Yellowstone Insurance Exchange, RRG Annual Subscribers Meeting Annual Update July 10 th, 2007 Coeur dAlene, Idaho.

Yellowstone Insurance Exchange, RRG

Annual Subscribers MeetingAnnual UpdateJuly 10th, 2007Coeur 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 – 12:00pmYellowstone Insurance Exchange, RRG

Annual Meeting of SubscribersSAC Meeting

12:00 pm Box Lunch 1:00 pm Golf at Resort Course 6:30 pm Reception and Dinner (Idaho

Room)

Financials

Revenue:2005 $2.62m

2006 $3.82m2007 (May) $3.92m

Net Income:2005 $88k

2006 $182k2007 (May) $775.6k

Financials

Assets 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 Class 6/14/2007Money Market 557,238$ Fixed Income 4,825,818$ Sub Total 5,383,056$ Accrued Income 48,924$ Total 5,431,980$

Asset Allocation

Yellowstone Insurance Exchange RRG - June 2007

Sector Rating

Fixed Income Diversification June

Asset Class 3 Month YTD 2007 1 Year HTD*Cash Equivalents 1.24% 2.04% 4.98% 4.62%Fixed Income 1.05% 2.01% 4.99% 4.00%Total Portfolio 1.10% 2.07% 5.17% 4.44%

Comparative Indices3-Month Treasury Bill 1.27% 2.08% 5.05% 4.69%Lehman 1-5 Yr Govt Index 0.47% 1.60% 5.18% 3.76%

*Inception date = 10/1/2005

Performance Summary – May 2007

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

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

Benchmarks – Average 15 Leading P&C Companies

Underwriting – 2007 Renewal

Feedback From January SurveyExposure 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

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”

Claims

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 Montana - 12 Idaho – 4 Wyoming – 0 NM - 1

2006 - 22 open2005 - 10 open

25 Closed Claims Montana - 16 Idaho – 5 Wyoming – 4 NM - 0

2006 Closed Claims -4 Montana - 3 Wyoming - 1

Claims

Larger Awards $250K (MT) - 2006 $210K (MT) - 2006

Payments in 2007

Trouble Spots 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 focusEmployment Practices LiabilityPhysician & ER Physician LiabilityDirectors & 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

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Yellowstone Insurance Exchange, RRG

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