Frequently Asked Questions:

Due to the experience and retrospective rating plans utilized, each participant is primarily responsible for the initial layer of losses on all claims (either $250,000 or $500,000). As a result, each participant is largely self-rated as respects losses in the initial loss layer. Above the individual workers compensation rating plans, all participants "pool" the risks as a group, generally up to a total loss occurrence of $3 million for workers compensation and $2 million for liability. The Company reinsures the workers compensation loss layer in excess of $3 million, to statutory limits for the Company?s core program and subject to reinsurance limit of $150 million for contractor controlled insurance programs. As respects third party general liability and automobile liability policies, the excess risk up to $2 million is also pooled.

A stock purchase of $75,000 is required along with a ten year subordinated debenture equal to 10% of the estimated first year gross annual premium for the participant. In addition, each participant must purchase insurance coverages during the first three years; from the fourth to the sixth year, the participant has the option of purchasing insurance or paying a fee.

The contractors/shareholders own an aggregate of 85.1% of the Company's equity account (the other 14.9% being owned by Bill McIntyre). Ownership of the 85.1% portion is prorated among the contractors on the basis of a formula that takes into account the following: (I) the net capital contributed; (ii) the net historical underwriting profits generated from that contractor's insurance business; (iii) the net historical investment income earned with respect to that contractor's insurance business; and (iv) a prorata portion of "pooled" underwriting and investment activities. In general, those contractors contributing the most profitable insurance business for the longest period of time receive the biggest share of the equity.

A cornerstone of the Company's program is individual underwriting of each account. Each participant's premiums are a function of that participant's own past losses and operational risks.

Each participant's own actual experience for past losses and operational risks helps determine, to a significant degree, the amount of premium needed in the primary loss levels. Premiums for the "pooled" layers above the primary plans are based on the historical experience of the group. The rating plan factors are established to produce an underwriting profit of 10% of premiums for the first six years of a shareholder's participation and 5% thereafter. Excess premiums are returned to the shareholder through annual retro returns or as profits to the shareholder's equity accounts (less the 14.9% profit credited to Mr. McIntyre).

In the soft insurance market of the 1990's, where competitors were cutting rates to acquire or retain business, the Company was competitive and performed well. We believe that the Company's low expense ratios and emphasis on services made it an unusually attractive insurance option for the construction industry.

In the early 2000's, the insurance market was relatively "tight", and insurance premiums often sky rocketed. With the number of competitors in the marketplace with creative ideas and a strong financial condition declining, the Company found that new business was seeking out the quality that it offered. Since 2001, the Company has added seventeen new shareholders, bringing its number of premium paying shareholders to 36 at the date of this booklet.

It is our intent that these premiums be deductible under current tax law. Our taxation counsel is available to provide each shareholder with a discussion of the tax law on this and other topics upon request.

To date, all insureds have been able to broaden their insurance protection by participating in the program.

The Company's program focuses on the workers compensation, general liability and automobile liability lines. The forms used for general liability and automobile liability policies specifically are designed by the Company for the construction industry. The Company assists its shareholders in placing other coverages in the open market. The forms used for workers compensation coverages are dictated by statute.

A competent team has been put together utilizing the strengths of highly qualified support service firms. Cornerstones of the Company's management include the following: (a) the emphasis it places on contractor safety and risk management programs; (b) the use of the Company's SWAT teams to coordinate and advise on serious accidents; and (c) a unique equity program that is designed to reward the shareholder for profitable insurance business placed with the Company. Careful reporting is made to the Executive Committee of the Company.

Investment in the Company is not a short-term commitment. Initially, participants must agree to place coverage in the Company for the first three years. For the second three year period, coverage can be placed elsewhere by paying a maintenance fee of 2.5% of the average annual premium for the prior three years. After six years, a participant may withdraw (after providing notice and complying with the other terms of the Bye-Laws) and receive the full value of its equity account, subject to a hold back to secure the participant?s debt to the Company. The Bye-Laws set out guidelines thereafter to govern the terms and conditions under which a participant can withdraw. Withdrawal on terms other than those approved in the Bye-Laws (i.e., an event of default) typically results in a 50% forfeiture of equity. All obligations of the participants to the Company must be settled upon withdrawal.

At the date of this booklet, the Company has approval to have up to 40 premium paying participants.

Yes. Day-to-day service responsibilities and fee-based compensation are divided between the agent and the Company.

Any company can go broke. However, on most of the business, the Company accepts a limited amount of risk, much of which is further limited by retrospective rating agreements, with the Executive Committee enforcing a reasonable underwriting discipline on the Company. The risk of insolvency is reduced by the demonstrated profitable 26 years of operations of the Company and the approximately $102 million of consolidated shareholders' equity as of June 30, 2007.

The Company retains Angeles Investment Advisors to advise it on the management of its investment funds. This advice includes recommendations on (a) asset allocations, (b) the selection of investment managers and (c) evaluation of performance by the investment managers. The Company's investment policy is to divide its funds between a bond portfolio and common stocks, with a target allocation of 45% of the Company?s shareholders' equity invested in common stocks. BlackRock Financial Management manages the Company's bond portfolio. The investment guidelines currently followed provide for a bond portfolio duration in the three-year range and an average rating of AA or better. No more than 5% of the portfolio can be invested in securities rated less than "BBB". The Company invests in common stocks through mutual funds and private accounts managed by various institutions.

Mutually agreeable third party administrators adjust most of the workers compensation claims. Claims under our general liability and automobile liability policies are adjusted by the staff of our insurance company.

Due to the need for equitable treatment of cash flow by each insured, cash flow plans are not offered by the Company.

In the current environment, the use of the Company's primary carrier is mandatory.

No, only $2,000,000 of the eligible premiums. This can be limited to a particular subsidiary, state, line of coverage, or project.

You automatically become a withdrawing shareholder at the end of the three years.

No, the Company may unilaterally cancel insurance coverage of a shareholder and its insured members, and the shareholder becomes a withdrawing shareholder at the end of three years.

All insureds are required to accept a three-year retrospective rating plan.