1. AMF Risk Management Solutions (AMF)
Captive Insurance Proposal for Funding Group Medical Stop Loss Insurance For:
William G. McKelvey
President
300 Congress Street
Quincy, Massachusetts 02169
Telephone: (866)
Fax: (617)
Cellular: (617)
A.M. Franklin Insurance Agency, Inc. (AMF)

2. AMF Risk Management Solutions Unique Stop Loss Business Offer
Traditional Stop Loss.
Stop Loss With Profit Sharing.
Innovative Captive Option – Bermuda.
All Products/Services written with major A+
Insurance Companies.

3. Who Provides the Major Services Under the AMF Risk Management Solutions Program?
Insurance companies with an “A+” Best Rating.
The Marchmont Insurance Company – Subsidiary of BF&M, Bermuda’s largest health insurance underwriter for citizens of Bermuda. “A” Best Rating.

4. Driving Healthcare Cost Down…. The Need for Insurance Captives
To foster more healthcare competition
A. The D.O.L. is encouraging captive formations to fund employee benefits.
Well managed healthcare programs funded through captives assist employers in controlling healthcare costs.
Captives help stabilize reinsurance rates by offering additional capacity to underwrite risk.
To reward brokers, agents & consultants for the design and implementation of well managed healthcare programs for employers.

5. Healthcare Cost Management
TODAY
Well Managed Healthcare Plan
$$$ Profits
$$ Insurance Company $$

6. Healthcare Cost Management Well Managed Healthcare Plan
TOMORROW
Well Managed Healthcare Plan
$$$ Profits
YOU And Your Clients

7. The AMF Risk Management Solutions Captive Program
Operates Like Conventional Stop Loss from the Employer’s Stand-Point.
Marchmont’s “Protected Cell” Captive serves as the vehicle for Producers to share profits/assume risk.
Tax advantages….but please consult your tax advisor.

8. Sample Of One TPA’s Captive Results
Financial Summary
Gross Written Premium $ ,498,751
Marchmont Specific/Aggregate Profit $ ,049,791
Specific Pooling Profit $ ,528
Total Profit $ ,559,319
Total Profit as a % of GWP %

9. Sample: Marchmont Risk Structure
$1,000,000/Person/Year
Insurance Company Risk
Marchmont/Producer
Risk
(80%)
Insurance Co.
Risk
(20%)
$500,000*
($7,500 to $500,000)
Employer Stop Loss Risk
Lives: 10 lives and greater.
Deductible: $7,500 to $500,000.
Captive Risk: Producer takes as little as 25%, or as great as 80% of Non-Insurance Company portion of $500,000 corridor; AMF takes the remainder (if any).
Lifetime Max.: $1,000,000 Per Person Per Year recommended.
* Set at this level for 2008 treaty year. May vary in future years.

10. Additional Product Features
No outside reinsurance on first $1,000,000. Our carriers both front and reinsure.
Aggregates – 20% & 25% corridors.
PPO Database – over 2,200 networks evaluated by AMFRMS for discounted rates.
Aggregate only stop loss (wrap) available over other insurers “high deductible” major medical plans.
Aggregate only stop loss available over self-insured dental plans with more than 50 employee participants.

11. Functions & Responsibilities of Parties Involved in Marchmont Program
Employer’s Self-Funded Group Medical Plan
Producer
Receive RFQ from Employers & Forward to AMFRMS for Proposal
Provides Funds to Marchmont to back its Share of Risk and to Pay for Captive Fees
Insurance Company
Provides Policy to Employer
Cedes Underwriting & Claims Paying Function to AMFRMS
Retains a Portion of Risk
Cedes Remainder of Risk to Marchmont
AMFRMS
Underwriters on Behalf of Insurance Company
Pays Claims In Accordance with Policy/Employer Plan Document
Retains a Portion of Risk through Marchmont
Receives RFQ from Producer
Collects/Premiums/Remits/Fees
Marchmont Insurance Company
Assumes a Portion of Risk Backed by Funds Held on Deposit from Producer/AMFRMS
Provides Accounting Services
Dividend Distributions to AMFRMS & Producer

12. AMF Risk Management Solutions Medical Stop Loss Risk Sharing Captive Program Projections
Illustration # 1
40% GWP Loss Ratio
I Gross Premiums
$ ,000,000.00
II. Program Expenses (37.5%) (Commissions 15%; Taxes 3%; Fronting 5%; Block Cover 4.5%; MGU 10%)
$ (375,000.00)
III. Net Premiums
$ ,000.00
IV. Pooling Charges (Avg. 3% $30,000 Spec)
$ (30,000.00)
V Claims Expense (40% LR)
$ (400,000.00)
VI. Catastrophic Claims Reimbursement (Assumes 0%) $
(Claims above the $500,000 corridor)
VII. Profits from $500,000 corridor (III – IV – V + VI)
$ ,000.00
Total Estimated Profits as a % of GWP
19.5% GWP
* Producer can assume 25% to 80% of risk. 80% of risk would generate
an estimated Producer Profit/Loss of:
15.6% GWP

13. AMF Risk Management Solutions Medical Stop Loss Risk Sharing Captive Program Projections
Illustration # 2
50% GWP Loss Ratio
I Gross Premiums
$ ,000,000.00
II. Program Expenses (37.5%) (Commissions 15%; Taxes 3%; Fronting 5%; Block Cover 4.5%; MGU 10%)
$ (375,000.00)
III. Net Premiums
$ ,000.00
IV. Pooling Charges (Avg. 3% $30,000 Spec)
$ (30,000.00)
V Claims Expense (50% LR)
$ (500,000.00)
VI. Catastrophic Claims Reimbursement (Assumes 0%) $
(Claims above the $500,000 corridor)
VII. Profits from $500,000 corridor (III – IV – V + VI)
$ ,000.00
Total Estimated Profits as a % of GWP
9.5% GWP
* Producer can assume 25% to 80% of risk. 80% of risk would generate
an estimated Producer Profit/Loss of:
7.6% GWP

14. AMF Risk Management Solutions Medical Stop Loss Risk Sharing Captive Program Projections
Illustration # 3
65% GWP Loss Ratio
I Gross Premiums
$ ,000,000.00
II. Program Expenses (37.5%) (Commissions 15%; Taxes 3%; Fronting 5%; Block Cover 4.5%; MGU 10%)
$ (375,000.00)
III. Net Premiums
$ ,000.00
IV. Pooling Charges (Avg. 3% $30,000 Spec)
$ (30,000.00)
V Claims Expense (65% LR)
$ (650,000.00)
VI. Catastrophic Claims Reimbursement (Assumes 0%) $
(Claims above the $500,000 corridor)
VII. Profits (Loss) from $500,000 corridor (III – IV – V + VI)
$ (55,000.00)
Estimated Profits (Loss) as a % of GWP
(5.5%) GWP
* Producer can assume 25% to 80% of risk. 80% of risk would generate
a estimated Producer Profit/Loss of:
(4.4%) GWP

15. AMF Risk Management Solutions Medical Stop Loss Risk Sharing Captive Program Projections
Illustration # 4
85% GWP Loss Ratio
I Gross Premiums
$ ,000,000.00
II. Program Expenses (37.5%) (Commissions 15%; Taxes 3%; Fronting 5%; Block Cover 4.5%; MGU 10%)
$ (375,000.00)
III. Net Premiums
$ ,000.00
IV. Pooling Charges (Avg. 3% $30,000 Spec)
$ (30,000.00)
V Claims Expense (85% LR)
$ (850,000.00)
VI. Catastrophic Claims Reimbursement (Assumes 0%) $
(Claims above the $500,000 corridor)
VII. Profits (Loss) from $500,000 corridor (III – IV – V + VI)
$ (255,000.00)
Estimated Profits (Loss) as a % of GWP
(25.5%) GWP
* Producer can assume 25% to 80% of risk. 80% of risk would
generate an estimated Producer Profit/Loss of:
Approximately (7.50%) GWP

16. AMF Production Requirements
Traditional Stop Loss Source
*15% Profit Sharing Arrangement
AMF/Marchmont/Captive Risk Sharing Option
Minimum Production: $1,500,000
Minimum Production: $3,000,000
Renewal Persistency: 80%
New Business Growth: 3 Cases per year
New Business Growth: 3 Cases per year minimum
New Business Growth: 5 Cases per year
Requirements:
Complete premium/claims
history for initial assessment.
Last look guaranteed on all
renewals & new business.
If AMF matches or beats
competitor – accounts to
be placed with AMF.
competitor – accounts to be
placed with AMF.
*applies to $500,000 risk corridor only.

17. Producer Cost To Participate
Traditional Stop Loss Source
* Profit Sharing Arrangement
AMF/Marchmont Captive
Producer’s Financial Commitment $0
Captive Rental Fee
$25,000 first two years, $40,000 thereafter up to five years
Preference Shares Purchase
$1,000 –
One time fee
Risk Capital
1.8% to 7.5% of Gross Written Premium
* Captive & Other Fees are charged against profits only if profits are generated.