PRIOR APPROVAL RATE APPLICATION

STATE OF CALIFORNIA Company Name DEPARTMENT OF INSURANCE (CDI) Line of Insurance Edition Date: 10/17/2014 Completed by: S. Ackerman Date: 11/24/2014 PRIOR APPROVAL RATE APPLICATION Attachment A California Earthquake EARTHQUAKE Your File #: SERFF CEA2014 ( 15 Characters Maximum) CD (plus 1 paper copy) Paper (1 original plus 1 copy) Filing No.: DEPARTMENT USE ONLY Does this filing include a variance request? Is this a variance request submitted after the prior approval application to which it applies? SERFF No.: Date Filed: If yes, provide the applicable CDI File Number: Compliance Date: Does this file contain group data? Date Public Notified: Note: Complete page 2 if this is a group filing Deemer Date: Is this a specialty filing? Intake Analyst: Latest applicable CDI file number in this line, subline and/or program: 11-2233 Company Name California Earthquake Authority Bureau & Senior: Group Filing: X-Reference No.: Yes No NAIC Company Code 10779 Group Name N/A Rate New Program Rule NAIC Group Code N/A Organized under the Laws of the State of California Form Variance % Change Line Type Line of Insurance: Subline Other Program Residential Home Office 801 K Street, Suite 1000, Sacramento, CA 95814 Name and Title of Contact Person Shawna Ackerman, Chief Actuary Toll Free Phone No.: (877) 797-4300 Fax No.: (916) 327-8270 Email Address ackermans@calquake.com Mailing Address 801 K Street, Suite 1000, Sacramento, CA 95814 I declare under penalty of perjury under the laws of the State of California, that the information filed is true, complete, and correct. (916) 661-5513 Authorized Signature Date of Filing Telephone Number Important note: Refer to CDI website at http://www.insurance.ca.gov/0250-insurers/0800-rate-filings/for the most current rate template and prior approval factors. Prior Approval Rate Application (General Information) Page 1

STATE OF CALIFORNIA Company Name: California Earthquake Authority DEPARTMENT OF INSURANCE (CDI) Line of Insurance: EARTHQUAKE Edition Date: 10/17/2014 PROPERTY AND LIABILITY FILING SUBMISSION DATA SHEET The purpose of this filing is as follows: (More than one may be marked ) TYPE OF FILING PRIOR APPROVAL RATE APPLICATION PAGES and EXHIBITS REQUIRED New Program ( Including adoption of advisory organization loss costs, forms and rules.) Pages 1 through 7, 10, 12, 13 & 14, plus exhibit 17 Rates ( Including adoption of advisory organization loss costs. ) Increase rates Decrease rate Zero Overall rate impact Pages 1 through 10, 13 & 14, plus exhibits Pages 1 through 10, 13 & 14, plus exhibits Pages 1 through 10, 13 & 14, plus exhibits Variance Filed together with the prior approval application to which it applies. Page 11 and exhibit 13 Filed after the prior approval application to which it applies. Pages 1 through 6, 11, plus exhibit 13 Coverage Forms ( Including adoption of advisory organization forms. ) With rate impact Without rate impact Pages 1 through 10, 12a, 13 & 14 plus exhibits Pages 1 through 5, 12a Rules ( Including adoption of advisory organization rules. ) With rate impact Pages 1 through 10, 12b, 13 & 14 plus exhibits (including exhibit 20) Without rate impact Pages 1 through 5, 12b, Exhibit 20 All Private Passenger Automobile class plans must be filed separately from the Prior Approval Rate Applications. Prior Approval Rate Application (Filing Data) Page 3

STATE OF CALIFORNIA DEPARTMENT OF INSURANCE (CDI) Edition Date: 10/17/2014 Company Name: California Earthquake Authority Line of Insurance: EARTHQUAKE PROPERTY AND LIABILITY FILING SUBMISSION DATA SHEET (Continued) Proposed Earned Premium Per Exposure: Proposed Overall Rate Change $ 1.83-8.2% INDICATED PROPOSED ADJUSTED PROJECTED COVERAGE* CHANGE (%) CHANGE (%) EARNED PREMIUM* EARNED PREMIUM 1. Residential Earthquake -8.3% -8.2% 646,462,010 593,588,389 2. 3. 4. 5. 6. 7. 8. 9. 10. TOTAL: -8.3% -8.2% 646,462,010 593,588,389 Total earned premium must include all income derived from miscellaneous fees and other charges. * Commercial Auto Liability and Physical damage must be combined in one application, with separate rate templates for liability and physical damage. * Adjusted earned premium is the historical earned premium for the most recent year adjusted to the current rate level and trended to the average date of loss of the proposed rating period. Prior Approval Rate Application (Filing Data Continued) Page 4

STATE OF CALIFORNIA DEPARTMENT OF INSURANCE (CDI) Edition Date: 10/17/2014 Company Name: California Earthquake Authority Line of Insurance: EARTHQUAKE FILING CHECKLIST Use this checklist to assemble a complete application Prior Approval Rate Application, Page 1 Group Filing, Page 2 Property and Liability Filing Submission Data Sheet, Page 3 Property and Liability Filing Submission Data Sheet, Page 4 Filing Checklist, Page 5 Supporting Data Exhibits, Page 6 Ratemaking Data and Template (s), Page 7 Reconciliation of Direct Earned Premium, Page 8 Additional Data Required by Statute, Page 9 Miscellaneous Fees and Other Charges, Page 10 Variance Request, Page 11 Forms and Rules, Page 12 Excluded Expenses, Page 13 Projected Yield and Federal Income Tax Rate on Investment Income, Page 14 Filing Memorandum See the prior approval rate filing instructions regarding the following attachments. Printed Rate and Rule Manual Pages Underwriting Rules Forms (Attach all independent forms and list all advisory organization forms ) Copies of Reinsurance Agreements ( Applies only to Medical Malpractice with facultative reinsurance attachment points above one million dollars and Earthquake, where the cost of reinsurance is included in the rate development.) Prior Approval Rate Application (Filing Checklist) Page 5

STATE OF CALIFORNIA DEPARTMENT OF INSURANCE (CDI) Edition Date: 11/18/2013 Company Name: California Earthquake Authority Line of Insurance: EARTHQUAKE SUPPORTING DATA EXHIBITS Use this document to assemble a complete application Exhibit 1: Exhibit 2: Exhibit 3: Exhibit 4: Exhibit 5: Exhibit 6: Exhibit 7: Exhibit 8: Exhibit 9: Exhibit 10: Exhibit 11: Exhibit 12: Exhibit 13: Exhibit 14: Exhibit 15: Exhibit 16: Exhibit 17: Exhibit 18: Exhibit 19: Exhibit 20: Filing History Rate Level History Policy Term Distribution Premium Adjustment Factor Premium Trend Factor Miscellaneous Fees and Other Charges Loss and Defense & Cost Containment Expense ( DCCE ) Development Factors Loss and DCCE Trend Catastrophe Adjustment Credibility Adjustment Ancillary Income Reinsurance Premium and Recoverables Variance Insurer's Ratemaking Calculations Rate Distribution Rate Classification Relativities New Program Group Filing Super Group Corporate Structure Verification (PPA only) Rules Exhibit 21: Prior Approval Rate Application (Supporting Data Exhibits) Page 6

RATEMAKING DATA (Click + to expand for more than 3 years; - to contract) Completed by S. Ackerman Date Completed 11/24/2014 Company/Group California Earthquake Authority Line Description EARTHQUAKE Coverage %Captive %Direct %Independent (Must add up to 100%) Marketing System: 100.00% Prior Effective Date (current rates) 1/1/2012 Proposed Effective Date (new rates) 1/1/2016 CDI File Number (Department use only ) 0 Does the data provided below reflect a Request for Variance? Variance #: Data below is: 2nd Prior Year 1st Prior Year Most Recent Year Projected*/ New Program** 2011 2012 2013 1 California Direct Written Premium 593,588,389 Exhibit 15, Col. (5). Total Projected Premium 2 California Direct Earned Premium 593,588,389 Exhibit 15, Col. (5). Total Projected Premium 3 Premium Adjustment Factor (Developed in Exhibit 4) 4 Premium Trend Factor * (Developed in Exhibit 5) 0.00% Trend for the period the rates will be in effect is included above 5 Miscellaneous Fees and Flat Charges (Not included in Line 2; 431,007 Exhibit 6, 2013 ratio applied to Developed in Exhibit 6) line 1 6 Earned Exposure Units 324,483,667 7 Historic Losses (Projected for New Programs) 270,315,730 8 Historic Defense and Cost Containment Expense (DCCE) 25,679,994 9 Loss Development Factor (Developed in Exhibit 7) Exhibit 14-3, line 1 Exhibit 14-3, line 2 + line 3 10 DCCE Development Factor (Developed in Exhibit 7) 11 Loss Trend Factor* (Developed in Exhibit 8) 0.00% Trend is included in line 7 12 DCCE Trend Factor* (Developed in Exhibit 8) 0.00% Trend is included in line 7 13 Catastrophe Adjustment Factor (Developed in Exh 9) 14 Credibility Factor for Losses & DCCE (Developed in Exhibit 10) 15 Excluded Expense Factor (From Page 13) 0.09% 16 Ancillary Income (Developed in Exhibit 11) 17 Projected Federal Income Tax Rate on Investment Income (From 34.92% Page 14) 18 Projected Yield (From Page 14) 1.31% Complete 19, 20 & 21 For Earthquake and certain Medical Malpractice with Reinsurance Only (see instructions) 19 Direct Commissions 10.00% 20 Reinsurance Premium (Developed in Exhibit 12) 234,610,951 21 Reinsurance Recoverables (Developed in Exhibit 12) 65,596,620 Exhibit 12, line 2 + line 4 Exhibit 12, line 3 Variance Change to Leverage on the basis that the insurer either writes at least 90% of its direct earned premium in one line or writes at least 90% of its direct earned premium in California. (Must be accompanied by Variance Request, subject to CDI approval) Variance Change to Efficiency Standard (Must be accompanied by Variance Request, subject to CDI approval) For all trend factors, the Projected Column should reflect the * annual trend expressed as a percentage. ** For New Programs, please see Rate Filing Instructions, Page 4. Prior Approval Rate Application (Ratemaking Data) Page 7

STATE OF CALIFORNIA DEPARTMENT OF INSURANCE (CDI) Edition Date: 10/17/2014 Company Name Line of Insurance California Earthquake Authority EARTHQUAKE STATUTORY PAGE 14 CALENDAR YEAR DATA RECONCILIATION OF DIRECT EARNED PREMIUM DATA PER PROGRAM Program Most Recent CDI File # 2nd 1st Most Prior Prior Recent Year Year Year 2011 2012 2013 1. Residential Eathquake 11-2233 $ 605,793,843 $ 588,502,379 $ 568,729,298 2. 3. 4. $ - $ - $ - 5. $ - $ - $ - 6. $ - $ - $ - 7. $ - $ - $ - 8. $ - $ - $ - 9. $ - $ - $ - 10. $ - $ - $ - TOTAL $ 605,793,843 $ 588,502,379 $ 568,729,298 Statutory Page 14 $ 605,793,843 $ 588,502,379 $ 568,729,298 Difference $ - $ - $ - Explain the Differences: This exhibit requires insurers to itemize each program until all data is reconciled to the corresponding annual statement line of insurance ( Statutory Page 14 ). For residual market data, a filing number is not required. Prior Approval Rate Application (Premium Reconciliation) Page 8

STATE OF CALIFORNIA DEPARTMENT OF INSURANCE (CDI) Edition Date: 10/17/2014 ADDITIONAL DATA REQUIRED BY STATUTE* Calendar Year DATA Company Name: Line of Insurance: California Earthquake Authority EARTHQUAKE Year 2013 1. Number of claims outstanding at beginning of year 2 2. Number of claims during the year 168 3. Number of claims closed during the year 165 4. Number of claims outstanding at year's end ( (1) + (2) - (3) ) 5 5. Unearned Premiums 288,464,329 6. Dollar amount of claims paid 225,000 7. Net loss reserves for outstanding claims excluding claims incurred but not reported 36,250 8. Net loss reserves for claims incurred but not reported - 9. Losses incurred as a percentage of premiums earned - including IBNR 0.1% 10. Net investment gain or loss and other income or gain or loss allocated to the line. 11,954,169 11. Net income before federal and foreign income taxes ( line 10 plus line 15 ) 243,921,432 12. Total number of policies in force on the last day of the reporting period 841,836 13. Total number of policies cancelled 14. Total number of policies non-renewed 15. Net underwriting gain or loss 231,967,263 ( =CY earned premiums minus CY incurred loss minus CY incurred expense ) 16. Separate allocations of expenses for: a) commissions and brokerage expense, b) other acquisition costs, c) general office expenses, d) taxes, licenses and fees, e) loss adjustment expense ( DCCE & AOE ), and 62,213,776 20,028,021 27,647,279 13,757,939 123,904 f) other expenses *CIC 1857.7, CIC 1857.9 and CIC 1864 Prior Approval Rate Application (Additional Data) Page 9

STATE OF CALIFORNIA DEPARTMENT OF INSURANCE (CDI) Edition Date: 10/17/2014 Company Name: California Earthquake Authority Line of Insurance: EARTHQUAKE MISCELLANEOUS FEES AND OTHER CHARGES Do any fees or installment finance charges apply to this program? If yes, identify the fee and the amount charged for each type of fee and for each transaction. INDIVIDUAL POLICY CHARGES New Business Renewals Policy fee Installment fee $ 1.00 $ 1.00 Installment finance charges ( ancillary income ) APR Endorsement fee Inspection fee Cancellation fee Reinstatement fee Late fee SR 22 Non-sufficient funds ( NSF ) fee ( ancillary income ) Membership dues ( ancillary income ) Other, specify: Except for installment finance charges, NSF fees, and membership dues, data relating to fees must be included in the ratemaking data, Page 7, Line 2 ( direct earned premium) or Line 5 ( miscellaneous fees ) and Exhibit 6, miscellaneous fees, must be completed. Refer to the instructions for additional information. Prior Approval Rate Application (Miscellaneous Fees) Page 10

STATE OF CALIFORNIA DEPARTMENT OF INSURANCE (CDI) Edition Date: 11/18/2013 FORMS Company Name: Line of Insurance: California Earthquake Authority EARTHQUAKE Insurers who wish to use a new or replacement form in connection with a new or existing program must furnish the following information and documentation for our review. Revisions must be highlighted and the corresponding manual pages must be provided. Restricts Broadens Rate SOURCE Coverage Coverage Impact % Flat FORM NO. TITLE TYPE SOURCE FORM NO * CATEGORY [ Yes/ No ] [ Yes/ No ] [ Yes / No ] Change Rate 1] New: BEQ-3B (xx/20xx) Basic Earthquake Policy - Homeowners 3 3 3 No Yes Yes See Exhibit 15 Old: BEQ-3B (01/2012) Basic Earthquake Policy - Homeowners 3 3 3 2] New: BEQ-3C (xx/20xx) Basic Earthquake Policy - Homeowners Choice 3 3 3 No Yes Yes See Exhibit 15 Old: BEQ-3C (07/2012) Basic Earthquake Policy - Homeowners Choice 3 3 3 3] New: BEQ-4A (xx/20xx) Basic Earthquake Policy - Renters 3 3 3 No Yes Yes See Exhibit 15 Old: BEQ-4A (01/2012) Basic Earthquake Policy - Renters 3 3 3 4] New: BEQ-6A (xx/20xx) Basic Earthquake Policy - Common Interest Development 3 3 3 No Yes Yes See Exhibit 15 Old: BEQ-6A (01/2012) Basic Earthquake Policy - Common Interest Development 3 3 3 5] New: CEA03A (XX/2016) Endorsement - Coverage for Exterior Masonry Veneer (Homeowners, Homeowners Choice) 2 3 2 No Yes Yes 10.0% Old: N/A 6] New: CEA04A (XX/2016) Endorsement - Coverage for Breakables (Homeowners, Homeowners Choice, Renters and Common Interest Development) 2 3 2 No Yes Yes 60.0% Old: N/A 9] New: CEADRV (xx/20xx) CEA Earthquake Insurance Dwelling Retrofit Verification Form 4 3 2 No No No Old: N/A 9] New: CEA02S (XX/2016) California Earthquake Authority Availability of Hazard-Reduction Premium Discount 4 3 3 No No No Old: CEA02 (01/2012) California Earthquake Authority Availability of Hazard-Reduction Premium Discount 4 3 3 9] New: Old: CEA Choice Notice (XX/2016) Important Notice 4 3 3 CEA Choice Notice - Ed.007/2012 Important Notice 4 3 3 TYPE: SOURCE CATEGORY Additional Information and Documents Required 1) Application 1) ISO* 1) New, mandatory 2) Endorsement 2) Other Advisory Organization* 2) New, optional 3) Policy 3) Company 3) Replacement, mandatory 4) Other ( Please define ) 4) Other (describe) 4) Replacement, optional 5) Withdrawn, mandatory 6) Withdrawn, optional * Provide California Dept. of Insurance number ( CDI# ) under the column identified as Source Form No. Describe the purpose of the form or form change For NEW FORMS, furnish a copy of the form to be filed, unless identical to an advisory organization form. If the form is a new endorsement to the policy, describe any changes in coverage under the policy. Describe what adjustments, if any, will be made to the premium due to the introduction of the forms. For REVISED FORMS, describe any changes in coverages between the proposed form and the current form. Reference pertinent sections of each form affected. Brackets [ ] should be used to identify any deletions on the current form and underline all changes in the revised form. Describe what adjustments, if any, will be made to the premium due to the revisions. Prior Approval Rate Application (Forms) Page 12(a)

STATE OF CALIFORNIA Company Name: California Earthquake Authority DEPARTMENT OF INSURANCE (CDI) Line of Insurance: EARTHQUAKE Edition Date: 10/17/2014 PROJECTED YIELD AND FEDERAL INCOME TAX RATE ON INVESTMENT INCOME Short Term Intermediate Long Term Assets Term Assets Assets Over 1 yr Over 5 yrs Over 10 yrs Line number One year or less through 5 yrs through 10 yrs through 20 yrs Over 20 yrs 1.7 US governments 1,763,206,531 2,731,162,320 2.7 All other governments 0 0 3.7 States, territories and possessions 0 0 4.7 Political subdivisions 0 0 Special revenue and 5.7 assessment obligations 434,160,150 0 6.7 Public utilities unaffiliated 61,860,810 0 Industrial and 7.7 miscellaneous 0 0 8.7 Credit tenant loans 0 0 Parent, subsidiaries and 9.7 affiliates 0 0 One year or less Over 1 year through 10 years Over 10 years (1) (2) (3) US government bonds Sum of line 1.7 and 2.7 1,763,206,531 2,731,162,320 0 Other taxable bonds Sum of line 6.7, 7.7, 8.7, 9.7 and half of 5.7 278,940,885 0 0 Tax exempt bonds Sum of line 3.7, 4.7, and half of 5.7 217,080,075 0 0 Data on line 1.7 through 9.7 are from the insurer group's most recent consolidated statutory annual statement, schedule D, part 1A, section 1. Prior Approval Rate Application (Yield Tax Worksheet) Page 14a

PROJECTED YIELD AND FEDERAL INCOME TAX RATE ON INVESTMENT INCOME Currently Federal Invested Available Return On Income Federal Income Assets Yield * Invested Assets Tax Rate Taxes [1] [2] [3]=[1]*[2] [4] [5]=[3]*[4] (1) US government bonds (A) Short 1,763,206,531 0.02% 411,415 35.00% 143,995 (B) Intermediate 2,731,162,320 2.42% 66,003,089 35.00% 23,101,081 (C) Long 0 2.91% 0 35.00% 0 (2) Other taxable bonds (A) Short 278,940,885 0.12% 344,027 35.00% 120,409 (B) Intermediate 0 3.29% 0 35.00% 0 (C) Long 0 4.32% 0 35.00% 0 (3) Tax exempt bonds (A) Short 217,080,075 0.08% 174,026 5.25% 9,136 (B) Intermediate 0 2.09% 0 5.25% 0 (C) Long 0 3.53% 0 5.25% 0 (4) Common Stock 0 (A) Dividends 0 14.18% 0 (B) Capital gains 0 34.10% 0 (5) Preferred stock 0 dividends 0 14.18% 0 (6) Mortgage loans 0 0 35.00% 0 (7) Real estate 0 0 35.00% 0 (8) Cash** 2,801,378 0.02% 654 35.00% 229 (9) Other*** 0 (A) Dividends 0 14.18% 0 (B) Capital gains 0 34.10% 0 (10) Total Sum of line (1) thru (9) 4,993,191,189 66,933,211 23,374,851 Data in column [1], line 4 through (9), are from the insurer group's most recent consolidated statutory annual statement page 2 - Assets. * Currently available yields are defined in CCR 2644.20. Latest values are posted at http://www.insurance.ca.gov/0250-insurers/0800-rate-filings/0200-prior-approval-factors/ ** Annual statement page 2, line 5, cash only. Cash equivalents and short-term investments are included in Schedule D. *** Annual statement page 2, line 6, 8, 9, and 11. Page 14b Prior Approval Rate Application (Yield Tax Worksheet)

PROJECTED YIELD AND FEDERAL INCOME TAX RATE ON INVESTMENT INCOME Currently Federal Invested Available Return On Income Federal Income Assets Yield Invested Assets Tax Rate Taxes [1] [2] [3]=[1]*[2] [4] [5]=[3]*[4] (10) Total 4,993,191,189 66,933,211 23,374,851 line (10) exhibit 13, page 2 (11) Investment expense 2,197,826 35.00% 769,239 Annual Statement (AS) page 11, line 25 (12) Total 4,993,191,189 64,735,385 22,605,612 after investment expense line (10) - line (11) (13) Federal income tax rate line (12) column [5] / column [3] 34.92% (14) Projected yield 1.30% on invested assets line (12) column [3] / column [1] Most Recent Year (15) Loss reserves 36,250 AS page 3, line 1 (16) Loss adjustment 3,263 expense reserves AS page 3, line 3 (17) Unearned premium 288,464,329 reserves AS page 3, line 9 (18) Surplus as regards 4,665,530,384 to policyholders AS page 3, line 37 (19) Total reserves and 4,954,034,226 surplus Sum of line (15) to (18) (20) Projected yield adjusted to reserve and surplus base line (14) * line (12) / line (19) 1.31% Page 14c Prior Approval Rate Application (Yield Tax Worksheet)

RATE TEMPLATE Edition Date: 10/17/2014 Attachment A (No input by filer) CDI FILE NUMBER: 0 COMPANY/GROUP: California Earthquake Authority LINE OF INSURANCE: EARTHQUAKE COVERAGE: 0 PRIOR_EFF_DATE: 1/1/2012 Completed by: S. Ackerman PROPOSED_EFF_DATE: 1/1/2016 Date: 11/24/2014 DATA PROVIDED BY FILER Year: 2011 2012 2013 PRIOR2 PRIOR1 RECENT PROJECTED/ SUMMARY WRT_PREM 0 0 0 593,588,389 ERN_PREM 0 0 0 593,588,389 PREM_ADJ 1.000 1.000 1.000 PREM_TREND 1.000 1.000 1.000 0.000 MISCELLANEOUS_FEES (& other flat charges) 0 0 0 431,007 EARNED_EXP 0 0 0 324,483,667 LOSSES 0 0 0 270,315,730 DCCE 0 0 0 25,679,994 LOSS_DEV 1.000 1.000 1.000 DCCE_DEV 1.000 1.000 1.000 LOSS_TREND 1.000 1.000 1.000 0.000 DCCE_TREND 1.000 1.000 1.000 0.000 CAT_ADJ 1.000 1.000 1.000 CREDIBILITY 100.00% EXPENSE EXCLUSION FACTOR 0.09% ANC_INC 0 0 0 0 FIT_INV 34.92% YIELD 1.31% CDI PARAMETERS: FIT_UW 35.00% EFF_STANDARD 22.85% LEVERAGE 1.00 PREMIUM_TAX_RATE 2.35% SURPLUS_RATIO 1.00 UEP_RES_RATIO 0.48 LOSS_RES_RATIO 1.00 RISK FREE RATE OF RETURN 1.53% October 2014 MAXIMUM RATE OF RETURN 7.53% MINIMUM RATE OF RETURN -6.00% CDI CALCULATIONS: ADJ_PREM 0 0 0 594,019,396 ADJUSTED_LOSSES 0 0 0 270,315,730 ADJUSTED_DCCE 0 0 0 25,679,994 ADJUSTED_LOSS+DCCE_RATIO 0.00% 0.00% 0.00% 49.83% TRENDED_CURRENT_RATE_LEVEL_PREMIUM #DIV/0! #DIV/0! #DIV/0! 1.83 LOSS+DCCE_PER_EXP #DIV/0! #DIV/0! #DIV/0! 0.91 COMP_LOSS+DCCE_PER_EXP #DIV/0! #DIV/0! #DIV/0! 1.25 CRED_LOSS_PER_EXP #DIV/0! #DIV/0! #DIV/0! 0.91 ANC_INC_PER_EXP #DIV/0! #DIV/0! #DIV/0! 0.00 FIXED_INV_INC_FACTOR 1.31% VAR_INV_INC_FACTOR 1.94% ANNUAL_NET_TREND 0.00% COMP_TREND 0.00% MAX_PROFIT 11.58% MIN_PROFIT -9.23% UW_PROFIT 8.75% MAX_DENOM 0.675 MIN_DENOM 0.883 MAX_PREMIUM $1.33 MIN_PREMIUM $1.02 CHANGE_AT_MIN -44.32% CHANGE_AT_MAX -27.16% Alternate Calculation with Reinsurance COMMISSION_RATE 10.00% RE_PREM - - - 234,610,951 RE_RECOV - - - 65,596,620 RE_PREM_PER_EXP #DIV/0! #DIV/0! #DIV/0! 0.72 RE_RECOV_PER_EXP #DIV/0! #DIV/0! #DIV/0! 0.20 COMP_LOSS_RE #DIV/0! #DIV/0! #DIV/0! 0.69 RMAX_PREMIUM $1.86 RCHANGE_AT_MAX 1.76%

RESIDENTIAL EARTHQUAKE FILING MEMORANDUM I. INTRODUCTION This filing is submitted to increase coverage and coverage options to policyholders and to adjust rate and premiums levels. Section II describes the proposed coverage changes. Section III addresses the proposed rate and premium changes. Section IV provides a brief overview of the supporting exhibits. The new editions of each of the CEA s current policy forms are included with the filing. The new editions incorporate new coverage enhancements and clarifications in coverage, definitions and policy language. II. PROPOSED COVERAGE CHANGES This filing expands the available deductible and coverage options for all products as follows: Deductible options - 5%, 10%, 15%, 20% and 25% (Coverage D continues to have no deductible.) Coverage C, Contents - new limits include $150,000 and $200,000 Coverage D, Loss of Use - new limits include $50,000, $75,000 and $100,000. The primary coverage changes that are specific to a certain product are summarized below. Homeowners and Manufactured Homes (Mobilehomes) Proposed Coverage Changes 1. Energy Efficient and Environmental Safety Replacement Upgrades A sublimit of $25,000 is granted to pay for the replacement or upgrade of damaged covered property with energy-efficient property. This is an increase in coverage over the current policy. 2. Increased Building Code Upgrade Limits Building code upgrade (BCU) coverage of $10,000 is included as an additional limit of insurance for homeowners and manufactured homes (mobilehomes), subject to the deductible. Homeowners can purchase an additional $10,000 of BCU for an additional premium. This filing extends the additional coverage option to manufactured homes (mobilehomes) and adds a new limit option of an additional $20,000, thereby raising the maximum available amount for BCU to $30,000 for both homeowners and manufactured homes (mobilehomes.) Page 1 of 43

Additionally, the policy is amended to reflect that the full amount of loss covered by BCU, up to the limit of insurance, will be applied to meet the deductible. This is an increase in coverage over the current policy. 3. Increased Chimney Sublimit In the current policy, losses paid for damage to any and all chimney(s) is limited to $5,000, as a sublimit to the dwelling coverage. The CEA proposes to increase the chimney sublimit to $10,000. This is an increase in coverage over the current policy. 4. Loss Assessment A number of homes are located in common interest developments wherein the homeowner is exposed to potential loss assessments for damage to common areas which are collectively owned. To date, the CEA has not extended coverage for this exposure under the homeowners product. The CEA proposes to grant a $10,000 sublimit for loss assessment to cover items similar to those that are covered by the condominium loss assessment product. This is an increase in coverage over the current policy. 5. Optional Coverage Masonry Veneer Exterior masonry veneer is excluded under the CEA policy. The CEA proposes to offer an option to buy masonry veneer coverage. Because the CEA does not currently collect any information regarding masonry veneer, in establishing the rate for this coverage, the CEA reviewed other California earthquake insurers rate filings. See Exhibit 16-HO for details. 6. Optional Coverage Breakable Items Breakable items such as glassware, ceramic and crystal are not covered under the CEA coverage grant for Coverage C, contents. An optional endorsement extending coverage to such items is included in this filing. 7. Personal Property Sublimits The CEA proposes to add a $3,000 sublimit on each of several classes of damageable personal property such as jewelry, collectible items and beverages. This is a restriction of coverage over the current policy and is consistent with the treatment of these items by other insurers. 8. Water Damage / Mold During the policy review process, the CEA identified a potential coverage gap between the CEA policy and the underlying residential policy in regards to precipitation entering the structure where the opening was the direct result of earthquake damage. The revised policy includes this damage with the existing water damage that is covered by the CEA, subject to applicable limits and deductibles. This is an increase in coverage over the current policy. Because water damage can be a covered loss under the CEA policy, damage caused by mold (fungi) is now specifically covered, subject to a $5,000 sublimit. The current policy is silent on the issue of damage due to mold. Thus, this could be viewed as a restriction in Page 2 of 43

coverage. However, losses due to mold are not contemplated in the current rate structure. An exclusion for mold-related losses is consistent with the treatment of these types of losses by other insurers. Renters / Common Interest Development (Condominium) Proposed Coverage Changes The current renters and common interest development (condominium) base-limits policies each provide personal property (Coverage C) coverage subject to a $750 deductible regardless of the amount of coverage purchased. With this filing, the CEA proposes to change the deductible application to a percentage of the selected limit, similar to what is done for the homeowners and manufactured homes (mobilehomes) Choice Coverage C product. Applying the deductible as a percentage of the limit is also consistent with the manner in which other insurers provide the coverage. This change represents a reduction in coverage resulting in lowered rates. Common Interest Development (Condominium) Proposed Coverage Changes Currently condominium owners can purchase Coverage A with a limit of $25,000. Additional limits of $50,000, $75,000 and $100,000 will be available to cover this exposure. A new Loss Assessment limit of $100,000 will also be available. As noted above, all current and new limits will be available with deductibles of 5%, 10%, 15%, 20% and 25%. III. SUMMARY OF RATE / PREMIUM CHANGES The rate and premium changes proposed herein are based on an analysis of the CEA s December 31, 2012 portfolio using the best available scientific information for assessing earthquake frequency, severity and loss. The resulting rate application is based on RQE (Risk Quantification & Engineering), Version 14. This catastrophe loss model, developed by EQECAT, incorporates the latest available scientific information consistent with the state-of-the-art knowledge of California seismic hazard, as required by the CEA enabling legislation. The basic seismic hazard in the model was directly developed from the June 2008 USGS-CGS time independent implementation of the Uniform California Earthquake Rupture Forecast (UCERF2) model. EQECAT then incorporated timedependent probabilities into the model from data provided by the Working Group on California Earthquake Probabilities (WGCEP 2007), which is also used in the UCERF2 model. Vulnerability functions were also updated to be consistent with the Next Generation Attenuation equations that are part of UCERF2. This is the same science underlying the current CEA rates which used EQECAT USQUAKE WORLDCAT enterprise model (WCe 3.15.) In 2013, EQECAT changed their modeling platform to take advantage of increased computing power resulting in the new RQE model. However, the underlying science remains unchanged as to the California earthquake model. Page 3 of 43

The USGS has updated the Uniform California Earthquake Rupture Forecast Time-Independent Model (UCERF3.) However, the time-dependent model, upon which the CEA has historically relied, is still under review. Rather than wait for the completion of the time-dependent model and its incorporation into the commercial loss models which may not occur until sometime in 2016, the CEA is proceeding with the overall indicated rate reduction. With this filing, the CEA is introducing a new hazard mitigation discount for homeowners of 10% or 20%, subject to verification that the subject home has been retrofitted in accordance with applicable standards. The current 5% hazard mitigation discount for homeowners will continue to be offered for new and renewal business that do not verify the retrofit. Because we do not know how many homeowners will verify, the comparison of current to proposed premiums in Exhibit 15 necessarily assumes that each homeowner that renews with a hazard mitigation discount will renew with the current 5% credit. To the extent that policyholders do verify, the overall rate reduction for homeowners policies will be greater. IV. OVERVIEW OF SUPPORTING EXHIBITS Although the CEA is not subject to the prior approval regulations, the CEA has, for ease of review, completed the exhibits requested in the prior approval rate filing application. The key exhibits for the development of the CEA rates and premiums are as follows: EXHIBIT 5 Premium Trend Factor Homeowners and Manufactured Homes (mobilehomes) premiums for Coverage A Dwelling depend on the Coverage A amount of the underlying dwelling policy. Exhibit 5 details the historical Coverage A amounts to develop an expected total amount of exposure for the period that the rates will be in effect, which is the combined effect of exposure growth (increases in the average Coverage A amount) and policy growth (anticipated increases in the number of policies sold.) For the remaining coverages (Coverage C, Coverage D, and building code upgrade coverage), the calculated premium trend factor is mainly a function of the policy growth, as the policy limits are fixed. There is no frequency trend associated with earthquakes; the severity trend is equal to the total expected increase in exposures. In other words, the calculated premium trend also functions as the loss trend which results in a 0% net trend assumption for the ratemaking process. EXHIBIT 12 Reinsurance Premium and Recoverables The CEA uses a net ratemaking approach wherein the net cost of risk financing (risk financing premiums less the expected recoveries) is included in the rate development. Exhibit 12 details the expected limits, premiums and recoverables. EXHIBIT 14 Insurer Ratemaking Calculations The component pieces of the net ratemaking calculation are presented in this exhibit. Exhibits 14-1 through 14-3 step through the development of the loss cost multipliers. Consistent with the Page 4 of 43

current approved rates, there is a separate loss cost multiplier for basic limits and increased limits. Increased limits are Coverage C limits in excess of $5,000, Coverage D limits in excess of $1,500, Building Code Upgrade limits in excess of $10,000 and deductibles lower than 15%. Exhibit 14-4 shows the calculation of the expected investment income for 2016 using the expected yield as calculated under the CDI methodology using the October 2014 yields posted on the CDI website. The CEA does not currently include an underwriting profit provision in its rates. It does, however, retain its net investment income to increase policyholder claims-paying capacity. EXHIBIT 15 Rate Distribution This exhibit displays the indicated and selected changes by product and coverage. EXHIBIT 16 Rate Classification Relativities Base rates, increased limits factors and deductible factors are developed for each product and coverage in this exhibit. As noted above, the CEA is introducing a new classification for verified hazard mitigation for homeowners policies. The remaining classification definitions are unchanged for homeowners and manufactured homes (mobilehomes) coverages. The CEA has also examined the rates for renters / condo coverages based on the latest modeled losses. The classification definitions are not changing for these coverages. The new limits and deductible options are based on modeled loss from EQECAT. Because these are new products, there is no underlying distribution. Therefore, the CEA makes the assumption that the new products will have the same distribution as the CEA portfolio at 12/31/2012. As noted previously, the one exception to this approach is the new optional Masonry Veneer coverage which is developed based on a review of other California earthquake insurers rate filings. Proposed policy forms The current policies and the proposed policies are included in the submission. Immediately preceding the policies is a summary overview of the changes to the current products policy. Proposed rate manual The submission includes a new CEA Rate manual. An overview of the changes to the manual is included immediately preceding the proposed rate manual. Page 5 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 1 - FILING HISTORY Filing Number Date Filed Product 11-2233 3/11/2011 Basic / HO Choice Products EXHIBIT 2 - RATE LEVEL HISTORY Filing Number Effective Date Product Rate Change 11-2233 7/1/2012 New HO Choice Product New coverage 11-2233 1/1/2012 Basic Product -12.5% EXHIBIT 3 - POLICY TERM DISTRIBUTION The policy term for all policies is one year. EXHIBIT 4 - PREMIUM ADJUSTMENT FACTOR The rates are developed using a pure premium methodology. Consequently, historical premium is not part of the rate development calculations. Premium adjustment factors are not applicable. Page 6 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 5 - PREMIUM TREND FACTOR HOMEOWNERS Homeowner exposure increases due to increases in the underlying Coverage A amount and policy growth. Policy counts and Coverage A amounts are shown below. Policy Average Quarter Count Coverage A Coverage A 1 3Q08 633,505 226,666,316,879 357,797 2 4Q08 629,071 228,347,513,601 362,992 3 1Q09 628,781 231,946,976,951 368,884 4 2Q09 637,015 238,882,210,140 375,002 5 3Q09 638,577 242,944,035,003 380,446 6 4Q09 640,913 246,589,327,710 384,747 7 1Q10 646,126 249,934,199,183 386,820 8 2Q10 651,925 253,034,916,276 388,135 9 3Q10 649,465 253,042,198,713 389,616 10 4Q10 647,542 253,108,775,707 390,876 11 1Q11 652,045 255,671,727,275 392,107 12 2Q11 655,264 258,228,649,309 394,083 13 3Q11 653,599 259,213,136,862 396,594 14 4Q11 652,404 260,958,414,679 399,995 15 1Q12 652,657 263,443,922,368 403,648 16 2Q12 657,175 268,177,755,287 408,077 17 3Q12 661,357 272,478,567,569 411,999 18 4Q12 664,875 275,642,979,097 414,579 19 1Q13 664,080 276,767,390,598 416,768 20 2Q13 664,035 278,523,840,691 419,442 21 3Q13 662,698 280,143,367,235 422,732 22 4Q13 663,316 282,603,811,527 426,047 23 1Q14 665,827 285,701,020,166 429,092 24 2Q14 673,104 290,921,231,025 432,208 590,078 246,344,855,009 417,478 Policy Growth Coverage A Growth 8-point 0.006 8-point 0.028 12-point 0.009 12-point 0.031 16-point 0.009 16-point 0.030 20-point 0.009 20-point 0.027 24-point 0.010 24-point 0.030 (A) Selected 0.010 (B) Selected 0.030 (C) Effective Date 1/1/2016 (D) Modeled Portfolio Run Date 12/31/2012 (E) Trend Period 4.00 (F) Exposure Growth 1.126 (G) Policy Growth 1.035 Page 7 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 5 - PREMIUM TREND FACTOR MANUFACTURED HOMES (MOBILEHOMES) Manufactured home (mobilehome) exposure increases due to increases in the underlying Coverage A amount and policy growth. Policy counts and Coverage A amounts are shown below. Policy Average Quarter Count Coverage A Coverage A 1 3Q08 19,074 1,297,155,022 68,006 2 4Q08 19,434 1,351,739,362 69,555 3 1Q09 18,168 1,279,023,325 70,400 4 2Q09 19,985 1,438,291,970 71,969 5 3Q09 20,677 1,518,324,418 73,431 6 4Q09 21,109 1,571,571,896 74,450 7 1Q10 22,694 1,710,181,618 75,358 8 2Q10 24,513 1,867,779,648 76,195 9 3Q10 24,449 1,882,762,461 77,008 10 4Q10 24,412 1,895,001,423 77,626 11 1Q11 24,360 1,907,414,932 78,301 12 2Q11 24,442 1,931,166,270 79,010 13 3Q11 24,897 1,982,988,492 79,648 14 4Q11 25,518 2,041,050,616 79,985 15 1Q12 26,074 2,097,137,494 80,430 1.005569522 16 2Q12 26,518 2,149,481,204 81,057 17 3Q12 26,442 2,166,779,103 81,945 18 4Q12 26,274 2,169,476,898 82,571 19 1Q13 26,116 2,170,818,327 83,122 20 2Q13 26,027 2,180,833,658 83,791 21 3Q13 26,332 2,220,429,244 84,324 1.048416503 22 4Q13 26,683 2,262,342,713 84,786 23 1Q14 26,967 2,299,356,241 85,266 24 2Q14 27,415 2,345,662,637 85,561 4Q11 24,423 1,895,871,122 77,626 0.933884102 Policy Growth Coverage A Growth 8-point 0.022 8-point 0.025 12-point 0.023 12-point 0.028 16-point 0.031 16-point 0.029 20-point 0.047 20-point 0.032 24-point 0.066 24-point 0.038 (A) Selected 0.030 (B) Selected 0.030 (C) Effective Date 1/1/2016 (D) Modeled Portfolio Run Date 12/31/2012 (E) Trend Period 4.00 (F) Exposure Growth 1.126 (G) Policy Growth 1.109 Page 8 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 5 - PREMIUM TREND FACTOR RENTERS / CONDOMINIUM UNITS Renter / condo exposure increases due to policy growth and increases in Coverage amounts. Policy counts and average coverage amounts are shown below. Policy Average Quarter Count Coverage Amount 1 3Q08 130,960 74,530 2 4Q08 130,787 75,071 3 1Q09 133,682 75,668 4 2Q09 135,632 76,107 5 3Q09 137,207 76,625 6 4Q09 137,638 77,103 7 1Q10 138,203 77,205 8 2Q10 139,297 77,341 9 3Q10 139,311 77,450 10 4Q10 138,947 77,474 11 1Q11 141,043 77,032 12 2Q11 142,422 76,908 13 3Q11 142,477 76,895 14 4Q11 143,022 76,751 15 1Q12 144,266 76,643 16 2Q12 145,937 76,626 17 3Q12 148,200 76,631 18 4Q12 150,354 76,634 19 1Q13 151,132 76,639 20 2Q13 151,397 76,886 21 3Q13 151,217 77,113 22 4Q13 151,837 77,307 23 1Q14 153,071 77,610 24 2Q14 155,701 77,828 4Q11 Policy Growth Coverage Growth 8-point 0.022 0.010 12-point 0.031 0.005 16-point 0.031 0.001 20-point 0.028 0.000 24-point 0.029 0.003 (A) Selected 0.030 (B) 0.000 (C) Effective Date 1/1/2016 (D) Modeled Portfolio Run Date 12/31/2012 (E) Trend Period 4.00 (F) Exposure Growth 1.000 (G) Policy Growth 1.109 Page 9 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 6 - MISCELLANEOUS FEES AND OTHER CHARGES 2011 2012 2013 1. Installment Fee Income 440,633 444,984 412,957 (A.S., page 4, line 13) 2. Earned Premium 605,793,843 588,502,379 568,729,298 3. Miscellaneous Fees % of Premium 0.07% 0.08% 0.07% (1) / (2) Page 10 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 7 - LOSS AND DEFENSE AND COST CONTAINMENT (DCCE) DEVELOPMENT FACTORS The modeled losses used to develop the rate indication are ultimate losses. Therefore, the loss development factors are 1.00 and there is no loss development shown in Exhibit 14. Loss adjustment expenses are paid by the participating insurance companies per contract at 9% of loss. Therefore, the LAE development factors are also 1.00. EXHIBIT 8 - LOSS AND DCCE TREND There is no expected loss or DCCE trend associated with this program other than the general trend in severity due to increasing coverage amounts and policy growth. Thus loss and DCCE trend factors and premium trend factors are the same. See Exhibit 5. EXHIBIT 9 - CATASTROPHE ADJUSTMENT This is a catastrophe line. Average annual losses have been modeled using the EQECAT RQE Version 14. See Filing Memorandum. EXHIBIT 10 - CREDIBILITY ADJUSTMENT Full credibility is given to the modeled average annual losses. EXHIBIT 11 - ANCILLARY INCOME There is no ancillary income as defined in the CDI rate filing instructions. Page 11 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 12 - REINSURANCE PREMIUM AND RECOVERABLES RISK FINANCING COSTS (Thousands) Total Basic Limits Increased Limits (1) Total Risk Transfer 4,449,000 3,839,487 609,513 (2) Premium 229,611 198,154 31,457 (3) Expected Recoveries 65,597 56,610 8,987 (4) Brokerage Expenses 5,000 4,315 685 (5) Net Cost 169,014 145,859 23,155 Notes: Estimated additional risk transfer limit needed to maintain target claims paying capacity after (1) consideration of all other forms of claims paying capacity (2) Expected cost of risk financing (3) Expected recoveries based on modeled losses, risk financing attachment level and limit (4) Broker fees paid in addition to reinsurance premium based on contractual agreements (5) = (3) - (4) + (5) Page 12 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 13 - REQUEST FOR VARIANCE N/A Page 13 of 43

The method used in the development of the rate level indication relies primarily on modeled earthquake losses. Exhibit 14-3 shows the development of the total needed premium and the resulting loss cost multiplier that is applied to the loss costs for each policy type. (1) Adjusted Average Annual Losses Modeled losses for the CEA portfolio as of December 31, 2012 adjusted for policy features and growth. (2) Loss Adjustment Expenses - Member Paid Per the Participating Insurer Agreement, the CEA pays the participating insurers 9% of the loss for adjusting claims. Calculated as Line (1) x 9%. (3) Loss Adjustment Expenses - CEA Paid Estimated adjusting and other expense that the CEA pays. Calculated as Line (1) x.5%. (4) Indicated Provision for Loss and Loss Adjustment Expense Sum of lines (1), (2), and (3). (5) Expenses - Participating Insurers Per the Insurer Participation Agreement, the CEA pays the participating insurers 6% of the net written CEA premium attributable to the Participating Insurer, not including any loading for reinsurance, capital costs or producer commission. (6) Premium, Net of Commission, Tax and Risk Financing Costs Interim calculation in order to determine the proper load for the participating insurers expenses, line (5). Calculated as line (4) / (1.0-6%). (7) Risk Financing Costs Estimated cost of risk financing. See Exhibit 12. (8) Recoveries Estimated losses recovered from risk financing sources based on modeled losses. (9) Reinsurance Brokerage Fees The CEA pays its reinsurance intermediary fees per contract, not under a commission agreement. (10) Annual Risk Capital Surcharge Additional capital paid by new participating insurers subject to CIC 10089.16 (d). Note: there are no monies due or expected. (11) Estimated Net Cost of Risk Financing Calculated as line (7) - line (8) + line (9) - line (10) (12) Premium Net of Commissions and Tax Calculated as line (6) + line (11) RESIDENTIAL EARTHQUAKE EXHIBIT 14-1 - INSURER'S RATEMAKING CALCULATIONS Page 14 of 43

(13) Commission By regulation, the CEA pays 10% commission. Calculated as line (17) x 10%. (14) CEA Operating Expenses By statute, the CEA operating expenses are capped at 6% of premium. Calculated as line (17) x 6%. (15) State Premium Tax Calculated as line (17) x 2.35%. (16) Underwriting Profit Provision See Exhibit 14-4. (17) Total Premium Calculated as the sum of lines (12) through (16). (18) Loss Cost Multiplier Calculated as line (17) / line (1). (19) Selected Loss Cost Multiplier Selection based on line (18). EXHIBIT 14-2 - INSURER'S RATEMAKING CALCULATIONS (20) Filed Loss Cost Multiplier Loss cost multiplier underlying current filed rates for basic and increased limits coverage. (21) Change due to change in loss cost multiplier Calculated as line (19) / line (20) - 1.0. RESIDENTIAL EARTHQUAKE Page 15 of 43

EXHIBIT 14-3 - INSURER'S RATEMAKING CALCULATIONS DEVELOPMENT OF LOSS COST MULTIPLIER (Thousands) Basic Increased Limits Limits (1) Adjusted Average Annual Loss 249,717 20,599 (2) Loss Adjustment Expense - Member paid 9% 22,474 1,854 (1) X 9% (3) Loss Adjustment Expense - CEA paid 0.5% 1,249 103 (1) X.5% (4) Indicated Provision for Loss and LAE 273,440 22,556 (1) + (2) + (3) (5) Expenses - Participating Insurers 6% 17,454 1,440 (6) x 6% (6) Premium Net of Commission, Tax and Risk Financing Costs 290,893 23,996 (4) / (1.0-6%) (7) Risk Financing Costs 198,154 31,457 (8) Expected Recoveries 56,610 8,987 (9) Reinsurance Brokerage Fees 4,315 685 (10) Annual Risk Capital Surcharge - - (11) Estimated Net Cost of Risk Financing 145,859 23,155 (7) - (8) + (9) - (10) (12) Premium Net of Commission and Tax 436,753 47,151 (6) + (11) (13) Commission 10% 53,491 5,775 (17) x 10% (14) CEA Operating Expense 6% 32,094 3,465 (17) x 6% (15) State Premium Tax 2.35% 12,570 1,357 (17) x 2.35% (16) Underwriting Profit Provision 0.0% - - (17) Total Premium 534,908 57,747 (12) + (13) + (14) + (15) + (16) (18) Loss Cost Multiplier 2.14 2.80 (17) / (1) (19) Selected Loss Cost Multiplier 2.14 2.80 (20) Filed Loss Cost Multiplier 2.22 2.71 (21) Change due to change in Loss Cost Multiplier -3.5% 3.3% (19) / (20) - 1.0 RESIDENTIAL EARTHQUAKE Page 16 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 14-4 - INSURER'S RATEMAKING CALCULATIONS DEVELOPMENT OF UNDERWRITING PROFIT PROVISION (Thousands) (1) Available Capital 4,737,999 (2) Implied Rate of Return 1.37% (3) Target after-tax return 65,106 (4) Unearned Premium Reserve 244,619 (5) Loss and LAE Reserves 262,001 (6) Investment Yield 1.31% (7) Return on Invested Assets 68,533 (8) Mitigation Fund (lesser of 5% of (7) or $5M) 3,427 (9) Expected Investment Income net of mitigation fund 65,106 (10) Selected pre-tax underwriting profit provision 0.0% Notes: (1) Projected CEA Capital at 7/1/2016 (assuming expected earthquake loss to CEA capital layer.) (1) / (9) The CEA retains its investment income in order to increase policyholder (2) claims paying capacity. This is equivalent to targeting a rate of return equal to the investment return and offsetting the rates for the expected investment income. (3) (1) * (2) (4) 50% of projected net premium (Exhibit 14-3, line 17 less line 11 plus line 8) (5) Expected Loss and LAE to CEA Capital layer (6) CDI Exhibit Page 14c (7) (6) * [(1) + (4) + (5)] (8) Per CIC 10089.37 (9) (7) - (8) Page 17 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 15 - RATE DISTRIBUTION Projected Projected CEA PRODUCT Indicated Selected Indicated Current Selected Change Change Premium Premium Premium (1) (2) (3) (4) (5) Dwellings Coverage A -6.8% -6.8% 467,426,696 501,487,892 467,426,696 Coverage C - Standard -31.6% -31.5% 49,865,419 72,940,565 49,935,119 Coverage C - Choice 4.4% 2.8% 905,996 868,205 892,711 Coverage D 19.2% 20.9% 21,360,963 17,927,267 21,665,569 Coverage F -7.3% -9.6% 1,365,967 1,473,847 1,332,553 SUBTOTAL -9.0% -9.0% 540,925,042 594,697,775 541,252,648 Manufactured Homes (mobilehomes) Coverage A 1.7% 1.4% 2,878,274 2,831,176 2,872,119 Coverage C - Standard -30.4% -30.0% 542,126 779,245 545,261 Coverage C - Choice 21.9% 21.6% 4,959 4,067 4,947 Coverage D 53.0% 53.0% 228,424 149,299 228,424 SUBTOTAL -2.9% -0.7% 3,653,782 3,763,787 3,738,834 Condominiums Coverage A 3.8% 4.0% 8,420,572 8,109,270 8,435,326 Coverage E 32.3% 32.4% 29,346,474 22,180,220 29,369,595 Renters/Condos Coverage C -52.0% -51.7% 7,019,882 14,627,127 7,063,740 Coverage D 20.6% 20.9% 3,718,430 3,083,831 3,728,246 SUBTOTAL 1.1% 1.2% 48,505,358 48,000,448 48,596,907 TOTAL -8.3% -8.2% 593,084,182 646,462,010 593,588,389 Page 18 of 43

RESIDENTIAL EARTHQUAKE EXHIBIT 16 - RATE CLASSIFICATION RELATIVITIES Indicated and proposed rates and policy premiums are detailed in the subsequent exhibits. Page 19 of 43

EXHIBIT 16-HO RATE DEVELOPMENT HOMEOWNER DWELLINGS COVERAGE A - 15% DEDUCTIBLE CEA Current Indicated Selected Territory Rate per $1,000 Rate per $1,000 Rate per $1,000 Change (1) (2) (3) (4) (5) 2 3.75 3.98 3.98 6.1% 4 3.03 3.14 3.14 3.6% 5 3.72 3.61 3.61-3.0% 6 2.10 2.07 2.07-1.4% 7 1.81 1.60 1.60-11.6% 8 2.83 2.74 2.74-3.2% 11 2.41 2.30 2.30-4.6% 12 2.03 1.89 1.89-6.9% 13 1.39 1.30 1.30-6.5% 15 1.47 1.39 1.39-5.4% 18 0.51 0.47 0.47-7.8% 19 1.31 1.19 1.19-9.2% 20 1.90 1.64 1.64-13.7% 22 3.09 2.67 2.67-13.6% 23 1.93 1.69 1.69-12.4% 24 1.74 1.49 1.49-14.4% 25 1.86 1.69 1.69-9.1% 26 2.13 1.91 1.91-10.3% 27 0.42 0.39 0.39-7.1% Page 20 of 43

EXHIBIT 16-HO RATE DEVELOPMENT HOMEOWNER DWELLINGS STANDARD COVERAGE C - $5,000, 15% DEDUCTIBLE CEA Current Indicated Selected Territory Rate per policy Rate per policy Rate per policy Change (1) (2) (3) (4) (5) 2 95.89 100.85 101 5.3% 4 71.01 79.56 80 12.7% 5 89.91 91.47 91 1.2% 6 55.96 52.45 52-7.1% 7 52.41 40.54 41-21.8% 8 73.05 69.43 69-5.5% 11 62.78 58.28 58-7.6% 12 61.17 47.89 48-21.5% 13 56.45 32.94 33-41.5% 15 56.35 35.22 35-37.9% 18 13.95 11.91 12-14.0% 19 40.92 30.15 30-26.7% 20 74.07 41.56 42-43.3% 22 114.76 67.66 68-40.7% 23 87.76 42.82 43-51.0% 24 77.65 37.76 38-51.1% 25 43.39 42.82 43-0.9% 26 67.15 48.40 48-28.5% 27 13.28 9.88 10-24.7% Page 21 of 43