Full Steam Ahead:

1. Full Steam Ahead: Clearing the Horizon - Cassatt Insurance Company, Ltd.

2. Introduction/Speakers Speakers: • Eric Dethlefs, CEO, Cassatt RRG Holding Company • Tom Alesi, CFO, Cassatt RRG Holding Company • Brad Adderley, Partner, Appleby Moderator: • Butch Agnew, SVP, Aon Captive & Insurance Managers

3. Presentation Summary • Speakers/Introduction • Who is Cassatt Insurance Company, Ltd.? • US Healthcare Business Environment • Risk Financing Options • Formation Summary • Initial Challenges • Early Results • Righting the Ship

4. Presentation Summary (Continued) • Relaunch • Lessons Learned • Questions?

5. Who is Cassatt Insurance Company, Ltd? • Cassatt Insurance Company Ltd. is a Class 2 Bermudian insurer celebrating its 20 year anniversary. • Formed in 1991 the Company’s lifecycle is a unique and interesting case study that highlights the potential ups and downs of a captive insurance program. • The Company participates in various layers of its shareholder organizations' insurance programs and insures or reinsures hospital and employed physicians' professional liability, miscellaneous health care institutions' professional liability, and general liability.

6. US Healthcare Business Environment • Health Care Institution Dilemma – 1990s • Medical malpractice insurance crisis in PA • Fewer carriers • Lower availability of coverage • Higher costs

7. Risk Financing Options • Decision Time around how to deal with a significant operational constraint • Available Options: Purchase commercial coverage Self-insurance • Pure individual institutional self-insurance • Shared risk program

8. For Formation Summary • Captive Formation • Initially formed by hospital cooperative • Buying power • Bermuda chosen as domicile • Class 2 insurer • Group of 10 PA Hospitals • Members / owners • Insureds • Transitioned to shared risk profile

9. Initial Challenges • Early challenges: • Thinly capitalized • Underwriting issues • Inadequate premiums early on • Holding company operated by cooperative • Membership commitment? • Lack of centralized control • Consultants in charge of major functions • Lack of accountability • Inability to effectively govern

10. Early Results • Predictable Results: 1993 to 2005: • High loss ratios • Declining surplus base • Thin regulatory compliance margins • Annual capital calls

11. Righting the Ship • Turning Point – January 1, 2006 • Cooperative exits insurance business • Cassatt Holding Company takes over: • Risk management • Claims management • Underwriting • Financial management

12. Righting the Ship (continued) • Governance Committees: • Risk Management Advisory Group • High risk sub-committees • Claims Advisory Group • 10 physicians plus risk managers • Risk, Underwriting, Claims • Finance (all CFOs) • Investment Advisory Group • Audit committee

13. Righting the Ship (continued) • Enhancements to Management: • Seasoned insurance professionals • Setting goals and objectives • Regular measurement • Regular committee meetings

14. Righting the Ship (continued) • Off-shore expertise: • Captive manager • Day-to-day operations • Benchmarking • Management consultant • Ratio analysis • Legal and compliance • Corporate services • Reinsurance brokerage

15. Relaunch • Current Company Status • Integrated risk management: • Group symposiums (CME) • Lessons learned • Risk-based assessments: • Obstetrics • Radiology • Emergency medicine • Accountability • Transparency

16. Relaunch (continued) • Current Company Status (continued): • In house claims management: • 5 seasoned handlers • Governed by claims advisory group • Actively manage cases • Defense counsel grading system • Goals and objectives: • 24 month reserves to ultimate • Settle only when warranted • Litigation success rate

17. Relaunch (continued) • Current Company Status (continued) • Underwriting Guidelines • Shared risk program • Premiums reflect experience / exposures • Professional liability insureds: • Health care institutions • Employed physicians • Independent physicians • Entities • Integration of physician base • Coordination of defense

18. Relaunch (continued) • Current Company Status (continued) • Financial Management • Operational goals measurement: • Loss ratios • Underwriting results • Surplus-to-net reserve ratio • Overall company confidence level • Regulatory compliance margins • Financial stress testing • Underwriting scenarios • Investment scenarios

19. Relaunch (continued) • Current Company Status (continued) • Investment Management • Investment Consultant • Investment Policy Statement; • Safety of principal • Liquidity • Yield as a distant third • Stress testing and • Market opportunities • Changing environment • STAY THE COURSE

20. Relaunch (continued) • Current Company Status (continued) • The Governance Process • Shareholders • Board of Directors • Subcommittees • Active involvement • Regular Meetings

21. Relaunch (continued) • Current Company Status (continued) • Cassatt has recently undertaken a comprehensive review of the Company’s bye-laws • Appleby’s has been instrumental in this bye-law refresh process guiding a Board working group through the nuances of multiple shareholder structure. • The work of the Cassatt board, and Cassatt Holding Company has positioned the Company in an excellent spot to adopt the Bermuda Code of Conduct.

22. Lessons Learned • Major Lessons Learned • Hire qualified insurance expertise • Internal staff • Outside consultants • Set up goals and objectives • Set up an effective governance structure • Take control of your captive

23. Questions?