Best's Rating and Report Updates for
Western Insurance Company

Best's Rating of A- (Excellent)
Financial Size Category of V ($10 million to $25 million)

Rating Category (Excellent): This rating is assigned to companies that have, in our opinion, an excellent ability to meet their ongoing obligations to policyholders. The Financial Size Category is assigned to all companies and reflects their size based on their capital, surplus and conditional reserve funds in millions of U.S. dollars.

The objective of Best's rating system is to provide an opinion of an insurer's financial strength and ability to meet ongoing obligations to policyholders. Our opinions are derived from the evaluation of a company's balance sheet strength, operating performance and business profile as compared to Best's quantitative and qualitative standards.View our Best's Rating System and Procedures for more information.

While Best's Ratings reflect our opinion of a company's financial strength and ability to meet its ongoing obligations to policyholders, they are not a warranty, nor are they a recommendation of a specific policy form, contract, rate or claim practice. View our entire notice for complete details.

*Note: The above information reflects the most recent Best's Rating for this company, which may have been released subsequent to the creation of the following Best's Company Report.

Best's Company Reports provide detailed business overview, extensive financial data and analytical commentary, product and geographic information, company history, as well as the rationale supporting the financial strength rating assigned by A.M. Best. These reports are updated on a regular basis based on input and analysis performed throughout the year.

Best Company Report Revision Date - 07/14/2008 *

The Report Revision Date * represents the last significant material change made to this report. Other non-material changes may have been made to this report subsequent to this date, but are not reflected in the report revision date. The Best Company Report below was created based on the following dates.

Rating and Commentary 1
Financial 2
General Information 3
Best's Rating: 12/17/2007
Time Period: 2nd Quarter - 2008
Corporate Structure: N/A
Rating Rationale: 12/17/2007
Last Updated: 09/09/2008
States Licensed: 08/26/2008
Report Commentary : 07/14/2008
Status: Quality Cross Checked
Officers and Directors: 03/14/2008


*Note: The Rating and Commentary 1date outlines the most recent updates to the Company's Rating, Rationale,and Report Commentary for key rating and business changes. Report commentary may include significant changes to Business Review, Financial Performance/Earnings, Capitalization, Investment/Liquidity, or Reinsurance sections of the report. The Financial 2 date reflects the current status of the financial tables found within the body of the Company Report, including whether the data has was loaded as received or had been run through our quality control cross-check process. The General Information 3date covers key areas that may have changed such as corpororate structure, states licensed or officers and directors.


Best's Company Report for
Western Insurance Company
Ultimate Parent: A & H Insurance Inc

WESTERN INSURANCE COMPANY

675 W. Moana Lane, Reno, Nevada, United States 89509
Mail Address: P.O. Box 21030, Reno, Nevada, United States 89515
Tel:   775-829-6650
AMB#:   12055
Ultimate Parent#:   30002
 Fax:   775-829-1930
NAIC#:   10008
FEIN#:   88-0312513

Report Revision Date: 07/14/2008

BEST'S RATING

Based on our opinion of the company's Financial Strength, it is assigned a Best's Rating of A- (Excellent). The company's Financial Size Category is Class V.

RATING RATIONALE

Rating Rationale: This rating reflects the company's excellent risk-adjusted capital, conservative underwriting leverage, sustained operating profitability, and solid balance sheet liquidity. Offsetting these positive factors are the company's geographic and product concentration and its rapid premium growth and continued expansion outside of Nevada. Despite these negative factors, the rating outlook considers continued operating profitability, adherence to conservative leverage measures and a level of risk-adjusted capital necessary to support future growth.

The rating is reflective of management's conservative operating strategy and continued positive cash flow. Over the years, the company has successfully carved out a small niche in the Nevada surety market which, historically, has generated underwriting profits, solid operating earnings and organic growth in surplus. While these positive factors exist, the rating also reflects the inherent risk associated with Western Insurance Company's aggressive growth and expansion efforts beyond A & H Insurance Inc. (its affiliated agency) and its core state of Nevada beginning in 2003. To this end, the company has grown aggressively in California, which now represents its largest state constituting over 60% of direct written premium. As a result, the company is susceptible to competition in both Nevada and Southern California, as well as changes in state regulatory and economic conditions.

Best's Rating: A- Outlook: Stable

FIVE YEAR RATING HISTORY

Best's
Date Rating
12/17/07 A-
05/07/07 A-
02/10/06 A-
01/11/05 A-
06/21/04 A-
12/23/03 A-
06/06/03 A-

KEY FINANCIAL INDICATORS

__________ Statutory Data ($000) __________
Direct Net Pretax
Period Premiums Premiums Operating
Ending Written Written Income
2003 1,149 618 701
2004 2,953 1,650 1,157
2005 5,590 3,890 1,614
2006 10,787 7,617 2,972
2007 14,177 10,969 4,727
 
06/2007 6,449 5,083 2,112
06/2008 5,917 5,242 2,718

__________ Statutory Data ($000) __________
Total Policy-
Period Net Admitted holders'
Ending Income Assets Surplus
2003 735 10,850 8,814
2004 815 13,907 10,521
2005 1,158 17,996 13,023
2006 2,340 27,471 16,011
2007 3,352 29,827 18,429
 
06/2007 1,697 28,239 17,589
06/2008 1,922 31,632 18,810

______ Profitability ______ _______ Leverage _______ ____ Liquidity ____
Inv. Pretax Overall Oper.
Period Comb. Yield ROR NA Inv NPW Net Liq Cash-
Ending Ratio (%) (%) Lev to PHS Lev (%) flow (%)
2003 68.4 2.6 109.6 26.7 0.1 0.3 532.9 634.3
2004 58.2 4.4 77.4 45.0 0.2 0.5 410.7 332.2
2005 57.9 3.4 52.5 35.0 0.3 0.7 361.9 187.9
2006 60.4 4.0 47.4 47.0 0.5 1.2 239.7 216.2
2007 64.4 4.1 44.8 59.7 0.6 1.2 261.7 179.5
 
5-Yr Avg 61.8 3.8 50.7 … … … … …
 
06/2007 64.7 XX 45.0 XX 0.6 1.2 265.2 143.0
06/2008 70.5 XX 46.1 XX 0.6 1.3 246.7 119.4

(*) Data reflected within all tables of this report has been compiled from the company-filed statutory statement. Within several financial tables of this report, this company is compared against the Professional Fidelity & Surety Writers.

BUSINESS REVIEW

Western Insurance Company (WIC) provides contract, subdivision and miscellaneous surety bonds in Nevada, California, Utah, Arizona, New Mexico, Texas, Colorado, Idaho and Washington. The majority of WIC's premium revenue is derived from small contractors in California and Nevada with an average contract bond limit of less than $350,000. The company's primary source of business is through an affiliated agency, A & H Insurance, Inc. and an unaffiliated agent in the Las Vegas area. In late 2003 and early 2004, the company began to appoint new non-affiliated agents which currently equate to forty-six in total. In addition, the company is a U.S. Treasury listed surety bond provider.

2007 BUSINESS PRODUCTION AND PROFITABILITY ($000)

% of Pure Loss
Product _____ Premiums Written _____ Total Loss & LAE
Line Direct Net NPW Ratio Reserves
Surety 12,577 9,965 90.8 10.8 4,919
Reins-Surety etc … 1,005 9.2 5.6 88
All Other 1,600 … … … …
Totals
14,177
10,969
100.0
10.4
5,007

Major 2007 Direct Premium Writings By State ($000): California, $7,358 (51.9%); Nevada, $3,596 (25.4%); Utah, $1,398 (9.9%); Texas, $610 (4.3%); Idaho, $492 (3.5%); 3 other jurisdictions, $722 (5.1%).

FINANCIAL PERFORMANCE

Western Insurance Company (WIC) has produced solid operating profits in recent years as evidenced by year-over-year increases in pre-tax operating income and net income since 2002. With the exception of 2003 the level of operating earnings, as measured by return on revenue (NPE) and equity (PHS), have also been excellent over the same period, as they have outperformed the industry composite for professional fidelity & surety writers. Also, the company's operating ratio is well below the company's peers on a five basis. The ability to produce these earnings is directly attributable to WIC's successful underwriting strategy which, thus far, has produced an underwriting profit in the majority of years. The company's earnings were bolstered further by solid increases in net investment income in recent years driven by growth in invested assets due to solid operating cash flows. The current invested portfolio consists mainly of cash & short term investments as well as government agency bonds and equities. While the company does hold a significant level of equities relative to the industry composite, this allocation has been reduced in recent years.

Although distribution and geographic expansion efforts are underway, as seen in growth in established states such as California and new states such as Colorado, Idaho and Washington, A.M. Best is guardedly optimistic in management's ability to sustain profitability due to WIC's conservative surety underwriting strategy, steady investment income stream and its continued use of collateral including personal indemnity agreements.

PROFITABILITY ANALYSIS

___________ Company ___________ _______ Industry Composite ________
Pretax Return Pretax Return
Period ROR on Comb. Oper. ROR on Comb. Oper.
Ending (%) PHS(%) Ratio Ratio (%) PHS(%) Ratio Ratio
2003 109.6 17.1 68.4 34.7 32.8 20.0 87.5 75.1
2004 77.4 14.8 58.2 23.8 31.8 17.3 81.3 68.6
2005 52.5 9.6 57.9 41.3 34.4 17.0 76.3 62.8
2006 47.4 18.2 60.4 46.7 34.2 19.5 75.2 62.6
2007 44.8 12.6 64.4 54.1 41.8 20.7 68.5 56.0
 
5-Yr Avg 50.7 14.2 61.8 47.3 35.6 19.0 76.6 63.9
 
06/2007 45.0 XX 64.7 52.1 XX XX XX XX
06/2008 46.1 XX 70.5 59.8 XX XX XX XX

UNDERWRITING EXPERIENCE

Net Undrw _____ Loss Ratios _____ ____ Expense Ratios ____
Income Pure Loss & Net Other Total Div. Comb
Year ($000) Loss LAE LAE Comm Exp. Exp. Pol. Ratio
2003 210 9.3 24.1 33.3 12.6 22.5 35.1 … 68.4
2004 590 23.7 10.8 34.5 1.9 21.7 23.7 … 58.2
2005 1,051 11.2 16.6 27.8 12.5 17.6 30.1 … 57.9
2006 2,063 11.1 18.4 29.4 14.4 16.6 31.0 … 60.4
2007 3,593 10.4 15.9 26.3 19.5 18.5 38.1 … 64.4
 
5-Yr Avg … 11.6 16.6 28.2 15.5 18.1 33.6 … 61.8
 
06/2007 1,500 10.0 14.6 24.5 XX XX 40.1 … 64.7
06/2008 2,060 8.9 12.6 21.5 XX XX 49.0 … 70.5

INVESTMENT INCOME ANALYSIS ($000)

_______________ Company _______________
Net Realized Unrealized
Inv Capital Capital
Year Income Gains Gains
2003 216 51 493
2004 513 -7 618
2005 512 114 -22
2006 856 536 296
2007 1,084 255 -1,185
 
06/2007 588 169 -125
06/2008 625 12 -1,219

__________ Company __________ _Industry Composite_
Inv Inc Inv Total Inv Inc Inv
Growth Yield Return Growth Yield
Year (%) (%) (%) (%) (%)
2003 7.6 2.6 9.6 -18.5 3.9
2004 138.1 4.4 9.8 14.8 4.1
2005 -0.2 3.4 4.0 19.3 4.4
2006 67.2 4.0 8.1 11.8 4.3
2007 26.6 4.1 0.6 11.7 4.3
 
5-Yr Avg 38.5 3.8 5.2 7.7 4.2
 
06/2007 XX XX 2.4 XX XX
06/2008 XX XX -2.0 XX XX

INVESTMENT PORTFOLIO ANALYSIS

2007 Inv
Asset Assets % of Invested Assets Annual
Class ($000) 2007 2006 % Chg
Long-Term bonds 5,942 21.1 18.1 25.5
Stocks 7,857 27.8 23.2 29.7
Affiliated Investments 1,681 6.0 1.0 564.8
Other Inv Assets 12,732 45.1 57.8 -15.7
Total
28,212
100.0
100.0
7.9

2007 BOND PORTFOLIO ANALYSIS

% of Mkt Val Avg. Class Class Struc. Struc.
Asset Total to Stmt Maturity 1 - 2 3 - 6 Secur. Secur.
Class Bonds Val(%) (Yrs) (%) (%) (%) (% of PHS)
Governments 3.3 0.0 11.2 100.0 … … …
States, terr & poss 93.5 0.4 12.4 100.0 … … …
Corporates 3.3 … 0.5 100.0 … … …
      Total all bonds
100.0
0.4
11.9
100.0
…
…
…

CAPITALIZATION

The company maintains solid risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR). This secure level of capitalization includes capital contributions in four of the past five years and is based on the company's conservative net and gross underwriting leverage. This view of capitalization also contemplates future capital accumulation via retained earnings. However, the capital position is somewhat tempered by WIC's rapid premium and associated liability growth in recent years as well as modest stockholder dividends over the same period.

CAPITAL GENERATION ANALYSIS ($000)

________ Source of Surplus Growth ________
Pretax Total Net
Operating Inv. Contrib.
Year Income Gains Capital
2003 701 545 2,029
2004 1,157 611 275
2005 1,614 91 1,403
2006 2,972 832 509
2007 4,727 -930 -55
 
5-Yr Total 11,172 1,149 4,161
 
06/2007 2,112 45 -25
06/2008 2,718 -1,206 -30

______ Source of Surplus Growth _______
Other, Change PHS
Net of in Growth
Year Tax PHS (%)
2003 -17 3,258 58.6
2004 -336 1,707 19.4
2005 -607 2,502 23.8
2006 -1,325 2,988 22.9
2007 -1,325 2,418 15.1
 
5-Yr Total -3,610 12,873 …
 
06/2007 -553 1,578 9.9
06/2008 -1,101 382 2.1

QUALITY OF SURPLUS ($000)

________ % of PHS ________ __ Dividend Requirements __
Year- Cap Stk/ Un- Stock- Div to Div to
End Contrib. assigned holder POI Net Inc.
Year PHS Cap. Other Surplus Divs (%) (%)
2003 8,814 54.9 … 45.1 -26 3.7 3.5
2004 10,521 48.6 … 51.4 … … …
2005 13,023 50.0 … 50.0 … … …
2006 16,011 44.2 … 55.8 -54 1.8 2.3
2007 18,429 38.4 … 61.6 -55 1.2 1.6
 
06/2007 17,589 40.3 … 59.7 -25 1.2 1.5
06/2008 18,810 37.6 … 62.4 -30 1.1 1.5

LEVERAGE ANALYSIS

___________ Company ___________ ______ Industry Composite ______
NPW to Reserves Net Gross NPW to Reserves Net Gross
Year PHS to PHS Lev Lev PHS to PHS Lev Lev
2003 0.1 0.1 0.3 0.4 0.7 0.7 2.0 2.8
2004 0.2 0.1 0.5 0.6 0.7 0.7 2.0 2.8
2005 0.3 0.1 0.7 0.9 0.7 0.6 2.2 2.9
2006 0.5 0.2 1.2 1.5 0.8 0.6 2.2 2.8
2007 0.6 0.3 1.2 1.6 0.7 0.5 2.0 2.5
 
06/2007 0.6 0.2 1.2 XX XX XX XX XX
06/2008 0.6 0.3 1.3 XX XX XX XX XX
 
Current BCAR: 286.2

PREMIUM COMPOSITION & GROWTH ANALYSIS

Period _____ DPW _____ _____ GPW _____
Ending ($000) (% Chg) ($000) (% Chg)
2003 1,149 1.0 1,149 1.0
2004 2,953 157.0 3,121 171.7
2005 5,590 89.3 6,172 97.7
2006 10,787 93.0 11,317 83.3
2007 14,177 31.4 15,182 34.2
 
5-Yr CAGR … 65.6 … 67.9
5-Yr Change … 999.9 … 999.9
 
06/2007 6,449 51.8 6,847 58.3
06/2008 5,917 -8.3 6,606 -3.5

Period _____ NPW _____ _____ NPE _____
Ending ($000) (% Chg) ($000) (% Chg)
2003 618 -37.8 640 -39.4
2004 1,650 166.8 1,496 133.7
2005 3,890 135.8 3,078 105.8
2006 7,617 95.8 6,265 103.5
2007 10,969 44.0 10,548 68.4
 
5-Yr CAGR … 61.7 … 58.5
5-Yr Change … 999.9 … 899.1
 
06/2007 5,083 80.4 4,691 96.1
06/2008 5,242 3.1 5,893 25.6

LOSS & ALAE RESERVE DEVELOPMENT: CALENDAR YEAR ($000)

Original Developed Develop. Develop. Develop. Unpaid Unpaid
Calendar Loss Reserves to to to Reserves Resrv. to
Year Reserves Thru 2007 Orig.(%) PHS (%) NPE (%) @12/2007 Dev.(%)
2002 560 762 36.1 3.6 72.2 180 23.6
2003 575 1,441 150.6 9.8 225.5 594 41.2
2004 943 1,511 60.2 5.4 101.0 675 44.7
2005 1,316 1,453 10.4 1.1 47.2 991 68.2
2006 2,712 2,518 -7.2 -1.2 40.2 2,320 92.1
2007 5,004 5,004 … … 47.4 5,004 100.0

LOSS & ALAE RESERVE DEVELOPMENT: ACCIDENT YEAR ($000)

Original Developed Develop. Unpaid Acc Yr. Acc Yr.
Accident Loss Reserves to Reserves Loss Comb
Year Reserves Thru 2007 Orig.(%) @12/2007 Ratio Ratio
2002 126 57 -54.8 38 5.4 47.0
2003 344 854 148.3 414 134.6 169.7
2004 295 183 -38.0 81 12.5 36.2
2005 540 330 -38.9 316 10.9 41.0
2006 1,528 1,421 -7.0 1,329 24.3 55.3
2007 2,684 2,684 … 2,684 27.1 65.1

CEDED REINSURANCE ANALYSIS ($000)

_______________ Company _________________ ____ Industry Composite ____
Ceded Business Rein Rec Ceded Business Rein Rec Ceded
Reins Retention to PHS Reins to Retention to PHS Reins to
Year Total (%) (%) PHS (%) (%) (%) PHS(%)
2003 557 53.8 0.3 6.3 54.9 52.7 81.4
2004 1,471 52.8 … 14.0 56.7 52.0 77.3
2005 2,859 63.0 4.4 22.0 61.0 50.7 73.6
2006 4,942 67.3 7.8 30.9 61.9 34.7 58.4
2007 6,750 72.3 13.8 36.6 63.5 31.8 53.9

2007 REINSURANCE RECOVERABLES ($000)

Paid & Total
Unpaid Unearned Other Reins
Losses IBNR Premiums Recov* Recov
US Insurers … 544 1,994 … 2,538
   Total (ex US Affils)
…
544
1,994
…
2,538
Grand Total … 544 1,994 … 2,538

* Includes Commissions less Funds Withheld

INVESTMENT LEVERAGE ANALYSIS (% OF PHS)

___________________ Company ___________________ Industry Composite
Class Real Other Non-Affl Class
3-6 Estate/ Invested Common Inv. Affil 3-6 Common
Year Bonds Mtg. Assets Stocks Lev. Inv. Bonds Stocks
2003 … 1.0 8.8 16.8 26.7 0.3 3.2 13.2
2004 … 3.4 17.1 24.5 45.0 0.3 2.4 14.1
2005 … 0.7 7.8 26.5 35.0 2.0 2.6 13.4
2006 … 2.4 15.0 29.6 47.0 1.6 1.7 15.0
2007 … 16.5 10.2 32.9 59.7 9.1 2.5 13.5

LIQUIDITY

WIC maintains very strong liquidity with all measures well in excess of the industry composite. Despite the company's double digit growth in premium over the past few years, the company has maintained more than adequate balance sheet assets to offset growth in liabilities. In addition, this favorable liquidity position is further enhanced by the company's positive operating cash flow in recent years.

LIQUIDITY ANALYSIS

____________ Company _____________ _________ Industry Composite _________
Gross Gross
Quick Current Overall Agents Bal Quick Current Overall Agents Bal
Year Liq (%) Liq (%) Liq (%) to PHS(%) Liq (%) Liq (%) Liq (%) to PHS(%)
2003 245.4 491.6 532.9 4.0 47.1 153.1 175.2 7.6
2004 185.1 381.8 410.7 2.9 47.8 160.1 176.0 5.4
2005 206.7 340.7 361.9 3.9 44.5 155.6 170.3 6.0
2006 141.0 222.7 239.7 4.8 46.9 159.2 171.7 6.5
2007 110.6 206.1 261.7 4.8 47.2 167.7 178.2 5.9
 
06/2007 XX 218.0 265.2 8.7 XX XX XX XX
06/2008 XX 185.2 246.7 12.6 XX XX XX XX

CASH FLOW ANALYSIS ($000)

_____________________ Company _____________________ _Industry Composite_
Underw Oper Net Underw Oper Underw Oper
Cash Cash Cash Cash Cash Cash Cash
Year Flow Flow Flow Flow (%) Flow (%) Flow (%) Flow (%)
2003 252 1,527 3,091 195.5 634.3 119.9 130.8
2004 877 1,438 441 241.7 332.2 120.1 129.4
2005 2,186 2,031 3,210 233.5 187.9 167.9 165.9
2006 4,494 4,596 4,741 242.7 216.2 153.9 145.3
2007 5,973 5,028 -4,622 237.6 179.5 152.9 143.1
 
06/2007 1,982 1,395 -4,531 196.2 143.0 XX XX
06/2008 1,160 864 -712 134.1 119.4 XX XX

HISTORY

WIC was incorporated in Nevada on February 4, 1994 and commenced business on March 3, 1994. The company has 500,000 of class A common stock authorized with 409,514 shares outstanding, as well as, 50,000 shares of preferred stock authorized with 30,760 shares outstanding with a 7% cumulative dividend.

MANAGEMENT

Administration of company affairs is under the direction of the president, Dick L Rottman. In addition, Mr. Rottman serves as chairman and chief executive officer of Bell United Insurance Company, A and H Insurance, Inc., Western Thrift & Loan and Western Bonding Company. Mr. Rottman formerly served as the Insurance Commissioner of the State of Nevada from 1971 to 1978.

Officers: Chairman, President and Chief Executive Officer, Dick L. Rottman; Senior Vice President and Chief Operating Officer, Janice L. Bowman; Vice President and Treasurer, Richard S. Rottman; Vice President, Bradley A. Pearce; Secretary, Carol B. Ingalls.

Directors: Janice L. Bowman, Carol B. Ingalls, Bradley A. Pearce, Dick L. Rottman (Chairman), Jean M. Rottman, Richard S. Rottman, Donald W. Winne.

REGULATORY

An examination of the financial condition was made as of December 31, 2005 by the Insurance Department of Nevada. The 2007 annual independent audit of the company was conducted by Larson & Company. The annual statement of actuarial opinion is provided by Glenn Taylor, ACAS, MAAA, Taylor-Walker & Associates, Inc.

TERRITORY

The company is licensed in AK, AZ, CA, CO, ID, MI, MO, MT, NV, NM, OH, OK, TX, UT, WA and WI.

REINSURANCE PROGRAMS

WIC participates in an excess of loss reinsurance program whereby the company retains the first $600,000 of contract and subdivision bond exposures. Under the contract bond provision, the program has a limit of $1.8 million per bond and an aggregate principle limit of $2.7 million. Under the subdivision bond provision, the program has a limit of $3.1 million per bond and a principle limit of $5.2 million. Higher limits are available from the reinsurer on a case by case basis. The company also participates in a 100% quota share reinsurance program whereby WIC assumes business in states where it does not have a license.

BALANCE SHEET ($000)

ADMITTED ASSETS 12/31/2007 12/31/2006 2007 % 2006 %
Bonds 5,942 4,735 19.9 17.2
Preferred stock 1,785 1,316 6.0 4.8
Common stock 6,072 4,743 20.4 17.3
Cash & short-term invest 7,640 12,263 25.6 44.6
Real estate, investment 837 88 2.8 0.3
Other non-affil inv asset 4,090 2,694 13.7 9.8
Investments in affiliates 1,436 … 4.8 …
Real estate, offices 244 253 0.8 0.9
   Total invested assets
28,047
26,093
94.0
95.0
 
Premium balances 887 772 3.0 2.8
Accrued interest 165 59 0.6 0.2
All other assets 729 548 2.4 2.0
   Total assets
29,827
27,471
100.0
100.0
 
LIABILITIES & SURPLUS 12/31/2007 12/31/2006 2007 % 2006 %
Loss & LAE reserves 5,007 2,713 16.8 9.9
Unearned premiums 2,905 2,483 9.7 9.0
All other liabilities 3,486 6,264 11.7 22.8
   Total liabilities
11,398
11,460
38.2
41.7
 
Capital & assigned surplus 7,080 7,080 23.7 25.8
Unassigned surplus 11,349 8,931 38.0 32.5
   Total policyholders' surplus 18,429 16,011 61.8 58.3
   Total liabilities & surplus
29,827
27,471
100.0
100.0

SUMMARY OF 2007 OPERATIONS ($000)

FUNDS PROVIDED
STATEMENT OF INCOME 12/31/2007 FROM OPERATIONS 12/31/2007
Premiums earned 10,548 Premiums collected 10,313
   Losses incurred 1,100    Benefit & loss related pmts 481
   LAE incurred 1,676
   Undrw expenses incurred 4,179    LAE & undrw expenses paid 3,859
Net underwriting income 3,593 Undrw cash flow 5,973
Net investment income 1,084 Investment income 991
   Other income/expense 50    Other income/expense 50
   Pre-tax oper income 4,727    Pre-tax cash operations 7,015
Realized capital gains 255
Income taxes incurred 1,631 Income taxes pd (recov) 1,987
   Net income 3,352    Net oper cash flow 5,028

INTERIM BALANCE SHEET ($000)

ADMITTED ASSETS 03/31/2008 06/30/2008
Cash & short term invest 6,852 6,928
Bonds 7,053 8,451
Preferred stock 1,780 1,726
Common stock 5,475 4,733
Other investments 6,768 7,064
   Total investments
27,927
28,902
 
Premium balances 1,168 2,372
Accrued interest 120 117
All other assets 242 240
   Total assets
29,457
31,632
 
LIABILITIES & SURPLUS 03/31/2008 06/30/2008
Loss & LAE reserves 5,211 5,515
Unearned premiums 2,480 2,669
All other liabilities 3,775 4,637
   Total liabilities
11,465
12,821
 
Capital & assigned surp 7,080 7,080
Unassigned surplus 10,912 11,730
   Policyholders' surplus
17,992
18,810
 
   Total liabilities & surplus
29,457
31,632

INTERIM INCOME STATEMENT ($000)

Period Ended Period Ended Increase/
06/30/2008 06/30/2007 Decrease
Premiums earned 5,893 4,691 1,203
Losses incurred 524 467 57
LAE incurred 743 684 59
Underwriters expenses incurred 2,566 2,040 527
 
 
 
 
Net underwriting income 2,060 1,500 561
Net investment income 625 588 37
Other income/expenses 33 24 9
 
 
 
 
   Pre-tax operating income 2,718 2,112 607
Realized capital gains 12 169 -157
Income taxes incurred 809 584 225
 
 
 
 
   Net income 1,922 1,697 225

INTERIM CASH FLOW ($000)

Period Ended Period Ended Increase/
06/30/2008 06/30/2007 Decrease
Premiums collected 4,563 4,042 521
Benefit & loss related pmts 495 148 347
Undrw expenses paid 2,909 1,912 997
Underwriting cash flow
1,160
1,982
-823
Investment income 731 576 155
Other income/expense
33
24
9
   Pre-tax cash operations
1,923
2,582
-659
Income taxes pd (recov) 1,059 1,187 -128
   Net oper cash flow
864
1,395
-531
© Copyright 2006 by A.M. Best Company, Inc.  ALL RIGHTS RESERVED.
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