Loading...
HomeMy WebLinkAboutResolution - 2008-R0002 - Purchase Of Property Insurance For Montford Dam - ACE Fire Underwriters - 01/10/2008Resolution No. 2008-R0002 January 10, 2008 Item No. 5.4 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to purchase for and on behalf of the City of Lubbock, property insurance by and between the City of Lubbock and ACE Fire Underwriters Insurance Company in the amount of $50,000,000 insurance coverage for Montford Dam, pursuant to the terms and conditions attached hereto as Exhibit "A," for a total premium in an amount not to exceed $133,722; and THAT THE City Manager or designee may execute any routine documents and forms ted with said insurance coverage. by the City Council this 10th day of January, 2008. DAVID A MILLER, MAYOR TTEST: Garza, City Secretary APPROVED AS TO CONTENT: r Lesa Hutcheson, Director of Risk Management AS TO FORM: City A C ;s/ccdocs-Agrmnt-COL & ACE Fire Underwriters Ins Co.res an. 16, 2007 Resolution No. 2008-R0002 JOHN T. MONTFoRD DAM / CITY OF LUBBOCK, TX /LAKE ALAN HENRY PROPERTY INSURANCE RENEWAL PROPOSAL JANUARY 18, 2008 To JANUARY 18, 2009 Executive Summary INTRODUCTION Napco LLC is pleased to continue our partnership with Wachovia Insurance Services and John T. Montford Dam/City of Lubbock, and we are grateful to have been given the opportunity to provide our Property Insurance Renewal Proposal. Napco prides itself on providing our clients with the highest level of professional program design, marketing and service delivery. Our goal is to continue our long-term business partnership with Wachovia Insurance Services and John T. Montford Dam/City of Lubbock. We recognize that in order to achieve this goal, we must continue to establish trust and commitment to positively impact our mutual relationship. BRIEF MARKET UPDATE To better understand the cyclical nature of pricing, coverage availability, and the property insurance marketplace in general, it is instructive to both re -visit the circumstances of the past two years, as well as the good news of what has occurred in 2007 to now benefit insureds. There is little doubt the 2005 Atlantic hurricane season had far reaching implications for the insurance industry. Hurricane Katrina dealt the industry a significant blow on August 29`x' when it became the costliest industry natural disaster ever - estimated to have caused over $45 Billion in insured losses. Within the next 2 months, Katrina was followed by Hurricane Rita, which caused an estimated $10 Billion in insured losses and Wilma who barreled across southern Florida leaving an estimated $12 Billion in insured damages in its aftermath. Never before has the industry experienced this frequency and severity of major storms in a single hurricane season. After these storms, the industry found itself in a state of paralysis. The assumptions utilized in the pricing, the insurer's aggregation management of exposures, and third -party natural catastrophe loss modeling had been woefully inaccurate. This sent underwriters back to the drawing board in an effort to reevaluate their true loss potential from natural catastrophes for both their current liabilities and also their renewal exposures. In short, most property risks, especially those with coastal or other catastrophe exposures, were to bear the expense of the losses produced in the 2005 hurricane season in the form of higher rates, tighter policy language, and the introduction of additional insurers as renewal capacity was restricted by incumbent markets. The overall market, including the pricing and availability of capacity, was affected in three central ways — catastrophe modeling inadequacy, reinsurance treaty cost, and financial rating agency impact: • Insurance underwriters were forced to seriously contemplate the underwriting value provided by third -party catastrophe models. Underwriters cited that 2005 model estimates were as much as 10 times lower than that of actual claims experience. AIR International (AIR) and Risk Management Solutions (RMS), models used by many insurers, updated Page 2 of 7 their exposure estimating software. In most instances, the new models increased expected losses by 30% - 80%+! This had significant price and available capacity impact on catastrophe exposed clients by driving up what insurers thought were their accumulations of risk. Uncertainty within the marketplace is largely driven by unknown reinsurance treaty renewal costs (insurance that insurance companies purchase to protect themselves from runaway loss). As reinsurance treaties continued to renew during 2006, reinsurance costs continued to climb as 2005 losses developed into higher and more concrete numbers. January 2007 catastrophe treaties, by -in -large, climbed about 40% to the increased July 2006 cost levels. An added strain on insurers was the financial rating agency impact. As a financial institution, insurance companies must maintain their financial strength and "ability to pay" to continue the public trust. Rating agencies such as A.M. Best, Fitch, and S&P imposed strict scrutiny on carrier's accumulations of risk in CAT prone areas — further exacerbated by the increased third party modeling of expected losses. In most instances during 2006, insurers had to cut their accumulations of risk in such CAT areas — continuing a drain on available deployed capital/capacity equating to higher pricing. Fortunately, 2007 has seen carriers willing to entertain, opportunistically, increases in capacity for individual risks they deem appropriately priced - having reduced their accumulations so dramatically in 2006. In summary, the insurance marketplace is still experiencing some lingering uncertainty due to expert warnings of a more active wind season than historically normal and lack of recent U.S. earthquake experience — but there is some very good news. Many insurers have looked to the capital markets to bolster their balance sheets. Some new insurer entrants have impacted the marketplace by making available new blocks of capacity (particularly Bermuda -based). Surely 2006's lack of significant CAT losses helped heal some of 2005's wounds. Pricing reductions, particularly for those accounts severely impacted by 2006 price hikes, have resulted from an easing of reinsurance costs, more capacity, reduced accumulations of marginal and catastrophe driven risks, and, so far, lack of 2007 major industry losses. We expect that investor pressure to maintain revenue and profitability positions from 2006, on the part of public insurance carriers, is fueling competition and thus price reductions and increases in deployed capital, especially since early Spring. TERRORISM ♦ Information on Terrorism Risk Insurance Act to follow pending renewal / extension of the act. Page 3 of 7 CONCLUSION Once again, your Napco team extends its thanks for the privilege of partnering with Wachovia Insurance Services and John T. Montford Dam/City of Lubbock on this program. We appreciate all the help and information supplied to us by both Wachovia Insurance Services and John T. Montford Dam/City of Lubbock. Beyond taking great pride in the program we have negotiated on your behalf, we truly value our business relationship with Wachovia Insurance Services and John T. Montford Dam/City of Lubbock and look forward in continuing to add value in your Property Insurance Program. Page 4of7 AUTHORIZATION OF PROPERTY INSURANCE This authorization of insurance may not comply with the specifications submitted for consideration. Please read this authorization carefully and review the policy forms for the actual coverages provided. Please provide written instructions to Napco in order to effect such coverage with the insurance companies outlined herein. This insurance quotation will be terminated and superseded upon delivery of the formal Confirmation of Insurance issued to replace it. Named Insured: John T Montf-or d Dam /City of Lubbock, TX / Lake Alan Henry _� I Mailing Address: M P.O. Box 2000 — Lubbock TX 79457 Policy Period: -- January 18, 2008 to January 18, 2009 at 12:01 AM local time of the insured address. Coverages: Property Damage, Newly Acquired Property, Debris Removal, Pollutant Clean- ! up, including Terrorism, and as more fully defined in the company policy forrn. Peril All risks of direct physical loss or damage including Flood, Earth moves en and Named Windstorm, excluding Boiler & Machinery. Territory: – This policy covers within the fifty states comprising the United States of America and the District of Columbia. Limits of Liability: $ 50,000,000 per occurrence, except: The following sublimits do not increase the above -stated per occurrence limit of liability: $ 50,000,000 per occurrence as respects Property Damage; $ 10,000,000 per occurrence and in the annual aggregate as respects Flood; 1 $ 10,000,000 per occurrence and in the annual aggregate as respects Earth i movement; 5% of the amount of loss, subject to a maximum of $2,500,000 per occurrence as respects Debris Removal. $ 2,500,000 per occurrence as respects Newly Acquired (90 Days Reporting); $ 1,000,000 per occurrence as respects Valuable Papers; f $ 1,000,000 per occurrence as respects Accounts Receivable; j $ 1,000,000 per occurrence as respects Demolition and Increased Cost of Construction; $ 1,000,000 per occurrence as respects Intake Tower and Outlet Works; $ 100,000 per occurrence as respects Transit; $ 100,000 per occurrence as respects Intake Bridge; $ 25,000 per occurrence and in the annual aggregate as respects Pollutant j Clean-up and Removal; And as more fully defined in the company policy form. _ -__ Page 5 of 7 AUTHORIZATION OF PROPERTY INSURANCE This authorization of insurance may not comply with the specifications submitted for consideration. Please read this authorization carefully and review the policy forms for the actual coverages provided. Please provide written instructions to Napco in order to effect such coverage with the insurance companies outlined herein. This insurance quotation will be terminated and superseded upon delivery of the formal Confirmation of Insurance issued to replace it. Deductibles: $2,000,000 per occurrence. Valuation: ; Real and Personal Property - Replacement Cost if replaced, otherwise Actual Cash Value. I And as more fully defined in the expiring ACE Engineered Risk Manuscript E policy form. �v Form: Per the expiring ACE Inland Marine - Engineered Risk Manuscript Policy Y' Form, including, but not limited to the following mandatory company { forms/endorsements: • ACE USA Pollution and Contamination Exclusion • Demolition and Increased Cost of Construction Endorsement • Transit Endorsement • Newly Acquired Property Endorsement f • Electronic Data/Cyber Risk Endorsement • Asbestos Exclusion I • Additional Exclusion - Fungus, Wet Rot, Dry Rot and Bacteria r • Nuclear, Chemical and Biological Exclusion Endorsement j i • Terrorism Exclusion - refer to Op tional_Terrorism Covera e offered herein '. Cancellation: Notice of Cancellation or Non -Renewal: j 60 Days Written Notice. - 10 Days Written Notice for Non Payment of Premium. L TIV:_— - $71,677,440---- _ _ - Annual Premium: $ 121,565 Property Premium 12,157 Premium for Optional Terrorism Coverage (pending renewal / extension of the TRIA Act) i $ 133,722 Total (plus any applicable taxes/surcharges/fees) i Loss History: No known or reported_ losses. Insurers: _ ACE Fire Underwriters_ Insurance Company (Admitted) Best's Rating: A+ XV _-- -__-.- ------_____.-__-- This quote is valid only until inception date noted herein. Page 6 of 7 Account Team Marketing Broker: John M. Carls Account Manager: Jennifer Ryan Placement Associate: Marco Perci 4 732-603-2061 'carlsengnapcollc.com 732-603-2083 jryanknapcollc.com 732-603-2070 mperci ,napcollc.com Napco LLC 333 Thornall Street, 91h Floor, Edison, NJ 08818 Tel: 732-549-5222 Fax: 732-549-0221 www.nancollc.com Napco has used due care in the preparation of this document. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. Napco shall owe no liability whatsoever to any person for any loss or damage caused by or resulting from any error in such information. Page 7 of 7 John T. Montford Dam Proposal of Insurance Policy Term 1/18/08 to 1118/09 Prepared by: Robert S. Bookhammer III, ARM -P Sr. Client Executive/Sr. Vice President Anne Street, CPCU, AU Commercial Account Executive Kim Englett, ACSR Commercial Account Associate 5956 Sherry Lane, Suite 2000 Dallas, TX 75225 Phone: (214) 365-9150 Fax: (214) 365-9141 Please refer to the policy contract for specific terms, conditions, limitations and exclusions. NOWHOVIA c:Wocume-1t3142TIocals-tltemplxpgrpwiseljohn t. montford dam proposal.doc INSURANCE SERVICES Caja..., omnim Table of Contents Overview ■ Service Team ■ When to Notify Wachovia Insurance Services ■ Partnership Expectations Premium ■ Premium Comparison ■ Premium Summary ■ Premium Payment Options ■ Marketing Summary Named Insured Schedule Property Coverages to Consider Insurance Company Financial Ratings Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:Wocume-1131427\locals-1ltempVpgrpwise\john t. montford dam proposal.doc CAN— ar)AI 7 WACHOVIA INSURAN. CE SERVICES IMPORTANT DISCLOSURES Insurance products are offered through Wachovia Insurance Services, Inc. and are underwritten by unaffiliated insurance companies. The coverage and limits presented in this proposal are a simplified outline of the respective insurance policies. The actual policies issued by the insurance company govern the coverage provided, and should be read for coverage terms, limits of liability, definitions, exclusions and conditions pertaining to your specific insurance program. This proposal is based on exposures to loss and other underwriting information provided by the client and made known to Wachovia Insurance Services, Inc. You must report all additions or corrections to these exposures so we may arrange the proper coverage. All property values used in this proposal were provided by the client and should be carefully reviewed and/or appraised for accuracy. Higher limits and additional coverages may be available upon request. Wachovia Insurance Services, Inc. has attempted to place your business insurance with markets that have displayed evidence of being properly managed and of strong financial condition. For more information about Wachovia Insurance Services insurance carrier selection and monitoring, please refer to the Insurance Company Financial Rating section. In the pages that follow, there may be proposals from companies that are identified as Non -admitted or Surplus Lines insurers. This designation means the insurance company is not licensed to do business in your state of domicile. The facts you should consider before placing coverage with a Non -admitted insurance company are as follows: • If the Insurance Company becomes insolvent, the state insolvency fund will not cover any claims. • Non -admitted carriers do not have to file their rates with the state and therefore their rates are not regulated. The use of Wachovia Premium Finance, Inc. is not a requirement for the purchase of insurance. Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-1131427Vocals-lltempVpgrpwisel ohn t. montford dam proposal.doc C,44i,... CPM07 WACHO}VIA 1NSURANI CE SERti710ES SERVICE TEAM SERVICE TEAM LEADER Bob Bookhammer, ARM -P If you have a question about coverage provided Senior Client Executive by your current insurance program or you need Direct Dial Number 214-365-4703 to discuss present or future changes in Email address: protection, protection, please contact: POLICY CHANGES/BILLING QUESTIONS Anne Street, CPCU, AU If you need to make a change during the policy Commercial Account Executive term or have questions about invoices or Direct Dial Number 214-365-4738 charges on your account, please contact: CLAIMS If you need to report a claim, find out the status Marc LaChey, AIC, AIM, ARM of a claim, or need Workers' Compensation Claim Consultant Direct Dial Number 214-365-4701 First Report of Injury forms, please contact: LOSS CONTROL If you need assistance with a safety program or Scott Bellamy, CSP, ARM advice on how to reduce losses and Risk Control Senior Consultant consequently the cost of your insurance, please Direct Dial Number 214-365-4753 contact: TELEPHONE NUMBERS Nationwide Toll Free: 800-531-2034 Direct Direct: 214-365-9150 Facsimile Machine Fax: 214-365-9141 OFFICE HOURS 8:00 — 5:00 CST Monday — Friday Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-11314271locals-iltemplxpgrpwiseljohn t. montford dam proposal.doc F,ii+nn Amn/m �1LCiI'IC>v� LNTS-[TMXNcE SE, RvICEs WHEN TO NOTIFY WACHOVIA INSURANCE SERVICES It is important that you advise Wachovia Insurance Services of any material changes in your operations which may have a bearing on your insurance program. Your insurers have evaluated and accepted the risks on the basis of the information given. Any variation of these details could lead to complication in the event of a loss. These changes may include, but are not limited to: • Changes of personnel affecting responsibility for insurance decisions. • Personnel traveling overseas/on temporary assignment overseastworking on military bases. • Acquisition or creation of new companies or subsidiaries and/or mergers in which you are involved or any legal change in the corporate structure. • Purchase, sale, lease, construction, or occupancy of new premises; real estate alteration, vacating the premises or temporary unoccupancy; extension or demolition of existing premises. This applies for both domestic and foreign locations. • Increase in values of building, business personal property, or inventory for both scheduled and unnamed locations. • Removal of business personal property or stock to new or temporary locations. • Addition of new locations, equipment or vehicles, whether hired, purchases, leased or borrowed. • Changes in processes, occupancy, products, revenue, sales, or business operations. • Addition, alteration or temporary disconnection of fire or burglary protection systems. • Use of owned or non -owned aircraft or watercraft. • Major changes in value or nature of goods being shipped. • Employment of personnel in states in which you were previously not doing business. • Election or appointment of a new C.E.O. or C.O.O., or change in control of either the Board of Directors or the stock ownership of the company. • Changes in ERISA Plan Assets. • Any written contracts executed with contractor, subcontractors, suppliers, or others. Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-11314271locals-1ltemplxpgrpwiseljohn t. montford dam proposal.doc 'G NCHOVIA Y -Ns -11".— C;E SRM710ES Coverage Property TRIA Total Premium Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-1131427\locals-1ltemp\xpgrpwise\john t. montford dam proposal.doc REMIUM OVERVIEW PREMIUM COMPARISON Expiring Renewal Premium Premium $131,369 $121,565 $13,137 $12,157 $144,506 $133,722 W&CHOVIii ]Nsi7F vNcESERVICES Coverage Description Premium Property......................................................................................................................... $133,722 TOTAL........................................................................................................................... $133,722 Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:\docume-1131427\locals-1\templxpgrpwiseljohn t. montford dam proposal.doc Fdi+in„ ai')nrm W-MMOVIA Lvsr. ��clJ SE, RVICIES COMPENSATION POLICY Transparency regarding our sources of income is critical to maintaining the confidence of our clients. Wachovia Insurance Services, Inc. receives the majority of its remuneration for insurance placement or related services from commissions paid by insurance companies or fees paid by the client. All forms of our compensation are described below. • Commission Commissions are paid to us by the insurer for the placement or renewal of insurance policies, day-to-day servicing of the account, claims handling and other services. Commissions are generally determined as a percentage of premiums but can also include specified dollar amounts per policy. Commission rates differ by type of policy and insurer. In some instances, insurers may pay us contingent commissions based on factors that are not client -specific including total premium volume, aggregate loss experience or other measures. Generally, we do not know if an insurer will pay us such commission or the amount until after the end of the insurer's underwriting year. Fee Fees we receive from the client are agreed to in writing by the client and us in a fee for service agreement for the placement of insurance, account servicing, claims handling, and other client services. For those premiums attributed to policies covered under a fee agreement, we will accept no other compensation from the insurer without written consent of the client. • Vendor Payments Wachovia Insurance Services receives payments from vendors (other than insurance companies) for placement of products and services, program oversight, and day -to day servicing of the account. • Interest Wachovia Insurance Services receives interest income on insurance monies in our bank accounts. If we finance or assist with the financing of your insurance premiums, Wachovia Insurance Services may receive income from the premium finance company. Expense Reimbursement / Administrative Service Fee Occasionally, insurance companies will pay Wachovia Insurance Services fees to help defray the costs of training and education or to provide services on their behalf for the client. These services can include policy issuance, record retention, risk control, data reporting, or other services not reflected in normal policy commission rates. We may provide these services directly or through a third party.. In the event insurance is placed through a Wachovia Insurance Services affiliated company, including wholesale insurance broker E -Risk or Besso Limited, or premiums are financed through Wachovia Premium Finance, Inc., a Wachovia Insurance Services affiliated company, that entity will also receive compensation. If you have any questions or require more information regarding our compensation for the placement of insurance or other client services, please contact your client executive or local office manager. We will disclose to our clients, upon request, all commission or other compensation we receive while acting on our clients' behalf. Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-11314271locals-1ltemplxpgrpwiseljohn t. montford dam proposal.doc WAC M.—MA L'V4T.?li�i\'CE SER�'IC;ES MARKETING SUMMARY INSURER RESPONSE LEXINGTON UNABLE TO SUPPORT REQUESTED PRICING FOR THE CAPACITY NEEDED. LONDON MARKETS MINIMAL SUPPORT AT PRICING LEVEL REQUESTED AXIS DECLINED - CLASS OF BUSINESS CHUBB CUSTOM DECLINED - CLASS OF BUSINESS BERMUDA MARKETS DECLINED - CLASS OF BUSINESS Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-113142AIocals-1ltemplxpgrpwiseljohn t. montford dam proposal.doc Frfl+^„ Annan �hrLC7I3t)ti'7A LV;!sT'R�'�t::E :�EI2�TZC:ES NAMED INSURED SCHEDULE John T. Montford Dam / City of Lubbock, TX / Lake Alan Henry Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-11314271locals-1ltemplxpgrpwise\john t. montford dam proposal.doc Pdif nn Amnr1`17 W+iCHOVIA I�iTSI?FiA'\'CE �ERTTIC;ES a - � INSURANCE CARRIER: ACE Fire Underwriters Insurance Company Admitted or Non- Admitted Admitted: CARRIER RATING: A+ XV as of 12/11/07 (Source: A.M. Best) POLICY TERM: January 18, 2008 to January 18, 2009 PREMIUM: $133,722 COVERAGE: The following location(s) will be covered for direct physical loss to insured property in accordance with the policy terms and conditions: John T. Montford Dam PERILS: All risks of direct physical loss or damage including Flood, Earth Movement and Named Windstorm, excluding Boiler & Machinery (Subject to policy conditions & exclusions) LIMIT: $50,000,000 Per Occurrence (Blanket) VALUATION: Replacement Cost, if replaced, otherwise Actual Cash Value DEDUCTIBLE(S): $2,000,000 per Occurrence FORM: ACE Inland Marine — Engineered Risk Manuscript Policy Form, including, but not limited to the following mandatory company forms/endorsements: • ACE USA Pollution & Contamination Exclusion • Demolition & Increased Cost of Construction Endt. • Transit Endorsement • Newly Acquired Property Endorsement • Electronic Data/Cyber Risk Endorsement • Asbestos Exclusion • Additional Exclusion — Fungus, Wet Rot, Dry Rot & Bacteria • Nuclear, Chemical & Biological Exclusion Endt • Terrorism Exclusion (Certified & Non -Certified Coverage is offered) Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-1131427Vocals-lltemptxpgrpwiseljohn t. montford dam proposal.doc Pd +inn Annan in NAT_ cH'oVL4 T_Nsvmi _ cE SERZZcES In evaluating your exposures to loss, we have been dependent upon information provided by you. If there are other areas that need to be evaluated prior to binding of coverage, please bring these areas to our attention. Specifically, we ask that you review the following items: HIGHER LIMITS: In today's litigious society, many businesses have found it necessary to increase the limits of liability to ensure they are adequate to protect their assets in the event of a loss. Higher limits of liability may be available. Please carefully review the limits to ensure your level of comfort with the limits. Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-1131427\locals-lltemplxpgrpwiseljohn t. montford dam proposal.doc P,fiflnn Ai,)=7 WACROVIA Lei i..?Eir11\C7E SERiZCES Wachovia Insurance Services Insurance Carrier Monitoring As a benefit to our clients, Wachovia Insurance Services, Inc. has a rigorous and disciplined process to monitor the financial strength of carriers whose products we sell. This is accomplished through Carrier Financial Strength Committees, made up of representatives from Wachovia Insurance Services and Wachovia Corporation's Legal, Compliance, and Operational and Credit Risk Management areas. There are three committees, one for each major line of business: 1) Property & Casualty, 2) Life and Health, and 3) Annuities. Each Committee meets at least quarterly. Based on analysis of quarterly statutory financial results, ratings provided by independent rating agencies, and financial analysis by Committee members, the Committees approve carriers with whom our sales professionals may place new and renewal business. The Committee also seeks to identify carriers whose financial strength is deteriorating so that we may recommend appropriate proactive action. The Committees are supported by ALIRT Insurance Research Service, LLC, a third -party vendor that specializes in providing analysis and consultative services regarding financial strength of insurance carriers to insurance agents and brokers. Although we take these actions to monitor financial strength of carriers, Wachovia Insurance Services does not guarantee performance of any carrier. At a client's request, Wachovia Insurance Services occasionally may place business with carriers not approved by the Committees. Most typically, these cases would involve specialized products or undersupplied markets where availability of insurance coverage from approved carriers is limited. In these cases, the client is required to sign an acknowledgement stating that the carrier does not meet Wachovia Insurance Services' normal ratings standards and that Wachovia Insurance Services does not guarantee performance of any carrier. When carriers are removed from approved status; typically due to concerns over financial strength or lack of competitive products; the Committee works with Wachovia Insurance Services to communicate this decision to all affected parties. Plans are designed and implemented to ensure the orderly migration of affected clients to alternate insurance carriers. Objective Assessments Help Insurance Buyers Make Informed Decisions As your insurance broker, one of our objectives is to provide you with information and assessments published by rating agencies on the financial stability of the insurers currently underwriting your coverage's, or of those insurers we recommend you consider. Wachovia Insurance Services uses information published by independent rating agencies A.M. Best and Standard & Poor's, among other factors as described above, to assess which insurer's to recommend. The A.M. Best rating for the carriers represented in this proposal are as follows: ACE Fire Underwriters Insurance Company A+ XV Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:\docume-1131427\locals-1\temp\xpgrpwise\john t. montford dam proposal.doc ar,)n/W in NVA-CF OVIA. I�'vTE3T.'Fi:12\"CE SSR«C:ES Wachovia Insurance Services Recommendation Guideline Financial Strength Ratings Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:\docume-1\31427\locals-1\templxpgrpwise\john t. montford dam proposal.doc FAifinn SWMIM FV11C;i3C)V.i�3 I2VS1UTRA'`CE S MULES Financial Size Ratings A.M. Best also assigns categories to insurance companies to indicate levels of statutory surplus and related. funds. While financial size is not solely indicative of an insurer's financial stability, Wachovia Insurance Services advises clients to select insurance companies with a minimum Financial Size Rating of VII ($50 million to $100 million adjusted surplus funds). Please refer to the policy contract for specific terms, conditions, limitations and exclusions. c:ldocume-11314271locals-1ltemplxpgrpwiseljohn t. montford dam proposal.doc Frfifinn Al=07 WWIIOVIA LvsT�Iz:a*�c;I; SzJres�c�s