Financial Statements. For the year ended December 31, (Unaudited)

Transcription

1 Financial Statements For the year ended December 31, 2012 (Unaudited)

2 Table of contents December 31, 2012 Summary of financial results - (unaudited) 1 Consolidated financial statements - (unaudited) Statutory consolidated statement of admitted assets, liabilities and accumulated surplus 3 Statutory consolidated statement of operations 4 Comparative financial statements - (unaudited) Statutory comparative statement of admitted assets, liabilities and accumulated surplus 5 Statutory comparative statement of operations 6 Statutory comparative statement of operations PLA 7 Statutory comparative statement of operations CLA 8 Statutory comparative statement of operations COASTAL 9 Statutory comparative administrative expenses schedule 10 Budgetary analysis - (unaudited) Statutory statement of operations 11 Statutory statement of operations PLA 12 Statutory statement of operations CLA 13 Statutory statement of operations COASTAL 14 Statutory comparative administrative expenses schedule 15 GAAP analysis - (unaudited) GAAP consolidated statement of net assets 16 GAAP consolidated statement of revenues, expenses and 17 changes in net assets Reconciliation of STAT to GAAP 18 Adjusted GAAP total net assets - (unaudited) 19

3 1 Summary of financial results - statutory basis (unaudited) December 31, 2012 Key Financial Data (in millions) Consolidated Actual YTD Consolidated Budget YTD.Variance from budget..variance from prior year Amount Percent Amount Percent Consolidated Actual Prior YTD Fav/(Unfav) Fav/(Unfav) Fav/(Unfav) Fav/(Unfav) Direct written premiums $ 3,180.8 $ 3,628.5 $ 3,084.4 $ (447.7) -12% % Ceded written premiums to: Takeout companies (262.0) (54.1) (44.5) (207.9) -384% (217.5) -489% FHCF (475.1) (550.0) (453.1) % (22.0) -5% Private reinsurers (334.0) (200.0) (113.6) (134.0) -67% (220.4) -194% Net written premiums $ 2,109.7 $ 2,824.4 $ 2,473.2 $ (714.7) -25% $ (363.5) -15% Net earned premiums $ 2,248.1 $ 2,590.5 $ 2,251.7 $ (342.4) -13% $ (3.6) 0% Losses incurred $ $ 1,188.3 $ 1,107.6 $ % $ % LAE incurred (30.9) -14% (10.9) -4% Net underwriting income $ $ $ $ % $ % Net Income (loss) $ $ $ $ % $ % Cash and invested assets $ 14,797.2 $ 12,670.6 $ 2, % Loss and LAE reserves 1, ,346.6 (72.5) -5% Ending surplus (deficit) $ 6,295.2 $ 5,588.1 $ % Policy Data Policies in-force 1,314,811 1,655,703 1,472,391 (340,892) -21% (157,580) -11% Polices serviced 1,591,813 1,712,564 1,525,968 (120,751) -7% 65,845 4% Key Underwriting Ratios Loss Ratio 36% 46% 49% 10% 22% 13% 27% LAE Ratio 11% 9% 11% -2% -22% 0% 0% Expense Ratio (based on DWP) 18% 16% 15% -2% -13% -3% -20% Combined Ratio 65% 71% 75% 6% 8% 10% 13%

4 2 Summary of financial results - statutory basis (unaudited) December 31, 2012 Key Financial Data (in millions) YTD Actual YTD Budget Prior YTD Actual PLA CLA COASTAL PLA CLA COASTAL PLA CLA COASTAL Direct written premiums $ 1,749.0 $ $ 1,231.0 $ 2,110.1 $ $ 1,318.2 $ 1,694.1 $ $ 1,187.8 Ceded written premiums to: Takeout companies (235.2) - (26.8) (41.6) - (12.5) (38.2) - (6.3) FHCF (184.0) (30.8) (260.3) (180.0) (60.0) (310.0) (158.8) (30.3) (264.0) Private reinsurers - - (334.0) - - (200.0) - - (113.6) Net written premiums $ 1,329.8 $ $ $ 1,888.5 $ $ $ 1,497.1 $ $ Net earned premiums $ 1,438.1 $ $ $ 1,619.5 $ $ $ 1,311.3 $ $ Losses incurred $ $ 12.3 $ $ 1,010.5 $ 45.9 $ $ $ 11.2 $ LAE incurred Net underwriting income $ $ $ $ $ 74.0 $ $ (66.8) $ $ Net Income (loss) $ $ $ $ $ 90.4 $ $ (19.4) $ $ Cash and invested assets $ 5,111.6 $ 1,778.1 $ 7,907.6 $ 3,475.1 $ 1,458.8 $ 7,736.7 Loss and LAE reserves 1, Ending surplus (deficit) $ 2,008.9 $ 1,343.4 $ 2,942.9 $ 1,698.6 $ 1,203.3 $ 2,686.2 Policy Data Policies in-force 860,502 8, ,163 1,184,675 7, ,466 1,003,856 8, ,161 Polices serviced 1,113,470 8, ,197 1,232,439 7, ,563 1,049,683 8, ,911 Key Underwriting Ratios Loss Ratio 48% 7% 18% 62% 27% 16% 73% 6% 18% LAE Ratio 14% 5% 8% 11% 6% 5% 14% 4% 7% Expense Ratio (based on DWP) 17% 20% 18% 15% 19% 17% 14% 18% 15% Combined Ratio 79% 32% 44% 88% 52% 38% 101% 28% 40%

5 Consolidated Financial Statements

6 3 Statement of admitted assets, liabilities and accumulated surplus - statutory basis (unaudited) December 31, 2012 Consolidated PLA CLA COASTAL Assets Cash and invested assets $ 14,797,187,898 $ 5,111,566,422 $ 1,778,063,713 $ 7,907,557,763 Premium receivable, net 178,230,651 92,350,355 6,645,477 79,234,819 Due from takeout companies 18,407,148 16,614,522-1,792,626 Reinsurance recoverable (4,348,717) (4,599,609) - 250,892 Edp equipment, net 9,808,284 9,808, Accrued investment income 88,285,945 24,224,799 6,518,455 57,542,691 Other assets 1,302,877 1,298,248-4,629 Due from investment broker Inter-account receivable (payable) 58, ,964,196 (31,298,179) (71,607,721) Assessment receivables 354,287,091 13,547,111 6,207, ,532,395 Total assets $ 15,443,219,473 $ 5,367,774,328 $ 1,766,137,051 $ 8,309,308,094 Liabilities Loss reserves $ 1,140,376,987 $ 869,890,854 $ 117,365,542 $ 153,120,591 Loss expense reserves 278,678, ,684,276 27,357,645 37,636,265 Unearned premiums, net 1,272,645, ,322,811 92,655, ,667,131 Unearned assessment income 85,051, ,051,218 Reinsurance premiums payable 189,533, ,533,501 Funds held under reinsurance treaties 2, ,667 Provision for reinsurance 2,046,705 1,942, ,552 Advance premiums & suspended cash 85,824,225 40,270,367 7,099,571 38,454,287 Notes payable 5,910,316,098 1,439,584, ,131,255 4,298,600,228 Interest payable 31,771,747 6,643, ,419 24,333,364 Taxes and fees payable 5,988,763 4,570, , ,403 Due to investment broker 23,653,641 2,825, ,810 20,490,627 Other liabilities 122,173,560 90,178,768 4,275,302 27,719,490 Total liabilities $ 9,148,062,749 3,358,913, ,753,362 5,366,396,324 Accumulated surplus Beginning surplus (deficit) 5,734,967,445 1,741,907,106 1,211,972,436 2,781,087,903 Restricted surplus 11,112, ,112,452 Change in non-admitted assets (114,601,443) (37,098,285) (5,692,110) (71,811,048) Change in provision for reinsurance Change in net unrealized capital Change in other (1,138,153) - - (1,138,153) Net income 664,816, ,052, ,103, ,660,616 Ending surplus (deficit) 6,295,156,724 2,008,861,265 1,343,383,689 2,942,911,770 Total liabilities & surplus (deficit) $ 15,443,219,473 $ 5,367,774,328 $ 1,766,137,051 $ 8,309,308,094

7 4 Statement of operations - statutory basis (unaudited) As of December 31, 2012 Consolidated PLA CLA COASTAL Net earned premiums: Direct earned premiums $ 3,129,665,899 $ 1,740,154,269 $ 201,934,631 $ 1,187,576,999 Ceded earned premiums (881,570,563) (302,034,648) (30,792,333) (548,743,582) Net earned premiums 2,248,095,336 1,438,119, ,142, ,833,417 Underwriting expense: Losses incurred $ 815,507,486 $ 686,973,615 $ 12,286,565 $ 116,247,306 Loss adjustment expense incurred 258,109, ,359,118 7,890,269 49,859,942 Producer commissions 255,760, ,445,203 22,762, ,552,335 Ceded commissions 4,388,646 3,815, ,657 Taxes and assessments 77,653,233 43,626,674 5,233,399 28,793,160 Administrative and other underwriting 224,763, ,296,944 13,049,611 84,416,967 Total underwriting expenses 1,636,182,240 1,186,517,543 61,222, ,442,367 Net underwriting income $ 611,913,096 $ 251,602,078 $ 109,919,968 $ 250,391,050 Other income (expense) Investment income $ 191,178,104 $ 58,561,200 $ 28,026,225 $ 104,590,679 Interest expense (197,691,484) (19,142,470) (2,288,867) (176,260,147) Financing costs (8,332,784) (7,442,843) (889,941) - Takeout bonuses 43,103 43, Assessment income 59,421,067 15,246,500 1,822,343 42,352,224 Other income and expense 8,285,321 5,184, ,635 2,586,810 Total other income (expense) 52,903,327 52,450,366 27,183,395 (26,730,434) Net income (loss) $ 664,816,423 $ 304,052,444 $ 137,103,363 $ 223,660,616

8 Comparative Financial Statements

9 5 Statutory statements of admitted assets, liabilities and accumulated surplus - comparative (unaudited) Consolidated PLA / CLA / COASTAL December 31, 2012 December 31, 2011 Variance Assets Cash and invested assets $ 14,797,187,898 $ 12,670,596,653 17% Premium receivable, net 178,230, ,017,669-2% Due from takeout companies 18,407, , % Reinsurance recoverable (4,348,717) 3,130, % Edp equipment, net 9,808,284 2,028, % Accrued investment income 88,285,945 72,830,920 21% Other assets 1,302,877 2,401,235-46% Due from investment broker - - 0% Inter-account receivable (payable) 58,296 52,582 11% Assessment receivables 354,287, ,302,301-26% Total assets $ 15,443,219,473 $ 13,414,234,965 15% Liabilities Loss reserves $ 1,140,376,987 $ 1,093,917,314 4% Loss expense reserves 278,678, ,652,533 10% Unearned premiums, net 1,272,645,451 1,411,230,633-10% Unearned assessment income 85,051, ,713,211-27% Reinsurance premiums payable 189,533,501 55,683, % Funds held under reinsurance treaties 2,667 3,548-25% Provision for reinsurance 2,046,705 2,664,060-23% Advance premiums & suspended cash 85,824,225 99,291,432-14% Notes payable 5,910,316,098 4,643,315,600 27% Interest payable 31,771,747 27,479,242 16% Taxes and fees payable 5,988,763 6,477,051-8% Due to investment broker 23,653,641 1,380, % Other liabilities 122,173, ,284,562 6% Total liabilities 9,148,062,749 7,826,093,750 17% Accumulated surplus Beginning surplus (deficit) 5,734,967,445 5,089,807,822 13% Restricted surplus 11,112,452 11,726,079-5% Change in non-admitted assets (114,601,443) 35,023, % Change in provision for reinsurance - 3,000, % Change in net unrealized capital - - 0% Change in other (1,138,153) (118,148) -863% Net Income 664,816, ,701,126 48% Ending surplus (deficit) 6,295,156,724 5,588,141,215 13% Total liabilities & surplus (deficit) $ 15,443,219,473 $ 13,414,234,965 15%

10 6 Statutory statement of operations - comparative (unaudited) PLA / CLA / COASTAL Year to Date December 31, 2012 December 31, 2011 Variance Net earned premiums: Direct earned premiums $ 3,129,665,899 $ 2,853,664,906 10% Ceded earned premiums (881,570,563) (601,934,084) -46% Net earned premiums 2,248,095,336 2,251,730,822 0% Underwriting expense: Losses incurred 815,507,486 1,107,599,777-26% Loss adjustment expense incurred 258,109, ,236,352 4% Producer commissions 255,760, ,156,223 2% Ceded commissions 4,388,646 (7,145,121) 161% Taxes and assessments 77,653,233 49,501,194 57% Administrative and other underwriting 224,763, ,831,463 44% Total underwriting expenses 1,636,182,240 1,803,179,888-9% Net underwriting income 611,913, ,550,934 36% Other income (expense) Investment income 191,178, ,456,015 43% Interest expense (197,691,484) (172,922,084) -14% Financing costs (8,332,784) (6,008,310) -39% Takeout bonuses 43,103 4,254,494-99% Assessment income 59,421,067 35,321,001 68% Other income and expense 8,285,321 6,049,077 37% Total other income (expense) 52,903, , % Net income (loss) $ 664,816,423 $ 448,701,127 48%

11 7 Statutory statement of operations - comparative (unaudited) Year to Date PLA December 31, 2012 December 31, 2011 Variance Net earned premiums: Direct earned premiums $ 1,740,154,269 $ 1,501,983,449 16% Ceded earned premiums (302,034,648) (190,650,556) -58% Net earned premiums 1,438,119,621 1,311,332,893 10% Underwriting expense: Losses incurred 686,973, ,885,799-29% Loss adjustment expense incurred 200,359, ,488,494 7% Producer commissions 124,445, ,072,219 3% Ceded commissions 3,815,989 (6,136,445) 162% Taxes and assessments 43,626,674 27,852,611 57% Administrative and other underwriting 127,296,944 88,000,396 45% Total underwriting expenses 1,186,517,543 1,378,163,074-14% Net underwriting income (loss) 251,602,078 (66,830,181) 476% Other income (expense) Investment income 58,561,200 38,779,930 51% Interest expense (19,142,470) % Financing costs (7,442,843) % Take-out bonuses 43,103 4,254,494-99% Assessment income 15,246, % Other income and expense 5,184,876 4,424,901 17% Total other income (expense) 52,450,366 47,459,325 11% Net income (loss) $ 304,052,444 $ (19,370,856) 1670%

12 8 Statutory statement of operations - comparative (unaudited) Year to Date CLA December 31, 2012 December 31, 2011 Variance Net earned premiums: Direct earned premiums $ 201,934,631 $ 202,948,770 0% Ceded earned premiums (30,792,333) (30,324,970) -2% Net earned premiums 171,142, ,623,800-1% Underwriting expense: Losses incurred 12,286,565 11,179,993 10% Loss adjustment expense incurred 7,890,269 6,180,905 28% Producer commissions 22,762,486 23,070,593-1% Ceded commissions - - 0% Taxes and assessments 5,233,399 3,443,164 52% Administrative and other underwriting 13,049,611 9,049,728 44% Total underwriting expenses 61,222,330 52,924,383 16% Net underwriting income (loss) 109,919, ,699,417-8% Other income (expense) Investment income 28,026,225 19,672,947 42% Interest expense (2,288,867) % Financing costs (889,941) % Take-out bonuses - - 0% Assessment income 1,822, % Other income and expense 513, ,275-30% Total other income (expense) 27,183,395 20,410,222 33% Net income (loss) $ 137,103,363 $ 140,109,639-2%

13 9 Statutory statement of operations - comparative (unaudited) Year to Date COASTAL December 31, 2012 December 31, 2011 Variance Net earned premiums: Direct earned premiums $ 1,187,576,999 $ 1,148,732,687 3% Ceded earned premiums (548,743,582) (380,958,558) -44% Net earned premiums 638,833, ,774,129-17% Underwriting expense: Losses incurred 116,247, ,533,985-14% Loss adjustment expense incurred 49,859,942 54,566,953-9% Producer commissions 108,552, ,013,411 2% Ceded commissions 572,657 (1,008,676) 157% Taxes and assessments 28,793,160 18,205,419 58% Administrative and other underwriting 84,416,967 58,781,339 44% Total underwriting expenses 388,442, ,092,431 4% Net underwriting income (loss) 250,391, ,681,698-37% Other income (expense) Investment income 104,590,679 75,003,138 39% Interest expense (176,260,147) (172,922,084) -2% Financing costs - (6,008,310) 100% Take-out bonuses - - 0% Assessment income 42,352,224 35,321,001 20% Other income and expense 2,586, , % Total other income (expense) (26,730,434) (67,719,354) 61% Net income (loss) $ 223,660,616 $ 327,962,344-32%

14 10 Statutory comparative administrative and other expenses (unaudited) Year to Date All departments December 31, 2012 December 31, 2011 Variance Salaries $ 72,588,210 $ 69,781,229 4% Employee benefits 15,967,625 15,214,472 5% Payroll taxes 5,936,132 5,429,282 9% Temporary services 10,352,057 4,982, % Other underwriting fees 39,579,594 16,124, % Other processing fees 1,413,180 1,402,747 1% Training 651, ,004-9% Recruiting 899, , % Printing 106, ,568-20% Office supplies 2,879,253 1,497,298 92% Subscriptions & dues 1,067, ,711 20% Postage 8,186,951 5,698,925 44% Telecommunications 3,422,514 4,046,306-15% Legal 1,625, , % Insurance 549, ,974-8% Travel & meals 1,930,558 1,633,699 18% Servicing carrier fees 10,060,915 9,732,474 3% Professional consulting 47,307,542 17,429, % Miscellaneous 11,500 38,445-70% Rent - facilities 7,577,459 6,451,843 17% Rent - ofc equip & furn 644, ,155 41% Depreciation 4,485,141 4,642,540-3% Producer fees collected (795,508) (824,237) 3% Maintenance & repairs 1,979,791 1,946,849 2% Bank charges 343, ,976-3% Software maint & licensing 13,883,283 9,030,157 54% FMAP funding (253,002) (239,796) -6% ULAE expense allocation (27,639,279) (21,865,278) -26% Total admin and other $ 224,763,522 $ 155,831,463 44% Capital acquisitions $ 12,155,786 $ 2,666, % Total expenditures $ 236,919,308 $ 158,498,447 49% Employee count 1,167 1,174-1%

15 Budgetary Analysis

16 11 Statement of operations - statutory basis (unaudited) Month ended December 31, 2012 PLA / CLA / COASTAL Actual Year to Date Budget Favorable (Unfavorable) Net earned premiums: Direct earned premiums $ 3,129,665,899 $ 3,366,347,911-7% Ceded earned premiums (881,570,563) (775,870,808) -14% Net earned premiums 2,248,095,336 2,590,477,103-13% Underwriting expense: Losses incurred 815,507,486 1,188,320,340 31% Loss adjustment expense incurred 258,109, ,155,440-14% Producer commissions 255,760, ,797,121 14% Ceded commissions 4,388, % Taxes and assessments 77,653,233 56,334,987-38% Administrative and other underwriting 224,763, ,258,422 0% Total underwriting expenses 1,636,182,240 1,994,866,310 18% Net underwriting income (loss) 611,913, ,610,793 3% Other income (expense) Investment income 191,178, ,140,387 65% Interest expense (197,691,484) (178,249,372) -11% Financing costs (8,332,784) % Take-out bonuses 43, % Assessment income 59,421,067 31,661,993 88% Other income and expense 8,285,321 7,262,014 14% Total other income (expense) 52,903,327 (23,184,978) 328% Net income (loss) $ 664,816,423 $ 572,425,815 16%

17 12 Statutory statement of operations - budget to actual (unaudited) Month ended December 31, 2012 PLA Actual Year to Date Budget Favorable (Unfavorable) Net earned premiums: Direct earned premiums $ 1,740,154,269 $ 1,817,369,504-4% Ceded earned premiums (302,034,648) (197,911,704) -53% Net earned premiums 1,438,119,621 1,619,457,800-11% Underwriting expense: Losses incurred 686,973,615 1,010,457,444 32% Loss adjustment expense incurred 200,359, ,819,595-14% Producer commissions 124,445, ,749,304 19% Ceded commissions 3,815, % Taxes and assessments 43,626,674 33,970,996-28% Administrative and other underwriting 127,296, ,709,645 1% Total underwriting expenses 1,186,517,543 1,501,706,984 21% Net underwriting income (loss) 251,602, ,750, % Other income (expense) Investment income 58,561,200 35,466,605 65% Interest expense (19,142,470) % Financing costs (7,442,843) % Take-out bonuses 43, % Assessment income 15,246, % Other income and expense 5,184,876 4,223,195 23% Total other income (expense) 52,450,366 39,689,800 32% Net income (loss) $ 304,052,444 $ 157,440,616 93%

18 13 Statutory statement of operations - budget to actual (unaudited) Month ended December 31, 2012 Year to Date CLA Actual Budget Favorable (Unfavorable) Net earned premiums: Direct earned premiums $ 201,934,631 $ 229,650,536-12% Ceded earned premiums (30,792,333) (60,000,000) 49% Net earned premiums 171,142, ,650,536 1% Underwriting expense: Losses incurred 12,286,565 45,930,108 73% Loss adjustment expense incurred 7,890,269 10,674,160 26% Producer commissions 22,762,486 23,134,549 2% Ceded commissions - - 0% Taxes and assessments 5,233,399 3,398,223-54% Administrative and other underwriting 13,049,611 12,503,047-4% Total underwriting expenses 61,222,330 95,640,087 36% Net underwriting income (loss) 109,919,968 74,010,449 49% Other income (expense) Investment income 28,026,225 16,037,718 75% Interest expense (2,288,867) % Financing costs (889,941) % Take-out bonuses - - 0% Assessment income 1,822, % Other income and expense 513, ,651 28% Total other income (expense) 27,183,395 16,438,369 65% Net income (loss) $ 137,103,363 $ 90,448,818 52%

19 14 Statutory statement of operations - budget to actual (unaudited) Month ended December 31, 2012 Year to Date COASTAL Actual Budget Favorable (Unfavorable) Net earned premiums: Direct earned premiums $ 1,187,576,999 $ 1,319,327,871-10% Ceded earned premiums (548,743,582) (517,959,104) -6% Net earned premiums 638,833, ,368,767-20% Underwriting expense: Losses incurred 116,247, ,932,788 12% Loss adjustment expense incurred 49,859,942 40,661,685-23% Producer commissions 108,552, ,913,268 11% Ceded commissions 572, % Taxes and assessments 28,793,160 18,965,768-52% Administrative and other underwriting 84,416,967 84,045,730 0% Total underwriting expenses 388,442, ,519,239 2% Net underwriting income (loss) 250,391, ,849,528-38% Other income (expense) Investment income 104,590,679 64,636,064 62% Interest expense (176,260,147) (178,249,372) 1% Financing costs - - 0% Take-out bonuses - - 0% Assessment income 42,352,224 31,661,993 34% Other income and expense 2,586,810 2,638,168-2% Total other income (expense) (26,730,434) (79,313,147) 66% Net income (loss) $ 223,660,616 $ 324,536,381-31%

20 15 Administrative and other expenses - statutory basis (unaudited) Month ended December 31, 2012 Actual Year to Date Budget Favorable (Unfavorable) Salaries $ 72,588,210 $ 74,670,688 3% Employee benefits 15,967,625 16,367,554 2% Payroll taxes 5,936,132 5,684,796-4% Temporary services 10,352,057 8,103,637-28% Other underwriting fees 39,579,594 35,899,899-10% Other processing fees 1,413,180 1,503,744 6% Training 651,781 1,562,708 58% Recruiting 899, , % Printing 106, ,137 45% Office supplies 2,879,253 1,731,010-66% Subscriptions & dues 1,067, ,811-8% Postage 8,186,951 6,489,064-26% Telecommunications 3,422,514 4,078,553 16% Legal 1,625, , % Insurance 549, ,400 18% Travel & meals 1,930,558 3,387,505 43% Servicing carrier fees 10,060,915 16,057,868 37% Professional consulting 47,307,542 43,901,887-8% Miscellaneous 11,500 43,457 74% Rent - facilities 7,577,459 7,998,105 5% Rent - ofc equip & furn 644, ,121-10% Depreciation 4,485,141 5,313,747 16% Producer fees collected (795,508) (899,640) -12% Maintenance & repairs 1,979,791 2,952,892 33% Bank charges 343, ,000 10% Software maint & licensing 13,883,283 14,331,616 3% FMAP funding (253,002) (256,950) -2% ULAE expense allocation (27,639,279) (27,429,387) 1% Total admin and other $ 224,763,522 $ 225,258,422 0% Capital acquisitions $ 12,155,786 $ 12,825,745 5% Total expenditures $ 236,919,308 $ 238,084,167 0% Employee count 1,167 1,322 12%

21 GAAP Financials

22 16 GAAP Consolidated statement of net assets (unaudited) December 31, 2012 Consolidated PLA CLA COASTAL Assets Cash and investments $ 15,058,522,140 $ 5,171,464,178 $ 1,804,349,362 $ 8,082,708,600 Premium receivable, net 178,230,651 92,350,355 6,645,477 79,234,819 Due from takeout companies 18,407,149 16,614,522-1,792,627 Reinsurance recoverables (4,348,717) (4,599,609) - 250,892 Accrued investment income 88,285,945 24,224,799 6,518,455 57,542,691 Prepaid reinsurance premiums 215,563, ,681,336-75,881,860 Deferred policy acquisition costs 144,181,025 73,473,840 12,225,370 58,481,815 Deferred takeout bonus Deferred financing costs 90,728,010 6,201, ,545 83,784,704 Fixed assets, net 16,504,570 16,504, Other assets 9,501,928 9,497,299-4,629 Due from investment broker Inter-account receivable (payable) 58, ,964,196 (31,298,179) (71,607,721) Assessment receivables 326,528,017 (1,699,389) 4,385, ,842,164 Total assets $ 16,142,162,210 $ 5,646,677,858 $ 1,803,567,272 $ 8,691,917,080 Liabilities Loss reserves $ 1,140,376,987 $ 869,890,854 $ 117,365,542 $ 153,120,591 Loss expense reserves 278,678, ,684,276 27,357,645 37,636,265 Direct unearned premiums 1,488,208, ,004,148 92,655, ,548,991 Unearned assessment income 107,709, ,709,267 Reinsurance premiums payable 189,533, ,533,501 Funds held under reinsurance treaties 2, ,667 Advance premiums & suspended cash 85,824,225 40,270,367 7,099,571 38,454,287 Notes payable 5,910,316,098 1,439,584, ,131,255 4,298,600,228 Interest payable 31,771,747 6,643, ,419 24,333,364 Taxes and fees payable 5,988,763 4,570, , ,403 Due to investment broker 23,653,641 2,825, ,810 20,490,627 Other liabilities 122,173,560 90,178,768 4,275,302 27,719,490 Total liabilities 9,384,237,290 3,496,652, ,753,362 5,464,831,681 Net assets Invested in capital assets 16,504,570 16,504, Restricted 11,112, ,112,452 Unrestricted 6,730,307,898 2,133,521,041 1,380,813,910 3,215,972,947 Total net assets 6,757,924,920 2,150,025,611 1,380,813,910 3,227,085,399 Total liabilities and net assets $ 16,142,162,210 $ 5,646,677,858 $ 1,803,567,272 $ 8,691,917,080

23 17 GAAP consolidated statement of revenues, expenses and change in net assets (unaudited) As of December 31, 2012 Consolidated PLA CLA COASTAL Operating revenue: Premiums earned $ 2,248,095,336 $ 1,438,119,621 $ 171,142,298 $ 638,833,417 Operating expenses: Losses incurred 815,507, ,973,615 12,286, ,247,306 Loss adjustment expense incurred 258,109, ,359,118 7,890,269 49,859,942 Producer commissions, net 266,352, ,836,713 22,948, ,567,341 Taxes and assessments 79,994,148 45,456,074 5,252,125 29,285,949 Administrative and other underwriting 216,984, ,538,883 13,172,644 80,273,325 Total operating expenses 1,636,948,381 1,188,164,403 61,550, ,233,863 Operating income 611,146, ,955, ,592, ,599,554 Non-operating revenues (expenses): Investments income 278,445,650 82,452,101 37,487, ,506,300 Interest expense (214,412,512) (19,142,470) (2,288,867) (192,981,175) Financing costs (7,463,769) (1,241,082) (148,396) (6,074,291) Takeout bonuses 43,103 43, Assessment Income 48,880, ,880,481 Other income and expense 6,829,416 4,650, ,446 1,608,898 Total non-operating revenues 112,322,369 66,761,724 35,620,432 9,940,213 Gain from operations 723,469, ,716, ,212, ,539,767 Federal income tax benefit Change in net assets $ 723,469,324 $ 316,716,942 $ 145,212,615 $ 261,539,767

24 18 Reconciliation of STAT to GAAP (unaudited) As of December 31, 2012 Consolidated PLA CLA COASTAL Net income - Statutory Basis $ 664,816,423 $ 304,052,444 $ 137,103,363 $ 223,660,616 Adjustments: Change in deferred policy acquisition costs (766,140) (1,646,859) (327,785) 1,208,504 Change in deferred financing costs (15,852,012) 6,201, ,544 (22,795,317) Change in deferred takeout bonuses Change in allowance for doubtful accounts (1,455,907) (534,805) 56,812 (977,914) Change in unearned assessment income 17,218, ,218,488 Change in 2012 FIGA assessment income (27,759,074) (15,246,500) (1,822,343) (10,690,231) Change in unrealized gain (loss) on investments 87,267,546 23,890,901 9,461,024 53,915,621 Change in net assets - GAAP $ 723,469,324 $ 316,716,942 $ 145,212,615 $ 261,539,767 Consolidated PLA CLA COASTAL Accumulated surplus - Statutory Basis $ 6,295,156,724 $ 2,008,861,265 $ 1,343,383,689 $ 2,942,911,770 Adjustments: Deferred policy acquisition costs 144,181,025 73,473,840 12,225,370 58,481,815 Deferred financing costs 90,728,010 6,201, ,545 83,784,704 Deferred takeout bonuses Unrealized gain (loss) on investments 172,157,866 44,494,796 20,912, ,750,782 Statutory non-admitted assets other than premium 104,071,713 30,298,296 5,373,361 68,400,056 Unrealized assessment income change (22,658,049) - - (22,658,049) 2012 FIGA assessment income change (27,759,074) (15,246,500) (1,822,343) (10,690,231) Statutory provision for reinsurance-sch F penalty 2,046,705 1,942, ,552 Total net assets - GAAP $ 6,757,924,920 $ 2,150,025,611 $ 1,380,813,910 $ 3,227,085,399

25 19 Adjusted GAAP total net assets per 16(L) of the Plan of Operations (unaudited)* As of December 31, 2012 Consolidated PLA CLA COASTAL GAAP total net assets $ 6,757,924,920 $ 2,150,025,611 $ 1,380,813,910 $ 3,227,085,399 Deferred takeout bonus Deferred financing costs (90,728,010) (6,201,761) (741,545) (83,784,704) Net assets related to pre-event notes (90,344,678) (88,295,312) (2,049,366) - Restricted cash - FSLSO (11,112,452) - - (11,112,452) Adjusted GAAP total net assets $ 6,565,739,780 $ 2,055,528,538 $ 1,378,022,999 $ 3,132,188,243 * GAAP for purposes of assessment calulation