Yellowstone Insurance Exchange, RRG

1. Yellowstone Insurance Exchange, RRG Annual Subscribers Meeting Annual Update July 10th, 2007 Coeur d’Alene, Idaho

2. Agenda • Welcome • 8:45am – 9:45am Risk Management Presentations • Managing in a Crisis • S. Yockey, Gritman Medical Center • National Trends in the Marketplace • Stephen Hill, Aspen Re, London, UK

3. Agenda • 10:00am – 12:00pm • Yellowstone Insurance Exchange, RRG Annual Meeting of Subscribers • SAC Meeting • 12:00 pm Box Lunch • 1:00 pm Golf at Resort Course • 6:30 pm Reception and Dinner (Idaho Room)

4. Financials • Revenue: • 2005 $2.62m • 2006 $3.82m • 2007 (May) $3.92m • Net Income: • 2005 $88k • 2006 $182k • 2007 (May) $775.6k

5. Financials • Assets • 2005 $11.8m • 2006 $16.7m • 2007 (May) $26.0m • Subscriber Savings Account Distribution • 2005 $107k • 2006 $189k • Three Largest Liabilities • 2005 $7.7m • 2006 $11.6m • 2007 (May) $15.5m • losses and loss adjustment expense, reinsurance premium payable and accrued expenses

6. Asset Allocation

7. Fixed Income Diversification June Sector Rating Yellowstone Insurance Exchange RRG - June 2007

8. Performance Summary – May 2007 *Inception date = 10/1/2005

9. Benchmarks – Average 15 Leading P&C Companies • Assets to Liabilities • YIE = $177.00 • Average = $164.37 • Surplus to Loss Reserves • YIE = $149.41 • Average = $119.15

10. Benchmarks – Average 15 Leading P&C Companies • Surplus to Net Premiums Written: • YIE = $136.53 • Average = $112.73 • Top 15 – Allstate, American Family Mutual, American Home, CNA, Farmers, Federal Insurance Company, Government Employees Ins., Liberty Mutual, National Union Fire Ins. (AIG), Nationwide, Progressive, State Farm, State Farm Mutual, USAA and Zurich

11. Underwriting – 2007 Renewal • Feedback From January Survey • Exposure Definitions helped but slowed the process • We are moving the underwriting process in-house • Dedicated to Yellowstone • Earlier Renewal • Faster Physician information • Changes you request • Will take effect 3rd quarter - 2007

12. Underwriting – 2008 Renewal • Members Receive Hospital and Excess App by 09/01/07 • List of Insured's • COI holders • List of physicians • List of Mid Level • Mid Level & Physicians with Tail • Physician Renewal app sent every other year – Not 2008 renewal • Mid Level renewal app every 3 years – Not 2008

13. Underwriting • Pricing: • For 2007 - On Target • 2008 Study under development • Projected rate increase • Pricing Dependent on Claims incurred and Reserve Study

14. Risk Management • Goals for 2007 • Increase visits to membership • Establish a Video Library • Regional Meetings to Improve Interaction with Members • Action Plan Compliance • Improve - Yellowstone Event System

15. Risk Management

16. Risk Management • Total 2006 Occurrences (6/19/07) • Total Occurrence Entered for 2006 totaled: 5,645 • Top Five Issues: • FALLS (1,398 – 25%) • MEDICATION (1,397 – 25%) • OTHER EVENTS (1,332 – 24%) • BEHAVIOR (811 – 14.3%) • TREATMENT/PROCEDURE (267– 5%)

17. Risk Management

18. Risk Management • For 2008: • Continue Action Plan Compliance • Expand Yellowstone Event System • Develop Additional “Packets for Information”

19. Claims • Reported Incidents & Claims: • We currently have 48 open Risk Management files and 140 closed Risk Management files. • We currently have 17 open claims and 25 closed claim files. • The breakdown of open claims is as follows: • 16 professional liability claims • 1 general liability claim. • 6 of these are in active litigation

20. Claims • 17 Open Claims • Montana - 12 • Idaho – 4 • Wyoming – 0 • NM - 1 • 2006 - 22 open • 2005 - 10 open • 25 Closed Claims • Montana - 16 • Idaho – 5 • Wyoming – 4 • NM - 0 • 2006 Closed Claims -4 • Montana - 3 • Wyoming - 1

21. Claims • Larger Awards • $250K (MT) - 2006 • $210K (MT) - 2006 • Payments in 2007 • Trouble Spots • Record Keeping – Documentations • Chain of Command • Privileges • Get the right person for job / community

22. Claims • Litigation Expense • Increases as the Claim Matures • Part of our Long – Term Strategy • Necessary Expense given the Alternatives

23. CMC Insurance Agency was formed in 2007 to provide additional insurance products that support the core products offered by Yellowstone Insurance Exchange, RRG.  •  The ultimate goal of CMC insurance is to provide one-stop shopping for insurance exchange and association members.

24. In creating CMC Insurance, the goals were to: • Create stronger insurance products that generate overall cost savings for association members • Provide a wider product line and stabilize pricing • Increase retention of membership and generate additional revenue for association equity holders • Control the quality of service partners

25. The agency brings together considerable insurance industry experience to provide a complete range of insurance products designed to complement the core products of Yellowstone Insurance Exchange, RRG. • Product focus • Employment Practices Liability • Physician & ER Physician Liability • Directors & Officers Liability

26. The agency is focused on the specialized insurance and risk management needs of hospitals and health care related organizations. • The agency has a firm commitment to provide the best possible service utilizing a range of insurance products developed for the health care industry from leading insurance organizations here in the United States and in London.

27. YIE - Key Success Factors • Strong member capitalization • Long term commitment • Stable growth - Control • Small to Midsize markets • No “Drift” from core competency • Past insurance cycles

28. YIE Goals: • Lower the overall exposure and market swings • Generate cost savings for your hospital in dividends • Install quality Risk Management Programs • Experience based underwriting critical to success

29. Yellowstone Insurance Exchange, RRG • Communications • 877-580-1100 • www.yierrg.com • Forms • Contacts • Applications • Newsletters • Company Information • mail@yierrg.com

30. Yellowstone Insurance Exchange, RRG • Questions