SYNERGY AND VALUE INVESTING The Spencer Capital Story Presented By: Tina Youngblood, Vice Chair, Spencer Capital Holdings CEO, Spencer Re Entrepreneurial Insurance Symposium September 1-2, 2015 Dallas

Birth of Spencer Capital  Founder, Dr. Ken Shubin Stein’s three passions as a child – investing, medicine and … insurance (particularly Berkshire Hathaway)  Left practicing medicine to invest full time and get involved with public health – co-founded Crutches 4 Kids  Started Spencer Capital Management and continues to serve as portfolio manager for the value- oriented firm – 15 year track record  Part of the value-oriented investing philosophy involves having a permanent capital vehicle  Launched holdings company as a permanent capital vehicle and the platform for investing in financial services companies A PURSUIT OF THREE PASSIONS Strictly Confidential. Not for Distribution. | 1

Investment Philosophy  Applies scientific method in evaluating investments – works to avoid cognitive biases  Follows Buffett style of business building – long-term compounding instrument that invests in businesses not stocks/securities  Look for excellent businesses run by talented people with integrity  To quote Warren Buffet, “In looking for people to hire, you look for three qualities – integrity, intelligence and energy. And if you don’t have the first, the other two will kill you.”  “Buy and hold” strategy – serve as an alternative to private equity – our ideal holding period is … forever SCIENTIFIC, PROCESS-ORIENTED, VALUE-BASED APPROACH Strictly Confidential. Not for Distribution. | 2

2000 Spencer Capital Management Formed 2011 Spencer Capital Holdings Formed 2011 SCH Acquires Spencer Re Reinsurance Business 2015 SCH Acquires USARG Captive Manager 2015 SCH Acquires SWDS F&I Agency Grow SCH organically and via acquisitions Spencer Capital’s Growth Story Strictly Confidential. Not for Distribution. | 3 TIMELINE SINCE 2000

Spencer Re Overview  Licensed as the first Class III international insurer in Puerto Rico in 2006, Spencer Re primarily offers reinsurance solutions to auto dealers for Vehicle Service Contracts (VSCs) sold to car buyers that provide coverage for certain auto repairs  Enables dealers through preferred shareholdings to realize underwriting profits and investment income on the contracts  Switzerland tax residency provides certain other benefits to clients and shareholders  Future growth and diversification into other reinsurance lines of business is being considered Strictly Confidential. Not for Distribution. | 4 TAX EFFICIENT REINSURANCE SOLUTIONS

USA Risk Group Overview Strictly Confidential. Not for Distribution. | 5  Founded in 1981 and headquartered in Barre, VT, USARG has a management team that is comprised of insurance industry veterans who are responsible for writing and developing captive insurance policies  Primarily a provider of onshore and offshore captive management services that include formation, licensing and ongoing management to over 300 clients in 20 domiciles  Core business is captive management of single parent captives, agency captives, group captives, risk retention groups, and special purpose captives  Provides placement services for alternative risk and specialty risk programs, early assessments of captive feasibility, program development including assisting with carrier and reinsurer selection and structuring of the entity LARGEST INDEPENDENT CAPTIVE MANAGER, FOURTH LARGEST OVERALL

Southwest Dealers Services (SWDS) Overview  An independent provider of F&I products and services to automobile dealers primarily across the Southwestern and Midwestern portions of the United States  Has grown significantly over the last several years by meeting the needs of dealers via new products and services, as well as expanding into new territories  Currently has a strong dealer network, with over 500 dealerships across the country  Growth expected through targeted acquisitions and organic growth Strictly Confidential. Not for Distribution. | 6 A LEADING PROVIDER OF FINANCE & INSURANCE (F&I) PRODUCTS

Strategic Synergies  Cross sell opportunities between each of the subsidiaries  SWDS is a current client of Spencer Re and a natural fit to work together  USARG client base offers diversification opportunities for Spencer Re and captive options to SWDS clients  Asset management opportunities with each subsidiary  Spencer Capital Management offers attractive investment strategy for clients in each subsidiary  High customer retention and veteran management teams  USARG and SWDS enjoy > 90% long-term customer retention  Management teams with over 20 years’ experience in the industry WHY WE CHOSE THESE BUSINESSES Strictly Confidential. Not for Distribution. | 7

Culture Matters Strictly Confidential. Not for Distribution. | 8

The Spencer Way…  Autonomy and a sense of permanence  Accountability with a long-term horizon (rather than short-term)  Do the right thing and do it the right way  Transparency and open and honest communication  Pull versus push support from the parent  Many mergers and acquisitions fail because of cultural fit rather than economic reasons RESPECT, AUTONOMY, ACCOUNTABILITY AND TEAMWORK Strictly Confidential. Not for Distribution. | 9