% 2.0% Proj. Loss Trend (Exhibit V, Sheet 1) 4.4% 1.0% 4.1% 4.0% 5.0% Trend Period (3/30/15-1/1/13) Example: BI/PD Complement = [( )/( )] Werner, G, and Modlin, C., Basic Ratemaking, Casualty Actuarial Society, Fourth Edition, October

146 10. Provide support for the overall proposed rate level change for towing and labor of +61.3%. Response Please see the towing and labor rate level indication below: Liberty Mutual Insurance Private Passenger Automobile Rhode Island Accident Period: 07/01/10 to 06/30/13 Evaluation Date: 6/30/13 (1) (2) (3) (4) (5) (6) (7) Accident Year Ending 6/30/XXXX Towing Earned Exposures Towing Earned Premium Towing Paid Loss Towing Claim Counts Frequency Severity ,161 $109,044 $22, % $ ,216 $103,330 $30, % $ ,514 $97,011 $35, % $ ,081 $87,751 $41, % $ ,354 $93,455 $48,495 1, % $47 5 pt. Regression Fit: 24.3% -0.3% Selected: 24.0% 0.0% (8) (9) (10) (11) (12) =(4) x [(1+(6))x(1+(7))] ( Year) =(9) x [(1+(6))x(1+(7))] (3/30/15-1/1/13) =(10) / (3) Accident Year Ending 6/30/XXXX On-Leveled Losses Projected Losses Projected Loss Ratio Weight 2009 $52,613 $85, % 0% 2010 $58,301 $94, % 0% 2011 $54,669 $88, % 33.3% 2012 $51,837 $84, % 33.3% 2013 $48,495 $78, % 33.3% (13) Weighted Projected Loss Ratio: 90.4% =sumproduct[(11),(12)] (14) LAE Load: (15) Expeses as a % of Premium: 33.0% (16) Indicated Rate Level Change: 63.8% = [(13) x (14)] / [1 - (15)] - 1 (17) Credibility: 100% Full Credibility Standard: 1,082 claims (18) Complement of Credibility: (3/30/15-1/1/13) 62.5% =[1+(6))x(1+(7)] (19) Credibility Weighted Indication: 63.8% =(16) x (17) + (1 - (17)) x (18) (20) Proposed Rate Change: 61.3% 7

147 Liberty Mutual Insurance Liberty Mutual Fire Insurance Company The First Liberty Insurance Corporation Liberty Insurance Corporation Rhode Island Private Passenger Automobile SERFF No. LBPM According to Exhibit VIII, LMGIC/LM-IC has not had the same rate changes in 2013 as LMFIC/TFLIC/LIC. a) Explain how the on-level factors on Exhibit II were developed, considering the varying rate history associated with the data included in the base years. Response As addressed later in this response, we currently do not have any in force policies in TFLIC nor is there any premium or loss experience. The LMFIC/LIC and LMGIC/LM-IC earned premiums are independently brought to the current rate level via the parallelogram method. Then by taking the ratio of the sum of the LMFIC/LIC on-level earned premium and the LMGIC/LM-IC on-level earned premium to the sum of the LMFIC/LIC earned premium at the collected level and the LMGIC/LM-IC earned premium at collected level we are able to calculate the implied total book on-level factors. b) Reconcile the varying rate changes with the statement "LMFIC and LIC are subject to the same rating programs as are LMGIC/LM-IC" from Item 3 of your November 14, 2013 response. Response The cited statement above indicates that LMFIC and LIC are subject to one rating program while LMGIC and LM-IC are subject to another, separate rating program. We apologize if that sentence was confusing to interpret. c) Explain if TFLIC data is included in the filing as well as data from LMFIC/LIC and LMGIC/LM-IC Response There are neither active policies in TFLIC nor any TFLIC experience in the ratemaking data, but we wish to keep the TFLIC rate level current should we propose to place policies in TFLIC at a later date. 2. Refine the table provided in Item 3 of your November 14, 2013 response to show a breakdown by company (LMFIC vs. LIC vs. TFLIC if applicable) of the premium, loss and claim count data within the indication. Response See the table below for experience by underwriting company:

148 Coverage Metric/Experience Year BI/PD 7/1/2010-6/30/2011 LMFIC 7/1/2011-6/30/2012 7/1/2012-6/30/2013 7/1/2010-6/30/2011 LIC 7/1/2011-6/30/2012 7/1/2012-6/30/2013 Earned Premium $15,916,815 $16,372,652 $14,915,679 $344,217 $243,871 $183,738 Incurred Loss $9,962,638 $10,243,570 $7,000,337 $137,299 $150,589 $100,742 Reported Claim Counts 1,832 1,892 1, Med Pay UM/UIM Comp. Collision Earned Premium $391,175 $405,227 $368,657 $8,134 $6,021 $4,574 Incurred Loss $495,303 $529,819 $619,157 $12,371 $11,466 $17,856 Reported Claim Counts Earned Premium $3,653,510 $3,818,755 $3,454,462 $65,227 $47,356 $36,557 Incurred Loss $1,264,732 $1,484,634 $483,226 $12,425 $0 $0 Reported Claim Counts Earned Premium $2,189,426 $2,307,977 $2,172,362 $34,790 $26,596 $21,940 Paid Loss xcat $1,299,334 $1,423,298 $1,433,179 $12,021 $25,188 $8,059 Paid Claim Counts xcat Earned Premium $8,034,078 $8,507,527 $8,057,340 $143,828 $111,399 $87,217 Paid Loss $4,360,884 $4,686,553 $4,611,489 $55,617 $35,477 $32,137 Paid Claim Counts 1,345 1,339 1, Coverage Metric/Experience Year BI/PD 7/1/2010-6/30/2011 LMGIC 7/1/2011-6/30/2012 7/1/2012-6/30/2013 7/1/2010-6/30/2011 LM-IC 7/1/2011-6/30/2012 7/1/2012-6/30/2013 Earned Premium $0 $245,402 $3,100,766 $0 $39,095 $492,585 Incurred Loss $0 $136,377 $1,616,610 $0 $2,815 $269,252 Reported Claim Counts Med Pay UM/UIM Comp. Collision Earned Premium $0 $4,360 $54,750 $0 $626 $7,757 Incurred Loss $0 $5,756 $214,443 $0 $0 $13,736 Reported Claim Counts Earned Premium $0 $33,888 $437,265 $0 $4,165 $54,370 Incurred Loss $0 $653 $186,119 $0 $0 $35,526 Reported Claim Counts Earned Premium $0 $36,698 $485,956 $0 $3,440 $46,050 Paid Loss xcat $0 $15,399 $346,705 $0 $3,655 $50,917 Paid Claim Counts xcat Earned Premium $0 $120,009 $1,611,167 $0 $10,849 $155,785 Paid Loss $0 $33,888 $1,171,584 $0 $4,704 $104,296 Paid Claim Counts Provide alternate rate indications using only the historical data from LMFIC and LIC (it is not necessary to submit supporting exhibits). Include scenarios using the following premium trend assumptions: a) The historical and prospective premium trends selected in the submitted rate indication;

149 Response Please note the resulting rate level indication seen below contemplates the adjustment made to the selected LAE ratios discussed in the Response to Question 5. Liberty Mutual Insurance Private Passenger Automobile Rhode Island Rate Indication & Statistics LMFIC/LIC 1 Year Trended Cred Wtd Coverage On-Level EP Distribution Rate Indication BI/PD 15,402,653 80% 23.7% MedPay 372,771 2% 63.8% UM/UIM 3,553,716 18% 2.1% Total Liability 19,329, % 20.5% Comp 2,390,337 20% 18.4% Coll 9,324,538 80% 0.0% Total Phys Dam 11,714, % 3.8% All Coverage 31,044, % b) 0% liability premium trend. Response Please note the resulting rate level indication seen below overlays the 0% projected liability premium trend on the indications contemplating the adjustment made to the selected LAE ratios as in table included in part a). Liberty Mutual Insurance Private Passenger Automobile Rhode Island Rate Indication & Statistics LMFIC/LIC 1 Year Trended Cred Wtd Coverage On-Level EP Distribution Rate Indication BI/PD 16,682,833 80% 16.0% MedPay 403,754 2% 52.2% UM/UIM 3,718,305 18% -2.0% Total Liability 20,804, % 13.5% Comp 2,390,337 20% 18.4% Coll 9,324,538 80% 0.0% Total Phys Dam 11,714, % 3.8% All Coverage 32,519, % 4. With respect to the support for the premium trend selections provided in Item 6 of your November 14, 2013 response:

150 a) Explain how the trend figures in the chart are calculated. Response Policies are assigned to the cohort corresponding to their renewal effective month. Then each premium effect (i.e. Day 1 Endorsement effect, Not Taken effect, and Mid-Term Cancellation effect) is calculated one at a time in the order that these changes occur in the lifecycle of a policy so that each effect can be isolated. The Day 1 Endorsement effect captures the premium effect of changes made by the policyholder between when the renewal offer is extended and when the policy renews. Specifically, it is computed as the change in average incepting premium from endorsements divided by the average offered premium less unity. The Not Taken effect is calculated after the Day 1 Endorsement effect. The Not Taken effect is calculated as the change in average incepting premium due to policies not accepting the renewal offer divided by the average offered premium less unity. Finally, because mid-term cancellations only affect policies that did accept the renewal offer, the Mid-Term Cancellation effect is computed as the change in average written premium after accounting for any mid-term endorsements divided by the average offered premium less unity. b) Explain why Liberty believes that items such as endorsements, not-taken renewals and mid-term cancellations are a significant contributor to negative liability trend, given that the decrease in premium is accompanied by a commensurate decrease in exposure. Response We have observed that policies that either do not accept the renewal offer or that cancel midterm tend to have higher average premiums than those policies that persist with us through time. This produces negative premium trend because premiums decrease faster than exposures in these instances. Endorsements do not always lead to a commensurate decrease in exposure. For instance, if a policyholder removed a youthful operator, but not a vehicle from their policy one might expect that their premium would decrease. 5. Explain the reason for the sharp decline in LAE ratios since In doing so, explain why Liberty believes that 2010 LAE ratios are still predictive of LAE ratios in future periods, given the much lower ratios observed in 2011 and Response The amount of ULAE allocated to Rhode Island in 2010 is causing the sharp decline in LAE ratios over time. We have been unsuccessful thus far in determining the primary driver behind the high 2010 ULAE allocation. We have also observed that the ULAE allocated to Rhode Island in 2009 was in line with the 2010 allocation and thus was high relative to 2011 and In light of this information, we have re-selected our LAE provision based on individual selections of ALAE and ULAE ratios to incurred loss. The ALAE ratio is selected based on the average of the last three years since these ratios have been relatively stable over that time period. The ULAE ratio is selected based on the median of the last three years, which effectively eliminates the high ratio in The effect on the rate level indication is a decrease from +18.2% to +16.7%. We

151 have updated the Actuarial Justification and Rate Procedural Summary to reflect this revision. Please see Exhibit VII Sheet 2 of the revised Actuarial Justification for these selections. In the prior round of communication it was requested that we report the resulting indication after setting the liability premium trend to be 0.0%. After considering the revised LAE ratios discussed above, setting the projected premium trend factors for liability coverages to unity yields the following rate level indication: Liberty Mutual Insurance Private Passenger Automobile Rhode Island Rate Indication & Statistics Combined 1 Year Trended Cred Wtd Coverage On-Level EP Distribution Rate Indication BI/PD 20,398,742 81% 16.8% MedPay 468,303 2% 65.2% UM/UIM 4,226,696 17% -1.4% Total Liability 25,093, % 14.6% Comp 3,098,640 22% 14.6% Coll 11,234,711 78% 1.5% Total Phys Dam 14,333, % 4.3% All Coverage 39,427, % 6. Provide alternate dislocation statistics in response to Items 12 and 13 of the Rhode Island Rate Procedural Informational Summary Form to reflect the cumulative impact of the proposed rate change and the prior rate increase effective 7/12/2013. In doing so, reflect the rate impacts that insureds would experience in a single annual period as a result of both rate changes. Response Please see below for an alternate dislocation statistics reflecting the rate impacts that insured would experience as a result of the proposed change and the prior rate increase effective 7/12/2013: Highest Increase: 30.4% Company: LMFIC Territory: 23 BIPD: No Coverage Med Pay: No Coverage Comprehensive: 500 Collision: No Coverage Uninsured Motorist: No Coverage Uninsured Motorist/Physical Damage: No Coverage Towing and Labor: 50

152 Class: 011 Tier: 90 Number of Vehicles: 1 Current Premium: $33 Proposed Premium as a result of both rate changes: $43 Smallest Increase: 5.4% Company: LMFIC Territory: 23 BIPD: 250/500/100 Med Pay: 2500 Comprehensive: 100 Collision: 500 Uninsured Motorist: 250/500 Uninsured Motorist/Physical Damage: 100,000 Towing and Labor: 50 Class: 048 Tier: 90 Number of Vehicles: 1 Current Premium: $1,887 Proposed Premium as a result of both rate changes: $1,988 Also, please note that an estimated number of 1020 policies, or 7.9% of exposures, will receive a rate increase in excess of 15% as a result of both rate changes. 7. Explain the process used to update the Model Year Symbol table, and provide support for the offset to comprehensive and collision base rates. Response While reviewing our 11/14/2013 response to your inquiries, we noticed that we may not have clearly communicated the process used to update the Model Year Symbol table. Please note that we meant to say that the proposed base rates by territory for comprehensive and collision also take into account the rate change needed to offset for the impact of the Model Year Symbol table revision in Question #1 of the above mentioned response. Since the revision of the Model Year Symbol table alone would result in a negative change for comprehensive and collision rates, our proposed base rates by territory for comprehensive and collision reflect the incremental increase to the rates needed to make the Model Year Symbol revision rate neutral.

153 Liberty Mutual Insurance Liberty Mutual Fire Insurance Company The First Liberty Insurance Corporation Liberty Insurance Corporation Rhode Island Private Passenger Automobile SERFF No. LBPM Provide an alternate rate indication with the following modifications: a) Adjust the complement of credibility to reflect the trend period from the midpoint of the current rates to the midpoint of the proposed rates. Response Please see the exhibit below that adjusts the complement of credibility to reflect the trend period as requested above. Please note that this method assumes that the current rates are adequate which we do not believe to be the case. Therefore, we have incorporated the residual indication based on our last approved filing which reflects the difference between our prior filing s indication and the approved rate change. (1) RB eff. Date of most recent rate revision: 7/12/2013 (2) RB eff. Date of proposed rate filing: 3/30/2014 (3) Years between most recent and proposed: [(2) - (1)] Mid point of exposure period: 11/19/2013 (3) / 2 + (1) (5) Average earnings date for exposure period: 5/19/2014 (4) + 0.5yrs (6) Average earnings date for prospective policy year: 3/30/2015 (7) Trend Length: (6) - (5) BI/PD MedPay UM/UIM Comp Coll (8) Indicated rate 6/28/13* 21.4% 44.9% 13.5% 25.1% -1.2% (9) Approved rate 7/12/13* 3.4% 2.0% 0.7% 3.4% 3.4% (10) Residual Indication 17.4% 42.0% 12.7% 21.0% -4.5% (11) Loss Trend 4.4% 1.0% 4.1% 4.0% 5.0% (12) Premium Trend -3.5% -3.5% -2.0% -0.5% 2.0% (13) Loss Ratio Trend 8.2% 4.7% 6.2% 4.5% 2.9% (14) Complement of Credibility 25.6% 47.7% 18.8% 25.8% -2.0% *LBPM (10) = [(1+(8)) / (1+(9))] -1 (13) = [(1+(11)) / (1+(12))] - 1 (14) = [(1+(10)) x (1+(13)) (7) ] - 1 Please note that if we were to assume rate adequacy of current rates, the all-coverage indication would only decrease by 1.5 percentage points.

154 b) Utilize only historical data from LMFIC and LIC. In doing so, revisit premium trend selections if warranted. Response The experience data in the rate level indications displayed in d) is from LMFIC/LIC policies only. Please find the revised premium trend selections below based on LMFIC/LIC data. Liberty Mutual Insurance Private Passenger Automobile Rhode Island LMFIC/LIC Premium Trend Rolling 4 Quarters Average On-leveled Earned Premium YRQTR BI/PD MedPay UM Comprehensive Collision 2010Q3 $670 $17 $153 $108 $ Q4 $667 $17 $153 $108 $ Q1 $665 $17 $153 $108 $ Q2 $663 $17 $153 $108 $ Q3 $657 $16 $152 $109 $ Q4 $652 $16 $152 $109 $ Q1 $646 $16 $151 $110 $ Q2 $640 $16 $151 $110 $ Q3 $633 $16 $150 $110 $ Q4 $627 $16 $149 $110 $ Q1 $621 $15 $148 $109 $ Q2 $615 $15 $147 $109 $ pt. -3.2% -3.5% -1.6% 0.6% 1.9% 10 pt. -3.6% -3.8% -1.9% 0.5% 2.0% 8 pt. -3.8% -3.9% -2.1% 0.2% 1.9% 6 pt. -3.8% -3.9% -2.3% -0.2% 1.7% 4 pt. -3.7% -3.8% -2.2% -0.5% 1.8% Historical Selection -3.5% -3.5% -2.0% 0.5% 2.0% Projected Selection -3.5% -3.5% -2.0% -0.5% 2.0% c) Utilize the updated LAE provision that was included with the December 31, 2013 response. Response The LAE provisions that were included in the December 31, 2013 response underlie the LMFIC/LIC rate level indications. d) Provide one scenario with the profit provision as submitted in the initial filing, and another scenario based on a 12.0% expected return on statutory surplus. Response The rate level indications with the profit provisions as submitted in the initial filing after accounting for a), b), and c) above are displayed by coverage below.

155 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Rate Indication & Statistics LMFIC/LIC 1 Year Trended Selected Raw Cred Wtd Coverage On-Level EP Distribution Rate Indication Rate Indication BI/PD 15,402,653 80% 23.7% 23.7% MedPay 372,771 2% 114.9% 82.0% UM/UIM 3,553,716 18% -24.0% 5.0% Total Liability 19,329, % 16.7% 21.4% Comp 2,390,337 20% 19.2% 19.8% Coll 9,324,538 80% 0.0% 0.0% Total Phys Dam 11,714, % 3.9% 4.1% All Coverage 31,044, % 14.9% The indicated liability and physical damage profit provisions with a targeted 12.0% return on statutory surplus are 3.4% and 7.0% respectively. Please see the resulting rate level indications displayed by coverage below after accounting for a), b), and c) above as well as the revised profit provisions. Liberty Mutual Insurance Private Passenger Automobile Rhode Island Rate Indication & Statistics LMFIC/LIC 1 Year Trended Selected Raw Cred Wtd Coverage On-Level EP Distribution Rate Indication Rate Indication BI/PD 15,402,653 80% 21.7% 21.7% MedPay 372,771 2% 111.3% 80.2% UM/UIM 3,553,716 18% -25.3% 4.6% Total Liability 19,329, % 14.8% 19.7% Comp 2,390,337 20% 16.5% 17.3% Coll 9,324,538 80% -2.3% -2.3% Total Phys Dam 11,714, % 1.5% 1.7% All Coverage 31,044, % 12.9% 2. Does the selected provision for Acquisition Expense include any adjustment to reflect the lower expenses associated with a renewal-only book of business? If yes, provide details. If no, explain why no adjustment is necessary. Response No, the selected Acquisition Expense provision does not include an adjustment. We do not feel that

156 such an adjustment is warranted because if we were to reflect the differences in acquisition costs between new and renewal business, we would be compromising our new business competitiveness and may find it difficult to grow and expand coverage. Further, we believe that it is reasonable and actuarially justified to consider the lifetime value of a policy at new business, and therefore, to amortize the acquisition costs over a policy s expected lifetime with Liberty. While a new business policy is certainly more likely than a renewal business policy to have costs in excess of premiums its first year, we aim to achieve target returns over the lifetime of the policy so as not to unduly hurt our competitive position. 3. Explain what is driving the sharp increase in countrywide auto fixed expense, and explain if the factors driving this trend are applicable to a renewal-only book of business. Response Fixed expense growth has been driven by an increase in advertising spend. We have observed explosive growth among national (and regional) carriers in the amount of advertising over the last five years. In order to advance our brand awareness, both for the sake of prospective customers as well as our current customers, we have had to increase our advertising and marketing spend accordingly. Additionally, administrative expenses incurred to service our existing customers have increased 6.0% year-over-year since Since both of these components are crucial to providing value to our existing customers, we feel that the fixed expense trend is applicable to this book of business. 4. Explain the process used to update the Model Year Symbol table, and provide support for the offset to comprehensive and collision base rates. (We note that is a repeat question from our December 11, 2013 request, since we find the response submitted on December 31, 2013 to be incomplete.) Response The table below illustrates the process used to update the Model Year Symbol (MYS) table. The vehicles shown in the table below were selected from our dislocation tool as an example. Although the example in the table below only includes comprehensive rates, please note that we use the same process for both comprehensive and collision rates. Current Comprehensive Premium Vehicle # Vehicle # a b c d e d/a e/d e/a Current MYS Factor New Comp Proposed MYS Only MYS Factor Premium New Comp MYS & Rate Revision Premium MYS Change Only New Premium vs. Comp MYS Only Premium MYS + Rate Revision Change $ $ $ % 17.9% 6.6% $ $ $ % 17.7% 7.0% As you can see, the current comprehensive premium for Vehicle #1 is $136. The revision made to the Model Year Symbol table as a result of ISO s updated Rating Symbols changes the MYS factor for this vehicle from 3.47 to All other things being constant, the comprehensive premium for this vehicle thus decreases to $123 (d), resulting in a -10% rate decrease (d/a). When we take into account both the MYS table update and our proposed rate level change, the proposed comprehensive premium for this vehicle would be $145 (e). Our proposed base rates by territory for comprehensive and collision thus reflect the incremental increase needed to attain our proposed rate level change after the new MYS factor gets applied to the vehicle (e/d). However, the impact to the vehicle s current comprehensive premium, calculated as the percentage difference between the proposed premium and the current premium for the vehicle, will only be 6.6% (e/a).

157 Liberty Mutual Insurance Liberty Mutual Fire Insurance Company The First Liberty Insurance Corporation Liberty Insurance Corporation Rhode Island Private Passenger Automobile SERFF No. LBPM Response Updated: 2/7/14 1. Provide an alternate rate indication with the following modifications: a) Adjust the complement of credibility to reflect the trend period from the midpoint of the current rates to the midpoint of the proposed rates. Response Please see Exhibit IX in Attachment A. Please note that if we were to assume rate adequacy of current rates in the calculation of our complement, the all-coverage indication would only decrease by 1.5 percentage points from 14.9% to 13.4%. b) Utilize only historical data from LMFIC and LIC. In doing so, revisit premium trend selections if warranted. Response Please see Attachment A. c) Utilize the updated LAE provision that was included with the December 31, 2013 response. Response The LAE provisions that were included in the December 31, 2013 response underlie the LMFIC/LIC rate level indications. Please see Exhibit VII Sheet 2 of Attachment A. d) Provide one scenario with the profit provision as submitted in the initial filing, and another scenario based on a 12.0% expected return on statutory surplus. Response Please see Exhibit A for the first scenario with the initially filed profit provision. An indication summary and revised Exhibit VII Sheet 1 are shown below with the profit provisions calculated at a 12.0% target return on statutory surplus. Additionally, we have provided Attachment B which shows the derivation of the underwriting profit provisions at a 12.0% target return on statutory surplus.

158 Liberty Mutual Insurance Private Passenger Automobile Rhode Island Rate Indication & Statistics LMFIC/LIC 1 Year Trended Cred Wtd Coverage On-Level EP Distribution Rate Indication BI/PD 15,402,653 80% 21.7% MedPay 372,771 2% 80.2% UM/UIM 3,553,716 18% 4.6% Total Liability 19,329, % 19.7% Comp 2,390,337 20% 17.3% Coll 9,324,538 80% -2.3% Total Phys Dam 11,714, % 1.7% All Coverage 31,044, %

159 2. Does the selected provision for Acquisition Expense include any adjustment to reflect the lower expenses associated with a renewal-only book of business? If yes, provide details. If no, explain why no adjustment is necessary. Response No, the selected Acquisition Expense provision does not include an adjustment. We do not feel that such an adjustment is warranted because if we were to reflect the differences in acquisition costs between new and renewal business, we would be compromising our new business competitiveness and may find it difficult to grow and expand coverage. Further, we believe that it is reasonable and actuarially justified to consider the lifetime value of a policy at new business, and therefore, to amortize the acquisition costs over a policy s expected lifetime with Liberty. While a new business policy is certainly more likely than a renewal business policy to have costs in excess of premiums its first year, we aim to achieve target returns over the lifetime of the policy so as not to unduly hurt our competitive position.