ANNUAL STATEMENT. Missouri Employers Mutual Insurance Company

ANNUAL STATEMENT OF THE Missouri Employers Mutual Insurance Company Of Columbia in the state of MO to the Insurance Department of the state of Missouri For the Year Ended December 31, 2013 PROPERTY AND CASUALTY 2013

PROPERTY AND CASUALTY COMPANIES - ASSOCIATION EDITION *10191201320100100* ANNUAL STATEMENT For the Year Ended December 31, 2013 of the Condition and Affairs of the NAIC Group Code... 0000, 0000, 0000, 0000 NAIC Company Code... 10191 Employer's ID Number... 43-1668466 (Current Period) (Prior Period) Organized under the Laws of Missouri State of Domicile or Port of Entry Missouri Country of Domicile US Incorporated/Organized... September 16, 1994 Commenced Business... March 1, 1995 Statutory Home Office 101 North Keene St... Columbia... MO...... 65201 (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 101 North Keene St... Columbia... MO...... 65201 573-499-9714 (Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Mail Address 101 North Keene St... Columbia... MO...... 65201 (Street and Number or P. O. Box) (City or Town, State, Country and Zip Code) Primary Location of Books and Records 101 North Keene St... Columbia... MO...... 65201 573-499-9714 (Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Internet Web Site Address Statutory Statement Contact Perry Heckemeyer 573-499-4396 (Name) (Area Code) (Telephone Number) (Extension) pheckeme@mem-ins.com 573-219-3396 (E-Mail Address) (Fax Number) OFFICERS Name Title Name Title 1. James C. Owen President & CEO 2. Douglas Scott Phillips CFO 3. Timothy Duane Jackman Vice President & Secretary 4. Teresa J. Underwood Vice President Derek Scoble Vice President OTHER DIRECTORS OR TRUSTEES James Joseph Jura Gary B. O'Neal Judith S. Heeter Charles A. Caisley William T. Reeves State of... County of... Missouri Boone The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual except to the extent that: (1) state law may differ; or, (2) that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement. (Signature) (Signature) (Signature) James C. Owen Douglas Scott Phillips Timothy Duane Jackman 1. (Printed Name) 2. (Printed Name) 3. (Printed Name) President & CEO CFO Vice President & Secretary (Title) (Title) (Title) Subscribed and sworn to before me a. Is this an original filing? Yes [ X ] No [ ] This day of 2014 b. If no 1. State the amendment number 2. Date filed 3. Number of pages attached

ASSETS Current Year Prior Year 1 2 3 4 Net Admitted Nonadmitted Assets Net Assets Assets (Cols. 1-2) Admitted Assets 1. Bonds (Schedule D)......346,072,000......346,072,000...301,368,581 2. Stocks (Schedule D): 2.1 Preferred stocks............0... 2.2 Common stocks......74,774,593...484,296...74,290,297...50,200,899 3. Mortgage loans on real estate (Schedule B): 3.1 First liens............0... 3.2 Other than first liens............0... 4. Real estate (Schedule A): 4.1 Properties occupied by the company (less $...0 encumbrances)......14,730,348......14,730,348...15,150,040 4.2 Properties held for the production of income (less $...0 encumbrances)............0... 4.3 Properties held for sale (less $...0 encumbrances)............0... 5. Cash ($...5,074,571, Schedule E-Part 1), cash equivalents ($...0, Schedule E-Part 2) and short-term investments ($...8,564,890, Schedule DA)......13,639,462......13,639,462...24,988,498 6. Contract loans (including $...0 premium notes)............0... 7. Derivatives (Schedule DB)............0... 8. Other invested assets (Schedule BA)............0... 9. Receivables for securities......1,104......1,104...44,230 10. Securities lending reinvested collateral assets (Schedule DL)............0... 11. Aggregate write-ins for invested assets......0...0...0...0 12. Subtotals, cash and invested assets (Lines 1 to 11)......449,217,507...484,296...448,733,211...391,752,248 13. Title plants less $...0 charged off (for Title insurers only)............0... 14. Investment income due and accrued......3,414,868......3,414,868...3,211,995 15. Premiums and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection......52,239,684...2,966,493...49,273,191...40,531,326 15.2 Deferred premiums, agents' balances and installments booked but deferred and not yet due (including $...4,597,639 earned but unbilled premiums)......4,597,639...459,764...4,137,875...3,078,773 15.3 Accrued retrospective premiums............0...7,708 16. Reinsurance: 16.1 Amounts recoverable from reinsurers......1,116,427......1,116,427...4,978,000 16.2 Funds held by or deposited with reinsured companies......1,208,319......1,208,319... 16.3 Other amounts receivable under reinsurance contracts............0...1,788,740 17. Amounts receivable relating to uninsured plans............0... 18.1 Current federal and foreign income tax recoverable and interest thereon............0... 18.2 Net deferred tax asset............0... 19. Guaranty funds receivable or on deposit............0... 20. Electronic data processing equipment and software......2,983,084...2,734,230...248,854...243,856 21. Furniture and equipment, including health care delivery assets ($...0)......154,757...154,757...0... 22. Net adjustment in assets and liabilities due to foreign exchange rates............0... 23. Receivables from parent, subsidiaries and affiliates............0... 24. Health care ($...0) and other amounts receivable............0... 25. Aggregate write-ins for other than invested assets......1,511,530...833,827...677,703...475,438 26. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25)......516,443,815...7,633,367...508,810,448...446,068,084 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts............0... 28. TOTALS (Lines 26 and 27)......516,443,815...7,633,367...508,810,448...446,068,084 DETAILS OF WRITE-INS 1101.............0... 1102.............0... 1103.............0... 1198. Summary of remaining write-ins for Line 11 from overflow page......0...0...0...0 1199. Totals (Lines 1101 thru 1103 plus 1198) (Line 11 above)......0...0...0...0 2501. Automobiles......677,705......677,705...475,437 2502. Other Assets Nonadmitted......833,827...833,827...0... 2503. Rounding Difference......(2)......(2)...1 2598. Summary of remaining write-ins for Line 25 from overflow page......0...0...0...0 2599. Totals (Lines 2501 thru 2503 plus 2598) (Line 25 above)......1,511,530...833,827...677,703...475,438 2

LIABILITIES, SURPLUS AND OTHER FUNDS 1 2 Current Year Prior Year 1. Losses (Part 2A, Line 35, Column 8)......195,240,375...179,399,000 2. Reinsurance payable on paid losses and loss adjustment expenses (Schedule F, Part 1, Column 6)......556,699...1,397,371 3. Loss adjustment expenses (Part 2A, Line 35, Column 9)......15,319,000...14,137,000 4. Commissions payable, contingent commissions and other similar charges......5,696,871...4,545,199 5. Other expenses (excluding taxes, licenses and fees)......6,859,869...3,288,264 6. Taxes, licenses and fees (excluding federal and foreign income taxes)......1,424,680...615,271 7.1 Current federal and foreign income taxes (including $...0 on realized capital gains (losses))......... 7.2 Net deferred tax liability......... 8. Borrowed money $...0 and interest thereon $...0......... 9. Unearned premiums (Part 1A, Line 38, Column 5) (after deducting unearned premiums for ceded reinsurance of $...0 and including warranty reserves of $...0 and accrued accident and health experience rating refunds including $...0 for medical loss ratio rebate per the Public Health Service Act)......73,822,104...59,236,866 10. Advance premium......2,039,108...1,679,925 11. Dividends declared and unpaid: 11.1 Stockholders......... 11.2 Policyholders......3,000,000...1,000,000 12. Ceded reinsurance premiums payable (net of ceding commissions)......3,325,545...1,582,440 13. Funds held by company under reinsurance treaties (Schedule F, Part 3, Column 19)......... 14. Amounts withheld or retained by company for account of others......7,065,235...6,511,820 15. Remittances and items not allocated......... 16. Provision for reinsurance (including $...0 certified) (Schedule F, Part 8).........10,800 17. Net adjustments in assets and liabilities due to foreign exchange rates......... 18. Drafts outstanding......... 19. Payable to parent, subsidiaries and affiliates......39,698...39,698 20. Derivatives......... 21. Payable for securities......... 22. Payable for securities lending......... 23. Liability for amounts held under uninsured plans......... 24. Capital notes $...0 and interest thereon $...0......... 25. Aggregate write-ins for liabilities......0...0 26. Total liabilities excluding protected cell liabilities (Lines 1 through 25)......314,389,184...273,443,654 27. Protected cell liabilities......... 28. Total liabilities (Lines 26 and 27)......314,389,184...273,443,654 29. Aggregate write-ins for special surplus funds......0...0 30. Common capital stock......... 31. Preferred capital stock......... 32. Aggregate write-ins for other than special surplus funds......0...0 33. Surplus notes......20,035,107...20,036,285 34. Gross paid in and contributed surplus......... 35. Unassigned funds (surplus)......174,386,157...152,588,145 36. Less treasury stock, at cost: 36.1...0.000 shares common (value included in Line 30 $...0)......... 36.2...0.000 shares preferred (value included in Line 31 $...0)......... 37. Surplus as regards policyholders (Lines 29 to 35, less 36) (Page 4, Line 39)......194,421,264...172,624,430 38. TOTALS (Page 2, Line 28, Col. 3)......508,810,448...446,068,084 DETAILS OF WRITE-INS 2501. Retrospective Premium......... 2502.......... 2503.......... 2598. Summary of remaining write-ins for Line 25 from overflow page......0...0 2599. Totals (Lines 2501 thru 2503 plus 2598) (Line 25 above)......0...0 2901.......... 2902.......... 2903.......... 2998. Summary of remaining write-ins for Line 29 from overflow page......0...0 2999. Totals (Lines 2901 thru 2903 plus 2998) (Line 29 above)......0...0 3201.......... 3202.......... 3203.......... 3298. Summary of remaining write-ins for Line 32 from overflow page......0...0 3299. Totals (Lines 3201 thru 3203 plus 3298) (Line 32 above)......0...0 3

STATEMENT OF INCOME 1 2 UNDERWRITING INCOME Current Year Prior Year 1. Premiums earned (Part 1, Line 35, Column 4)......151,494,646...128,382,274 DEDUCTIONS 2. Losses incurred (Part 2, Line 35, Column 7)......95,222,035...94,843,787 3. Loss adjustment expenses incurred (Part 3, Line 25, Column 1)......14,289,002...12,642,090 4. Other underwriting expenses incurred (Part 3, Line 25, Column 2)......49,190,964...37,378,367 5. Aggregate write-ins for underwriting deductions......0...0 6. Total underwriting deductions (Lines 2 through 5)......158,702,001...144,864,244 7. Net income of protected cells......... 8. Net underwriting gain (loss) (Line 1 minus Line 6 plus Line 7)......(7,207,355)...(16,481,970) INVESTMENT INCOME 9. Net investment income earned (Exhibit of Net Investment Income, Line 17)......14,228,833...14,230,960 10. Net realized capital gains (losses) less capital gains tax of $...0 (Exhibit of Capital Gains (Losses))......1,771,420...1,560,721 11. Net investment gain (loss) (Lines 9 + 10)......16,000,253...15,791,681 OTHER INCOME 12. Net gain (loss) from agents' or premium balances charged off (amount recovered $...(414,805) amount charged off $...0)......(414,805)...(472,306) 13. Finance and service charges not included in premiums......... 14. Aggregate write-ins for miscellaneous income......594,644...329,943 15. Total other income (Lines 12 through 14)......179,839...(142,363) 16. Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines 8 + 11 + 15)......8,972,737...(832,652) 17. Dividends to policyholders......3,122,573...1,021,284 18. Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 16 minus Line 17)......5,850,164...(1,853,936) 19. Federal and foreign income taxes incurred......... 20. Net income (Line 18 minus Line 19) (to Line 22)......5,850,164...(1,853,936) CAPITAL AND SURPLUS ACCOUNT 21. Surplus as regards policyholders, December 31 prior year (Page 4, Line 39, Column 2)......172,624,430...167,699,533 22. Net income (from Line 20)......5,850,164...(1,853,936) 23. Net transfers (to) from Protected Cell accounts......... 24. Change in net unrealized capital gains or (losses) less capital gains tax of $...0......13,391,573...4,108,479 25. Change in net unrealized foreign exchange capital gain (loss)......... 26. Change in net deferred income tax......... 27. Change in nonadmitted assets (Exhibit of Nonadmitted Assets, Line 28, Column 3)......2,544,293...2,681,151 28. Change in provision for reinsurance (Page 3, Line 16, Column 2 minus Column 1)......10,800...(10,800) 29. Change in surplus notes......(1,178)...365 30. Surplus (contributed to) withdrawn from protected cells......... 31. Cumulative effect of changes in accounting principles......... 32. Capital changes: 32.1 Paid in......... 32.2 Transferred from surplus (Stock Dividend)......... 32.3 Transferred to surplus......... 33. Surplus adjustments: 33.1 Paid in......... 33.2 Transferred to capital (Stock Dividend)......... 33.3. Transferred from capital......... 34. Net remittances from or (to) Home Office......... 35. Dividends to stockholders......... 36. Change in treasury stock (Page 3, Lines 36.1 and 36.2, Column 2 minus Column 1)......... 37. Aggregate write-ins for gains and losses in surplus......1,182...(362) 38. Change in surplus as regards policyholders for the year (Lines 22 through 37)......21,796,834...4,924,897 39. Surplus as regards policyholders, December 31 current year (Line 21 plus Line 38) (Page 3, Line 37)......194,421,264...172,624,430 DETAILS OF WRITE-INS 0501.......... 0502.......... 0503.......... 0598. Summary of remaining write-ins for Line 5 from overflow page......0...0 0599. Totals (Lines 0501 thru 0503 plus 0598) (Line 5 above)......0...0 1401. Other Revenue......594,644...329,943 1402.......... 1403.......... 1498. Summary of remaining write-ins for Line 14 from overflow page......0...0 1499. Totals (Lines 1401 thru 1403 plus 1498) (Line 14 above)......594,644...329,943 3701. Surplus Note Accrued Interest......1,178...(365) 3702. Rounding Difference......4...3 3703.......... 3798. Summary of remaining write-ins for Line 37 from overflow page......0...0 3799. Totals (Lines 3701 thru 3703 plus 3798) (Line 37 above)......1,182...(362) 4

CASH FROM OPERATIONS CASH FLOW 1 2 Current Year Prior Year 1. Premiums collected net of reinsurance......157,786,207...129,690,672 2. Net investment income......15,270,330...14,983,626 3. Miscellaneous income......179,839...(142,363) 4. Total (Lines 1 through 3)......173,236,376...144,531,935 5. Benefit and loss related payments......75,779,338...71,005,639 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts......... 7. Commissions, expenses paid and aggregate write-ins for deductions......56,765,280...51,344,295 8. Dividends paid to policyholders......1,122,573...2,021,284 9. Federal and foreign income taxes paid (recovered) net of $...0 tax on capital gains (losses)......... 10. Total (Lines 5 through 9)......133,667,191...124,371,218 11. Net cash from operations (Line 4 minus Line 10)......39,569,185...20,160,717 CASH FROM INVESTMENTS 12. Proceeds from investments sold, matured or repaid: 12.1 Bonds......59,530,000...73,079,537 12.2 Stocks......4,841,939...1,719,571 12.3 Mortgage loans......... 12.4 Real estate......... 12.5 Other invested assets......... 12.6 Net gains or (losses) on cash, cash equivalents and short-term investments......... 12.7 Miscellaneous proceeds......43,126... 12.8 Total investment proceeds (Lines 12.1 to 12.7)......64,415,065...74,799,108 13. Cost of investments acquired (long-term only): 13.1 Bonds......104,402,707...82,059,352 13.2 Stocks......14,423,908...3,305,316 13.3 Mortgage loans......... 13.4 Real estate......... 13.5 Other invested assets......... 13.6 Miscellaneous applications.........35,506 13.7 Total investments acquired (Lines 13.1 to 13.6)......118,826,615...85,400,174 14. Net increase (decrease) in contract loans and premium notes......... 15. Net cash from investments (Line 12.8 minus Lines 13.7 minus Line 14)......(54,411,550)...(10,601,066) 16. Cash provided (applied): CASH FROM FINANCING AND MISCELLANEOUS SOURCES 16.1 Surplus notes, capital notes......(1,178)...365 16.2 Capital and paid in surplus, less treasury stock......... 16.3 Borrowed funds......... 16.4 Net deposits on deposit-type contracts and other insurance liabilities......... 16.5 Dividends to stockholders......... 16.6 Other cash provided (applied)......3,494,506...2,376,112 17. Net cash from financing and miscellaneous sources (Lines 16.1 to 16.4 minus Line 16.5 plus Line 16.6)......3,493,328...2,376,477 RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11 plus Line 15 plus Line 17)......(11,349,037)...11,936,128 19. Cash, cash equivalents and short-term investments: 19.1 Beginning of year......24,988,498...13,052,370 19.2 End of year (Line 18 plus Line 19.1)......13,639,462...24,988,498 Note: Supplemental disclosures of cash flow information for non-cash transactions: 20.0001......... 5

UNDERWRITING AND INVESTMENT EXHIBIT PART 1 - PREMIUMS EARNED 1 2 3 4 Unearned Premiums Unearned Premiums Net December 31 December 31 Premiums Premiums Prior Year- Current Year- Earned Written per per Col. 3, per Col. 5, During Year Line of Business Column 6, Part 1B Last Year's Part 1 Part 1A (Cols. 1 + 2-3) 1. Fire...............0 2. Allied lines...............0 3. Farmowners multiple peril...............0 4. Homeowners multiple peril...............0 5. Commercial multiple peril...............0 6. Mortgage guaranty...............0 8. Ocean marine...............0 9. Inland marine...............0 10. Financial guaranty...............0 11.1 Medical professional liability - occurrence...............0 11.2 Medical professional liability - claims-made...............0 12. Earthquake...............0 13. Group accident and health...............0 14. Credit accident and health (group and individual)...............0 15. Other accident and health...............0 16. Workers' compensation......166,079,884...59,236,866...73,822,104...151,494,646 17.1 Other liability - occurrence...............0 17.2 Other liability - claims-made...............0 17.3 Excess workers' compensation...............0 18.1 Products liability - occurrence...............0 18.2 Products liability - claims-made...............0 19.1, 19.2 Private passenger auto liability...............0 19.3, 19.4 Commercial auto liability...............0 21. Auto physical damage...............0 22. Aircraft (all perils)...............0 23. Fidelity...............0 24. Surety...............0 26. Burglary and theft...............0 27. Boiler and machinery...............0 28. Credit...............0 29. International...............0 30. Warranty...............0 31. Reinsurance - nonproportional assumed property...............0 32. Reinsurance - nonproportional assumed liability...............0 33. Reinsurance - nonproportional assumed financial lines...............0 34. Aggregate write-ins for other lines of business......0...0...0...0 35. TOTALS......166,079,884...59,236,866...73,822,104...151,494,646 DETAILS OF WRITE-INS 3401................0 3402................0 3403................0 3498. Summary of remaining write-ins for Line 34 from overflow page......0...0...0...0 3499. Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above)......0...0...0...0 6

UNDERWRITING AND INVESTMENT EXHIBIT PART 1A - RECAPITULATION OF ALL PREMIUMS 1 2 3 4 5 Reserve for Amount Unearned Amount Unearned Rate Credits Total Reserve (Running One Year (Running More Than and Retrospective for Unearned or Less from Date One Year from Earned But Adjustments Based Premiums Line of Business of Policy) (a) Date of Policy) (a) Unbilled Premium on Experience Cols. 1 + 2 + 3 + 4 1. Fire..................0 2. Allied lines..................0 3. Farmowners multiple peril..................0 4. Homeowners multiple peril..................0 5. Commercial multiple peril..................0 6. Mortgage guaranty..................0 8. Ocean marine..................0 9. Inland marine..................0 10. Financial guaranty..................0 11.1 Medical professional liability - occurrence..................0 11.2 Medical professional liability - claims-made..................0 12. Earthquake..................0 13. Group accident and health..................0 14. Credit accident and health (group and individual)..................0 15. Other accident and health..................0 16. Workers' compensation......73,822,104............73,822,104 17.1 Other liability - occurrence..................0 17.2 Other liability - claims-made..................0 17.3 Excess workers' compensation..................0 18.1 Products liability - occurrence..................0 18.2 Products liability - claims-made..................0 19.1, 19.2 Private passenger auto liability..................0 19.3, 19.4 Commercial auto liability..................0 21. Auto physical damage..................0 22. Aircraft (all perils)..................0 23. Fidelity..................0 24. Surety..................0 26. Burglary and theft..................0 27. Boiler and machinery..................0 28. Credit..................0 29. International..................0 30. Warranty..................0 31. Reinsurance - nonproportional assumed property..................0 32. Reinsurance - nonproportional assumed liability..................0 33. Reinsurance - nonproportional assumed financial lines..................0 34. Aggregate write-ins for other lines of business......0...0...0...0...0 35. TOTALS......73,822,104...0...0...0...73,822,104 36. Accrued retrospective premiums based on experience...... 37. Earned but unbilled premiums......0 38. Balance (sum of Lines 35 through 37)......73,822,104 DETAILS OF WRITE-INS 3401...................0 3402...................0 3403...................0 3498. Summary of remaining write-ins for Line 34 from overflow page......0...0...0...0...0 3499. Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above)......0...0...0...0...0 (a) State here basis of computation used in each case: 7

UNDERWRITING AND INVESTMENT EXHIBIT PART 1B - PREMIUMS WRITTEN 1 Reinsurance Assumed Reinsurance Ceded 6 2 3 4 5 Net Premiums Direct Written Business From From To To (Cols. 1 + 2 + 3 Line of Business (a) Affiliates Non-Affiliates Affiliates Non-Affiliates - 4-5) 1. Fire.....................0 2. Allied lines.....................0 3. Farmowners multiple peril.....................0 4. Homeowners multiple peril.....................0 5. Commercial multiple peril.....................0 6. Mortgage guaranty.....................0 8. Ocean marine.....................0 9. Inland marine.....................0 10. Financial guaranty.....................0 11.1 Medical professional liability - occurrence.....................0 11.2 Medical professional liability - claims-made.....................0 12. Earthquake.....................0 13. Group accident and health.....................0 14. Credit accident and health (group and individual).....................0 15. Other accident and health.....................0 16. Workers' compensation......166,965,432......7,460,852......8,346,400...166,079,884 17.1 Other liability - occurrence.....................0 17.2 Other liability - claims-made.....................0 17.3 Excess workers' compensation.....................0 18.1 Products liability - occurrence.....................0 18.2 Products liability - claims-made.....................0 19.1, 19.2 Private passenger auto liability.....................0 19.3, 19.4 Commercial auto liability.....................0 21. Auto physical damage.....................0 22. Aircraft (all perils).....................0 23. Fidelity.....................0 24. Surety.....................0 26. Burglary and theft.....................0 27. Boiler and machinery.....................0 28. Credit.....................0 29. International.....................0 30. Warranty.....................0 31. Reinsurance - nonproportional assumed property......xxx..................0 32. Reinsurance - nonproportional assumed liability......xxx..................0 33. Reinsurance - nonproportional assumed financial lines......xxx..................0 34. Aggregate write-ins for other lines of business......0...0...0...0...0...0 35. TOTALS......166,965,432...0...7,460,852...0...8,346,400...166,079,884 DETAILS OF WRITE-INS 3401......................0 3402......................0 3403......................0 3498. Summary of remaining write-ins for Line 34 from overflow page....0...0...0...0...0...0 3499. Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above)......0...0...0...0...0...0 (a) Does the company's direct premiums written include premiums recorded on an installment basis? Yes [ ] No [ X ] If yes: 1. The amount of such installment premiums $...0. 2. Amount at which such installment premiums would have been reported had they been recorded on an annualized basis $...0. 8

9 Annual Statement for the year 2013 of the UNDERWRITING AND INVESTMENT EXHIBIT PART 2 - LOSSES PAID AND INCURRED Losses Paid Less Salvage 5 6 7 8 1 2 3 4 Percentage of Net Losses Losses Losses Incurred Unpaid Net Losses Incurred (Col. 7, Part 2) Direct Reinsurance Reinsurance Net Payments Current Year Unpaid Current Year to Premiums Earned Line of Business Business Assumed Recovered (Cols. 1 + 2-3) (Part 2A, Col. 8) Prior Year (Cols. 4 + 5-6) (Col. 4, Part 1) 1. Fire...............0.........0...0.0 2. Allied lines...............0.........0...0.0 3. Farmowners multiple peril...............0.........0...0.0 4. Homeowners multiple peril...............0.........0...0.0 5. Commercial multiple peril...............0.........0...0.0 6. Mortgage guaranty...............0.........0...0.0 8. Ocean marine...............0.........0...0.0 9. Inland marine...............0.........0...0.0 10. Financial guaranty...............0.........0...0.0 11.1 Medical professional liability - occurrence...............0.........0...0.0 11.2 Medical professional liability - claims-made...............0.........0...0.0 12. Earthquake...............0.........0...0.0 13. Group accident and health...............0.........0...0.0 14. Credit accident and health (group and individual)...............0.........0...0.0 15. Other accident and health...............0.........0...0.0 16. Workers' compensation......77,606,656...5,482,004...3,708,000...79,380,660...195,240,375...179,399,000...95,222,035...62.9 17.1 Other liability - occurrence...............0.........0...0.0 17.2 Other liability - claims-made...............0.........0...0.0 17.3 Excess workers' compensation...............0.........0...0.0 18.1 Products liability - occurrence...............0.........0...0.0 18.2 Products liability - claims-made...............0.........0...0.0 19.1, 19.2 Private passenger auto liability...............0.........0...0.0 19.3, 19.4 Commercial auto liability...............0.........0...0.0 21. Auto physical damage...............0.........0...0.0 22. Aircraft (all perils)...............0.........0...0.0 23. Fidelity...............0.........0...0.0 24. Surety...............0.........0...0.0 26. Burglary and theft...............0.........0...0.0 27. Boiler and machinery...............0.........0...0.0 28. Credit...............0.........0...0.0 29. International...............0.........0...0.0 30. Warranty...............0.........0...0.0 31. Reinsurance - nonproportional assumed property......xxx............0.........0...0.0 32. Reinsurance - nonproportional assumed liability......xxx............0.........0...0.0 33. Reinsurance - nonproportional assumed financial lines......xxx............0.........0...0.0 34. Aggregate write-ins for other lines of business......0...0...0...0...0...0...0...0.0 35. TOTALS......77,606,656...5,482,004...3,708,000...79,380,660...195,240,375...179,399,000...95,222,035...62.9 DETAILS OF WRITE-INS 3401................0.........0...0.0 3402................0.........0...0.0 3403................0.........0...0.0 3498. Summary of remaining write-ins for Line 34 from overflow page......0...0...0...0...0...0...0...xxx... 3499. Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above)......0...0...0...0...0...0...0...0.0

10 Annual Statement for the year 2013 of the UNDERWRITING AND INVESTMENT EXHIBIT PART 2A - UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES Reported Losses Incurred But Not Reported 8 9 1 2 3 4 5 6 7 Net Losses Excluding Net Incurred but Net Losses Unpaid Loss Reinsurance Deduct Reinsurance not Reported Reinsurance Reinsurance Unpaid Adjustment Line of Business Direct Assumed Recoverable (Cols. 1 + 2-3) Direct Assumed Ceded (Cols. 4 + 5 + 6-7) Expenses 1. Fire...............0............0... 2. Allied lines...............0............0... 3. Farmowners multiple peril...............0............0... 4. Homeowners multiple peril...............0............0... 5. Commercial multiple peril...............0............0... 6. Mortgage guaranty...............0............0... 8. Ocean marine...............0............0... 9. Inland marine...............0............0... 10. Financial guaranty...............0............0... 11.1 Medical professional liability - occurrence...............0............0... 11.2 Medical professional liability - claims-made...............0............0... 12. Earthquake...............0............0... 13. Group accident and health...............0......... (a)...0... 14. Credit accident and health (group and individual)...............0............0... 15. Other accident and health...............0......... (a)...0... 16. Workers' compensation......193,643,578...6,139,425...54,146,500...145,636,503...61,572,872...1,972,000...13,941,000...195,240,375...15,319,000 17.1 Other liability - occurrence...............0............0... 17.2 Other liability - claims-made...............0............0... 17.3 Excess workers' compensation...............0............0... 18.1 Products liability - occurrence...............0............0... 18.2 Products liability - claims-made...............0............0... 19.1, 19.2 Private passenger auto liability...............0............0... 19.3, 19.4 Commercial auto liability...............0............0... 21. Auto physical damage...............0............0... 22. Aircraft (all perils)...............0............0... 23. Fidelity...............0............0... 24. Surety...............0............0... 26. Burglary and theft...............0............0... 27. Boiler and machinery...............0............0... 28. Credit...............0............0... 29. International...............0............0... 30. Warranty...............0............0... 31. Reinsurance - nonproportional assumed property......xxx............0...xxx............0... 32. Reinsurance - nonproportional assumed liability......xxx............0...xxx............0... 33. Reinsurance - nonproportional assumed financial lines......xxx............0...xxx............0... 34. Aggregate write-ins for other lines of business......0...0...0...0...0...0...0...0...0 35. TOTALS......193,643,578...6,139,425...54,146,500...145,636,503...61,572,872...1,972,000...13,941,000...195,240,375...15,319,000 DETAILS OF WRITE-INS 3401................0............0... 3402................0............0... 3403................0............0... 3498. Summary of remaining write-ins for Line 34 from overflow page......0...0...0...0...0...0...0...0...0 3499. Totals (Lines 3401 thru 3403 plus 3498) (Line 34 above)......0...0...0...0...0...0...0...0...0 (a) Including $...0 for present value of life indemnity claims.

1. Claim adjustment services: UNDERWRITING AND INVESTMENT EXHIBIT PART 3 - EXPENSES 1 2 3 4 Other Loss Adjustment Underwriting Investment Expenses Expenses Expenses Total 1.1 Direct......5,492,299.........5,492,299 1.2 Reinsurance assumed......934,062.........934,062 1.3 Reinsurance ceded......235,000.........235,000 1.4 Net claim adjustment services (1.1 + 1.2-1.3)......6,191,361...0...0...6,191,361 2. Commission and brokerage: 2.1 Direct, excluding contingent.........13,861,172......13,861,172 2.2 Reinsurance assumed, excluding contingent.........1,339,634......1,339,634 2.3 Reinsurance ceded, excluding contingent...............0 2.4 Contingent - direct...............0 2.5 Contingent - reinsurance assumed...............0 2.6 Contingent - reinsurance ceded...............0 2.7 Policy and membership fees...............0 2.8 Net commission and brokerage (2.1 + 2.2-2.3 + 2.4 + 2.5-2.6 + 2.7)......0...15,200,806...0...15,200,806 3. Allowances to manager and agents...............0 4. Advertising......1,322...1,251,771......1,253,093 5. Boards, bureaus and associations......6,800...628,651......635,451 6. Surveys and underwriting reports......1,223...22,124......23,347 7. Audit of assureds' records...............0 8. Salary and related items: 8.1 Salaries......4,939,180...16,871,433......21,810,613 8.2 Payroll taxes......378,924...916,426......1,295,350 9. Employee relations and welfare......983,255...3,291,433......4,274,688 10. Insurance......335,136...29,081......364,217 11. Directors' fees.........138,250......138,250 12. Travel and travel items......17,628...401,418......419,046 13. Rent and rent items.........1,602,331......1,602,331 14. Equipment......118,901...1,520,047......1,638,948 15. Cost or depreciation of EDP equipment and software......1,092,648...1,507,153......2,599,801 16. Printing and stationery......55,400...95,156......150,556 17. Postage, telephone and telegraph, exchange and express......165,791...356,049......521,840 18. Legal and auditing.........553,644......553,644 19. Totals (Lines 3 to 18)......8,096,208...29,184,967...0...37,281,175 20. Taxes, licenses and fees: 20.1 State and local insurance taxes deducting guaranty association credits of $...0.........1,838,157......1,838,157 20.2 Insurance department licenses and fees.........2,808......2,808 20.3 Gross guaranty association assessments...............0 20.4 All other (excluding federal and foreign income and real estate)...............0 20.5 Total taxes, licenses and fees (20.1 + 20.2 + 20.3 + 20.4)......0...1,840,965...0...1,840,965 21. Real estate expenses.........528,756...419,694...948,450 22. Real estate taxes.........282,382......282,382 23. Reimbursements by uninsured plans...............0 24. Aggregate write-ins for miscellaneous expenses......1,433...2,153,088...1,471,701...3,626,222 25. Total expenses incurred......14,289,002...49,190,964...1,891,395 (a)...65,371,361 26. Less unpaid expenses - current year......15,319,000...13,981,420......29,300,420 27. Add unpaid expenses - prior year......14,137,000...8,448,734......22,585,734 28. Amounts receivable relating to uninsured plans, prior year...............0 29. Amounts receivable relating to uninsured plans, current year...............0 30. TOTAL EXPENSES PAID (Lines 25-26 + 27-28 + 29)......13,107,002...43,658,278...1,891,395...58,656,675 DETAILS OF WRITE-INS 2401. Investment Expense............660,427...660,427 2402. Surplus Note Interest............811,274...811,274 2403. Miscellaneous......1,433...2,153,088......2,154,521 2498. Summary of remaining write-ins for Line 24 from overflow page......0...0...0...0 2499. Totals (Lines 2401 thru 2403 plus 2498) (Line 24 above)......1,433...2,153,088...1,471,701...3,626,222 (a) Includes management fees of $...0 to affiliates and $...0 to non-affiliates. 11

EXHIBIT OF NET INVESTMENT INCOME 1 2 Collected Earned During Year During Year 1. U.S. government bonds... (a)...186,443...183,120 1.1 Bonds exempt from U.S. tax... (a)...... 1.2 Other bonds (unaffiliated)... (a)...12,669,978...12,890,469 1.3 Bonds of affiliates... (a)...... 2.1 Preferred stocks (unaffiliated)... (b)...... 2.11 Preferred stocks of affiliates... (b)...... 2.2 Common stocks (unaffiliated)......1,687,452...1,673,156 2.21 Common stocks of affiliates......... 3. Mortgage loans... (c)...... 4. Real estate... (d)...1,364,400...1,364,400 5. Contract loans......... 6. Cash, cash equivalents and short-term investments... (e)...9,082...9,082 7. Derivative instruments... (f)...... 8. Other invested assets......... 9. Aggregate write-ins for investment income......0...0 10. Total gross investment income......15,917,355...16,120,228 11. Investment expenses... (g)...660,427 12. Investment taxes, licenses and fees, excluding federal income taxes... (g)... 13. Interest expense... (h)...811,274 14. Depreciation on real estate and other invested assets... (i)...419,694 15. Aggregate write-ins for deductions from investment income......0 16. Total deductions (Lines 11 through 15)......1,891,395 17. Net investment income (Line 10 minus Line 16)......14,228,833 DETAILS OF WRITE-INS 0901.......... 0902.......... 0903.......... 0998. Summary of remaining write-ins for Line 9 from overflow page......0...0 0999. Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above)......0...0 1501....... 1502....... 1503....... 1598. Summary of remaining write-ins for Line 15 from overflow page......0 1599. Totals (Lines 1501 thru 1503 plus 1598) (Line 15 above)......0 (a) Includes $...356,497 accrual of discount less $...1,181,173 amortization of premium and less $...420,525 paid for accrued interest on purchases. (b) Includes $...0 accrual of discount less $...0 amortization of premium and less $...0 paid for accrued dividends on purchases. (c) Includes $...0 accrual of discount less $...0 amortization of premium and less $...0 paid for accrued interest on purchases. (d) Includes $...1,364,000 for company's occupancy of its own buildings; and excludes $...0 interest on encumbrances. (e) Includes $...0 accrual of discount less $...0 amortization of premium and less $...0 paid for accrued interest on purchases. (f) Includes $...0 accrual of discount less $...0 amortization of premium. (g) Includes $...0 investment expenses and $...0 investment taxes, licenses and fees, excluding federal income taxes, attributable to Segregated and Separate Accounts. (h) Includes $...0 interest on surplus notes and $...0 interest on capital notes. (i) Includes $...419,694 depreciation on real estate and $...0 depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) 1 2 3 4 5 Realized Change in Gain (Loss) Other Total Realized Change in Unrealized on Sales Realized Capital Gain (Loss) Unrealized Foreign Exchange or Maturity Adjustments (Columns 1 + 2) Capital Gain (Loss) Capital Gain (Loss) 1. U.S. government bonds............0...... 1.1 Bonds exempt from U.S. tax............0...... 1.2 Other bonds (unaffiliated)......896,439......896,439...(241,051)... 1.3 Bonds of affiliates............0...... 2.1 Preferred stocks (unaffiliated)............0...... 2.11 Preferred stocks of affiliates............0...... 2.2 Common stocks (unaffiliated)......874,981......874,981...13,632,448... 2.21 Common stocks of affiliates............0...176... 3. Mortgage loans............0...... 4. Real estate............0...... 5. Contract loans............0...... 6. Cash, cash equivalents and short-term investments............0...... 7. Derivative instruments............0...... 8. Other invested assets............0...... 9. Aggregate write-ins for capital gains (losses)......0...0...0...0...0 10. Total capital gains (losses)......1,771,420...0...1,771,420...13,391,573...0 DETAILS OF WRITE-INS 0901.............0...... 0902.............0...... 0903.............0...... 0998. Summary of remaining write-ins for Line 9 from overflow page......0...0...0...0...0 0999. Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above)......0...0...0...0...0 12

EXHIBIT OF NONADMITTED ASSETS 1 2 3 Current Year Prior Year Change in Total Total Total Nonadmitted Assets Nonadmitted Assets Nonadmitted Assets (Col. 2 - Col. 1) 1. Bonds (Schedule D)............0 2. Stocks (Schedule D): 2.1 Preferred stocks............0 2.2 Common stocks......484,296...484,120...(176) 3. Mortgage loans on real estate (Schedule B): 3.1 First liens............0 3.2 Other than first liens............0 4. Real estate (Schedule A): 4.1 Properties occupied by the company............0 4.2 Properties held for the production of income............0 4.3 Properties held for sale............0 5. Cash (Schedule E-Part 1), cash equivalents (Schedule E-Part 2) and short-term investments (Schedule DA)............0 6. Contract loans............0 7. Derivatives (Schedule DB)............0 8. Other invested assets (Schedule BA)............0 9. Receivables for securities............0 10. Securities lending reinvested collateral assets (Schedule DL)............0 11. Aggregate write-ins for invested assets......0...0...0 12. Subtotals, cash and invested assets (Lines 1 to 11)......484,296...484,120...(176) 13. Title plants (for Title insurers only)............0 14. Investment income due and accrued............0 15. Premiums and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection......2,966,493...2,481,465...(485,028) 15.2 Deferred premiums, agents' balances and installments booked but deferred and not yet due......459,764...342,086...(117,678) 15.3 Accrued retrospective premiums............0 16. Reinsurance: 16.1 Amounts recoverable from reinsurers............0 16.2 Funds held by or deposited with reinsured companies............0 16.3 Other amounts receivable under reinsurance contracts............0 17. Amounts receivable relating to uninsured plans............0 18.1 Current federal and foreign income tax recoverable and interest thereon............0 18.2 Net deferred tax asset............0 19. Guaranty funds receivable or on deposit............0 20. Electronic data processing equipment and software......2,734,230...5,344,204...2,609,974 21. Furniture and equipment, including health care delivery assets......154,757...216,231...61,474 22. Net adjustment in assets and liabilities due to foreign exchange rates............0 23. Receivables from parent, subsidiaries and affiliates............0 24. Health care and other amounts receivable............0 25. Aggregate write-ins for other than invested assets......833,827...1,309,554...475,727 26. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 through 25)......7,633,367...10,177,660...2,544,293 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts............0 28. TOTALS (Lines 26 and 27)......7,633,367...10,177,660...2,544,293 DETAILS OF WRITE-INS 1101.............0 1102.............0 1103.............0 1198. Summary of remaining write-ins for Line 11 from overflow page......0...0...0 1199. Totals (Lines 1101 thru 1103 plus 1198) (Line 11 above)......0...0...0 2501. Other Assets Non-Admitted......833,827...1,309,554...475,727 2502.............0 2503.............0 2598. Summary of remaining write-ins for Line 25 from overflow page......0...0...0 2599. Totals (Lines 2501 thru 2503 plus 2598) (Line 25 above)......833,827...1,309,554...475,727 13

NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies A. Accounting Practices The financial statements of (the Company) are presented on the basis of accounting practices prescribed or permitted by the Missouri Department of Insurance. The Missouri Department of Insurance recognizes only statutory accounting practices prescribed or permitted by the state of Missouri for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency under the Missouri Insurance law. The National Association of Insurance Commissioners (NAIC) Accounting Practices and Procedures Manual (NAIC SAP) has been adopted as a component of prescribed accounting practices that differ from those found in Missouri. The state has adopted certain prescribed accounting practices that differ from those found in NAIC SAP. Specifically, company owned automobiles, which are not admitted under NAIC SAP, are admitted under this prescribed practice. By using this prescribed practice, the surplus of the Company was increased at December 31, 2013 and 2012 by $677,705 and $475,437, respectively. In addition the state has allowed the Company to value its investment in United Security Insurance Company at its statutory capital and surplus amount plus a value for state licenses until the first quarter of 2014. By using this permitted practice, the surplus of the Company was increased at December 31, 2013 and 2012 by $1,700,000. The State of Missouri also requires that accrued interest not yet due on surplus notes be added to the face value of the surplus notes with a corresponding decrease in unassigned surplus. Under NAIC SAP, accrued interest not yet due may not be added to the face value of the surplus notes. Under NAIC SAP, surplus notes would be reduced by $35,107 and $36,285 at December 31, 2013 and 2012, respectively, and unassigned surplus would be increased by $35,107 and $36,285 at December 31 2013 and 2012, respectively. A reconciliation of the Company s net income and capital and surplus between NAIC SAP and practices prescribed and permitted by the state of Missouri is shown below: 14 2013 2012 (1) Net Income(Loss) Missouri State Basis $5,850,168 $(1,853,936) (2) State Prescribed Practices (Income) -0- -0- (3) State Permitted Practices (Income) -0- -0- (4) Net Income, NAIC SAP $5,850,168 $(1,853,936) (5) Statutory Surplus Missouri Basis $194,421,264 $172,624,430 (6) State Prescribed Practices (Surplus) ($677,705) ($475,437) (7) State Permitted Practices (Surplus) ($1,700,000) ($1,700,000) (8) Statutory Surplus, NAIC SAP $192,043,559 $170,448,993 B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with Statutory Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. C. Accounting Policy Premiums are earned over the terms of the related insurance policies and reinsurance contracts. Unearned premium reserves are established to cover the unexpired portion of premiums written. Such reserves are computed by pro rata methods. In addition, the Company uses the following accounting policies. (1) Short term investments are stated at amortized cost. (2) Bonds, not backed by other loans, are stated at amortized cost, except for bonds that are rated

NOTES TO FINANCIAL STATEMENTS by the NAIC as a class 3-6 which are reported at the lower of amortized cost or fair market value. Amortization is calculated using the scientific constant yield to worst method. (3) Common stocks, other than affiliated stocks, are stated at market value. (4) Preferred stocks are stated in accordance with the guidance provided in SSAP No. 32. (5) The Company owns no mortgage loans. (6) Loan-backed securities are stated at either amortized cost or the lower of amortized cost or fair market value. The prospective adjustment method is used to value all securities. (7) The Company owns 100% of the capital stock of Missouri Employers General Agency (MEGA), a general agency. The value reported is the underlying equity of MEGA. (8) The Company has no interests in joint ventures, partnerships, or limited liability companies. (9) The Company owns no derivative instruments. (10) The Company does not anticipate investment income. (11) Unpaid losses and loss adjustment expenses include an amount determined from individual case estimates and loss reports and an amount, based upon past experience, for losses incurred but not reported. Such liabilities are necessarily based upon assumptions and estimates and while management believes the amount is adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and for establishing the resulting liability are continually reviewed and any adjustments are reflected in the period determined. (12) The Company had no change in capitalization policy or predefined thresholds. (13) The Company has no pharmaceutical rebate receivables. 2. Accounting Changes and Correction of Errors The Company had no corrections of errors or changes in accounting principles. 3. Business Combinations and Goodwill The Company did not participate in any business combinations and does not recognize any goodwill as an admitted asset. 4. Discontinued Operations The Company had no discontinued operations during 2013. 5. Investments A. The Company has no mortgage loans. B. The Company did not restructure any debt during 2013. C. The Company had no involvement in reverse mortgages during 2013. D. Loan Backed Securities (1) Carrying value for Structured securities have been determined in accordance with the guidelines provided by the NAIC. Fair value is determined using a pricing hierarchy starting with a widely accepted pricing vendor, followed by external broker/dealers, Bloomberg, analytic modeling and a benchmark to index model. Our asset manager uses a proprietary model for loss assumptions and widely accepted models for prepayment assumptions in valuing mortgage-back and asset-backed securities with inputs from major third party data providers. It combines the effects of interest rates, volatility, and pre-payment speeds based on Monte Carlo 14.1