QUARTERLY SOLVENCY REPORTS & NARRATIVE

Each quarter, we review the financial statements of more than one hundred insurance companies and issue a one page SOLVENCY REPORT on each company. Our one page report presents in summary form the dollar amounts, taken directly from the company's financial statement, for each of the major financial categories. Up to five years of history can be presented on one report which allows the reader to quickly pin pointed financial down turns and other trends.

In conjunction with these Solvency Reports, we also prepare a Narrative Report which identifies financial items of interest that we feel should be highlighted for each of the companies we have reviewed. The narrative routinely includes comments on items such as; new investment, losses, violation of the state guidelines used by insurance examiners and regulatory actions. The reports and narrative are usually issued within thirty days after the statutory insurance company deadline for filing with the Department of Insurance.

Our SOLVENCY REPORTS are a timely and uncomplicated way to check on a company's solvency. Reports are designed to provide the user with a one page financial picture of the most important solvency information in a company's financial statement. With our reports you have the information necessary to make intelligent decisions about a company.

Reports are prepared by first reviewing a company's financial statements and then transferring specific line item entries, which we call solvency indicators, into our reports. The information is then compared against generally accepted audit review guidelines. If the indicators are not in line with the guidelines, a "NOTE" is printed on the report. Each note is numbered to match the guidelines presented below. Notes serve to highlight statement items that need careful consideration.

1. Agents Balances in excess of 40% of Surplus.
2. Large increases or decreases in total Assets or Liabilities from the prior quarter.
3. Premiums Written that exceed ten times Surplus.
4. Net Premiums Written that exceed four times Net Surplus and/or ten times Gross Surplus.
5. Large (25%) increases or decreases in Premiums Written.
6. Large increases in the amount of Ceded Reinsurance.
7. Continued losses reported under Underwriting Income.
8. Total operating percentages greater than 100%, which indicates an operating loss.
9. Negative Net Income.
10. Adjustments to Surplus.

Our SOLVENCY Reports are issued within two to three weeks after the statutory deadline for financial statements. The statutory deadline is 45 days (annual is 60 days) after the end of the quarter:

QUALIFICATIONS

Jack Traylor, President of T&T Reports, Inc., has administered more than thirty major insurance company insolvencies. He has more than twenty years experience working with troubled company situations and is experienced in the day to day management of company operations.

Prior to working with T&T Reports, he held the position of Deputy Director with the Florida Department of Insurance where, along with other duties, he organized and directed the Bureau of Administrative Supervision, which worked with financially troubled insurance companies prior to a formal rehabilitation or liquidation order.

Prior to the above, he worked with the Illinois Department of Insurance as the Chief Operating Officer for the Office of the Special Deputy Receiver, where he was responsible for all insurance company conservation, rehabilitation and liquidation activities in that state.

Before going to Illinois he worked with the Florida Department of Insurance where he was Bureau Chief for the Division of Rehabilitation and Liquidation.

He holds a Bachelor of Science degree from Florida State University in Business Administration, Master and Doctorate degrees in Public Administration from Nova University and a Master of Management degree from Northwestern University. He is also a Certified Insurance Receiver.

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