Joint webinar by InsuranceIR and WebFilings on Using the 10-K to Enhance the Investor Relations Effort

1. Using the 10-K to Enhance the Investor Relations Effort A Primer on the 10-K’s Elements and How They Serve Investor Needs Heather J. Wietzel, PrincipalInsuranceIR LLCInsuranceIR.com

2. Safe Harbor This presentation is intended to be general in nature I am not an attorney, if you need specific advice, please consult your legal counsel or accounting firm Every company and every 10-K is different The regulations allow significant flexibility, leading to wide variations Examples used today are from published 10-Ks No relationship with selected companies No “inside” insight into their objectives, etc. Examples primarily drawn from insurance company reports

3. Enhancing the IR Effort Why companies should integrate other investor communication tools with the 10-K Which elements of the 10-K can be leveraged in other materials How companies can leverage the 10-K to achieve “best-in-class” investor communications

4. Why? 10-K has management’s attention! Section 302 of SOX: CEO and CFO have direct and personal accountability, with meaningful penalties for “knowing” misrepresentation SEC Director of Corporation Finance, Meredith Cross (at 2010 NIRI National): "Companies should tell a consistent story, both inside and outside their filings." If it’s in the 10-K, it’s fully disclosed Limits Regulation FD concerns 10-Ks often draw on a depth of resources unavailable to one- and two-person IR teams

5. … and Investors Read Them! Example from a Stifel Nicolaus research report: “We’re fine-tuning our earnings model for XXX to incorporate some of the segment-specific expense data included in its 10-K filings." Delta Reports from Thomson Reuters StreetEvents: “Quickly review the differences between sequential 10-Ks or 10-Qs with Delta Reports, which highlight all changes in a separate column.”

6. Overview of 10-K “Items” Item 1 – Business Description Item 1A – Risk Factors Items 2-5 – Property, Legal and Market Items Item 6 – Financial Data Item 7 – MD&A Item 7A – Market Risk Item 8 – Financial Statements and Notes Items 9 through the Exhibits

7. Item 1: Comprehensive Look at Business Highlights of instructions Narrative description of business (by segment, when appropriate) Principal products and services, with detail on product development Backlog and contracts subject to renegotiation Competitive conditions in the business, including principal methods of competition (e.g., price, service, warranty or product performance) Research and development activities and spending Full instructions available from the Securities Lawyer’s Deskbook

8. Example: NYSE:HCC (market cap $3.4 billion) HCC 2009 10-K Relative Statistics Provide Useful Insight

9. Example: NASDAQ: SIGI (Market cap $984 million) SIGI 2009 10-K Business Breakdown

10. Item 1A: Risk Exposure and Insight Highlights of Instructions Discussion of the most significant factors that make the offering [issuer] speculative or risky. This discussion must be concise and organized logically. Do not present risks that could apply to any issuer or any offering. Explain how the risk affects the issuer or the securities being offered “Information reduces risk” Address investor concerns with facts

11. Example: NYSE:VR (market cap $3.1 billion) Validus Group 2009 10-K Item 1A Answer Questions With Facts

12. Items 2, 3 and 5 Item 2 -- Description of Property Item 3 -- Legal Proceedings "Material" pending legal proceedings Item 5 -- Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters

13. Item 6: Selected Financial Data Required line items: Net sales or operating revenues Income (loss) from continuing operations Income (loss) from continuing operations per common share Total assets Long-term obligations and redeemable preferred stock; and Cash dividends declared per common share. “Registrants may include additional items which they believe would enhance an understanding of and would highlight other trends in their financial condition and results of operations”

14. Example: NYSE:RNR (market cap $3.4 billion) RNR 2009 10-K Well Beyond Required Data

15. Item 7 and 7A: "Analysis" Item 7 -- Management's Discussion and Analysis of Financial Condition and Results of Operations Item 7A -- Quantitative and Qualitative Disclosures about Market Risk

16. SEC on the MD&A “Management's most important responsibilities include communicating with investors in a clear and straightforward manner. MD&A is a critical component of that communication.” “… there are circumstances, particularly regarding known material trends and uncertainties, where forward-looking information is required to be disclosed.” “We also encourage companies to discuss prospective matters and include forward-looking information in circumstances where that information may not be required, but will provide useful material information for investors that promotes understanding Interpretation: Commission Guidance Regarding Management's Discussion and Analysis of Financial Condition and Results of Operations

17. SEC on the Executive Summary “… balanced, executive-level discussion that identifies the most important themes or other significant matters with which management is concerned” “A good introduction or overview would include economic or industry-wide factors relevant to the company” “A good introduction or overview also would provide insight into material opportunities, challenges and risks … on which the company's executives are most focused for both the short and long term, as well as the actions they are taking to address these opportunities, challenges and risks.” Interpretation: Commission Guidance Regarding Management's Discussion and Analysis of Financial Condition and Results of Operations

18. Example: NYSE:PRA(market cap $1.9 billion) PRA 2009 10-K Performance Targets AND Drivers

19. Example: NYSE:THG (market cap $2.1 billion) THG 2009 10-K Management’s Decision Process

20. Item 8: The Details Financial statements – the foundation of all corporate reporting Notes – the basis on which the financial statements are calculated

21. Item 9 to the End Item 9 -- Changes In and Disagreements With Accountants on Accounting and Financial Disclosure Item 9A -- Controls and Procedures and Internal Control over Financial Reporting Other exhibits and information normally incorporated by reference to the proxy

22. Using the 10-K as a Resource Earnings release Conference call Presentations Annual report Fact sheets and others Website

23. Can (or Should) IR Participate in 10-K? SEC Director of Corporation Finance, Meredith Cross (at 2010 NIRI National): “Investor relations is key in this process. I think it would be very useful if companies, when preparing disclosure documents, would more effectively pool their resources.” IR understands needs of audience Investor feedback can refine message Create efficiencies Using news release/script as draft for Executive Summary of MD&A Treating “Business Description” as “Company Profile” Sharing tables and data between financial supplement, release, script and 10-K (sequential vs. year-over-year)

24. Using the 10-K to Enhance the Investor Relations Effort A Primer on the 10-K’s Elements and How They Serve Investor Needs Heather J. Wietzel, PrincipalInsuranceIR LLCInsuranceIR.com