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

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

Agenda 10:00am – 12:00pm 12:00 pm Box Lunch 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)

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

Financials Assets Subscriber Savings Account Distribution 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

Asset Allocation

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

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

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

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

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

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

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

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

Risk Management

Total 2006 Occurrences (6/19/07) 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%)

Risk Management

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

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

Claims 17 Open Claims 2006 - 22 open 2005 - 10 open 25 Closed 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

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

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

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.

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

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

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.

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

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

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

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