1. WSTIP Assessing Economic Funding Needs Strictly Private and Confidential Draft Result Update June 28, 2012 DISCUSSION PURPOSES ONLY

2. PwC (DRAFT) WSTIP – Assessing Economic Funding Needs 2 Summary of Preliminary Results December 31, 2011

3. PwC Components of Capital Requirements 1-in-100 year scenario Reserving Risk booked reserves insufficient Underwriting prospective year deviates from budgeted amount Asset and Credit Risk Assets impaired Operational External fraud, software failure, etc.

4. PwC Process Identify and quantify individual risks Reserving Underwriting Asset & Credit Operational Assess correlation AL & APD versus AL & GL Aggregate risks Resulting Tools

5. PwC Broader Pooling Industry Perspective Capital Issue Functioning as “mutual insurers” but largely operating as “group self-insurers” Metrics impact decisions Relevance of “group self- insurance” model today? Capital levels receiving more scrutiny

6. PwC Benefits Perspective on funding adequacy of the program Better decision making Does it make sense to increase the SIR? More efficient program External and internal scrutiny Is it really necessary to have a $20m fund balance?

7. pwc.com This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2012 PwC. All rights reserved.“PwC” and “PwC US” refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.