1. May 5, 2009 John Wortman, CEO Louisiana Citizens Property Insurance Corporation

2.  Background on Louisiana Citizens  Current Status  Assessment Process  Depopulation  Future Challenges 2

3.  Property Residual Market Started in Louisiana in 1970  FAIR Plan  Coastal Plan  Audubon Insurance Managed the Pools’ Operations  Policy Issuance and Maintenance  All Claim Handling  Systems  Financial Reporting 3

4.  In Early 2000’s Audubon Shut Down Risk Bearing Operations (Kept Servicing Carrier Operations)  In 2002 FAIR and Coastal Plans Boards Became Concerned That All Audubon Operations Might be Shut Down  Made a Decision to Hire PIAL to Oversee the Development of an In House System that would be used by Multiple Service Providers 4

5.  At the Time, PIAL was Very Small with Little Insurance Experience (Fewer than 20 People)  Protection Class Determination for Cities and Towns  Individual Commercial Property Building Rating  In 2002 PIAL Hired SBS (No RFP) to Build a Policy Management System  SBS had Little Insurance Experience  PIAL had Little Insurance Operational Experience 5

6.  Began to Move Forward with the New Strategy in 2003  In 2003 the Legislature Formed Louisiana Citizens Property Insurance Corporation as the Successor to the FAIR and Coastal Plans  Citizens Board was Formed in the Fall of 2003 (Much Overlap with PIAL Board)  Decision from Citizens Board to Continue the Strategy (New System and Multiple Service Providers) 6

7.  Citizens Entered a Contract with PIAL to Manage Operations  In Late 2004 an RFP for Service Providers was Released  Awards were Made to Three Vendors to Become Service Providers April 1, 2005  Unsuccessful Bidders Brought Legal Action Against the Process  Implementation was Moved Back Six Months (Until October 1, 2005) 7

8.  Courts Held the Process was Fair and Let Awards Stand (July 2005)  SBS Continued to Build the System  Service Providers Began to Gear up to Take Over Most Audubon Functions on October 1, 2005  PIAL Began to Hire Personnel to Build a Website and to Begin to Perform Insurance Functions 8

9.  August 2005 – Hurricane Katrina Struck Louisiana  September 2005 – Hurricane Rita Struck Louisiana  Decision Made in September to Proceed to Implement New Operations October 1, 2005  Little Insurance Company Experience at PIAL  Storms Disrupted Physical Workspace  Storms Disrupted Employee Lives 9

10.  Service Providers were New  System Did Not Work Properly  Company Had to Raise $1 Billion in Debt  Storms Generated 80,000 New Claims  As a Result of the Above, Operations were Inefficient  In Early 2007 Insurance Commissioner Hired a Consulting Firm to Examine Citizens 10

11.  Their Report to the Board in March did not Paint a Pretty Picture  Board Decided to Employ a CEO and Begin to Separate from PIAL  CEO Hired April 23, 2007  Assessment of Conditions  Plan to Separate and Build a Citizens Organization 11

12.  Hired Experienced Insurance Personnel  Completed 2005, 2006 and 2007 Financials  Outside Auditors were Hired  Outside Audits Completed  Completed PIAL/Citizens Separation Plan (Work Space and Work Tools) 12

13.  Extended Service Provider Contracts to 4/1/09 (Out of Storm Season)  RFP for New Service Contractor Bids has been Released – Awards Made Effective May 1  Assessed Viability of the Policy Management System  Determined not Salvageable – RFP for New System has been Released – Contract Awarded 13

14.  Developed Comprehensive Catastrophe and Disaster Recovery Plans  Moved Server Rooms out of Harms Way  Assessment Process Ahead of Schedule to Pay Off Debt  Current Exposures (Before Depopulation)  170,000 Policies in Force  $260,000,000 in Annualized Premiums  $35 Billion of Total Insured Values  Third Largest Property Insurer in Louisiana 14

15.  Established RFP for Reinsurance Broker  Benfield Selected  Reinsurance Program Effective June 1, 2008  Purchased 90% of $500 Million Excess of a $200 Million Retention  After Depopulation - One in One Hundred Year Event $850 Million 15

16.  Hurricanes Katrina and Rita  80,000 Total Claims  78,500 Closed  1,500 Open Law Suits  5 Certified Open Class Action Law Suits  Timely Investigation and Payments  Policy Fee  Overhead and Profit  $1.3 Billion Paid  $1.5 Billion Final Estimate 16

17.  Hurricane Gustav (September 1, 2008)  Generated 51,000 Claims  50,300 Closed  Incurred $230 Million  Hurricane Ike (September 13, 2008)  Generated 3,600 Claims  3,400 Closed  Incurred $12 Million 17

18.  Regular Assessment  Assess Insurance Industry  No More than One Assessment per Year  Up to 10% per Assessment  Property Lines of Insurance  Due within 30 Days of Assessment  May Recoup from Policyholder 18

19.  Emergency Assessment  Assess Policyholder  Up to 10% per Year  Property Lines of Insurance  Industry Collects from Policyholder  Policyholder Receives a Tax Credit for Assessment  Current Assessment 5%  Emergency Assessment Timelines  April 1 – Insurance Companies Report Prior Year DWP to Louisiana Insurance Department 19

20.  July 1 - Department of Insurance Certifies the Total Direct Written Premium to La Citizens  July 1 - Trustee Notifies La Citizens of the Debt Service Requirements for the Next Bond Year  Aug 1 - La Citizens Determines the Minimum Levy Requirements (in dollars) and the Uniform Assessment Percentage Applicable to Affected Policyholders for the Next Bond Year  Aug 1 – La Citizens Confirms or Revises its Determination of the Plan Year Deficit (2005 Katrina/Rita)  Sept 1 - Department of Insurance Verifies the Determination of the Uniform Assessment Percentage 20

21.  Sep 15 - The Corporation Notifies Affected Insurance Companies of the Assessment Percentage  Jan 1 - Effective Date for (2005) Deficit Emergency Assessment at the Assessment Percentage  Mar 31 - End of First quarter of Collections  Apr 30 - Deadline for Remittance of First Quarter Collections of 2005 Deficit Emergency Assessment by Affected Insurance companies 21

22.  Depopulation Process  Takeout Company Signs Confidentiality Agreement  LCPIC Provides Database of Available Policies to Company  Takeout Company Selects Policies  Agents Authorize Policies to Company of Their Choice  Take out Company Assumes Authorized Policies on Assumption Date  Takeout Company Contracts with Agent 22

23.  LCPIC Maintains Policies Until Expiration  Takeout Company Issues Replacement Policy at Renewal  Takeout Company is Responsible for Losses from Assumption Date  Round I (March 1, 2008)  7 Companies Participated  26,000 Policies Removed  $6 Billion in TIV  $40 Million in Premium 23

24.  Round II (December 1, 2008)  8 Companies Participated  15,000 Policies Removed  $3 Billion in TIV  $24 Million in Premium  Key Issues (Round I)  New to Everyone  Rates and Forms  Multiple Companies Authorized to Remove Same Policy  Effective Communication 24

25.  Manual Process  Key Issues (Round II)  Automated Authorization - More Effective Use of Web Site  On-line Agent Registration  Secure Web Portal for Company Selection Process  Secure Web Portal for Agent Authorization (Eliminated Duplicates)  Simplified Opt Out Procedure  La Citizens Confirmed Assumptions to Agents and Insureds 25

26.  Round III  Taking Place at this Time (will Conclude June 1)  Benefits  Policyholders have Wider Choice of Insurers  Lower Prices  Agents have New Markets  Increased Economic Activity in Louisiana  LCPIC Reduces PIF Count  Less Chance of Industry Assessment 26

27.  Implement the New System  Complete Monthly Financial Reporting  Continue to Evaluate and Test the Catastrophe Plan  Refine the Website  Continue to Work on Depopulation  Implement New Service Provider Contracts 27

28.  Establish Detailed Financial Plans  Establish Detailed and Measurable Operating Objectives and Plans  Develop Agency Council and Agency Training Programs  Continue to Develop Workflow Improvements 28