Newco Partners June 2009 Copy

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Newco Partners June 2009 Copy

  1. 1. NEWCO INSURANCE COMPANY OVERVIEW OF NON-STANDARD AUTO INSURANCE OPPORTUNITY CONFIDENTIAL JUNE 2009 THIS COMMUNICATION IS CONFIDENTIAL AND CONTAINS PROPRIETARY INFORMATION, INCLUDING TRADE SECRETS, BELONGING TO NEWCO INSURANCE COMPANY. NEITHER THIS DOCUMENT NOR ANY INFORMATION CONTAINED IN IT MAY BE REPRODUCED OR DISCLOSED TO ANY PERSON, EXCEPT AS EXPRESSLY AUTHORIZED IN WRITING BY NEWCO. THIS COMMUNICATION IS FOR DISCUSSION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR TO PURCHASE SECURITIES, NOR A SOLICITATION OF AN OFFER TO SELL OR TO PURCHASE SECURITIES. ANY SALE OR PURCHASE OF SECURITIES SHALL BE TRANSACTED THROUGH A REGISTERED BROKER-DEALER. © 2009– NEWCO PARTNERS Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  2. 2. Confidential Memorandum This confidential Overview of Opportunity (the “Overview”) contains proprietary non-public information regarding an existing insurance general agency and a start-up insurance company (collectively, the “Company”) and is furnished exclusively by the Company on a confidential basis. All recipients of this Overview (“Recipients’), regardless of the source from which they received the Overview, agree that all of the information contained herein is of a confidential nature, that they will treat it in a confidential manner, that they will not, directly or indirectly, disclose or permit their agents, representatives, employees, officers, directors or affiliates to disclose any of such information, and that they will use the Overview and any related information only to evaluate a specific transaction with the Company and for no other purpose. The information contained in this Overview has been obtained from the Company and other sources and has been prepared for the purpose of providing interested parties with general information to assist them in their evaluation of the operations of the Company. This Overview is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities. Any sale or purchase of securities shall be transacted through a registered broker- dealer. The Company reserves the right to negotiate with one or more prospective transaction partners at any time and to enter into a definitive agreement for the merger or sale of the Company and/or sale of related assets without prior notice to the recipient or other transaction partners. The Company also reserves the right not to enter into any transaction and to terminate, at any time, further discussions with any party and to modify data, documentation, confidentiality, and other procedures at any time and for any reason. This Overview contains certain forward-looking statements, including among others (i) anticipated trends in the Company’s financial condition and results of operations and (ii) the Company’s business strategy. These forward-looking statements are based largely on the Company’s current expectations and are subject to a number of risks and uncertainties. Actual results could differ materially from these forward- looking statements. NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY THE COMPANY AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION OR ANY OTHER WRITTEN OR ORAL COMMUNICATION TRANSMITTED OR MADE AVAILABLE TO A PROSPECTIVE PURCHASER OF EQUITY SECURITIES OF THE COMPANY. NOTHING CONTAINED IN THE OVERVIEW IS OR SHALL BE RELIED UPON AS A PROMISE OR REPRESENTATION, WHETHER AS TO THE PAST OR THE FUTURE PERFORMANCE OF THE COMPANY. ANY ESTIMATES OR PROJECTIONS CONTAINED HEREIN HAVE BEEN PREPARED BY, AND ARE BASED ON INFORMATION CURRENTLY AVAILABLE TO THE COMPANY AND INVOLVE SIGNIFICANT SUBJECTIVE JUDGMENTS AND ANALYSIS AND, ACCORDINGLY, NO REPRESENTATION OR ASSURANCE IS MADE AS TO THEIR ATTAINABILITY. ONLY THOSE REPRESENTATIONS AND WARRANTIES MADE IN A DEFINITIVE, WRITTEN PURCHASE AGREEMENT AND SUBJECT TO SUCH LIMITATIONS AND RESTRICTIONS AS MAY BE SPECIFIED THEREIN, SHALL HAVE ANY LEGAL OR BINDING EFFECT. Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  3. 3. NEWCO INSURANCE COMPANY OVERVIEW OF NON-STANDARD AUTO OPPORTUNITY NewCo has developed a niche opportunity to build and grow a multi-state private- passenger automobile insurance company specializing in non-standard coverage. Because of its long standing history and experience in the Private Passenger Auto Insurance Industry, NewCo has created a formidable business model that ensures a win-win proposition for the company itself and its investment partners. The five key strengths to this opportunity are the following: • Acquisition of an Existing and Profitable Carrier: NewCo is currently in talks with the acquisition of an existing B+ rated carrier that fits the criteria of its business strategy to build Critical Mass of Premium Volume of $650M over a 6- year period. • Production: NewCo has strong relationships with and – more importantly – the strong support of large retail producers of non standard auto premium in its key target markets. Through these producers, the Company expects to have access to over $500million in premium volume and expects to bind an additional $57M in Premium volume in year 1. • Profitability of Target Market: NewCo will concentrate exclusively on highly profitable lines of business, with a special emphasis on a niche market – non- standard and middle-market coverage for existing and emerging ethnic communities. Although NewCo anticipates that it will write other tiers of private- passenger auto coverage in the future, its initial focus will be on the non-standard tier, where there are a number of underserved niche opportunities. • Underwriting and Product Management: NewCo will leverage its experience in the non-standard and middle-market tiers to implement disciplined approaches to developing its products and selecting the specific risks to insure, always with a view toward binding the most profitable risks in its target niche. • Management: NewCo’s management team has an impressive – and profitable – track record of running multi-state private-passenger automobile insurance companies, particularly in non-standard lines. BUSINESS STRATEGY: 1. NewCo is seeking **$50Million in capital to execute Phase 1 of its Strategic Plan by acquiring an existing Carrier for its current Book Value and $25M in Phase 2 for additional Surplus in Year 2. The Company expects that it will grow its annual premium to about $775M within 6 years, producing an aggregate net income in excess of $180M with an IRR in excess of 26%. (See Financial Highlights) 2. NewCo is currently seeking a Primary Investor under a Joint-Venture arrangement and then syndicate the balance of additional funds required. Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  4. 4. Consolidated Gross Written Premium $900,000,000.00 $800,000,000.00 $700,000,000.00 $600,000,000.00 $500,000,000.00 $400,000,000.00 $300,000,000.00 $200,000,000.00 $100,000,000.00 $- Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Consolidated Gross Income $200,000,000.00 $180,000,000.00 $160,000,000.00 $140,000,000.00 $120,000,000.00 $100,000,000.00 $80,000,000.00 $60,000,000.00 $40,000,000.00 $20,000,000.00 $- Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  5. 5. Production NewCo’s management team has excellent relationships with a number of key producers, particularly in the Western and Mountain States. These producers have strongly encouraged the management team to launch a carrier and have pledged to help meet NewCo’s premium targets. Two of these producer groups, moreover, focus almost exclusively on NewCo’s largest target niche – the Latin-American community – and together control over $2.5 billion in premium. The strength of the management team’s relationships with these producers suggests that if all other things were equal, they would prefer to place business with NewCo than their current carriers. An important element of the Company’s distribution strategy, however, is that all other things are not equal. Instead, there are three additional, fundamental reasons – in addition to strong personal relationships – that the producers would prefer to place business with NewCo: 1. The producers are looking for stable, long-term partners in the non-standard auto space. While some large multi-line carriers have announced in recent years that they would be entering the non-standard market, the producers have found that these carriers are not actually offering products that would appeal to their non- standard customers and some appear to have pulled back substantial capacity. Similarly, because very few of these carriers have launched meaningful marketing campaigns aimed at non-standard customers, particularly in the Latino community, producers do not believe that their sales efforts are being supported by the carriers in the non-standard tiers. 2. For a variety of reasons, many producers would prefer to reduce the business that they do with the carriers that have historically been strong in the non- standard market, such as Progressive, Mercury General, and Infinity. Some of the reasons vary from producer to producer, but they include notions that the large carriers have undercut the producers by: • Competing against them with direct-sales models; and • Reducing both their commission structures and their opportunities to charge fees to the customers. Similarly, while Progressive, Mercury General, and Infinity are widely considered to have excellent customer-service and point-of-sale systems, some producers have complained that other carriers deploy cumbersome customer-service systems that increase the time it takes them to bind a policy or change a customer’s coverage. Accordingly, some producers have expressed a strong desire to move more business to a company like NewCo, which intends to deploy a user-friendly producer interface. 3. Perhaps most importantly, the commission structure that NewCo will offer the producers will be higher than the structures offered by the major non-standard and middle-market carriers. In offering a higher commission structure, the Company is not simply paying an above-market rate to secure market share. Rather, the Company will be saving substantial marketing and distribution resources by securing significant production from a few large brokers, and is passing some – but not all – of those savings back to the producers. Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  6. 6. In total, NewCo expects to generate $187 million in premium volume in the first full year of operations, which is expected to increase to $775M by Year 6. The Company anticipates that the bulk of the premium volume will come from the following key producers: • Company A: The Company has as its member agents California (1500 agents), Nevada (250 agents), Arizona (300 agents), Colorado (250 agents), and other states control in excess of $1.8 billion in total premium, including about $1.5 billion in California alone. • Company B: The Company currently controls a projected $350 million in premium volume, and it is projected to increase its total premium volume to over $500 million by the end of 2008. • Company C: The Company writes auto insurance in California, Arizona, Colorado, Nevada, New Mexico, Utah, and other states and controls over $35 million in total premium and is expected to grow to $140 million in five years. • Company D: The Company currently produces $1.7 billion in premium and has agreed to assign a portion of its premium volume to NewCo. • Company E: The Company has 16 offices in Utah and Nevada and produces approximately $14 million in premium volume each year. Profitability of Target Markets With its intended focus on the non-standard auto-insurance segment – with a special emphasis on the Latin-American community – NewCo will be targeting one of the most profitable segments within private-passenger auto insurance, as well as one of the more profitable niches within that segment. A few years ago, a number of large personal-lines carriers entered the non-standard market with considerable fanfare, leading to increased competition and lower rates. Much of that capacity has recently been withdrawn, however, as those carriers either shifted their focus away from the non-standard market, or have completely exited the space. As a result, the non-standard space in general has not only emerged as a highly profitable sector, but analysts predict that price pressures and competition will continue to ease. Within the broader non-standard space, moreover, the Company’s target definition of non-standard drivers and its target niche – the Latin-American community – have been particularly profitable: 1. Target Definition of Non-Standard: The term “non-standard auto” means different things to different companies. For some, for example, it suggests a risk pool consisting of young drivers with one or more accidents or violations. The Company, however, will target drivers who do not meet the typical definition of a “standard risk” for a variety of reasons that have nothing to do with their driving records. The bulk of NewCo’s target insureds, for example, will likely be insureds that do not fit into a typical standard program because of the low limits they purchase or because they select a monthly-payment option. Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  7. 7. 2. Latin-American Niche: NewCo will further specialize in the niche of Latin- American drivers in both the non-standard and middle-market tiers. In the experience of both the management team and NewCo’s key producers, Latin- American insureds have a significantly better risk profile than most non-standard customers, particularly in the Latin-American community, where insureds often seek far lower limits than other drivers and often prefer to resolve minor accidents without notifying their insurance companies. Underwriting and Product Management Disciplined underwriting is critical to the success of any insurer. For NewCo that underwriting process begins with product management – studying loss data carefully and tightly defining the parameters of the risks that the Company will accept. As set forth above, the Company intends in the first few years of business to write almost exclusively in select segments of the non-standard market, targeting drivers who seek relatively low limits for both bodily injury and physical damage. By limiting the initial product offering to low limits with limited physical-damage coverage, NewCo expects to avoid not only high value claims, but also costly loss-adjustment expenses and litigation exposure. As the Company builds its overall portfolio, it will evaluate expanding its product offer to include standard and preferred business, but the vast majority of the premium volume will continue to come from non-standard and middle-market risks. NewCo intends to monitor its bound business closely, moreover, to ensure that it achieves its optimal mix of business and that actual loss experience is in line with expectations. With this approach, NewCo projects that its loss ratios – including loss-adjustment expenses will be not greater that 64% in year 1 to approximately 57% by year 6. Management NewCo’s management team consists of 3 partners that have substantial experience at running all aspects of personal-lines insurance companies, particularly in the non- standard auto insurance as well as Sales. The key partners who lead the Company include: • The a former president and chief executive officer of a large specialty auto insurance writer who has over 28 years of experience in senior management, sales, marketing, and operations within personal-lines carriers; and • A former senior executive officer of two publicly-traded insurance companies, CIGNA and American Bankers Insurance Group, Inc. (now an operating unit of Assurant, Inc.), where he had significant underwriting, sales, regulatory, and P&L responsibility. • A former senior executive of 2 Property & Casualty Insurance Agencies where he had significant Administration and Sales responsibility. Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  8. 8. The Company has also targeted a number of key executives to join NewCo upon capitalization. These executives – all of whom have substantial and profitable experience in the non-standard and middle-market auto insurance space – include a chief financial officer, product manager, claims executive, and chief information officer. Operational Strategy NewCo’s management team will draw on their decades of experience in running insurance companies to establish an efficient and effective operation. Highlights of the Company’s operational plan include: 1. Licensing: The Company expects that the fastest route to create critical mass and intrusion into the market place will be to purchase an existing B+ rated company (currently being reviewed by NewCo), that is licensed in 48 states. With this acquisition, time to production after Regulatory and Department of Insurance approvals will be no more that 90-120 days. 2. Staffing: In addition to key executives discussed above, existing staff would be supplemented as needed to handle additional business volume, primarily in the claims area. The Company projects that its headcount will grow from 205 currently to 225 by the end of the first year of operations, and to 375 within five years. The Company further intends to establish its headquarters in New York as well as Tampa, and Salt Lake City. 3. IT Systems: In addition to the acquisition of the B+ Rated carrier, NewCo’s Management team has already reviewed and inspected the current IT Systems, accounting and financial-reporting systems, and considers that these systems are more then adequate to grow the company to its intended projections of $775Million in Year 6. As a further note the current point-of-sale (P.O.S) delivery system will allow producers to enter critical customer and underwriting data remotely, make coverage changes, generate endorsements, and monitor payment status and other customer-service issues. Such ‘P.O.S’ systems are expected to substantially reduce the Company’s customer-service and call-center requirements, as well as create substantial efficiencies for the producers. Because the ability to bind and issue policies quickly and easily is critical to most producers’ profitability, such efficiencies are always important considerations when producers pick which companies they want to promote. 4. Claims Management: Because claims are one of the single most important factors in driving a private-passenger auto insurer’s profitability, existing staff would be supplemented as needed to handle the claims area. NewCo intends to manage its claim activities very closely and does not intend to outsource the function, as some insurers have. One of the most important hires will be an effective and experienced claims professional who will have overall authority for ensuring that the Company pays claims fairly and effectively, but within its defined loss parameters. The Company will hire adjustors as it grows, and will contract with outside vendors to provide certain claims-related services, such as damage appraisals. Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  9. 9. Risks and Risk Management There are a number of risks associated with operating – and investing in –an insurance company, including underwriting risk, operational risk, financial risk, and regulatory risk. One of the most serious concerns for new entities is “start-up risk,” the risk that an untested management team in a new venture with uncertain revenue projections will not achieve its early objectives, which will then hinder its ability to achieve its longer-term objectives. By leveraging its strong relationships with a number of key producers who are highly motivated to assist the Company, and by virtue of its highly regarded and experienced management team, NewCo expects that it has substantially reduced its start-up risks. Other risks include, but are certainly not limited to, the risk of maintaining adequate loss reserves, the risk of unexpected underwriting losses from changes in legal-liability statutes and judicial rulings, risks associated with dishonest employees; the risk of catastrophic losses from extreme weather or other natural disasters, the risks that the regulatory requirements for operating in these businesses will change substantially, competitive risk from new or existing insurers, interest-rate risk, or general market or economic risk. NewCo intends to implement a robust risk-management program to achieve the following: • Identifying the potential negative events that could affect its ability to meet its objectives; • Quantifying those risks in terms of both likelihood and consequences; • Implementing effective solutions to mitigate or hedge those risks; and • Monitoring the effectiveness of its risk-management initiatives. While it is impossible to eliminate all risks, NewCo’s risk-management program will be designed to reduce the risks that it faces to an acceptable level, thereby providing greater assurances that the Company will achieve its forecasted financial results. FINANCIAL HIGHLIGHTS:  Premium increases significantly under the aggressive growth strategy, with projected premiums starting at $187 million in year 1 and growing to $775 million in year 6.  Average five-year returns are projected to be 26.5%, although these returns may be further improved by using debt or other alternative capital sources.  Annual net income expected to grow to $180 million in year 6.  Book equity increases to approximately $180 million in year 6, representing a 3.6x increase over the initial investment.  Combined ratios are slightly lower than in the base line plan. Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  10. 10.  Fee income generated is expected to increase significantly under the new plan to over $40.86M** in Year 6.  Generation of Policy Fees Breakdown: 4.5-5% of Gross Written Premium (GWP); Monthly Billing Fees of 2.5-3% of GWP and miscellaneous Fees of 1% of GWP. ** Please Note** This fee income value is NOT reflected in the Surplus. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Initial Surplus $50,000 $56,544 $94,143 $114,072 $142,443 $180,699 Additional Paid In $0 $25,000 $0 $0 $0 $0 TOTAL SURPLUS $50,000 $81,544 $94,143 $114,072 $142,443 $180,699 Prem to Surplus B4 Reins 3.74 4.29 4.29 4.29 4.29 4.29 Prem to Surplus Post Reins 2.99 3.00 3.00 3.00 3.00 3.00 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Written Premium $187,000 $349,474 $403,469 $488,882 $610,472 $774,424 Reinsurance 20.0% 30.0% 30.0% 30.0% 30.0% 30.0% Ceded Premium $37,400 $104,842 $121,041 $146,665 $183,142 $232,327 Reins Rate 7.0% 7.0% 5.0% 5.0% 5.0% 5.0% Reins Cost $2,618 $7,339 $6,052 $7,333 $9,157 $11,616 Net Written Premium $149,600 $244,632 $282,428 $342,217 $427,330 $542,097 Earned Premium $127,160 $207,937 $240,064 $290,885 $363,231 $460,782 Loss & LAE $81,382 $129,961 $147,159 $174,531 $212,490 $262,646 ULAE $6,358 $10,397 $10,803 $11,635 $16,345 $20,735 Reins Charge $2,618 $7,339 $6,052 $7,333 $9,157 $11,616 Acquisition Exp $22,253 $35,349 $40,811 $49,450 $61,749 $78,333 Operating Exp $7,948 $12,476 $13,204 $14,544 $17,253 $20,735 Total Expense $120,559 $195,522 $218,029 $257,494 $316,995 $394,065 Underwriting Income $6,601 $12,415 $22,035 $33,391 $46,236 $66,717 Investment Income $3,467 $6,968 $8,625 $10,257 $12,619 $15,818 Income B4 Tax $10,068 $19,383 $30,661 $43,648 $58,854 $82,535 Income Tax $3,524 $6,784 $10,731 $15,277 $20,599 $28,887 NET INCOME $6,544 $12,599 $19,930 $28,371 $38,255 $53,648 Book Return on Capital Average Capital $53,272 $62,843 $104,108 $128,258 $161,571 $207,523 Und Ret On Capital - Pre Tax 12.4% 19.8% 21.2% 26.0% 28.6% 32.1% Return On Capital - Pre Tax 18.9% 30.8% 29.5% 34.0% 36.4% 39.8% Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  11. 11. …Financial Highlights continued…. Loss & LAE 64.0% 62.5% 61.3% 60.0% 58.5% 57.0% ULAE 5.0% 5.0% 4.5% 4.0% 4.5% 4.5% Effective Reins Rate 2.1% 3.5% 2.5% 2.5% 2.5% 2.5% Acquisition 17.5% 17.0% 17.0% 17.0% 17.0% 17.0% Operating 6.3% 6.0% 5.5% 5.0% 4.8% 4.5% Implied CR 94.8% 94.0% 90.8% 88.5% 87.3% 85.5% Investment Income Capital $50,000 $81,544 $94,143 $114,072 $142,443 $180,699 Unearned Premium $11,220 $29,567 $39,530 $46,848 $57,716 $72,707 Loss Reserves $20,346 $52,836 $69,280 $80,423 $96,755 $118,784 TOTAL $81,566 $163,947 $202,952 $241,343 $296,915 $372,190 Assumed Rate 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% Investment Income $3,467 $6,968 $8,625 $10,257 $12,619 $15,818 Loss Reserves Beginning $0 $40,691 $64,980 $73,580 $87,265 $106,245 Incurred $81,382 $129,961 $147,159 $174,531 $212,490 $262,646 Payout $40,691 $105,672 $138,560 $160,845 $193,510 $237,568 Ending Reserve $40,691 $64,980 $73,580 $87,265 $106,245 $131,323 Average Reserve $20,346 $52,836 $69,280 $80,423 $96,755 $118,784 Unearned Premium Beginning Balance 0 $22,440 $36,695 $42,364 $51,333 $64,100 Net Prem Written $149,600 $244,632 $282,428 $342,217 $427,330 $542,097 Premium Earned $127,160 $207,937 $240,064 $290,885 $363,231 $460,782 Ending Unearned $22,440 $36,695 $42,364 $51,333 $64,100 $81,314 Average Balance $11,220 $29,567 $39,530 $46,848 $57,716 $72,707 Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.
  12. 12. Use of Funds & Exit Strategy: NewCo’s strategic Plan is a 2-Phase approach in its Expansion Model: Phase 1: Year 1: $50M is needed for the acquisition of an existing B+ rated Insurance Carrier with Surplus of approximately ($50M); that is licensed in 48 plus states. NewCo’s management team will add its $50M in premium to the acquisition and begin the “Critical Mass” of $187M of Premium in Year 1. Phase 2: The addition of $25M in additional Surplus is needed for Year 2 to continue the Critical Mass of Premium Volume (see below) that will also reduce the need for Re-Insurance Costs. No additional Surplus will be needed. Year 2: $81.5M in additional Surplus allows NewCo to service another $162M in Premium to bring the Premium Volume to $349M. Year 3: $94.1M Surplus allows NewCo to service another $54M in Premium to bring the Premium Volume to $403M. Year 4: $114M Surplus allows NewCo to service another $85M in Premium to bring the Premium Volume to $488M. Year 5: $142M Surplus allows NewCo to service another $122M in Premium to bring the Premium Volume to $610M. Year 6: $180M Surplus allows NewCo to service another $164M in Premium to bring the Premium Volume to $774M. Exit Strategy NewCo Partners intends to go public within 5-6 years. Respectfully Submitted, Joe Reaiche NewCo Snr. Managing Partner Confidential Memorandum © NewCo Partners This communication is for discussion purposes only and does not constitute an offer to sell or to purchase securities, nor a solicitation of an offer to sell or to purchase securities.

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