suretytoday Welcome to Surety Today, the electronic quarterly

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suretytoday volume I number 1 third quarter 2003 Welcome to Surety Today, the electronic quarterly

The articles are intended to keep you informed about our products and services, and to help you market

Bill Cheatham We offer our agents and brokers these advantages: financial stability over a century of

state-of-the-art system, Zurich Surety Express industry standard-setting claims services assistance in

Financial Services In this issue: Please contact me with your thoughts about Surety Today.

The buttons at the end Zurich Surety Express Simple. Fast. Accessible.

1 suretytoday volume I number 1 third quarter 2003 Welcome to Surety Today, the electronic quarterly publication of Zurich North America Surety. The articles are intended to keep you informed about our products and services, and to help you market them to your preferred customers. Our goal is to be your surety of choice for your best accounts. Bill Cheatham We offer our agents and brokers these advantages: financial stability over a century of surety experience nationwide network of Surety Account Executives easy, rapid processing through our state-of-the-art system, Zurich Surety Express industry standard-setting claims services assistance in accessing products and services of affiliate Zurich units Zurich North America is a member of Zurich Financial Services In this issue: Please contact me with your thoughts about Surety Today. We want this to be an interactive publication, and your input is important to us. The buttons at the end Zurich Surety Express Simple. Fast. Accessible. of this newsletter are an easy way for you to reply or to opt out of receiving further editions of this bulletin. Best regards, Financial stability through conservative underwriting Bill Cheatham Meet the Surety Team President Zurich North America Surety

Agents and Getting bonds to customers faster will enable you to focus on selling industry offers a competitive advantage.

2 suretytoday volume I number 1 third quarter 2003 Zurich Surety Express Simple. Fast. Accessible. Launched just about a year ago, Zurich Surety Express is Zurich North America Surety s web-enabled, single-entry bond processing system. Agents and Getting bonds to customers faster will enable you to focus on selling industry offers a competitive advantage. Getting bonds to customers faster and with less effort will enable you to focus on selling and on developing and maintaining customer relationships. brokers can rate, quote and issue commercial and contract surety bonds online. This single-entry Internet tool is intended to help Zurich North America and with less effort Online access to the best products in the hold the position of market leader in the Financial stability through conservative underwriting surety industry; remain our distributors While the number of Surety companies and customers carrier of choice; and within the insurance industry continues to leverage accompanying efficiencies to shrink, and competitors lose capacity, our write more business and provide superior conservative approach to underwriting has and on developing customer service. and maintaining The efficiency of Zurich Surety Express enabled us to thrive despite, or perhaps because of, changing market conditions. These results are not reflective of trends customer offers your organization a unique way to manage customer relations while within the surety industry, but rather are relationships. potentially reducing costs significantly. It an indication of our consistent approach is available to all Surety distributors who to the market. We believe our are registered through underwriting discipline and profitable results best reflect the interests and needs of the customer. For the past three years, Surety has been enhancing our online Forms Library. It presently holds over 2,000 bond forms, with more being added every day. These forms are available in all 50 states to all registered Surety distributors.

3 Total Surety 000 Omitted Gross Written Underwriting Loss Ratio Expense Combined Net Basis Premium Income Ratio Ratio YTD June ,133 3, % 47.1% 87.1% ,069 19, % 51.4% 80.6% ,512 25, % 52.6% 77.7% ,503 13, % 61.2% 82.8% ,135 16, % 61.1% 88.2% ,423 19, % 60.8% 85.9% Zurich Financial Services We are pleased to report that the operating performance of the Group s core businesses has significantly improved in the first six months and major milestones of our action plan to improve earnings have been reached. Net income for the half year rose to USD 701 million, compared with last year s loss of USD 2 billion. The improvement in our underlying performance is also reflected in our Business Operating Profit, which grew by 56 percent to USD 1.3 billion. Zurich is succeeding in strengthening the Group s reserves and capital position. Our equity increased to USD 18.7 billion, up from USD 16.8 billion at the end of last year. We believe that pursuing operating excellence and financial discipline are key in an economic environment characterized by weak investment returns and low economic growth. Zurich North America Corporate s nonlife business continued to post strong results. For the six months ended June 30, 2003, gross written premium and policy fees were up 14 percent compared to the previous year, while the combined ratio improved 1.4 percentage points to 96.3%.

4 Meet the Surety team! Connie Dunn Administrative Asst. William E. Cheatham President Frank E. Martin, Jr. Ted Martinez C. Wayne Robbins Jay Levenson Paul Rogers Michael Hammond VP, E-Business VP, Commercial Surety Gerald Haley Audit Manager Sr. VP Sr. VP U/W & Mkt. AVP s Core Contract Large Contract Surety Administration U/W & Mktg. U/W & Mktg. Eric Barns John Markotic Stephen Arnold Greg Murray Robert Sutton AVP, Northeast Sr. Regional VP Sr. Regional VP Sr. U/W Officer AVP North Central Mid-Atlantic East Mid-Atlantic, West Steve Moxley Brent Rice John Sanders Dawn Brown William J. Mills, Jr. Sr. U/W Officer Sr. Regional VP Sr. Regional VP Sr. U/W Officer Sr. U/W Officer Mid Atlantic North Central North Central Southeast & NY East West Melinda Coleman Richard Caby William Martin John Holder Sr. U/W Officer Sr. Regional VP Sr. Regional VP Sr. U/W Officer South Central, SW Southeast Southeast North Central & NW Southern Northern Myra M. Manning George Runey Jadon Smith Jim McGeeney Veronica Price Sr. Regional VP Sr. Regional VP Sr. U/W Officer Underwriter I South Central Southwest Donn Kolbeck Sr. Regional VP Northwest Robert Miedema Sr. Regional VP Northeast Patrick Hannigan Managing Director Zurich Canada Patrick Evans Asst. VP Environmental Surety

5 About Zurich North America Surety Zurich North America Surety specializes in contract bonds for the construction industry, environmental surety, and offers a wide range of commercial surety products, including license, permit, miscellaneous, judicial and public official surety bonds. We are a division of the Commercial Business Group. Zurich North America ( is a leading commercial property-casualty insurance provider serving the multinational, middle market and small business sectors in the United States and Canada. Headquartered in Schaumburg, Ill., Zurich North America has 12,750 employees and wrote $13.6 billion in premiums in The Zurich U.S. pool of companies is rated A (excellent) by A.M. Best and A+ (strong) by Standard & Poor s. Zurich North America is a member of Zurich Financial Services ( an insurance-based financial services provider with an international network that focuses its activities on its key markets of North America, the United Kingdom and Continental Europe. Founded in 1872, Zurich is headquartered in Zurich, Switzerland. It has offices in approximately 60 countries and employs about 68,000 people. The description of policy provisions provides a broad overview of coverages only. All coverages are subject to conditions, coverage limits, limits of liability, limitations and exclusions as contained in the policy. See the policy itself for an exact description of the coverage provided. Coverages underwritten by member companies of Zurich North America, including Zurich American Insurance Company. Certain coverages not available in all states. Certain coverages may be written on a non-admitted basis. A A 08/ Zurich North America Surety 3910 Keswick Road Baltimore, MD zurichna.com/surety 2001 Zurich American Insurance Company

suretytoday Bill Cheatham President, Surety

suretytoday Bill Cheatham President, Surety How has the surety market evolved over the last 24 months? Probably the most significant change is the limited number of active surety companies willing to participate with uncompleted aggregate bonded