HCC INSURANCE HOLDINGS, INC. HOUSTON CASUALTY GROUP

HCC INSURANCE HOLDINGS, INC. HOUSTON CASUALTY GROUP American Contractors Indem Co A+ Avemco Insurance Company A+ Houston Casualty Company A+ U.S. Specialty Insurance Co A+ United States Surety Company A+ HCC Specialty Ins Co A+ HCC LIFE INSURANCE COMPANY A+ Back to Top 2014 A.M. Best Company, Oldwick, NJ 08858 Printed Cctober 31, 2014 www.ambest.com Page 1 of 14

Ultimate Parent: HCC Insurance Holdings, Inc HCC INSURANCE HOLDINGS, INC. 160 Greentree Drive, Suite 101, Dover, DE 19904 Web: www.hcc.com Tel: 713-690-7300 Fax: 713-462-2401 AMB#: 058391 Ultimate Parent#: 058391 FEIN#: 74-0336636 Publicly Traded Corporation: HCC Insurance Holdings, Inc NYSE: HCC CORPORATE OVERVIEW HCC Insurance Holdings, Inc. (HCC), a Delaware corporation, operates as a publicly traded, international holding company [NYSE: HCC]. HCC was formed in 1991, while its predecessor corporation was formed in 1974. The company specializes in providing accident and health, aviation, property, energy, professional liability, surety, and other specialty lines coverage. These lines of business are offered through Houston Casualty Company (HC); U.S. Specialty Insurance Company (USSIC); Avemco Insurance Company (AIC); HCC Specialty Insurance Company (HCCSpl); HCC Surety Group, which is represented by American Contractors Indemnity Company (ACIC) and United States Surety Company (USSC); HCC International Insurance Company PLC (HCCI); HCC Europe, Seguros y Reaseguros S.A. (HCCE); HCC Reinsurance Company (HCC Re); and HCC Life Insurance Company (HCC Life). The insurance operations are based in Texas with offices across the United States. Additionally, HC maintains a branch office in London, England. Business is marketed worldwide through independent agents and brokers, as well as through affiliated agencies and brokers, which include Professional Indemnity Agency, Inc. (PIA) dba HCC Public Risk, HCC Specialty Underwriters, Inc. (HCCSU), (combined into its underwriting division of HCC Specialty), HCC Global Financial Products, LLC (HCCG), HCC Indemnity Guaranty Agency, Inc. (HCCIG), HCC Medical Insurance Services, LLC (HCCMIS), HCC Underwriting Agency, Ltd. (HCCUA), G.B. Kenrick & Associates, Inc. dba Kenrick Corporation (Kenrick) and HCC Casualty Insurance Services, Inc. The HCC Specialty division acts as an underwriting agency writing kidnap and ransom, professional liability, employment practices liability, and difference in conditions coverage. It also acts as an underwriting agency of specialty insurance for sports disability, film production and other group life, accident and health and specialty lines of business. HCCG is an underwriting agency that writes predominantly directors and officers liability insurance. HCCIG is an underwriting agency specializing in writing insurance and reinsurance related to various financial products, representing its affiliates HC, HCC Re and USSIC. HCCMIS is an underwriting agency specializing in domestic and international short-term medical and accident and health insurance coverage to customers in approximately 180 countries on behalf of HCC Life and HCCUA. HCCUA is a managing agent for HCC s 100% participation in Lloyd s of London Syndicate 4141, which specializes in United Kingdom third-party liability, employers liability, and short-term medical risks. Kenrick is focused on providing insurance solutions for public entity risks and makes up HCC Public Risk, which was formed in June of 2009. The company s agency formerly named InsPro Corporation was renamed HCC Casualty Insurance Services, Inc. where HCC s casualty business is now underwritten. Despite the steady acquisition activity, financial leverage maintained at HCC has been managed to a conservative level. HCC is one of the larger property and casualty writers in the United States based on net premium revenue, total assets and shareholders equity. HCC s financial leverage is modest based on its debt to capital (excluding other comprehensive income/loss). Additionally, HCC s debt service capabilities, as measured by operating earnings before interest and taxes (EBIT) to annual interest expense, are exceptionally strong. In recent years, management has focused on expanding underwriting activities through the acquisition of underwriting teams. The recent acquisitions have focused on technical and construction property, and primary and excess casualty business. CORPORATE STRUCTURE AMB# COMPANY NAME DOMICILE % OWN 058391 HCC Insurance Holdings, Inc DE 058331 Avemco Corporation DE 100.00 000191 Avemco Insurance Company MD 100.00 012531 HCC Specialty Ins Co OK 100.00 051534 HCC Ins Holdings (Intl) Ltd United Kingdom 100.00 051535 HCC Specialty Hldgs (No.1) Ltd United Kingdom 100.00 047525 Pepys Holdings Limited United Kingdom 100.00 051638 HCCI Group Limited United Kingdom 100.00 087312 HCC International Ins. Co. Plc United Kingdom 100.00 083642 Houston Cas Co Europe Seg Reas Spain 100.00 072473 HCC Reinsurance Company Ltd Bermuda 100.00 051532 Illium, Inc. DE 100.00 003286 Houston Casualty Company TX 100.00 009081 HCC Life Insurance Company IN 100.00 000747 U.S. Specialty Insurance Co TX 100.00 051196 Surety Associates Holdings Co NM 100.00 011019 American Contractors Indem Co CA 100.00 051238 USSC Holdings Inc MD 100.00 012009 United States Surety Company MD 100.00 Associated With: HCC Insurance Holdings, Inc HOUSTON CASUALTY GROUP 13403 Northwest Freeway, Houston, TX 77040-2401 Web: www.hcc.com Tel: 713-462-1000 Fax: 713-462-4210 AMB#: 018421 Associated Ultimate Parent#: 058391 RATING RATIONALE Rating nale: The ratings of Houston Casualty Company and its commercial property/casualty affiliates reflect their sustained profitability, strong level of capitalization, and solid liquidity while also recognizing the financial flexibility and support afforded by their publicly traded parent, HCC Insurance Holdings, Inc. (HCC). The ratings are also indicative of A.M. Best s view of the group s near-term earnings prospects considering HCC s long-standing presence in the specialty property/casualty market, its low to moderate risk profile, and its conservative investment strategy. Partially offsetting these positive rating factors are the recent adverse loss reserve development in the group s directors and officers and professional liability lines, the potential emergence of future D&O claims and the challenges related to low new money yields and duration risk. The outlooks reflect A.M. Best s expectation for continued underwriting and operating profitability over the near to medium term. The ratings are supported by the group s proven underwriting expertise, along with a conservative investment and loss reserve strategy that has led to long-term operating profitability. These attributes are also the primary drivers for the group s considerable balance sheet strength. Over the past several years, the group has produced consistently outstanding gross and net underwriting results leading to superior operating margins despite adverse results in the group s professional liability line and the recent competitive challenges in the specialty admitted and surplus lines markets. HCC s success is largely driven by its underwriting acumen, its well-established reputation in those select markets where HCC participates, its effective utilization of affiliated underwriting agencies / insurance intermediaries, and the optimal utilization of reinsurance. Credit risk is minimized by the group s use of high-quality reinsurers and its proactive approach in monitoring reinsurance recoverable amounts, including commutations when deemed prudent. 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 2 of 14

The ratings also recognize HCC s improved overall capitalization, the result of strong earnings generation and, to a lesser extent, low investment leverage. Underwriting leverage has declined during the most recent calendar years as a result of a more than commensurate level of surplus appreciation. The group also remains exposed to large catastrophe losses due to its property and energy lines of business, and more recently its property treaty business, but on a net basis, catastrophe exposure is significantly moderated by catastrophe reinsurance. Potential upward movement in the ratings is unlikely in the near term. Downward movement in the ratings could result from a material decline in the organization s capitalization, negative trends in claim frequency or severity that could materially impair underwriting results, as well as significant unforeseen adverse loss reserve development due to an underestimation of liabilities. Outlook: Stable RATING UNIT MEMBERS Houston Casualty Group (AMB# 018421): AMB# COMPANY BEST S FSR 011019 American Contractors Indem Co A+ 000191 Avemco Insurance Company A+ 003286 Houston Casualty Company A+ 000747 U.S. Specialty Insurance Co A+ 012009 United States Surety Company A+ 012531 HCC Specialty Ins Co A+ KEY FINANCIAL INDICATORS ($000) Statutory Data Direct Premiums Written Premiums Written Pre-tax Operating Income Income Total Admitted Assets Policyholders Surplus 2009 1,131,966 832,590 339,604 258,433 4,122,525 1,631,518 2010 1,021,117 772,570 317,864 261,749 4,198,973 1,712,377 2011 1,010,139 831,895 245,087 210,084 4,394,460 1,757,217 2012 1,039,484 803,662 364,021 314,955 4,539,471 1,858,512 2013 1,057,507 772,058 415,274 352,444 4,424,450 1,979,051 Profitability Leverage Liquidity Inv. Pre-tax NA NPW Overall Oper. Comb. Yield ROR Inv to Liq. Cash (%) (%) Lev PHS Lev. (%) flow (%) 2009 81.7 5.4 41.2 0.0 0.5 2.0 166.9 152.3 2010 84.7 5.2 40.0 0.2 0.5 1.9 169.6 135.9 2011 95.1 5.6 30.6 0.0 0.5 2.0 167.1 138.4 2012 84.5 5.7 43.9 15.8 0.4 1.9 169.8 146.9 2013 76.5 5.5 52.5 25.3 0.4 1.6 181.7 142.0 5-Yr 84.5 5.5 41.6 (*) Within several financial tables of this report, this company is compared against the Commercial Casualty Composite. (*) Data reflected within all tables of this report has been compiled through the A.M. Best Consolidation of statutory filings. BUSINESS PROFILE The insurance companies comprising the HCC Insurance Group, led by Houston Casualty Company, provide a wide range of products and coverages including group life, accident and health, aviation, property, marine, energy, professional liability including directors and officers liability, surety, primary and excess casualty, and other specialty lines. The group s business is produced directly and through independent agents, brokers and third-party administrators on a worldwide basis. Affiliated underwriting agencies act on behalf of insurance companies within the group, as well as unaffiliated insurance companies, to provide underwriting management and claim administration services. Accident and health coverage is provided through the group s affiliate HCC Life Insurance Company, marketed directly through unaffiliated agents, brokers and third-party administrators as well as directly through its affiliated underwriting agency HCC Medical Insurance Services, LLC. Professional liability, including directors and officers liability is written through acquired underwriting agencies. Surety operations in the U.S. include contract surety bonds, commercial surety bonds and bail bonds written primarily through American Contractors Indemnity Company, United States Surety Company, and U.S. Specialty Insurance Company. These are managed together as the U.S. Surety division. The company also writes surety business in the UK, Ireland and Spain through HCC Europe, Seguros y Reaseguros S.A., and HCC International Insurance Company PLC. Aviation coverage is marketed to offshore operations, corporations, cargo operations, commuter airlines, governments and private aircraft owners on both a domestic and international basis. Facilities are currently dedicated to the handling of aircraft hull and liability insurance. In addition to conventional corporate and personal aircraft, the group covers specialty types, such as sport and antique airplanes, amphibians and seaplanes. Operations of the lead company include a branch office in London, England. This location writes property coverage for large multinational corporations, marine hull and liability coverage for ocean-going vessels, and onshore and offshore energy coverage for large oil companies and drilling contractors. This office also coordinates assumed reinsurance consisting of accident and health reinsurance coverage, facultative aviation, and property and energy reinsurance issued by local companies in order to satisfy licensing requirements. HCC supplements the activities of its risk-bearing companies with underwriting agencies who write on behalf of its insurance carriers and, in certain situations, other non-affiliated companies. These organizations generate fee and commission income, including profit commissions, for the group while bearing no insurance risk. The principal agencies operating within HCC are HCC Global Financial Products, LLC, HCC Indemnity Guaranty Agency, Inc., HCC Specialty Underwriters, Inc., Professional Indemnity Agency, Inc. dba HCC Public Risk, HCC Underwriting Agency Ltd, and HCC Medical Insurance Services, LLC. The underwriting agencies specialize in the various lines of business written by the group s insurance carriers. Over the years, the organization has made numerous strategic transactions that have furthered its overall business strategy. These acquisitions have allowed the organization to expand its product and geographic diversification. Many of these opportunities also advanced the distribution channels. TOTAL PREMIUM COMPOSITION & GROWTH ANALYSIS DPW Reinsurance Prem Assumed Reinsurance Prem Ceded ($000) (% Chg) ($000) (% Chg) ($000) (% Chg) 2009 1,131,966 8.9 100,425-22.2 399,801 23.0 2010 1,021,117-9.8 131,594 31.0 380,142-4.9 2011 1,010,139-1.1 136,945 4.1 315,189-17.1 2012 1,039,484 2.9 135,402-1.1 371,225 17.8 2013 1,057,507 1.7 117,688-13.1 403,137 8.6 5-Yr CAGR 0.3-1.8 4.4 NPW NPE ($000) (% Chg) ($000) (% Chg) 2009 832,590-1.3 824,919 2.6 2010 772,570-7.2 795,084-3.6 2011 831,895 7.7 801,136 0.8 2012 803,662-3.4 828,651 3.4 2013 772,058-3.9 791,234-4.5 5-Yr CAGR -1.8-0.3 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 3 of 14

2013 BY-LINE BUSINESS ($000) Reinsurance Reinsurance DPW Prem Assumed Prem Ceded Product Line ($000) (%) ($000) (%) ($000) (%) Oth Liab CM 482,887 45.7 2,269 1.9 127,522 31.6 Aircraft 89,869 8.5 49,114 41.7 27,215 6.8 Surety 70,605 6.7 47 0.0 13,456 3.3 Oth Liab Occur 87,854 8.3 39,555 9.8 Com l MultiPeril 41,864 4.0 1,059 0.9 11,655 2.9 Ocean Marine 92,532 8.8 4,944 4.2 66,467 16.5 Reins-Property 38,511 32.7 8,603 2.1 Credit 19,840 1.9 3,521 0.9 All Other 172,056 16.3 21,745 18.5 105,143 26.1 Total 1,057,507 100.0 117,688 100.0 403,137 100.0 Business NPW Retention Product Line ($000) (%) (%) Oth Liab CM 357,633 46.3 73.7 Aircraft 111,768 14.5 80.4 Surety 57,196 7.4 81.0 Oth Liab Occur 48,299 6.3 55.0 Com l MultiPeril 31,268 4.0 72.8 Ocean Marine 31,009 4.0 31.8 Reins-Property 29,908 3.9 77.7 Credit 16,319 2.1 82.3 All Other 88,658 11.5 45.7 Total 772,058 100.0 65.7 BY-LINE RESERVES ($000) Product Line Oth Liab CM 1,218,558 1,259,788 1,251,862 1,158,557 1,081,012 Aircraft 68,153 69,012 67,531 66,738 80,201 Surety 11,771 9,054 8,968 6,993 5,897 Oth Liab Occur 49,234 49,969 50,590 71,455 38,022 Com l MultiPeril 79,895 77,828 52,242 36,815 32,266 Ocean Marine 39,852 35,115 50,440 51,614 75,757 Reins-Property 8,099 8,632 10,850 Credit 15,624 16,171 15,738 7,080 6,714 All Other 237,414 238,058 286,405 328,960 388,891 Total 1,728,599 1,763,627 1,794,627 1,728,212 1,708,759 GEOGRAPHIC BREAKDOWN BY DIRECT PREMIUM WRITINGS ($000) New York 161,695 159,856 151,336 156,873 175,868 California 149,682 144,521 130,915 127,690 146,943 Texas 122,622 122,293 122,751 128,598 127,080 Louisiana 58,109 47,562 57,255 55,002 55,658 Michigan 40,844 40,423 28,395 24,434 34,700 Illinois 40,094 37,679 40,980 43,190 46,024 Florida 33,336 34,190 36,159 31,650 37,255 Ohio 27,472 29,675 27,332 27,044 28,978 Pennsylvania 24,765 31,547 39,715 38,054 39,619 North Carolina 24,361 23,596 22,094 22,088 29,313 All Other 374,527 368,142 353,209 366,496 410,528 Total 1,057,507 1,039,484 1,010,139 1,021,117 1,131,966 RISK MANAGEMENT HCC s Enterprise Risk Management (ERM) process is very well-developed, assessing the organization s risks systematically and determining the most appropriate responses to them. The company s Internal Risk Committee is responsible for the ongoing enhancement and integration of the ERM process throughout the organization. ERM policies and procedures are central to the organization s operations and strategic planning. Catastrophe Exposure and Management: Maintaining sufficient reinsurance to support the catastrophe portion of its portfolio, as well as limiting its exposure in any one class of business, is an integral part of the group s business strategy. Various domestic and foreign reinsurers are utilized in order to limit the group s credit risk to any particular reinsurer. In addition, management has positioned the group to be able to increase the utilization of reinsurance as market conditions warrant, while maintaining a solid balance sheet to support increased retention of premium when reinsurance capacity lessens. A specific reinsurance program is structured for each major line of business. Over the last decade, the group has significantly reduced its ceded business, going from ceding almost two-thirds of its gross unaffiliated book of business to less than one-third. This strategic change has been undertaken to increase retentions, capitalize on improved market conditions, and manage reinsurance costs. The utilization of reinsurance to mitigate the group s exposure to any one event leaves it exposed to the impact of changes in the reinsurance sector, including but not limited to pricing behavior, credit risk and dispute risk. As such, management remains highly attuned to activity in the reinsurance market sector seeking to ensure that the group remains aligned with financially strong reinsurance partners. The focus on maintaining solid partnerships has led to the commutation of treaties when circumstances determined it to be the best strategic option. Leadership expects to continue to pro-actively manage its level of reinsurance recoverable amounts effectively, along with promptly addressing instances where a reinsurer s financial strength may weaken. OPERATING PERFORMANCE Operating Results: On a five-year basis, the group s pre-tax and after-tax returns substantially surpass the average produced by the industry composite. This level of performance is driven by the group s underwriting discipline, consolidated expense ratio advantage, and the sizeable income garnered from its high quality investment portfolio. Despite overall market softening that has caused margin compression in recent years, the group has focused on specific lines of business it feels still offer the greatest profit potential. These more desirable lines of business include professional liability, certain surety lines, medical stop loss, offshore energy, and aviation. Increased net investment income generated by the group s growing, conservative portfolio has also helped drive profits. Despite the reserve adjustment that impacted profitability within the professional liability lines in 2011, proactive steps taken by management since then have led to improved earnings in the subsequent periods. These steps are directly related to the Diversified Financial Products line of business within the segment, which provides coverage for private equity partnerships, hedge funds, and investment managers. The group should continue to generate better than average earnings given its focused specialty underwriting approach, diversification and ability to focus on lines of business less impacted by market pressures. The improved pricing environment over the past couple of years should also contribute to promising earnings prospects. Considering the group s successful history in managing the cycle and its steadfast application of conservative operating fundamentals, operating results are expected to remain favorable. PROFITABILITY ANALYSIS ($000) Company Pre-tax After-tax Operating Operating Total Income Income Income Return 2009 339,604 258,605 258,433 283,996 2010 317,864 250,353 261,749 283,118 2011 245,087 206,538 210,084 220,275 2012 364,021 297,959 314,955 329,760 2013 415,274 335,432 352,444 393,632 5-Yr Total 1,681,850 1,348,886 1,397,664 1,510,781 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 4 of 14

Company Industry Composite Pre-tax Return Operating Pre-tax Return Operating DIRECT LOSS RATIO BY STATE ROR on PHS ROR on PHS 5-Yr Avg 2009 41.2 18.6 59.0 15.4 11.4 84.7 New York 27.3 33.6 40.5 47.9 101.7 49.3 2010 40.0 16.9 60.9 11.2 9.5 88.1 California 52.1 51.7 57.6 42.5 42.3 49.1 2011 30.6 12.7 68.4 6.7 5.6 93.0 Texas 69.2 21.8 35.8 46.6 34.6 41.0 2012 43.9 18.2 57.1 7.6 7.8 91.5 Louisiana 58.5 10.4 50.0-4.5 57.8 34.7 2013 52.5 20.5 48.4 15.0 12.4 84.5 Michigan 13.8 145.2-34.3-27.0-37.4 26.4 5-Yr Avg 41.6 17.5 58.8 11.2 9.3 88.3 Illinois 27.4 79.3 127.4 93.8 28.0 70.2 Florida 1.2 100.8 109.7 56.3 41.2 62.8 Underwriting Results: Over the last five years, the group s underwriting Ohio 2.4 42.9-47.0 18.0 149.7 34.5 performance has been very strong as evidenced by a combined ratio during Pennsylvania 15.2 46.3 37.6 54.0 2.9 31.8 that period that is significantly better than that of the industry composite. A North Carolina 20.8 35.9 63.5 9.5 80.2 43.1 distinct loss ratio advantage has led to the above-average historical All Other 37.8 26.0 65.3 60.3 32.1 44.3 underwriting performance. HCC has generally been able to drive exceptional Total 38.2 40.3 53.4 47.7 46.2 45.1 results from nearly all of its core business units, despite the financial crisis and the less favorable results within its Professional Liability Segment in 2011. Investment Results: The portfolio has produced an average investment yield Given the tail on professional lines claims, it takes several years before above the industry composite average for an extended period. The group s management can best gauge its ultimate loss picks on certain legacy claims. investment leverage remains conservative compared to industry composite Nevertheless, HCC has reserved this business to the levels management norms. The invested asset portfolio is predominately concentrated in believes are most prudent and is actively following these claims and high-quality fixed-income securities, with an emphasis on municipal bonds, development in this line very closely. asset-backed and mortgage-backed securities, corporate bonds and to a lesser Competitive market pressures have compressed profit margins on certain extent, treasury securities. The average maturity of HCC s fixed income lines of coverage in specialty admitted and surplus lines business. In recent portfolio is seven years which leaves HCC somewhat exposed to duration risk years, the group has increased retentions on lines such as professional liability, in the event of a liquidity need. In 2012, the group began to diversify its aviation, and energy where business written has proven to be profitable. The investment portfolio by purchasing unaffiliated common stocks. As of group s combined ratio has historically benefited from a large amount of year-end 2013 this allocation was roughly eight percent of invested assets, ceding commission that has largely offset commissions paid on direct and slightly ahead of composite results, and within management s acceptance assumed business. Increasing net retentions, however, have tempered the level. The group s higher retention levels, the increase in the payout period for positive impact of ceding commissions in recent years. Management expects claims due to the writing of more longer-tail business, and the impact of HCC s long-held underwriting discipline to allow the group to sustain the reinsurance commutations have combined to produce solid operating cash favorable underwriting and operating results even as segments of the market flows in recent years. These cash flows have driven notable growth in both the face greater price competition. invested asset base and net investment income. UNDERWRITING EXPERIENCE INVESTMENT GAINS ($000) Undrw Loss s Expense s Ind Company Income Pure Other Total Div. Comb. Realized Unrealized ($000) Loss LAE Loss LAE & Comm. Exp. Exp. Pol. Inv Capital Capital 2009 148,542 44.2 11.3 55.5 18.2 8.1 26.3 81.7 99.9 Year Income Gains Gains 2010 127,485 45.4 12.2 57.6 18.4 8.7 27.1 84.7 104.3 2009 187,476-171 25,562 2011 30,855 53.2 14.9 68.1 19.2 7.9 27.0 0.0 95.1 107.7 2010 189,604 11,396 21,369 2012 135,324 44.2 11.3 55.5 17.6 11.4 29.1 0.0 84.5 105.7 2011 213,704 3,545 10,192 2013 191,895 35.9 10.9 46.8 17.2 12.4 29.6 0.0 76.5 98.8 2012 227,657 16,996 14,805 5-Yr Total/Avg 634,101 44.6 12.1 56.7 18.1 9.7 27.8 84.5 103.2 2013 222,036 17,012 41,189 5-Yr Total 1,040,478 48,778 113,117 BY-LINE LOSS RATIO Product Line 5-Yr Avg Oth Liab CM 41.0 49.3 62.0 51.4 52.2 51.6 Aircraft 48.2 51.5 55.4 49.8 48.8 50.7 Surety 8.0 8.3 7.5 3.5 3.1 6.5 Oth Liab Occur 8.7 17.7-99.9 999.9-99.9 49.0 Com l MultiPeril 54.6 85.3 68.4 33.0 55.2 61.9 Ocean Marine 28.1 54.0 9.8 4.4 3.4 21.9 Reins-Property 5.2-0.5 53.4 999.9 16.4 Credit -1.4 5.9 33.2 81.5 40.5 28.4 All Other 38.9 34.7 67.6-29.9 16.5 28.6 Total 35.9 44.2 53.2 45.4 44.2 44.6 Company Industry Composite Inv Inc Inv Return on Total Inv Inc Inv Growth Yield Inv Assets Return Growth Yield Year (%) (%) (%) (%) (%) (%) 2009 4.3 5.4 5.4 6.2-9.4 4.4 2010 1.1 5.2 5.5 6.1 3.7 4.5 2011 12.7 5.6 5.7 6.0-5.0 4.2 2012 6.5 5.7 6.1 6.5-0.1 4.1 2013-2.5 5.5 5.9 7.0 6.6 4.3 5-Yr Avg 4.2 5.5 5.7 6.3-1.1 4.3 BALANCE SHEET STRENGTH Back to Top Capitalization: As measured by Best s Capital Adequacy (BCAR), the group s capital position is more than supportive of its current rating level. Excellent operating results have provided the financial means to support the group s business risks. The considerable appreciation in the group s policyholders surplus over the last several years has been driven primarily by operating earnings and both realized and unrealized gains. Policyholders surplus growth has been somewhat constrained by dividend payments to the parent company. Despite the challenging market and limited opportunities for profitable top line growth, the group s earnings have benefited from a fairly stable level of earned premiums due in part to increased premium retentions. 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 5 of 14

Until recently, the strong cash flow of HCC s underwriting agencies has historically been enough to cover the operating and dividend requirements of the holding company. As underwriting agencies have been combined with insurance companies, the lead company now takes regular dividends from HCC s insurance company subsidiaries. Future dividend levels paid upstream by the insurance companies, eventually to the ultimate parent, are not expected to materially weaken the capitalization of the subsidiaries. Current BCAR: 276.3 CAPITAL GENERATION ANALYSIS ($000) Source of Surplus Growth Pre-tax Realized Unrealized Operating Capital Income Capital Year Income Gains Taxes Gains 2009 339,604-171 81,000 25,562 2010 317,864 11,396 67,512 21,369 2011 245,087 3,545 38,549 10,192 2012 364,021 16,996 66,061 14,805 2013 415,274 17,012 79,842 41,189 5-Yr Total 1,681,850 48,778 332,964 113,117 Source of Surplus Growth Change % Chg Contrib. Other in in Year Capital Changes PHS PHS 2009-113,719 46,194 216,470 15.3 2010-211,485 9,226 80,858 5.0 2011-183,449 8,015 44,841 2.6 2012-229,911 1,445 101,294 5.8 2013-266,478-6,615 120,539 6.5 5-Yr Total -1,005,043 58,264 564,002 6.9 QUALITY OF SURPLUS ($000) Surplus Other Contributed Unassigned Year Notes Debt Capital Surplus 2009 617,766 1,013,752 2010 618,117 1,094,259 2011 618,740 1,138,477 2012 615,035 1,243,477 2013 615,432 1,363,619 Year-End Conditional Adjusted Year PHS Reserves PHS 2009 1,631,518 21,363 1,652,881 2010 1,712,377 11,504 1,723,880 2011 1,757,217 8,150 1,765,367 2012 1,858,512 7,931 1,866,443 2013 1,979,051 10,697 1,989,747 LEVERAGE ANALYSIS Company Industry Composite Res. Res. NPW to PHS to PHS Lev. Gross Lev. NPW to PHS to PHS Lev. Gross Lev. 2009 0.5 1.0 2.0 2.9 0.7 1.5 2.9 3.7 2010 0.5 1.0 1.9 2.7 0.7 1.4 2.8 3.6 2011 0.5 1.0 2.0 2.7 0.8 1.5 3.0 3.8 2012 0.4 0.9 1.9 2.5 0.8 1.4 2.9 3.8 2013 0.4 0.9 1.6 2.3 0.8 1.4 3.0 3.8 CEDED REINSURANCE ANALYSIS ($000) Company Bus. Reins. Ceded Ret. Recov. to Reins. to (%) PHS (%) PHS (%) Industry Composite Bus. Reins. Ceded Ret. Recov. to Reins. to (%) PHS (%) PHS (%) Ceded Reins. Total 2009 1,411,424 67.6 62.3 86.5 82.7 60.0 83.5 2010 1,298,474 67.0 53.6 75.8 82.3 56.1 78.4 2011 1,211,705 72.5 51.3 69.0 82.2 57.8 82.5 2012 1,254,666 68.4 47.5 67.5 82.3 57.3 82.2 2013 1,325,235 65.7 46.5 67.0 82.6 54.9 81.0 2013 REINSURANCE RECOVERABLES ($000) Paid & Unpaid Losses IBNR Unearned Premiums Other Recov* Total Reins Recov Foreign Affiliates... 1,940 13 41,086-36,890 6,149 US Insurers... 201,478 242,014 128,484 3,156 575,132 Pools/Associations... 1 1 Other Non-US... 150,591 104,597 84,311 322 339,821 Total (ex US Affils)... 354,010 346,624 253,881-33,412 921,103 * Includes Commissions less Funds Withheld Loss Reserves: On a calendar year basis, the group has historically reported favorable loss reserve development. However, deficiencies are reported for accident years 2008-2010 as a result of the increase in reserves for the Diversified Financial Products line of business in the group s Professional Liability Segment. These reserve charges resulted primarily from revised assumptions with regards to the frequency and severity of claims. Favorable reserve development returned in 2012, as redundancies were experienced in most segments. A.M. Best expects the group s reserve development pattern to be more reflective of the favorable historical norms over the near term. LOSS & ALAE RESERVE DEVELOP.: CALENDAR YEAR ($000) Orig. Developed Develop. Develop. Develop. Unpaid Unpaid Loss Reserves to to to Reserves Res. to Reserves Thru 13 Orig. (%) PHS (%) NPE (%) @12/13 Develop. (%) Calendar Year 2008 1,629,585 1,417,567-13.0-15.0 176.2 429,649 30.3 2009 1,695,406 1,616,584-4.6-4.8 196.0 600,878 37.2 2010 1,718,621 1,654,937-3.7-3.7 208.1 789,833 47.7 2011 1,784,389 1,698,304-4.8-4.9 212.0 1,059,016 62.4 2012 1,755,639 1,668,985-4.9-4.7 201.4 1,340,393 80.3 2013 1,721,087 1,721,087 217.5 1,721,087 100.0 LOSS & ALAE RESERVE DEVELOP.: ACCIDENT YEAR ($000) Accident Year Orig. Loss Reserves Developed Reserves Thru 13 Develop. to Orig. (%) Unpaid Reserves @12/13 Acc. Yr Loss Acc. Yr Comb. 2008 423,470 482,696 14.0 123,719 71.0 97.1 2009 420,193 510,328 21.5 171,229 73.2 99.4 2010 400,676 402,961 0.6 188,955 59.8 86.9 2011 434,417 436,634 0.5 269,183 65.3 92.4 2012 419,774 379,547-9.6 281,377 55.3 84.4 2013 380,694 380,694 380,694 57.4 87.1 ASBESTOS & ENVIRONMENTAL (A&E) RESERVE ANALYSIS Company Industry Composite Year A&E Reserve ($000) Reserve Retention (%) IBNR Mix (%) Survival (3 yr) Comb. Impact (1 yr) Comb. Impact (3 yr) Survival (3 yr) Comb. Impact (1 yr) Comb. Impact (3 yr) 2009 76 100.0 XX XX XX 1.3 XX 2010 45 100.0 XX 0.0 XX XX 1.8 XX 2011 22 100.0 1.1 0.0 9.3 1.4 1.5 2012 6 100.0 0.3 0.0 0.0 8.4 1.2 1.5 2013 16 100.0 0.8 0.0 0.0 8.5 1.4 1.4 Liquidity: The group maintains a sound liquidity position as evidenced by current and overall liquidity ratios that exceed industry composite averages. The level of invested assets has increased significantly over the last five years, more than offsetting the growth in total liabilities stemming from advancing loss reserve positions. Operating cash flow, driven primarily by increased investment income, remains solid. Historically, the group s adequate liquidity position has been derived from consistent operating cash flow and contributed capital from the parent holding company, supplemented with solid investment income. The parent filed a universal shelf registration in March, 2012 that expires in March, 2015. The shelf registration statement provides for the issuance of an aggregate of $1.0 billion of securities that helps provide the group with greater financial flexibility. These securities may be debt securities, equity securities, or a combination thereof. 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 6 of 14

HCC maintains a $600 million revolving loan facility, of which $239 million of available capacity remained as of December 31, 2013. In April 2014, HCC amended its credit facility to increase borrowing capacity to $825 million and extended the term to 2019. HCC uses this facility to fund repurchases of its common stock. The parent also has a $90 million standby letter of credit facility that is used to guarantee the performance of its Lloyd s of London syndicate. The standby facility expires in 2016. LIQUIDITY ANALYSIS Company Industry Composite Gross Gross Quick Liq. (%) Current Liq. (%) Overall Liq. (%) Agents Bal. to PHS (%) Quick Liq. (%) Current Liq. (%) Overall Liq. (%) Agents Bal. to PHS (%) 2009 29.6 135.6 166.9 12.3 21.0 111.0 146.4 9.0 2010 23.3 139.7 169.6 9.2 21.1 111.4 146.8 8.9 2011 24.1 138.0 167.1 10.2 20.0 109.3 145.1 10.1 2012 22.9 142.4 169.8 7.4 21.9 108.4 145.4 10.8 2013 22.1 152.0 181.7 6.7 22.0 109.5 145.0 10.8 CASH FLOW ANALYSIS ($000) Company Industry Composite Underw Oper Underw Oper Underw Oper Cash Cash Cash Cash Cash Cash Cash Year Flow Flow Flow Flow (%) Flow (%) Flow (%) Flow (%) 2009 254,843 374,602 180,727 140.0 152.3 99.0 110.1 2010 146,658 263,797-131,710 122.5 135.9 96.4 108.5 2011 112,960 288,669-12,196 116.2 138.4 96.6 107.8 2012 149,738 348,233 29,053 121.7 146.9 99.5 112.9 2013 156,878 303,991-126,653 125.2 142.0 106.1 117.5 5-Yr Total 821,077 1,579,293-60,780 INVESTMENT LEVERAGE ANALYSIS (% OF PHS) Industry Company Composite Class 3-6 Bonds Real Estate/ Mtg. Other Invested Assets Common Stocks Non-Affil. Inv. Lev. Affil. Inv. Class 3-6 Bonds Common Stocks 2009 0.0 0.0 0.0 23.1 5.9 8.6 2010 0.2 0.0 0.0 0.2 23.3 7.0 9.3 2011 0.0 0.0 0.0 23.2 7.0 9.8 2012 6.9 8.8 15.8 24.0 6.9 10.5 2013 7.1 18.2 25.3 22.4 7.5 13.2 INVESTMENTS - SECURITIES Current Year Distribution of Bonds By Maturity Years Yrs-Avg 0-1 1-5 5-10 10-20 20+ Maturity Government 1.1 1.8 0.8 0.5 0.1 5 Gov t Agencies & Muni 3.4 20.7 31.2 10.0 5.6 8 Industrial & Misc 0.7 9.5 14.6 6 Total 5.3 32.0 46.5 10.5 5.7 7 Bonds (000) 3,235,490 3,432,525 3,442,002 3,257,705 3,017,717 US Government 3.5 4.2 6.5 6.3 6.9 Foreign Government 0.3 0.8 1.3 1.3 Foreign - All Other 3.4 3.8 2.5 2.2 1.3 State/Special Revenue - US 71.2 71.9 72.9 75.7 72.1 Industrial & Misc - US 21.6 19.4 16.8 14.5 19.7 Private Issues 9.6 7.3 1.5 0.0 0.0 Public Issues 90.4 92.7 98.5 100.0 100.0 Bond Quality (%) Class 1 92.1 92.8 97.1 97.9 97.9 Class 2 3.6 3.6 2.9 2.0 2.1 Class 3 3.6 2.8 0.0 Class 4 0.7 0.9 0.0 Class 6 0.0 0.0 INVESTMENTS - EQUITIES Stocks (000) 797,237 577,727 400,248 390,341 367,721 Unaffiliated Common 45.2 28.4 0.0 Affiliated Common 54.8 71.6 100.0 100.0 100.0 INVESTMENTS - MORTGAGE LOANS & REAL ESTATE Mortgage Loans & Real Estate (000) 6,762 7,372 7,906 8,001 8,648 Property Occupied by Co 100.0 100.0 100.0 100.0 100.0 INVESTMENTS - OTHER INVESTED ASSETS Other Inv Assets (000) 33,967 161,137 132,205 144,131 285,309 Cash 48.5 10.1 6.6 7.0 23.5 Short-Term 51.3 89.6 92.9 92.8 76.2 Schedule BA Assets 0.1 0.3 0.2 All Other 0.1 0.3 0.4 0.2 MANAGEMENT Management is under the direction of Chief Executive Officer Christopher J. B. Williams; President and Chief Operating Officer William N. Burke, Jr.; Executive Vice President and Chief Financial Officer Brad T. Irick; Executive Vice President Michael J. Schell; Executive Vice President Mark W. Callahan; Executive Vice President and Chief Accounting Officer Pamela J. Penny; and Executive Vice Presidents Barry J. Cook, and Craig J. Kelbel. REINSURANCE Reinsurance is maintained on a quota share and excess of loss basis with a separate program maintained for each major line of business. Catastrophe coverage is purchased for property, property treaty, marine, energy, aviation, and other catastrophe exposed lines of business. Facultative reinsurance is also purchased when deemed appropriate. CONSOLIDATED BALANCE SHEET (at December 31, 2013) ADMITTED ASSETS ($000) 12/31/13 12/31/12 13% 12% Bonds... 3,235,490 3,432,525 73.1 75.6 Common stock... 360,344 163,999 8.1 3.6 Cash & short-term invest... 33,929 135,582 0.8 3.0 Other non-affil inv asset... 39 555 0.0 0.0 Investments in affiliates... 436,893 438,727 9.9 9.7 Real estate, offices... 6,762 7,372 0.2 0.2 Total invested assets... 4,073,457 4,178,761 92.1 92.1 Premium balances... 172,785 175,782 3.9 3.9 Accrued interest... 34,905 37,825 0.8 0.8 All other assets... 143,303 147,104 3.2 3.2 Total assets... 4,424,450 4,539,471 100.0 100.0 LIABILITIES & SURPLUS ($000) 12/31/13 12/31/12 13% 12% Loss & LAE reserves... 1,728,599 1,763,627 39.1 38.9 Unearned premiums... 448,296 467,472 10.1 10.3 Conditional reserve funds... 10,697 7,931 0.2 0.2 All other liabilities... 257,807 441,930 5.8 9.7 Total liabilities... 2,445,400 2,680,960 55.3 59.1 Capital & assigned surplus... 615,432 615,035 13.9 13.5 Unassigned surplus... 1,363,619 1,243,477 30.8 27.4 Total policyholders surplus... 1,979,051 1,858,512 44.7 40.9 Total liabilities & surplus... 4,424,450 4,539,471 100.0 100.0 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 7 of 14

CONSOLIDATED SUMMARY OF 2013 OPERATIONS ($000) Funds Provided from Statement of Income 12/31/13 Operations 12/31/13 Premiums earned... 791,234 Premiums collected... 780,270 Losses incurred... 283,960 Benefit & loss-related pmts 320,549 LAE incurred... 86,578 Undrw expenses incurred 228,696 LAE & undrw expenses paid 302,787 Div to policyholders... 105 Div to policyholders... 57 underwriting income 191,895 Undrw cash flow... 156,878 investment income... 222,036 Investment income... 246,964 Other income/expense... 1,343 Other income/expense... 1,343 Pre-tax oper income... 415,274 Pre-tax cash operations 405,185 Realized capital gains... 17,012 Income taxes incurred... 79,842 Income taxes pd (recov)... 101,194 income... 352,444 oper cash flow... 303,991 Ultimate Parent: HCC Insurance Holdings, Inc HCC LIFE INSURANCE COMPANY 150 West Market Street, Suite 800 Indianapolis, IN 46204 Exec. Office: 225 TownPark Drive, Suite 350, Kennesaw, GA 30144 Web: www.hcclife.com Tel.: 770-973-9851 Fax: 770-973-9854 AMB#: 009081 NAIC#: 92711 Ultimate Parent#: 058391 FEIN#: 35-1817054 BEST S CREDIT RATING Best s Financial Strength Rating: A+ Outlook: Stable Best s Financial Size Category: IX RATING RATIONALE Rating nale: The rating of HCC Life Insurance Company (HCC Life) reflects its role as a core subsidiary of HCC Holdings, Inc., and its adequate risk-adjusted capitalization. Additionally, HCC Life is among the leaders in the medical stop-loss market, driven by its premium growth and strong earnings. Offsetting rating factors include HCC Life s concentrated business profile, the increasing average duration of its bond portfolio and the potential longer-term impact that the Patient Protection and Affordable Care Act (PPACA) could have on its customers and the medical stop-loss marketplace. HCC Life continues to strengthen its role as a core subsidiary of HCC Holdings, Inc., through the growth of its medical stop-loss business. Medical stop-loss, in addition to its short-term medical insurance lines of business, represents a growing portion of the parent organization s premium revenue and operating income. HCC Life s low expense structure and conservative underwriting practices have enabled it to retain a market-leading position within the medical stop-loss marketplace. Additionally, HCC Life s selective underwriting has historically enabled it to successfully navigate the cyclical nature of the business and continue to deliver healthy profit margins. Medical stop-loss has comprised over ninety percent of HCC Life s net written premium for many years. HCC Life s business profile has grown more concentrated with its recent exit from the excess-of-loss for HMOs and excess medical reinsurance lines. A.M. Best believes that HCC Life s concentration in the medical stop-loss business exposes it to the underwriting cycles and other market risks specific to the stop-loss market. However, this risk is partially mitigated by the growth in its short-term medical insurance lines. In an effort to generate more investment yield, HCC Life has been investing in longer-dated fixed income securities. A.M. Best maintains a cautious stance on this investment strategy, given the short-term nature of the company s liabilities. While the organization has explored other investment alternatives including bank loans and equities, HCC Life s portfolio remains allocated almost entirely to investment-grade bonds. A.M. Best notes that while the investment portfolio has performed well in recent years, HCC Life continues to maintain a sizable exposure to municipal bonds with some concentration in certain states. Moreover, A.M. Best notes that while PPACA is not likely to have a significant near-term impact on HCC Life s customer base or its medical stop-loss business, its longer-term impact on the customers of this line of business remains uncertain. A.M. Best believes that potential upward movement in HCC Life s rating is unlikely in the near to medium term. Factors that could lead to a negative rating action include a significant decline in operating performance and/or risk-adjusted capitalization as well as a change in A.M. Best s view of the strategic importance of HCC Life to HCC Holdings, Inc., or a decline in the creditworthiness of its property/casualty affiliates. FIVE YEAR RATING HISTORY Date Best s FSR Date Best s FSR 09/25/14 A+ 08/10/11 A+ 10/03/13 A+ 10/15/10 A+ 09/26/12 A+ KEY FINANCIAL INDICATORS ($000) Total Capital Capital Asset Surplus Valuation Premiums Invest Funds Reserve Written Income Income Year Assets 2009 598,019 367,721 410 651,838 20,215 65,955 2010 608,334 390,337 620 637,048 26,874 78,557 2011 655,731 400,248 899 685,996 28,618 89,035 2012 731,234 413,727 1,179 821,011 29,486 100,213 2013 750,192 436,893 1,521 854,594 59,013 142,116 (*) Within several financial tables of this report, this company is compared against the Group Accident & Health Composite. (*) Data reflected within all tables of this report has been compiled from the company-filed statutory statement. BUSINESS PROFILE HCC Life Insurance Company (HCC Life), based in Kennesaw, GA, is licensed in all states and the District of Columbia. The company specializes in marketing medical stop-loss insurance for self-insured corporations and groups. HCC Life provides a good source of product and earnings diversification for HCC Insurance Holdings, Inc. (HCCIH), the ultimate holding company. The company is a wholly owned subsidiary of Houston Casualty Company (HCC). HCC is a wholly owned subsidiary of Illium, Inc., which in turn is a wholly owned subsidiary of HCCIH. HCCIH, based in Houston, TX, is a publicly-traded specialty insurance holding company that markets property and casualty, life, accident and health (primarily medical stop-loss) and credit and surety insurance worldwide through its operating insurance subsidiaries and affiliated underwriting agencies. HCC Life s products include medical stop-loss and short-term domestic medical products written in the United States. The majority of the business covers employer sponsored groups of employees, and claims are reported and settled within 12 to 15 months for each reporting year. The company has achieved growth primarily through numerous acquisitions and ongoing product development. Through acquisitions, HCC Life has grown its market position and retained an experienced senior management team with an average of over 20 years of experience. Recent growth has been organic as the company leverages its scale and relationships with brokers. The company s medical stop-loss insurance provides protection for catastrophic losses to employers that self-fund their employee benefit plans. HCC Life markets medical stop-loss to employers through insurance brokers, consultants and third-party administrators (TPA). Underwriting offices are located throughout the United States to allow geographic management of the business, deal with catastrophic health claims and work with employers and their plan administrators to control plan costs. Short-term medical insurance provides temporary coverage, up to eleven months, for individuals in the United States without primary insurance during transitional periods. The short-term domestic medical products are purchased through an Internet portal accessed by consumers, brokers and consultants. 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 8 of 14

In 2005, HCCIH acquired Perico Ltd., based in St. Louis, Missouri, licensed in the District of Columbia and all states except New York, to underwrite medical stop-loss and group life products. Later that year, HCCIH acquired an inactive entity, MIC Life Insurance Company (MIC Life), with the intention of utilizing this entity to issue medical stop-loss and group life products. MIC Life was renamed Perico Life and became the primary issuing carrier for Perico s business. In early 2006, HCCIH contributed its investment in Perico Life to HCC Life. In late 2006, HCC Life, after receiving a capital contribution from HCC, acquired and integrated the Health Products Division of Allianz Life Insurance Company of North America into its operations. This division of Allianz was an underwriter of medical stop-loss business for self-insured corporations and groups and medical excess insurance for HMOs, and a provider of excess insurance for integrated delivery systems and excess medical reinsurance for small and regional insurance carriers. This acquisition provided HCC Life with PPO and HMO stop-loss products and an extensive broker network, thereby expanding its stop-loss product portfolio and distribution system. HCCIH s 2008 acquisition of a managing general underwriter that predominately writes medical stop-loss, Cox Insurance Company, significantly increased Perico Life s gross written premium. Prior to the acquisition, Perico Life s medical stop-loss was marketed primarily by TPAs, targeted to small employer groups with 200 or less employees. The company also had an ancillary line of business that consisted of group term life products. In 2011, Perico Life consolidated its operations into HCC Life. With the consolidation, new and renewal business was placed on HCC Life s paper effective July 1, 2011. In 2013, HCC Life entered into negotiations with MAPFRE USA Corporation (MAPFRE) for the sale of Perico Life. This sale was closed on June 1, 2014 and certain administrative obligations by the parties will continue for a pre-defined period as outlined in the Administrative Services Agreement. On August 30, 2012, HCC Risk Solutions Company (HCCRS), was created and subsequently granted a certificate of authority by the State of Nevada. HCCRS is a wholly owned subsidiary of HCC Life. Beginning with policy effective dates in 2014, HCCRS is assuming medical stop loss business from HCC Life. Scope of Operations: HCC Life primarily markets specific and aggregate medical stop-loss coverage for employer groups. Medical stop-loss coverage is a form of excess insurance that protects employers that self-fund their employee health care plans by limiting their exposure from the severity of loss. Coverages are marketed chiefly to employer groups with primarily less than 1,000 lives, but with an average of over 500 employee lives. HCC Life s ancillary lines of business chiefly consist of group term life, disability income, short-term medical, and student medical coverages. The company also has a transplant network, LifeTrac, which is a national network offering clinical support and access to hundreds of transplant programs at a select group of the world s leading transplant facilities. The company did offer medical excess insurance for HMOs and excess medical reinsurance for small and regional insurance carriers, but those lines of business were discontinued by the end of 2012. TOTAL PREMIUM COMPOSITION & GROWTH ANALYSIS Reinsurance DPW Prem Assumed ($000) (% Chg) ($000) (% Chg) 2009 597,332-2.0 77,515-6.4 2010 619,104 3.6 55,776-28.0 2011 670,420 8.3 44,602-20.0 2012 805,148 20.1 41,233-7.6 2013 894,243 11.1 12,831-68.9 5-Yr CAGR 8.0-31.1 Reinsurance Prem Ceded NPW & Deposits ($000) (% Chg) ($000) (% Chg) 2009 23,009-19.8 651,838-1.7 2010 37,833 64.4 637,048-2.3 2011 29,026-23.3 685,996 7.7 2012 25,371-12.6 821,011 19.7 2013 52,479 106.9 854,594 4.1 5-Yr CAGR 12.8 5.2 Territory: The company is licensed in the District of Columbia and all states. Business Trends: HCC Life, with over $800 million in stop-loss gross premium written the past two years, is a market leader in stop-loss insurance. The company has been able to build its medical stop-loss book of business with high quality, profitable contracts while regulating retention levels in order to match the risk profile prescribed by its internal forecasting models. In 2010, HCC Life expanded its earnings diversification with the growth of its disability short-term medical insurance products. Although the company s other supplemental health products continue to grow steadily, especially its medical insurance services which includes short-term medical insurance, the premiums for these lines of business have been modest compared to its medical stop-loss line of business. 2013 BY-LINE BUSINESS ($000) Reinsurance DPW Prem Assumed Product Line ($000) (%) ($000) (%) Ordinary life 2,177 0.2 Group life 2,245 0.3 Individual annuities 172 0.0 Individual A&H 33,563 3.8 Group A&H 856,084 95.7 12,831 100.0 Total 894,243 100.0 12,831 100.0 Reinsurance Prem Ceded NPW Product Line ($000) (%) ($000) (%) Ordinary life 2,177 4.1 Group life 62 0.1 2,184 0.3 Individual annuities 172 0.3 Individual A&H 24,554 46.8 9,009 1.1 Group A&H 25,514 48.6 843,401 98.7 Total 52,479 100.0 854,594 100.0 BY-LINE RESERVES ($000) Product Line Group life 75 108 109 110 112 Individual A&H 4,418 2,416 2,029 2,319 1,318 Group A&H 4,556 1,929 3,158 2,409 1,834 Total 9,049 4,452 5,297 4,838 3,264 LIFE POLICIES STATISTICS -Ordinary Policies- -Group Policies- -Group Certificates- Year Issued In Force Issued In Force Issued In Force 2009 5,440 24 200 14,550 48,855 2010 5,068 20 168 1,884 39,028 2011 4,715 14 136 1,056 44,815 2012 4,370 20 118 1,124 31,900 2013 4,085 2 91 101 26,782 Whole Life Endow. & LIFE INSURANCE IN FORCE ($000) Total Insurance In Force Year Adds Term Credit Group Industrial 2009 166,122 134,248 909,232 1,209,602 2010 150,392 122,803 895,498 1,168,693 2011 140,675 110,330 792,714 1,043,719 2012 129,518 99,039 748,530 977,087 2013 120,111 89,985 693,714 903,810 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 9 of 14

NEW LIFE BUSINESS ISSUED ($000) Year Whole Life & Endow. Term Credit Group Industrial Total Insurance Issued Non- Par (%) Par (%) 2009 278,717 278,717 100.0 2010 33,957 33,957 100.0 2011 15,918 15,918 100.0 2012 17,794 17,794 100.0 2013 1,745 1,745 100.0 ORDINARY LIFE STATISTICS Ord. Renew Average 1st Yr 1st Yr Gen. Lapse Premium Ord. Policy Avg Prem / Comm / Exp. / Persist (in dollars) Prem Total 1st Yr Policies Year % % Issued In Force ($/M) Prem Prem In Force 2009 5.6 92.1 55,215 9.31 2010 7.5 92.4 53,906 9.47 2011 7.3 95.8 53,235 9.87 2012 8.4 91.6 52,301 9.93 2013 6.9 95.9 51,431 10.36 First Year Gen l Exp/ Return on Number of Policies Premium Reserves Reserves Year Issued In Force (000) (%) (%) 2009 5,440 2010 5,068 2011 4,715 2012 4,370 2013 4,085 TOTAL ANNUITY ACTUARIAL RESERVES BY WITHDRAWAL CHARACTERISTICS With Min or No Surrender Surrender Charge 5% With Charge (%) or more (%) MVA (%) No Surrender Allowed (%) Total Annuity Year Res (000) 2009 88.8 11.2 2010 89.8 10.2 2011 90.2 9.8 2012 91.1 8.9 2013 91.0 9.0 GEOGRAPHIC BREAKDOWN BY DIRECT PREMIUM WRITINGS ($000) Texas 67,231 58,956 45,914 39,123 40,396 California 64,226 62,177 50,252 46,722 46,242 Ohio 59,306 50,284 41,298 40,645 36,377 Indiana 59,206 56,121 30,641 25,016 26,757 North Carolina 40,117 35,275 32,273 26,972 23,983 Illinois 37,625 34,252 25,852 25,063 25,503 New York 37,372 32,592 27,766 22,890 24,302 Wisconsin 35,612 34,944 29,720 30,095 28,188 Georgia 28,718 26,544 23,059 20,031 21,688 District of Columbia 28,612 5,118 9,835 11,101 4,102 All Other 436,205 408,880 353,798 331,428 319,778 Total 894,230 805,142 670,409 619,087 597,315 RISK MANAGEMENT HCC and its subsidiaries implemented a formal Enterprise Risk Management (ERM) Plan a number of years ago. The plan encourages a strong risk culture and governance, ongoing discipline and risk identification, and quarterly underwriting reviews and internal audits. Additionally, HCC s Enterprise Risk Oversight Committee, which consists of members of the organization s Board of Directors, holds quarterly meetings with senior management to discuss existing and potential risks to the organization. ERM is incorporated in the decision making process through consistent risk analysis. HCC utilizes its ERM process to improve growth and margins from its existing lines of business in addition to reviewing new potential lines of business or acquisitions. The long-term strategy within HCC s ERM strategy is to maintain financial stability through capital allocation, asset-liability management, and reinsurance and hedging programs all while reviewing operational changes to optimize growth potential. A variety of methods and tools are uses company-wide in risk assessment and management efforts. Key methods and tools include: 1) underwriting risk management, in which underwriting authority limits are set and approvals required for exceptions to established limits, 2) natural catastrophic risk management, where a variety of catastrophe modeling techniques, both internal and external, are used to monitor exposures against stated risk tolerances, 3) a Reinsurance Security Policy Committee, which is responsible for monitoring reinsurers, reinsurance recoverable balances and changes in a reinsurer s financial condition, 4) investment risk management, where the Investment and Finance Committee of the Board of Directors provides oversight of capital and financial resources, as well as investment policies, strategies, transactions and investment performance, 5) the use of a proprietary economic capital model, which is integrated into planning, 6) the use of outside experts to perform scenario testing, where deemed beneficial and 7) a risk reporting framework, including a risk dashboard, to regularly communicate to management and the Board of Directors the risk profile related to our risk appetite and tolerances. HCC plans to continue to invest in resources and technology to support its ERM process. OPERATING PERFORMANCE Operating Results: HCC Life has reported increased operating earnings in each of the past five years primarily due to its consistent net investment income, ongoing expense management and premium revenue growth within its medical stop-loss line of business. As the company has substantially grown its book of business over time, it has consistently reported sizable net operating gains. In addition, HCC Life s net income has also improved as the amount of realized investment losses has remained modest in recent years. In 2013, HCC Life improved its statutory net operating earnings over 40% due to much improved underwriting results, net investment income and premium revenue. The increase in underwriting income came from its growth in premium while maintaining consistent consolidated loss ratios and lower expense ratios in addition to implementing rate increases consistent with medical inflation trends. A.M. Best notes that despite the increasing competition within the industry, the company has been able to maintain its medical stop-loss net loss ratio within its target range. Additionally, HCC Life has been able to modify its commission schedule, when needed, to keep its competitive pricing and maintain profit margins. Through the first half of 2014, HCC Life has posted improved statutory net operating earnings when compared to the same period in 2013. A decrease in the medical stop-loss net loss ratio more than offset an increase in the expense ratio for a lower combined ratio. A.M. Best has remained cautious for some time of the prolonged downturn in the underwriting cycle of the medical stop-loss market given HCC Life s reliance on this business for both premium revenue and net income. Like other health insurance lines of business, utilization has been down since the economic crisis. However, A.M. Best notes that the company has exhibited discipline in responding to the pressures of a more competitive environment, and as the market leader in the medical stop-loss market, has a competitive advantage with its lower expense structure. Additionally, all of HCC Life s other ancillary product lines contributed to the organization s profitability. The company will continue to look at increasing its earned premium and operating earnings diversification from the growth of its MIS short-term medical insurance products. PROFITABILITY ANALYSIS ($000) Company Pre-tax Oper Operating Total Income Gain Income Return 2009 91,102 65,955 65,955 76,256 2010 107,455 78,637 78,557 79,108 2011 122,603 89,122 89,035 88,571 2012 137,383 100,243 100,213 100,423 2013 182,752 142,116 142,116 109,662 5-Yr Total 641,295 476,073 475,876 454,021 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 10 of 14

Company Industry Composite BALANCE SHEET STRENGTH Operating Operating Operating Operating Capitalization: HCC Life s capital and surplus has grown consistently over ROR ROE ROR ROE the past several years as a result of substantial net income, partially offset by 2009 9.7 18.5 5.7 20.8 stockholder dividend distributions. While the company benefits from the 2010 11.6 20.7 6.4 22.1 explicit support of its parent organization, it has historically maintained 2011 12.3 22.5 5.6 18.3 appropriate risk-adjusted capitalization for its insurance and investment risks. 2012 11.6 24.6 6.3 22.0 HCC Life increased its capital and surplus by over 5% in 2013. The increase 2013 15.2 33.4 5.9 20.1 in surplus was due to the company s growth in earnings partially offset by an 5-Yr Avg 12.3 24.3 6.0 20.7 $84 million dividend payment made to HCC. A.M. Best notes that despite PROFITABILITY TESTS Comm & dividend distributions totaling over $360 million in the past five years, the company s capital and surplus continued to grow each year due to its improved operating results. Through the first half of 2014, capital and surplus has Ben Paid Exp to NOG Operating increased by over 11%; however, there were no dividends paid during this to NPW NPW to Tot NOG to Return on Total period. A.M. Best expects the company to continue to retain some of its prior Year & Dep & Dep Assets Tot Rev Equity Yield Return year s statutory earnings, rather than dividend all of it to HCC, in an effort to 2009 76.1 13.2 11.2 9.7 18.5 3.63 5.56 support new business growth. 2010 74.3 13.1 13.0 11.6 20.7 4.77 5.05 HCC Life currently maintains an adequate risk-adjusted capitalization level 2011 73.4 13.0 14.1 12.3 22.5 4.88 4.89 for its insurance and investment risks based on the company s Best Capital 2012 74.9 12.3 14.5 11.6 24.6 4.59 4.85 Adequacy (BCAR). However, its NAIC risk-based capital (RBC) ratio is 2013 72.6 12.9 19.2 15.2 33.4 8.79 4.61 considerably lower than other similar-rated peers. The difference is in the way 5-Year Avg 74.2 12.9 14.6 12.3 24.3 5.44 4.93 the NAIC RBC ratio calculates the C-2 insurance risk. The NAIC s model is more conservative in how it handles medical stop-loss business compared to NET OPERATING GAIN ($000) A.M. Best s BCAR model. A.M. Best will continue to monitor the annual Product Line dividend requirements and HCC Life s ability to keep its capitalization level Ordinary life 477 614 614 449 444 adequate to support its premium growth. Group life 331 635 465 257 173 Individual A&H 871 3,799-1,259 983 392 Current BCAR: 188 Group A&H 140,438 95,195 89,302 76,948 64,946 CAPITAL GENERATION ANALYSIS ($000) Total 142,116 100,243 89,122 78,637 65,955 Source of Surplus Growth Pre-Tax Realized Unrealized Adjusted Capital Income Capital Year Gain Gains Taxes Gains 2009 91,102 25,147 10,300 2010 107,455-80 28,818 551 2011 122,603-86 33,481-464 2012 137,383-30 37,140 210 2013 182,752 40,636-32,454 ACCIDENT & HEALTH STATISTICS ($000) Premiums Premiums Loss Exp. Underwriting Year Written Earned Results 2009 649,228 649,583 76.1 13.2 69,493 2010 634,546 632,969 74.5 13.1 77,992 2011 683,473 683,014 73.5 13.0 91,744 2012 818,612 819,456 75.0 12.3 104,453 2013 852,410 847,780 73.0 12.9 119,153 Current Year Experience: Group 843,401 840,773 73.0 12.8 119,290 Other 9,009 7,007 70.7 24.3-137 5-Yr Total 641,295-197 165,222-21,856 Source of Surplus Growth Change Change % Chg in Other in in Year AVR Changes C&S C&S 2009-198 -53,706 22,351 6.5 2010-210 -56,282 22,616 6.2 2011-279 -78,382 9,911 2.5 2012-280 -86,664 13,479 3.4 2013-341 -86,156 23,165 5.6 INVESTMENT GAINS ($000) Company Realized Unrealized Inv Capital Capital Year Income Gains Gains 2009 20,215 10,300 2010 26,874-80 551 2011 28,618-86 -464 5-Yr Total -1,308-361,190 91,522 4.8 2012 29,486-30 210 2013 59,013-32,454 QUALITY OF SURPLUS ($000) 5-Year Total 164,206-197 -21,856 Surplus Other Contributed Unassigned Company -Industry Composite- Year Notes Debt Capital Surplus Inv Inc Inv Return on Total Inv Inc Inv 2009 320,695 47,026 Growth Yield Inv Assets Return Growth Yield 2010 320,135 70,202 Year (%) (%) (%) (%) (%) (%) 2011 319,841 80,407 2009-10.8 3.6 3.7 5.6-8.9 5.0 2012 319,758 93,969 2010 32.9 4.8 4.9 5.1 13.6 5.5 2013 319,249 117,644 2011 6.5 4.9 5.0 4.9-9.5 4.8 Year-End Asset Valuation Adjusted 2012 3.0 4.6 5.1 4.9 4.6 5.0 Year C&S Reserve C&S 2013 100.1 8.8 9.3 4.6-12.9 4.4 2009 367,721 410 368,132 5-Yr Avg 28.4 5.4 5.7 4.9-3.0 4.9 2010 390,337 620 390,958 2011 400,248 899 401,147 2012 413,727 1,179 414,907 2013 436,893 1,521 438,413 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 11 of 14

LEVERAGE ANALYSIS Company -Industry Composite- C&S NPW Change C&S to Surplus & Dep in NPW to Surplus Year Liab Relief to Capital & Dep Liab Relief 2009 160.1 2.0 1.8-1.7 30.0 3.5 2010 179.9 3.3 1.6-2.3 31.4 3.7 2011 157.6 2.6 1.7 7.7 29.6 3.3 2012 131.2 2.3 2.0 19.7 29.6 5.3 2013 140.6 4.2 1.9 4.1 30.4 6.0 effort to improve investment returns. Additionally, the company has been reinvesting more of its short-term investments and common stock holdings into bonds to generate higher net yields. While its ultimate parent, HCC, has been investing in more opportunistic investments in recent years, including bank loans and dividend paying equities, HCC Life has not incorporated that investment strategy yet within its own investment portfolio at this time. HCC Life incurred modest realized capital losses in its bond portfolio in three of the past five years. The exceptions were in 2009 and 2013, when no net realized gain or loss was reported. A.M. Best notes that despite the modest realized losses in prior years, HCC Life has sufficient premium and investment cash flow to cover its predictable contractual obligations and operating expenses. With the sale of Perico Life in June 2014, HCC Life owns 100% of the common stock of HCC Risk Solutions Company and US Holdings Inc. HCC Life s common stock value in US Holdings Inc has an admitted value of 0. CEDED REINSURANCE ANALYSIS Company -Industry Composite- Face Affil Unaffil Total Total Amount Reins Reins Reins Surplus Reins Reins Reins Year Reins Ceded Rec/C&S Rec/C&S Rec/C&S Relief Leverage Rec/C&S Leverage INVESTMENT YIELDS 2009 343,687 0.0 3.7 3.7 2.0 24.7 5.3 132.2 2010 290,501 0.0 3.7 3.8 3.3 24.9 5.8 133.5 Cash & Invest. 2011 260,815 0.0 5.7 5.7 2.6 28.7 8.2 146.6 Short- Real Estate Exp. 2012 237,984 5.0 5.0 2.3 24.8 9.4 148.3 Year Yield Bonds Stocks Mortgages Term Gross 2013 210,096 0.0 3.8 3.8 4.2 24.7 10.3 151.5 2009 3.63 4.51 0.21 3.85 2010 4.77 4.48 11.98 0.11 2.33 Liquidity: HCC Life maintains an adequate level of liquidity, based on A.M. 2011 4.88 4.53 12.77 0.03 2.38 Best s methodology for liquidity, due to its holdings in publicly-traded 2012 4.59 4.36 11.64 0.02 2.50 securities in addition to its cash and short-term investments. Despite the 2013 8.79 3.90 99.00 0.01 1.11 decreasing percentage of cash and short-term investments, A.M. Best believes HCC Life s liquidity position is appropriate for the short-term nature of its INVESTMENTS - SECURITIES liability profile. In addition, the ultimate holding company, HCC, has access Current Year Distribution of Bonds By Maturity to capital markets and lines of credit to provide the members of the group with Years Yrs-Avg additional sources of cash, if needed. 0-1 1-5 5-10 10-20 20+ Maturity LIQUIDITY ANALYSIS Government 1.3 0.9 2 Gov t Agencies & Muni 2.7 15.5 46.3 9.2 7.4 9 Company Operating Non-Inv Delnq & Cash Quick Current Grade Bonds Foreclsd Industrial & Misc Total 0.2 4.1 1.9 18.4 14.6 60.9 9.2 7.4 7 8 Year Flow ($000) Liquidity Liquidity to Capital Mtg to Capital 2009 1,586 193.7 213.7 0.2 2010 6,300 198.8 220.9 0.1 Bonds (000) 673,632 591,409 525,346 484,864 472,956 2011 42,863 172.4 194.4 0.0 US Government 1.1 2.7 5.8 2.5 3.5 2012 65,978 150.0 174.0 Foreign - All Other 1.1 1.7 2.4 1.5 2013 50,768 148.0 178.8 0.7 State/Special Revenue - US 82.1 83.1 79.8 85.5 81.6 Industrial & Misc - US 15.6 12.4 12.1 10.5 14.9 Company Industry Composite Mtg & Cred Affil Private Issues 10.9 7.5 3.0 Ten Lns Invest Quick Current Public Issues 89.1 92.5 97.0 100.0 100.0 Year & RE to Cap to Capital Liquidity Liquidity 2009 13.5 58.2 72.0 2010 12.9 57.8 72.3 Bond Quality (%) 2011 12.4 55.1 69.1 Class 1 98.0 96.9 96.9 97.2 96.0 2012 12.4 51.7 66.7 Class 2 1.6 3.1 3.1 2.7 3.8 2013 4.4 51.8 66.6 Class 3 0.5 0.1 Class 4 0.0 0.1 0.1 Investments: HCC Life maintains a conservative investment portfolio that Class 6 0.0 0.0 has generated consistent returns. The company has utilized a conservative investment strategy to preserve and maintain capital. More than nine-tenths of INVESTMENTS - EQUITIES invested assets are comprised of investment-grade bonds, most of which are publicly-traded. The remainder of HCC Life s investment portfolio consists of Stocks (000) 19,127 51,581 49,870 50,398 49,780 affiliated common stock, cash and short-term investments. State, municipal Affiliated Common 100.0 100.0 100.0 100.0 100.0 and special revenue issues comprise over four-fifths of the bond portfolio, with the remainder primarily in corporate issues. The average maturity of the INVESTMENTS - OTHER INVESTED ASSETS bond portfolio, which has increased in recent years in an effort to generate more yield as a result of the prolonged low interest rate environment, is now Other Inv Assets (000) 10,300 41,758 41,206 39,000 44,808 over eight years. The average maturity of the group s bond portfolio reflects Cash 19.7 52.9 89.8 73.7 47.5 the relatively short duration of the company s insurance liabilities. Short-Term 80.3 47.1 10.2 26.3 52.5 Despite the continued low interest rate environment, HCC Life increased its net investment income considerably in 2013 due to a one-time event. During HISTORY the third quarter, Perico Life paid a $35 million extra-ordinary dividend to HCC Life. The dividend was reported as net investment income on the company s statutory financials. Without the extra-ordinary dividend, HCC Life s net investment income would have declined over 18% for the year. Despite the sizeable increase within the company s invested assets, lower net yields adversely impacted investment income for the year. HCC Life continues to invest in fixed maturity securities with longer durations in an Date Incorporated: 12/03/1980 Domicile: IN Date Commenced: 03/12/1981 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 12 of 14

Originally incorporated as Indianapolis Life Pension and Insurance Company as of December 3, 1980 and operated as VASA Life Insurance Company from January 18, 1991 through November 5, 1993; Seaboard Life Insurance Company (USA) from November 5, 1993 through March 2, 1999; Centris Life Insurance Company from March 2, 1999 through December 28, 1999 and the present title was adopted December 28, 1999. Mergers: Enumclaw Life Insurance Company, Washington, 1994; California Casualty and Life Insurance Company, California, 1995. REGULATORY An examination of the financial condition was made as of December 31, 2009, by the insurance department of Indiana. The 2013 annual independent audit of the company was conducted by PricewaterhouseCoopers, LLP. The annual statement of actuarial opinion is provided by Sam Gutterman, PricewaterhouseCoopers, LLP. REINSURANCE HCC Life does not cede any of its new medical stop-loss business. However, since the introduction of PPACA, HCC Life now offers medical stop-loss with unlimited benefits. HCC Life purchases excess of loss reinsurance excess of $6 million. Thus, the maximum exposure the company has to any one policy with unlimited coverage limits is $6 million. HCC Life does not have any reinsurance agreements on its medical stop-loss business with coverage limits at or below $5 million. The company does cede some of the accident and health business related to its disability income line primarily to various Lloyd s syndicates, London, UK. Additionally, HCC Life offers group life contract with a maximum net retention of $50,000. FINANCIAL INFORMATION BALANCE SHEET ($000) - December 31, 2013 Assets Liabilities Total bonds 673,632 + policy reserves 9,049 Total common stocks 19,127 Policy claims 257,879 Cash & short-term inv 10,300 Interest maint reserve 5,446 Prems and consids due 20,558 Comm taxes expenses 27,332 Accrued invest income 7,128 Asset val reserve 1,521 Other assets 19,447 Other liabilities 12,072 Total liabilities 313,300 Common stock 2,500 Paid in & contrib surpl 316,135 Special surplus funds 614 Unassigned surplus 117,644 SUMMARY OF OPERATIONS ($000) Premiums: Death benefits 1,441 Group life 2,184 Acc & health benefits 618,580 Acc & health group 843,401 Incr life reserves -33 Acc & health other 9,009 Incr a & h reserves 4,630 Total premiums 854,594 Commissions 59,427 investment income 59,013 Comm exp reins assumed 658 Amort interest maint res 2,388 Insur taxes lic & fees 22,853 Comm & exp reins ceded 18,336 General ins expenses 45,334 Other income 1,313 MANAGEMENT Officers: President and Chief Executive Officer, Craig J. Kelbel; Executive Vice President and Chief Operating Officer, Daniel A. Strusz; Executive Vice Total 935,643 Total 752,891 President and Chief Financial Officer, Mark R. Sanderford; Executive Vice Gain from operations before FIT & div to policyholders... 182,752 Presidents, William N. Burke, Jr., Mark W. Callahan, Mark A. Carney, Brad T. Federal income taxes incurred... 40,636 Irick, Christopher J. B. Williams; Senior Vice President and Chief Underwriting Officer, Lawrence J. Stewart; Senior Vice President and Chief gain from operations after federal income taxes... 142,116 Actuary, Thomas E. Weist; Senior Vice Presidents, Charles G. Carlson, J. CASH FLOW ANALYSIS ($000) David Grider, Jr. (Sales & Marketing), Michael J. Lee (Regional), Jeffrey E. Petty (Regional), Michael J. Remeika (Regional), Andrew J. Ritchie; Vice Funds Provided Funds Applied President and Treasurer, Dwayne J. Lee; Vice Presidents, Sharon L. Brock, Gross cash from oper 935,897 Benefits paid 624,619 Anthony J. Budreski, Timothy R. Campbell (Marketing), Edgar Carbonell, Long-term bond proceeds 113,846 Comm, taxes, expenses 124,497 Valda L. Harrison Flowers (Marketing), Peter G. Johnson (Marketing), Other cash provided 315 Long-term bonds acquired 196,075 Michael S. Lanza, Todd E. Marcoux (Marketing), Thomas A. Matchinsky, Decr cash & short-term 31,458 Div to stockholders 84,295 Pamela A. McGovern (Marketing), Joycelyn M. Ray, Deborah L. Riffe, Randy Other cash applied 52,030 D. Rinicella, Christopher D. Sanborn; Secretary, Alexander M. Ludlow. Directors: Mark A. Carney, Brad T. Irick, Craig J. Kelbel, Mark R. Sanderford, Christopher J. B. Williams. Total 1,081,516 Total 1,081,516 Back to Top Assets 750,192 Total 750,192 +Analysis of reserves; Life $75; accident & health $8,974. 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 13 of 14

Why is this Best s Rating Report important to you? Back to Top A Best s Rating Report from the A.M. Best Company showcases the opinion from the leading provider of insurer ratings of a company s financial strength and ability to meet its obligations to policyholders, as well as its relative credit risk. The A.M. Best Company is the oldest, most experienced rating agency in the world and has been reporting on the financial condition of the insurance companies since 1899. A Best s Financial Strength Rating is an independent opinion of an insurer s financial strength and ability to meet its ongoing insurance policy and contract obligations. The Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance policy and contract obligations. The rating is not assigned to specific insurance policies or contracts and does not address any other risk, including, but not limited to, an insurer s claims-payment policies or procedures; the ability of the insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder. The rating is not a recommendation to purchase, hold or terminate any insurance policy, contract or any other financial obligation issued by an insurer, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser. In arriving at a rating decision, A.M. Best relies on third-party audited financial data and/or other information provided to it. While this information is believed to be reliable, A.M. Best does not independently verify the accuracy or reliability of the information. The company information appearing in this pamphlet is an extract from the complete company report prepared by the A.M. Best Company or A.M. Best Europe Rating Services Limited. For the latest Best s Financial Strength Ratings along with their definitions and A.M. Best s Terms of Use, visit the A.M. Best website at www.ambest.com. You may also obtain AMB Credit Reports by visiting our site or calling our Customer Service department at +1-908-439-2200, ext. 5472. To expedite your request, please provide the company s identification number (AMB#). 2014 A.M. Best Company, Oldwick, NJ 08858 Printed October 31, 2014 www.ambest.com Page 14 of 14