ARECA Insurance Exchange Board of Trustees

2009 Annual Meeting Year in Review Presented by Marilyn Leland, Exec. VP

ARECA Insurance Exchange

What will be covered

 Financial report  Underwriting report  Claims report  Loss Control report

ARECA Insurance Exchange

Financial Report

   2008 admitted assets of $20.2M, a decrease of $2.6M from 2007.

$13.5M in policyholders’ surplus at the end of 2008, down from 2007 by $4.3M.

Surplus allocated to policyholders was $1,267,284, which was down from the prior year by $961,685 due to unfavorable losses and investment returns reported in 2007.

AIE Income 1998-2009 Year to Date $3,000,000 $2,000,000 $1,000,000 $0 -$1,000,000 -$2,000,000 -$3,000,000 -$4,000,000 1998 1999 2000

Net Underwriting Gain (Loss)

2001 2002 2003 2004

Net Investment Gain (Loss)

2005 2006 2007

Total Other Income

2008 2009

Net Income

ARECA Insurance Exchange

Financial Report

AIE ended 2008 with a net loss of ($2,880,606) vs. income of $1,084,546 budgeted: a $3,965,152 variance for the year. Variances:  Premiums written decreased slightly to $5.7M (2008) from $6M (2007), $261,929 less than budget.

 Reinsurance was approx. $40,000 less than budget.

 Investment and other income was approx. $1,451,868   less than budget.

Loss expense was $2,930,031 higher than budget. We had total losses of $6,022,030.

AIE Net Losses Incurred 1998 to 2009 Year to Date $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 1998 1999 2000 2001 2002 2003 2004

Net Losses Incurred

2005 2006 2007 2008 2009

ARECA Insurance Exchange

Financial Report

 2009 dividend payments totaled $0 compared to $381,699 for 2008.

Historical:

 Income allocated to policyholders since inception is $32,598,668.

 Total surplus paid to policyholders since inception is $19,018,493.

 The 10-year average surplus paid to policyholders is $1,302,234.

Surplus and Dividends 1998 to 2009 Year to Date $20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 1998 1999 2000

Dividend Payments

2001 2002 2003

Surplus

2004 2005 2006 2007 2008 2009

Contributions of Surplus to Subscribers

ARECA Insurance Exchange

Underwriting Report Subscriber update

 Gained new subscriber: MEA   Lost one subscriber: CVEA Marketing for new members

ARECA Insurance Exchange

Underwriting Report Policy update

Property  Continuing to refine the new policy  increase policy sublimits  add margin clause

ARECA Insurance Exchange

Underwriting Report Policy update

Casualty  Attach EMF (Electromagnetic Fields) exclusion

ARECA Insurance Exchange

Underwriting Report Forecast for 2010 rates

 Workers’ Compensation (NCCI)   Property Casualty

ARECA Insurance Exchange

Underwriting Report Reinsurance

Update on pricing projections for 2010  Property  Casualty

ARECA Insurance Exchange

Claims Report 2008-2009 Claims update

 One boiler loss in 2008, none in 2009  No property losses  2005 liability incident in litigation  No major work comp injuries in 2009  AK Fee schedule extended by legislature through 2010

ARECA Insurance Exchange

Claims Report 2008-2009 Mandatory MMIR Section 111

 Medicare (Center for Medicare Services)  Mandatory reporting of Medicare eligible beneficiaries with open claims on quarterly basis  Register by August 30, 2008   Query database for Medicare claimants Quarterly reports due April 1, 2010 forward

ARECA Insurance Exchange

Claims Report 2008-2009 Claims trends

2002--218 2003--190 2004--195 2005--209 2006--174 2007--168 2008--178 2009---86 (through 7/09)

ARECA Insurance Exchange Claim Numbers By Policy Line 2000-2009 180 160 140 120 100 80 60 40 20 0 2000 2001 Auto 2002 2003 Gen Liab 2004 2005 Prop 2006 2007 Work Comp 2008 2009

6000 5000 4000 3000 ARECA Insurance Exchange Incurred Losses by Policy Year 2000-2009 Work Comp Property General Liability Auto Liability 2000 1000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

ARECA Insurance Exchange

Loss Control update

      Property valuations/schedules Catastrophic modeling Property surveys Machinery inspections Jurisdictional inspections Workers’ Compensation modification factor

0,4 0,2 0 1,4 0,8 0,6 1,2 1

Worker Compensation Experience Modification Factors All Exchange Members 2008 AIE Member Utilities

ARECA Insurance Exchange

NRECA Safety Accreditation

     Purpose and process Frequency and severity Management and application 2009 Accreditation  Naknek Electric Association 2010 Accreditations  Homer Electric Association  Chugach Electric Association