sealed bid request for proposal

Department of Buildings and General Services Agency of Administration BGS Financial Operations Office of Purchasing & Contracting 10 Baldwin St [phone] 802-828-2211 Montpelier VT05633-7501 [fax] 802-828-2222 http://bgs.vermont.gov/purchasing

SEALED BID

REQUEST FOR PROPOSAL

Actuarial Services

ISSUE DATE: May 17, 2010 QUESTIONS DUE BY: June 7, 2010 @ 4:30 PM DUE DATE and TIME: June 25, 2010 @ 1:30 PM LOCATION OF BID OPENING: 10 Baldwin St, Montpelier PLEASE BE ADVISED THAT ALL NOTIFICATIONS, RELEASES, AND AMENDMENTS ASSOCIATED WITH THIS RFP WILL BE POSTED AT:

http://bgs.vermont.gov/purchasing/bids THE STATE WILL MAKE NO ATTEMPT TO CONTACT VENDORS WITH UPDATED INFORMATION. IT IS THE RESPONSIBILITY OF EACH VENDOR TO PERIODICALLY CHECK http://bgs.vermont.gov/purchasing/bids FOR ANY AND ALL NOTIFICATIONS, RELEASES AND AMENDMENTS ASSOCIATED WITH THE RFP.

PURCHASING AGENT: Betsy Laraway TELEPHONE: (802) 828-4658 E-MAIL: [email protected] FAX: (802) 828-2222

http://bgs.vermont.gov/purchasing/bids

STATE OF VERMONT OFFICE OF PURCHASING & CONTRACTING RFP for Actuarial Services PAGE 1

1. OVERVIEW:

1.1. SCOPE AND BACKGROUND: The Office of Purchasing & Contracting is seeking to establish purchasing agreements with one or more companies that can provide Actuarial Services for review of their two self-insurance funds: Workers’ Compensation and Automobile and General Liability

The contract is to provide an actuarial review of self-insured programs provided by the Risk Management Division of Buildings and General Services, claims audit, review of the historic sufficiency of the sovereign immunity limits, and other services as may be called for.

1.2. CONTRACT PERIOD: Contracts arising from this request for proposal will be for a period of 24 months with an option to renew for 2 additional 12 -month periods. Proposed start date will be July 15, 2010.

1.3. CONTRACT VALUE/QUANTITY: The estimated annual value of this contract is $10,000. The annual value and quantities are estimated only based on prior usage; actual purchases may be higher or lower depending on the state’s needs.

1.4. SINGLE POINT OF CONTACT: All communications concerning this Request For Proposal (RFP) are to be addressed in writing to the attention of: Betsy Laraway, Purchasing Agent, State of Vermont, Office of Purchasing & Contracting, 10 Baldwin St - Montpelier, Montpelier, VT 05633-7501. Betsy Laraway, Purchasing Agent is the sole contact for this proposal. Actual contact with any other party or attempts by bidders to contact any other party could result in the rejection of their proposal.

1.5. BIDDERS’ CONFERENCE: There will be no bidders’ conference.

1.6. QUESTION AND ANSWER PERIOD: Any vendor requiring clarification of any section of this proposal or wishing to comment or take exception to any requirements or other portion of the RFP must submit specific questions in writing no later than 4:30 PM June 7, 2010. Questions may be e-mailed to [email protected] . Any objection to the RFP, or to any provision of the RFP, that is not raised in writing on or before the last day of the question period is waived. At the close of the question period a copy of all questions or comments and the State's responses will be posted on the State’s web site http://bgs.vermont.gov/purchasing/bids . Every effort will be made to have these available as soon after the question period ends, contingent on the number and complexity of the questions.

1.7. INSTRUCTIONS FOR BIDDERS: see sections 5 and 6.

2. DETAILED REQUIREMENTS:

2.1. BACKGROUND: The State has been self-insured for workers compensation since February 1, 1990 and liability since July 1, 1990. The last change to sovereign immunity limits was made July 1, 1990 when the limits were fixed at $250,000 per person, $1,000,000 per occurrence. In 1989 the limits had been revised to $250,000 per person, $500,000 per occurrence changing from the initial limits of $75,000 per person, $300,000 per occurrence established in the early 1960’s

2.2. Workers compensation has been fully self-insured from its inception February 1, 1990 with unlimited liability and no commercially purchased excess insurance. The liability program, which is limited by the sovereign immunity statute (referenced below), has purchased excess insurance from its inception July 1, 1990. For the first three years of the liability program the self-insured retention (SIR) was $150,000. From 1993 forward the SIR has been $250,000.

2.3. Statutory Basis: The relevant statutory language pertaining to this study can be found at the following:

http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=29&Chapter=055&Section=01408

The Vermont Statutes Online

Title 29: Public Property and Supplies

Chapter 55: STATE INSURANCE

29 .S.A. § 1408. Workers' compensation insurance

mailto:[email protected]




(c) (f) Losses shall be fully reserved and funded in accordance with common insurance industry practices and in accordance with the principle of accuracy rather than adequacy whenever possible. The fund shall be actuarially reviewed annually.

And http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=29&Chapter=055&Section=01406


Title 29: Public Property and Supplies

Chapter 55: STATE INSURANCE

29 .S.A. § 1406. Liability insurance

(3) Losses shall be fully reserved and funded and provision shall be made for losses incurred but not reported. The fund shall be actuarially reviewed annually.

And http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=12&Chapter=189&Section=05601


Title 12: Court Procedure

Chapter 189: TORT CLAIMS AGAINST THE STATE

12 .S.A. § 5601. Liability of state

(8) (h) The commissioner of buildings and general services shall review the adequacy of the dollar limits on liability imposed by 12 V.S.A. § 5601 and shall report his or her findings to the Judiciary Committees of the House and Senate not later than January 1 in every odd-numbered year.

The full chapter regarding sovereign immunity statute can be found at: http://www.leg.state.vt.us/statutes/sections.cfm?Title=12&Chapter=189


Title 12: Court Procedure

Chapter 189: TORT CLAIMS AGAINST THE STATE

2.4. Actuarial Study: The State of Vermont is seeking qualified vendors to provide an annual actuarial review of its two casualty self-insurance funds, Workers Compensation and Liability (general, auto, and employment practices/discrimination). Specifically we require an estimate of ultimate losses for each expired year and a five-year forecast of future ultimate losses.

2.4.1. Confidence Levels / Future Projections: The estimates of ultimate values need to reflect best estimate of ultimate loss as well as at confidence levels of 50%, 75%, and 95%. The five-year projections should reflect retention levels of $250,000, $500,000, $1,000,000 and unlimited. Additionally the sovereign immunity study will require a retention level study reflecting that specific value.

2.4.2. Data Elements: Information available includes payroll and other broad based exposure data, claims data in general and in detail. The nature and detail of data elements that you request for the study should be outlined in your proposal.

2.4.3. Reserves: All reserves should be developed on an undiscounted basis only.

2.5. Claims Audit: On-site claims audit reviewing claims handling and reserve practices. The purpose of this claims audit is to assess the adequacy and sufficiency of claim reserving practices and to assist in establishing best practices for



http://www.leg.state.vt.us/statutes/sections.cfm?Title=12&Chapter=189


the claims handling staff. Ideally timing will have the audit conducted in June so it may be used as a tool to aid in the actuarial study as well.

2.5.1. Data Location: The on-site inspections of specific claim files will be conducted at the Office of Risk Management and Office of Workers Compensation, both in Montpelier.

2.5.2. Data Review: A representative sampling of files is to be reviewed and critique developed. The number of files (open or closed) is indeterminate. It is expected that a representative sample, sufficient to give the auditing entity a clear sense of the practices of the claims adjusting agency would be chosen. The sample must be adequate to determine the current practices and to offer guidance on best practices. It is expected that this selection would be broad based and represent the full range of claims, size of claims, and claims types to best be able to aid in the evaluation of the claims practices in use. Best practices and claims reserve sufficiency and accuracy should be evaluated.

2.5.3. Closing Conference: It is desirable but not required that a closing discussion to involve the RMD claims staff is included. This will give the adjustors an opportunity to hear first impressions and ask questions.

2.6. Sovereign Immunity Limits: An annual review of the sufficiency of the sovereign immunity limits relative to historic goals. The continuing goal is to stay in step with the original principle of that earlier legislative session and to keep faith with their evaluation of just and equitable compensation. To that end we have attempted to maintain current immunity limits at a similar relative dollar value. CPI has been the most widely used measure to establish that value but we are open to other or broader interpretations.

2.7. Miscellaneous Services: From time to time, additional analysis is needed and rates should be provided for such additional services on a time and expense basis.

2.8. Actuarial Study Time Frame: Both the actuarial study and claims audit are to be conducted annually. The study will be conducted in July / August, draft report due in mid August and final figures due September first (dates approximate). Flexibility in scheduling will be important, but the turn-around time will necessarily be short. The claims audit may be conducted separately or jointly. When the contract year allows, it is preferable for the claims audit to be conducted prior to the actuarial study so the actuarial study might benefit from the information in the claims audit.

2.9. Claims Administration: Workers compensation claims have been administered by in-house staff from the program’s inception. From 1990 until July 2005, liability claims had been administered by Crawford & Company as our TPA. In July of 2005 the State began to self administer all new claims regardless of date of occurrence. Crawford continued to run off claims they had received prior to July 2005 until June of 2007 at which time all remaining claims were taken over by the State. All records are now at Risk Management and Worker s Compensation offices in Montpelier.

2.10. Claims Administration Staff: Risk management has four adjusters teamed with four medical case managers handling workers compensation claims. There is one full time liability claims adjuster.

2.11. Legal Representation: With the exception of conflict of interest situations all liability claims are handled by the Office of the Attorney General. There is a dedicated Civil Division staff that handle the bulk of the claims but there are also Human Resources attorneys, and department of corrections dedicated Assistant Attorneys General that will handle some of the claims. Workers compensation claims are handled under contract by one of two private counsel firms that specialize in workers compensation.

2.12. Current Contract: The current contractor is AMI risk Consultants of Miami, Florida. Most recently the annual fee for services was $6,975.

2.13. Current Study: A copy of the most recent actuarial study is attached. A claims audit was not performed in 2009.

2.14. Open Claims: The open claim count as of 5/12/2010 stand at 473 workers compensation claims, 60 auto, and 181 general liability/EPL/discrimination claims.

2.15. Claims RMIS: The current risk management information system is AON’s IVOS.


2.16. Services: It is not necessary that the actuarial firm also conduct the claims audit. This second leg of the contract

may by conducted by a sub-contractor. But that subcontractor should be identified in the proposal and references and other qualifications should be provided. There must be a single point entity responsible for all aspects of the contract.

2.17. Reports: The State will require an original hard copy report and six additional copies, including one loose leave copy as well as an electronic copy. These should be presented as an Actuarial Report and a separate Claims Audit.

3. GENERAL REQUIREMENTS:

3.1. PRICING: Any and all costs that you wish the state to consider must be submitted for consideration. If applicable, all equipment pricing is to include F.O.B. delivery to the ordering facility. No request for extra delivery cost will be honored. All equipment shall be delivered assembled, serviced, oiled, and ready for immediate use, unless otherwise requested by the purchasing agency.

Proposals should be developed indicating rates for services as well as a “not to exceed” cost for each year, exclusive of additional projects. An estimate of expected costs for each phase of the project is requested. Hourly rates for potential additional projects should be separately identified. Proposals are to reflect all years of the contract term including the possible two one year extensions. Rates for each year must be specifically identified.

3.2. WORKER’S COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT: The Department of Buildings and General Services in accordance with Act 54, Section 32 of the Acts of 2009 and for total projects costs exceeding $250,000.00, requires bidders comply with the following provisions and requirements.

(a) (1) Bidder is required to self report detailed information including information relating to past violations, convictions, suspensions, and any other information related to past performance and likely compliance with proper coding and classification of employees requested by the applicable agency.

The bidder is required to report information on any violations that occurred in the previous 12 months.

(a) (2) Bidder is required to provide a list of subcontractors on the job along with lists of subcontractor’s subcontractors and by whom those subcontractors are insured for workers’ compensation purposes. Include additional pages if necessary. This is not a requirement for subcontractor’s providing supplies only and no labor to the overall contract or project.

In order for a bidder’s response to be considered valid bidders must complete and submit the following two (2) forms at time of bid:

Self Reporting

Subcontractor Reporting

3.3. AVAILABILITY: Initial work will begin in July, the draft report is due mid August and final report by September 1. These dates necessarily are not firm but they do reflect the intent.

3.4. METHOD OF ORDERING: Purchase orders must be used to order items available under this contract. If verbal orders are given a confirming purchase order must be issued.

3.5. INVOICING: All invoices are to be rendered by the Contractor on the vendor's standard billhead and forwarded directly to the institution or agency ordering materials or services and shall specify the address to which payments will be sent.

3.6. CANCELLATION: The State specifically reserves the right to cancel the contract, or any portion thereof, if, in the opinion of its Commissioner of Buildings and General Services, the services or materials supplied by the contractor are not satisfactory or are not consistent with the terms of the contract

3.7. METHOD OF AWARD: Awards will be made under the provisions of 29 V.S.A. § 903. The State may award one or more contracts and reserves the right to make additional awards to other compliant bidders at any time during the


first year of the contract if such award is deemed to be in the best interest of the State. All other considerations being equal, preference will be given to resident bidders of the state and/or to products raised or manufactured in the state.

3.7.1. Evaluation Criteria: Proposals will be evaluated on the basis of the qualifications of the proposing company(s) (25%), the scope of the funds review and the claims audit (25%), the ability to meet the time constraints (10%), and the cost of the proposal across the entire term of the contract (40%).

3.7.1.1. Bidders must demonstrate for themselves and any subcontractors that they have the organization, experience, technical skills, financial resources, and proven track record to effectively provide the services required.

3.7.1.2. A comprehensive scope of report outline should be provided for both the fund review and claims audit.

3.7.1.3. Bidders should indicate the anticipated time table for report delivery starting with initial delivery of data to final copy.

3.8. CONFIDENTIALITY: The successful response will become part of the contract file and will become a matter of public record, as will all other responses received. If the response includes material that is considered by the bidder to be proprietary and confidential under 1 VSA, Chapter 5, the bidder shall clearly designate the material as such, explaining why such material should be considered confidential. The bidder must identify each page or section of the response that it believes is proprietary and confidential with sufficient grounds to justify each exemption from release, including the prospective harm to the competitive position of the bidder if the identified material were to be released. Under no circumstances can the entire response or price information be marked confidential. Responses so marked may not be considered.

3.9. CONTRACT TERMS: The selected vendors will sign a contract with the State to provide the items named in their responses, at the prices listed. Minimum support levels, terms, and conditions from this RFP, and the vendor’s response will become part of the contract. This contract will be subject to review throughout its term. The State will consider cancellation upon discovery that a vendor is in violation of any portion of the agreement, including an inability by the vendor to provide the products, support, and/or service offered in their response.

3.10. STATEMENT OF RIGHTS: The State of Vermont reserves the right to obtain clarification or additional information necessary to properly evaluate a proposal. Vendors may be asked to give a verbal presentation of their proposal after submission. Failure of vendor to respond to a request for additional information or clarification could result in rejection of that vendor's proposal. To secure a project that is deemed to be in the best interest of the State, the State reserves the right to accept or reject any and all bids, in whole or in part, with or without cause, and to waive technicalities in submissions. The State also reserves the right to make purchases outside of the awarded contracts where it is deemed in the best interest of the State.

3.11. TAXES: Most state purchases are not subject to federal or state sales or excise taxes and must be invoiced tax free. An exemption certificate will be furnished upon request covering taxable items. The contractor agrees to pay all Vermont taxes which may be due as a result of this order. If taxes are to be applied to the purchase it will be so noted in the response.

3.12. ORDER OF PRECEDENCE: The order of precedence for documentation will be the State of Vermont Standard Contract Form and attachments, the bid document and any amendments, and the vendor’s response and any amendments.

3.13. SPECIFICATION CHANGE: Any changes or variations in the specifications must be received in writing from the Office of Purchasing & Contracting. Verbal instructions or written instructions from any other source are not to be considered.

3.14. AMENDMENTS: No changes, modifications, or amendments in the terms and conditions of this contract shall be effective unless reduced to writing, numbered, and signed by the duly authorized representative of the State and Contractor.


3.15. NON COLLUSION: The State of Vermont is conscious of and concerned about collusion. It should therefore be

understood by all that in signing bid and contract documents they agree that the prices quoted have been arrived at without collusion and that no prior information concerning these prices has been received from or given to a competitive company. If there is sufficient evidence to warrant investigation of the bid/contract process by the Office of the Attorney General, all bidders should understand that this paragraph might be used as a basis for litigation.

4. VENDOR RESPONSE CONTENT AND FORMAT: The content and format requirements listed below are the minimum required for our evaluation. They are not intended to limit the content of the proposals; vendors may include additional information or offer alternative solutions which may be considered.

4.1. NUMBER OF COPIES: Submit one original bid and one copy of the bid.

4.2. BACKGROUND AND EXPERIENCE. Provide a full description of the experience you have had in supplying actuarial review for a public entity and audits of claims functions.

4.3. REFERENCES. Provide the names, addresses, and phone numbers of at least three companies with whom you have transacted similar business in the last 12 months. You must include contact names who can talk knowledgeably about performance.

4.4. REPORTING REQUIREMENTS: Provide a sample of your current reporting document.

4.5. PRICING: Proposals should be developed indicating rates for services as well as a “not to exceed” cost for each year, exclusive of additional projects. An estimate of expected costs for each phase of the project is requested. Hourly rates for potential additional projects should be separately identified. Proposals are to reflect all years of the contract term including the possible two one year extensions. Rates for each year must be specifically identified.

4.6. CERTIFICATE OF COMPLIANCE: This form must be completed and submitted as part of the response for the proposal to be considered valid.

4.7. WORKERS’ COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT; SELF REPORTING: This form must be completed and submitted as part of the response for the proposal to be considered valid.

4.8. WORKERS’ COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT; SUBCONTRACTOR REPORTING: This form must be completed and submitted as part of the response for the proposal to be considered valid.

4.9. OFFSHORE OUTSOURCING QUESTIONNAIRE: This form must be completed and submitted as part of the response for the proposal to be considered valid.

5. SUBMISSION INSTRUCTIONS:

5.1. CLOSING DATE: The closing date for the receipt of proposals is 1:30 p.m. EST, June 25, 2010.

5.2. The bid opening will be held at 10 Baldwin St, Montpelier, VT and is open to the public.

5.3. SEALED BID INSTRUCTIONS: All bids must be sealed and must be addressed to the State of Vermont, Office of Purchasing & Contracting, 10 Baldwin St - Montpelier, VT 05633-7501. BID ENVELOPES MUST BE CLEARLY MARKED ‘SEALED BID’ AND SHOW THE REQUISITION NUMBER AND/OR PROPOSAL TITLE, OPENING DATE AND NAME OF BIDDER.

5.3.1. All bidders are hereby notified that sealed bids must be received and time stamped by the Office of Purchasing & Contracting located at 10 Baldwin St - Montpelier, VT 05633-7501by the time of the bid opening. Bids not in possession of the Office of Purchasing & Contracting at the time of the bid opening will be returned to the vendor, and will not be considered.

5.3.2. Office of Purchasing & Contracting may, for cause, change the date and/or time of bid openings or issue an addendum. If a change is made, the State will make a reasonable effort to inform all bidders by posting at: http://bgs.vermont.gov/purchasing/bids.



5.3.3. All bids will be publically opened. Typically, the Office of Purchasing & Contracting will open the bid, read the

name and address of the bidder, and read the bid amount. However, the Office of Purchasing & Contracting reserves the right to limit the information disclosed at the bid opening to the name and address of the bidder when, in its sole discretion, the Office of Purchasing & Contracting determines that the nature, type, or size of the bid is such that the Office of Purchasing & Contracting cannot immediately (at the opening) determine that the bids are in compliance with the RFP. As such, there will be cases in which the bid amount will not be read at the bid opening. Bid openings are open to members of the public. Bid results are a public record however, the bid results are exempt from disclosure to the public until the award has been made and the contract is executed.

5.4. DELIVERY METHODS:

5.4.1. U.S. MAIL: Bidders are cautioned that it is their responsibility to originate the mailing of bids in sufficient time to ensure bids are received and time stamped by the Office of Purchasing & Contracting prior to the time of the bid opening.

5.4.2. EXPRESS DELIVERY: If bids are being sent via an express delivery service, be certain that the RFP designation is clearly shown on the outside of the delivery envelope or box. Express delivery packages will not be considered received by the State until the express delivery package has been received and time stamped by the Office of Purchasing & Contracting.

5.4.3. HAND DELIVERY: Hand carried bids shall be delivered to a representative of the Division prior to the bid opening.

5.4.4. ELECTRONIC: Electronic bids will not be accepted.

5.4.5. FAX BIDS: FAXED responses MAY be acceptable. You must contact the purchasing agent and obtain prior approval. If approval is received, the FAX must be prefixed with the “SEALED BID”. Bidders are cautioned that if a FAXED response is approved it is their responsibility to originate the message in sufficient time to insure receipt by the Office of Purchasing & Contracting prior to the time of the bid opening. All pages must be printed and in the possession of the division prior to the date and time of the bid opening or the bid will not be considered. FAXED bidders are cautioned that bids submitted by the FAX method may be compromised prior to the time of the sealed bid opening. FAXED information is accessible when transmitted and confidentiality cannot be guaranteed. State reserves the right to reject a faxed bid if it appears that the faxed bid is incomplete or portions of the faxed bid or eligible.

6. ATTACHMENTS:

6.1. Attachment C: Standard State Contract Provisions (January 8, 2009)

6.2. Certificate of Compliance

6.3. Price Schedule

6.4. Offshore Outsourcing Questionnaire

6.5. Workers’ Compensation; State Contracts Compliance Requirement; Self Reporting

6.6. Workers’ Compensation; State Contracts Compliance Requirement; Subcontractor Reporting

Revised 01-08-09

State of Vermont ATTACHMENT C: STANDARD STATE PROVISIONS

FOR CONTRACTS AND GRANTS

1. Entire Agreement: This Agreement, whether in the form of a Contract, State Funded Grant, or Federally Funded Grant, represents the entire agreement between the parties on the subject matter. All prior agreements, representations, statements, negotiations, and understandings shall have no effect.

2. Applicable Law: This Agreement will be governed by the laws of the State of Vermont.

3. Definitions: For purposes of this Attachment, “Party” shall mean the Contractor, Grantee or Subrecipient, with whom the State of Vermont is executing this Agreement and consistent with the form of the Agreement.

4. Appropriations: If this Agreement extends into more than one fiscal year of the State (July 1 to June 30), and if appropriations are insufficient to support this Agreement, the State may cancel at the end of the fiscal year, or otherwise upon the expiration of existing appropriation authority. In the case that this Agreement is a Grant that is funded in whole or in part by federal funds, and in the event federal funds become unavailable or reduced, the State may suspend or cancel this Grant immediately, and the State shall have no obligation to pay Subrecipient from State revenues.

5. No Employee Benefits For Party: The Party understands that the State will not provide any individual retirement benefits, group life insurance, group health and dental insurance, vacation or sick leave, workers compensation or other benefits or services available to State employees, nor will the state withhold any state or federal taxes except as required under applicable tax laws, which shall be determined in advance of execution of the Agreement. The Party understands that all tax returns required by the Internal Revenue Code and the State of Vermont, including but not limited to income, withholding, sales and use, and rooms and meals, must be filed by the Party, and information as to Agreement income will be provided by the State of Vermont to the Internal Revenue Service and the Vermont Department of Taxes.

6. Independence, Liability: The Party will act in an independent capacity and not as officers or employees of the State.

The Party shall defend the State and its officers and employees against all claims or suits arising in whole or in part from any act or omission of the Party or of any agent of the Party. The State shall notify the Party in the event of any such claim or suit, and the Party shall immediately retain counsel and otherwise provide a complete defense against the entire claim or suit.

After a final judgment or settlement the Party may request recoupment of specific defense costs and may file suit in Washington Superior Court requesting recoupment. The Party shall be entitled to recoup costs only upon a showing that such costs were entirely unrelated to the defense of any claim arising from an act or omission of the Party.

The Party shall indemnify the State and its officers and employees in the event that the State, its officers or employees become legally obligated to pay any damages or losses arising from any act or omission of the Party.

7. Insurance: Before commencing work on this Agreement the Party must provide certificates of insurance to show that the following minimum coverages are in effect. It is the responsibility of the Party to maintain current certificates of insurance on file with the state through the term of the Agreement. No warranty is made that the coverages and limits listed herein are adequate to cover and protect the interests of the Party for the Party’s operations. These are solely minimums that have been established to protect the interests of the State.

Workers Compensation: With respect to all operations performed, the Party shall carry workers’ compensation insurance in accordance with the laws of the State of Vermont.

General Liability and Property Damage: With respect to all operations performed under the contract, the Party shall carry general liability insurance having all major divisions of coverage including, but not limited to:

Premises - Operations

Products and Completed Operations

Personal Injury Liability

Contractual Liability

Revised 01-08-09

The policy shall be on an occurrence form and limits shall not be less than:

$1,000,000 Per Occurrence

$1,000,000 General Aggregate

$1,000,000 Products/Completed Operations Aggregate

$ 50,000 Fire/ Legal/Liability

Party shall name the State of Vermont and its officers and employees as additional insureds for liability arising out of this Agreement.

Automotive Liability: The Party shall carry automotive liability insurance covering all motor vehicles, including hired and non-owned coverage, used in connection with the Agreement. Limits of coverage shall not be less than: $1,000,000 combined single limit.

Party shall name the State of Vermont and its officers and employees as additional insureds for liability arising out of this Agreement.

8. Reliance by the State on Representations: All payments by the State under this Agreement will be made in reliance upon the accuracy of all prior representations by the Party, including but not limited to bills, invoices, progress reports and other proofs of work.

9. Requirement to Have a Single Audit: In the case that this Agreement is a Grant that is funded in whole or in part by federal funds, and if this Subrecipient expends $500,000 or more in federal assistance during its fiscal year, the Subrecipient is required to have a single audit conducted in accordance with the Single Audit Act, except when it elects to have a program specific audit.

The Subrecipient may elect to have a program specific audit if it expends funds under only one federal program and the federal program’s laws, regulating or grant agreements do not require a financial statement audit of the Party.

A Subrecipient is exempt if the Party expends less than $500,000 in total federal assistance in one year.

The Subrecipient will complete the Certification of Audit Requirement annually within 45 days after its fiscal year end. If a single audit is required, the sub-recipient will submit a copy of the audit report to the primary pass-through Party and any other pass-through Party that requests it within 9 months. If a single audit is not required, the Subrecipient will submit the Schedule of Federal Expenditures within 45 days. These forms will be mailed to the Subrecipient by the Department of Finance and Management near the end of its fiscal year. These forms are also available on the Finance & Management Web page at: http://finance.vermont.gov/forms

10. Records Available for Audit: The Party will maintain all books, documents, payroll papers, accounting records and other evidence pertaining to costs incurred under this agreement and make them available at reasonable times during the period of the Agreement and for three years thereafter for inspection by any authorized representatives of the State or Federal Government. If any litigation, claim, or audit is started before the expiration of the three year period, the records shall be retained until all litigation, claims or audit findings involving the records have been resolved. The State, by any authorized representative, shall have the right at all reasonable times to inspect or otherwise evaluate the work performed or being performed under this Agreement.

11. Fair Employment Practices and Americans with Disabilities Act: Party agrees to comply with the requirement of Title 21V.S.A. Chapter 5, Subchapter 6, relating to fair employment practices, to the full extent applicable. Party shall also ensure, to the full extent required by the Americans with Disabilities Act of 1990 that qualified individuals with disabilities receive equitable access to the services, programs, and activities provided by the Party under this Agreement. Party further agrees to include this provision in all subcontracts.

12. Set Off: The State may set off any sums which the Party owes the State against any sums due the Party under this Agreement; provided, however, that any set off of amounts due the State of Vermont as taxes shall be in accordance with the procedures more specifically provided hereinafter.

13. Taxes Due to the State:

http://finance.vermont.gov/forms

Revised 01-08-09

a. Party understands and acknowledges responsibility, if applicable, for compliance with State tax laws, including income tax withholding for employees performing services within the State, payment of use tax on property used within the State, corporate and/or personal income tax on income earned within the State.

b. Party certifies under the pains and penalties of perjury that, as of the date the Agreement is signed, the Party is in good standing with respect to, or in full compliance with, a plan to pay any and all taxes due the State of Vermont.

c. Party understands that final payment under this Agreement may be withheld if the Commissioner of Taxes determines that the Party is not in good standing with respect to or in full compliance with a plan to pay any and all taxes due to the State of Vermont.

d. Party also understands the State may set off taxes (and related penalties, interest and fees) due to the State of Vermont, but only if the Party has failed to make an appeal within the time allowed by law, or an appeal has been taken and finally determined and the Party has no further legal recourse to contest the amounts due.

14. Child Support: (Applicable if the Party is a natural person, not a corporation or partnership.) Party states that, as of the date the Agreement is signed, he/she:

a. is not under any obligation to pay child support; or

b. is under such an obligation and is in good standing with respect to that obligation; or

c. has agreed to a payment plan with the Vermont Office of Child Support Services and is in full compliance with that plan.

Party makes this statement with regard to support owed to any and all children residing in Vermont. In addition, if the Party is a resident of Vermont, Party makes this statement with regard to support owed to any and all children residing in any other state or territory of the United States.

15. Sub-Agreements: Party shall not assign, subcontract or subgrant the performance of his Agreement or any portion thereof to any other Party without the prior written approval of the State. Party also agrees to include in all subcontract or subgrant agreements a tax certification in accordance with paragraph 13 above.

16. No Gifts or Gratuities: Party shall not give title or possession of any thing of substantial value (including property, currency, travel and/or education programs) to any officer or employee of the State during the term of this Agreement.

17. Copies: All written reports prepared under this Agreement will be printed using both sides of the paper.

18. Certification Regarding Debarment: Party certifies under pains and penalties of perjury that, as of the date that this Agreement is signed, neither Party nor Party’s principals (officers, directors, owners, or partners) are presently debarred, suspended, proposed for debarment, declared ineligible or excluded from participation in federal programs or programs supported in whole or in part by federal funds.

(End of Standard Provisions)

RFP/PROJECT: ACTUARIAL SERVICES DATE: MAY 17, 2010

CERTIFICATE OF COMPLIANCE

This form must be completed in its entirety and submitted as part of the response for the proposal to be considered valid. TAXES: Pursuant to 32 V.S.A. § 3113, bidder hereby certifies, under the pains and penalties of perjury, that the company/individual is in good standing with respect to, or in full compliance with a plan to pay, any and all taxes due to the State of Vermont as of the date this statement is made. A person is in good standing if no taxes are due, if the liability for any tax that may be due is on appeal, or if the person is in compliance with a payment plan approved by the Commissioner of Taxes. INSURANCE: Bidder certifies that the company/individual is in compliance with, or is prepared to comply with, the insurance requirements as detailed in Section 7 of Attachment C: Standard State Contract Provisions. Certificates of insurance must be provided prior to issuance of a contract and/or purchase order. If the certificate(s) of insurance is/are not received by the Office of Purchasing & Contracting within five (5) days of notification of award, the State of Vermont reserves the right to select another vendor. Please reference the RFP and/or RFQ # when submitting the certificate of insurance.

CONTRACT TERMS: The undersigned hereby acknowledges and agrees to Attachment C: Standard State Contract Provisions. TERMS OF SALE: The undersigned agrees to furnish the products or services listed at the prices quoted. The Terms of Sales are Net 30 days from receipt of service or invoice, whichever is later. Percentage discounts may be offered for prompt payments of invoices, however such discounts must be in effect for a period of 30 days or more in order to be considered in making awards. FORM OF PAYMENT: Would you accept the Visa Purchasing Card as a form of payment? ____ Yes ____ No

Insurance Certificate(s): Attached ______________ Will provide upon notification of award ____________ Delivery Offered: _______ days after notice of award Terms of Sale: ___________________ (If Discount) Quotation Valid for: _____ days Date: __________ Name of Company: __________________________ Contact Name: ______________________________ Address: ___________________________________ Fax Number: ___________________________ ___________________________________________ E-mail: _______________________________ By: _______________________________________ Name: _______________________________ Signature (Bid Not Valid Unless Signed) (Type or Print)

All returned quotes and related documents must be identified with our request for quote number.

RFP/PROJECT: ACTUARIAL SERIVCES DATE: MAY 17, 2010

WORKERS’ COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT

Self Reporting

Form 1 of 2

This form must be completed in its entirety and submitted as part of the response for the proposal to be considered valid. The Department of Buildings and General Services in accordance with Act 54, Section 32 of the Acts of 2009 and for total projects costs exceeding $250,000.00, requires bidders comply with the following provisions and requirements. Bidder is required to self report the following information relating to past violations, convictions, suspensions, and any other information related to past performance relative to coding and classification for worker’s compensation. The state is requiring information on any violations that occurred in the previous 12 months.

Summary of Detailed Information Date of Notification Outcome

WORKERS’ COMPENSATION STATE CONTRACTS COMPLIANCE REQUIREMENT: Bidder hereby certifies that the company/individual is in compliance with the requirements as detailed in Act 54, Section 32 of the Acts of 2009. Date: Name of Company: Contact Name: Address: Title: Phone Number: E-mail: Fax Number: By: Name: Signature (Bid Not Valid Unless Signed)* (Type or Print) *Form must be signed by individual authorized to sign on the bidder’s behalf.

RFP/PROJECT: ACTUARIAL SERVICES DATE: MAY 17, 2010

WORKERS’ COMPENSATION; STATE CONTRACTS COMPLIANCE REQUIREMENT

Subcontractor Reporting

Form 2 of 2

This form must be completed in its entirety and submitted as part of the response for the proposal to be considered valid. The Department of Buildings and General Services in accordance with Act 54, Section 32 of the Acts of 2009 and for total projects costs exceeding $250,000.00 requires bidders to comply with the following provisions and requirements. Bidder is required to provide a list of subcontractors on the job along with lists of subcontractor’s subcontractors and by whom those subcontractors are insured for workers’ compensation purposes. Include additional pages if necessary. This is not a requirement for subcontractor’s providing supplies only and no labor to the overall contract or project.

Subcontractor Insured By Subcontractor’s Sub Insured By

Date: Name of Company: Contact Name: Address: Title: Phone Number: E-mail: Fax Number: By: Name: Signature (Bid Not Valid Unless Signed)* (Type or Print) *Form must be signed by individual authorized to sign on the bidder’s behalf.

Offshore Outsourcing Questionnaire Vendors must indicate whether or not any services are or will be performed in a country other than the United Sates. Indicate N/A if not applicable. Services:

Proposed Service to be Outsourced

Bid Total

Offshore Dollars

Represents what % of total Contract Dollars

Outsourced Work Location (Country)

Subcontractor

If any or all of the services are or will be outsourced offshore, Vendors are required to provide a cost estimate of what the cost would be to provide the same services onshore and/or in Vermont.

Proposed Service to be

Outsourced

Bid Total if provided

Onshore

Bid Total if provided in

Vermont

Cost Impact

Onshore Work Location

Subcontractor

Name of Bidder: Signature of Bidder: Date

STATE OF VERMONT REQUEST FOR PROPOSAL

ACTUARIAL SERVICES PRICING WORKSHEET

Year One

Actuarial Study Cost $

Claims Audit Cost $

Annual Not to Exceed Figure $

Hourly Rate for Special Projects $ Per Hour

Year Two


Claims Audit Cost $



Year Three (Option)


Claims Audit Cost $



Year Four (Option)


Claims Audit Cost $



Name of Bidder: Signature of Bidder: Date:

AMI Risk Consultants, Inc.

State of Vermont

Self - Insurance Program Actuarial Review

as of June 30, 2009

Firm: AMI Risk Consultants, Inc. 11410 N. Kendall Drive, Suite 208 Miami, Florida 33176 (305) 273-1589

Contact: Aguedo (Bob) M. Ingco, FCAS, MAAA, CPCU, ARM

Date: September 17, 2009

September 17, 2009 Mr. Bill Duchac Manager, Office of Risk Management BGS Financial Operation 200 Governor Aiken Avenue Montpelier, VT 05633-5801 Dear Mr. Duchac: We are pleased to submit to you ten (10) bound and one (1) unbound copies of the final report for our actuarial review of the self-insurance program of the State of Vermont as of June 30, 2009. We very much appreciate the cooperation and courtesies extended to us during the course of this engagement. Please do not hesitate to contact us should you have any questions regarding the report. Sincerely, Bob Ingco, FCAS, MAAA, CPCU, ARM President


TABLE OF CONTENTS

I. EXECUTIVE SUMMARY PAGE

Purpose................................................................................................................................. 1

Conclusions.......................................................................................................................... 2-5 Distribution and Use ............................................................................................................ 6

Reliances and Limitations .................................................................................................... 6

II. ACTUARIAL REPORT PAGE

Background .......................................................................................................................... 7

Actuarial Approach .............................................................................................................. 8-10

Results of Calculations......................................................................................................... 11-14

Attached Exhibits ................................................................................................................. 15-17

III. ACTUARIAL EXHIBITS EXHIBIT

Summary of Results ...................................................................................................... Summary Calculation of Ultimate Losses for Workers' Compensation ............................................... I Calculation of Ultimate Losses for General Liability .......................................................... II Calculation of Ultimate Losses for Automobile Liability .................................................... III

Calculation of Projected Losses for Workers' Compensation.............................................. IV

Calculation of Projected Losses for General Liability ........................................................ V

Calculation of Projected Losses for Automobile Liability .................................................. VI


TABLE OF CONTENTS (continued)

Analysis Reserve Change for Workers' Compensation....................................................... Appendix A

Analysis Reserve Change for General Liability................................................................... Appendix B

Analysis of Reserve Change for Automobile Liability ........................................................ Appendix C

Future Funding Amounts At Alternate Sovereign Immunity Limits for General Liability and Automobile Liability ..................................... Appendix D

IV. GLOSSARY OF TERMS


State of Vermont

Self-Insurance Program Actuarial Review June 30, 2009

Purpose

The State of Vermont (the State) has engaged the services of AMI Risk Consultants, Inc. (AMI) to perform the following for its self-insurance program: • Estimate the funding requirements for outstanding liabilities (loss reserves)

at June 30, 2009 for workers’ compensation, general liability, and automobile liability, to comply with the Government Accounting Standards Board Statement Number 10 (GASB 10).

• Estimate the funding requirements for prospective fiscal accident years

2009/2010, 2010/2011, 2011/2012, 2012/2013 and 2013/2014 at the State’s current retention.

• Review the sufficiency of the current sovereign immunity limits. The funding requirements are liabilities retained by the State for losses and allocated loss adjustment expenses (ALAE). We did not include in our estimates any provision to meet other general and administrative expenses of the State’s self-insurance program. For this report, the term "losses" means losses and ALAE, unless otherwise indicated.


O:\State of Vermont\2009\State of Vermont_RPT2009.doc Page 2

Conclusions

Funding for Outstanding Liabilities at June 30, 2009 Our estimated outstanding liabilities (or loss reserves) by type of coverage at June 30, 2009 are shown below. This is the estimated unpaid balance on claims that occurred on or before that date.

Estimates of outstanding liabilities (loss reserves) at higher confidence levels can be seen in the Summary Exhibit, Pages 1 and 2 following this report.

Outstanding Liabilities at June 30, 2009 Undiscounted

Expected Confidence Level (amounts in thousands)

Workers

Compensation General Liability

Automobile Liability Total

$19,112 $4,946 $1,061 $25,119



Conclusions (continued)

Funding for New Claims Occurring in Future Fiscal Years Our estimate of ultimate losses for accidents occurring in prospective fiscal years 2009/2010, 2010/2011, 2011/2012, 2012/2013 and 2013/2014 are shown below. These are the necessary amounts to fund new accidents that will occur during the next five (5) fiscal policy periods:

Estimates at higher confidence levels can be seen on Pages 4-8 of the Summary Exhibit attached to this report. The estimates shown above assume the State will continue with no excess insurance on workers’ compensation and a $250 thousand retention on general and automobile liability claims.

Funding for Future Claims Undiscounted

Expected Confidence Level Current Retention

(amounts in thousands)

Fiscal Year

Workers’ Compensation

General Liability

Automobile Liability TOTAL

2009/2010 $7,780 $1,373 $347 $9,500 2010/2011 8,018 1,436 361 9,815 2011/2012 8,255 1,500 376 10,131 2012/2013 8,500 1,568 391 10,459 2013/2014 8,752 1,638 407 10,797




Reconciliation of Current Reserves to Last Year’s Estimate

Reconciliation to Prior Year’s Estimate – Undiscounted All Coverages Combined – Expected Confidence Level

(amounts in thousands) 1. Estimated undiscounted loss reserves at 6/30/2008 $22,305 2. Loss payments during FY 2009 for accident years 2008 and prior. ($5,460) 3. Change in estimated ultimate losses for accident years 2008 and prior due to re-evaluation at 6/30/2009

$645

4. Estimated ultimate losses for AY 2009 $9,781 5. Loss payments during FY 2009 for accident year 2009 ($2,152) 6. Estimated undiscounted loss reserves at 6/30/2009 Sum of (1) thru (5)

$25,119

This table shows the components impacting the change in the total reserve level between June 30, 2008 and June 30, 2009. The increase in the reserve level from $22,305 to $25,119 is due primarily to the cost of the new accidents that occurred in 2009 (Item 4). Because this cost exceeds the reduction in the reserve from payments made during the year (Item 2 plus Item 5), there is a net increase in the reserve. It is commonly the case for both insurance companies and self-insurance programs that the cost of new accidents is larger than the payout of older claims. The latest year’s claims are typically more costly than prior years due to increased exposure to loss and the impact of inflation on the average claim cost. In addition to the cost of new claims the reserve was also impacted by an adverse development on prior accidents of $645 (Item 3). This means that claims that occurred in prior accident years developed by more than expected during the past year, and that estimated ultimate losses for past years have increased by $645. Further discussion is included in the next section, “Reserve Change by Coverage”.




Reserve Change by Coverage The total undiscounted reserve increased by $2,814 thousand over the estimate from a year ago. The table below shows the change by coverage.

Estimated Undiscounted Reserves

Expected Confidence Level (000’s)

Coverage

At June 30, 2008 At June 30, 2009 Change

Workers’ Compensation $17,121 $19,112 $1,991 General Liability 4,255 4,946 691

Auto Liability 929 1,061 132 Total $22,305 $25,119 $2,814

The primary increase occurred in Workers’ Compensation. Although the Workers’ Compensation increase was due mainly to the cost of claims for the new 2009 accidents, there was also an adverse development on prior accident years, primarily accident year 2006. The table below details the $548 change in ultimate losses for 2006 claims. It shows the significant increase in case incurred losses over the past year for these claims, and the resulting upward shift in the estimate of ultimate losses.

Adverse Development of

Workers’ Compensation Accident Year 2006 (000’s)

Case Incurred

Losses At 6/30/08

Estimated Ultimate Losses

At 6/30/08

Case Incurred

Losses At 6/30/09

Estimated Ultimate Losses

At 6/30/09

Change in Estimated

Ultimate Losses $5,848 $6,996 $6,953 $7,544 $548

Overall prior accident year development for Automobile Liability was slightly favorable (by $55 thousand) and for General Liability was slightly adverse (by $13 thousand). Please see Appendices D-F in the Exhibits Section of this report for a complete reconciliation of reserves between June 30, 2008 and June 30, 2009 for each coverage.



Distribution and Use

This report is for the internal use of the management of the State and their independent accountants, solely to enable the latter to opine on the annual financial statements of the State. We suggest that the user of this report review a complete copy as parts considered out of context might be misleading. Please request our written consent prior to distributing this report to other third parties.

Reliance and Limitations

In performing the analysis we relied without audit or verification on the following information furnished by the State: • Historical loss development information prepared by the State, by accident

year and by type of coverage, for incurred and paid losses through June 30, 2009. The types of coverage are: workers' compensation, general liability, and automobile liability.

• Exposure estimates by accident year through June 30, 2009. For workers'

compensation and general liability, the State provided payroll; for automobile liability claims, the State provided number of vehicles.

In performing the work, we spoke with Mr. Bill Duchac, Manager, Office of Risk Management for the State. Estimates of net reserves are subject to potential errors of estimation because the ultimate liability for claims is subject to the outcome of events yet to occur, e.g., jury decisions and attitudes of claimants with respect to settlements. In projecting loss emergence, we assumed that historical loss development patterns and insurance industry loss development patterns are predictive of future patterns. We have not anticipated any extraordinary changes in the legal, social or economic environment that might affect the ultimate cost of claims. We cannot reasonably estimate the uncertainties that ultimate liabilities are subject to. Therefore, while we believe our assumptions and methods are reasonable, we cannot guarantee that actual results will not differ, perhaps substantially, from our estimates. Loss Development History for General and Automobile Liability This year we appended an additional diagonal to the General Liability and Automobile Liability triangles which were created last year. As the triangle history builds over time, progressively more weight will be assigned to the State’s development pattern and less to industry factors.



Background

The State has been self-insured for workers compensation since February 1, 1990 and liability since July 1, 1990. The last change to sovereign immunity limits was made July 1, 1990 when the limits were fixed at $250,000 per person, $1,000,000 per occurrence. In 1989 the limits had been revised to $250,000 per person, $500,000 per occurrence changing from the initial limits of $75,000 per person, $300,000 per occurrence established in the early 1960’s. Workers compensation has been fully self-insured from its inception February 1, 1990 with unlimited liability and no commercially purchased excess insurance. The liability program, which is limited by the sovereign immunity statute (referenced below), has purchased excess insurance from its inception July 1, 1990. For the first three years of the liability program the self-insured retention (SIR) was $150,000. From 1993 forward the SIR has been $250,000.



Actuarial Approach Description of the methods we used to estimate the reserves as of June 30, 2009.

Recommended Funding Level as of June 30, 2009 To estimate total reserves as of June 30, 2009, we first estimated ultimate losses. Paid losses through June 30, 2009 were then subtracted from ultimate losses to estimate total reserves.

To estimate ultimate losses, we used the following four actuarial approaches. They were applied separately by accident year and by type of coverage:

• Incurred Loss Development Approach (ILDA) • Paid Loss Development Approach (PLDA) • Bornhuetter-Ferguson Incurred Loss Approach (BFILA) • Bornhuetter-Ferguson Paid Loss Approach (BFPLA).

Incurred Loss Development Approach (ILDA) Under the ILDA, we multiplied incurred losses to date by the appropriate loss development factors to estimate ultimate losses.

In applying this approach, we used loss development factors that are based on the State's historical loss development patterns, supplemented by insurance industry loss development patterns as compiled by AM Best. We assumed that losses are reported and reserved consistently.

Paid Loss Development Approach (PLDA) The PLDA is similar to the ILDA. Instead of multiplying incurred losses by loss development factors, we multiplied paid losses by the appropriate loss development factors to estimate ultimate losses.

In applying this approach, we used loss development factors that are based on the State's historical loss development patterns, supplemented by insurance industry development patterns as compiled by AM Best. We assumed that losses are paid consistently.

Bornhuetter-Ferguson Incurred Loss Approach (BFILA) Under the BFILA, we summed actual incurred losses and expected unreported losses to estimate projected ultimate losses.

In applying this approach, we estimated expected unreported losses by using loss development factors that are based on the State's historical loss development patterns, supplemented by insurance industry loss development patterns. We also used the average of estimated loss rates (ultimate losses divided by exposure base) indicated by the ILDA and PLDA. We assumed that losses are reported and reserved consistently.



Actuarial Approach (continued)

Bornhuetter-Ferguson Paid Loss Approach (BFPLA) Under the BFPLA, we summed actual paid losses and expected unpaid losses to estimate projected ultimate losses.

In applying this approach, we estimated expected unpaid losses by using loss development factors that are based on the State's historical loss development patterns, supplemented by insurance industry loss development patterns. We also used the average of estimated loss rates (ultimate losses divided by exposure base) indicated by the ILDA and PLDA. We assumed that losses are paid consistently.

Calculation of Ultimate Losses for Accident Year 2008/2009 To react to the immaturity of the paid and incurred losses for accident year 2008/2009, we used the Loss Rate Approach (LRA) instead of the ILDA and PLDA. Under the LRA, a loss rate is estimated for 2008/2009 by averaging net ultimate losses divided by exposure of prior years. This loss rate is multiplied by the 2008/2009 exposure to estimate the 2008/2009 ultimate loss. Risk Margins

Our estimates using the various methods and procedures we have described, are based on an expected value. Conceptually, an expected value is an average value. The actual losses of an entity like the State will vary and could be higher or lower than this average value. The more risk margin that is added to this average value in determining the funding level, the higher the likelihood that the State’s funding level will be sufficient to pay for actual losses.

In our calculations, we used margins for 60%, 70%, 75%, 85%, 90% and 95% confidence levels. With the 75% confidence level, we are estimating the margin that is necessary so that there is a 75% likelihood that the funding level will be sufficient to cover the actual liabilities.



Actuarial Approach (continued) The steps we used to estimate the recommended funding levels for Fiscal Accident Years 2009/2010,2010/2011, 2011/2012, 2012/2013, and 2013/2014.

Recommended Funding Levels for 2009/2010, 2010/2011, 2011/2012, 2012/2013 and 2013/2014 To estimate the funding levels for prospective fiscal accident years 2009/2010, 2010/2011, 2011/2012, 2012/2013 and 2013/2014 by coverage, we followed these steps: • Estimated the historical loss rates by accident year. • Extrapolated the historical loss rates to fiscal years 2009/2010,

2010/2011, 2011/2012, 2012/2013 and 2013/2014. • Multiplied the extrapolated loss rates by the projected exposures. As we did when estimating the loss reserves as of June 30, 2009, we then estimated a risk margin.



Results of Calculations

Outstanding Liabilities at June 30, 2009 Our estimated outstanding liabilities by type of coverage at June 30, 2009, are depicted in the pie chart below. We prepared the pie chart to show the proportion of the estimated reserves (prior to the addition of any risk margin for adverse deviations) of $25.1 million associated with each coverage.

Roughly three-quarters, or 76% of the $25.1 million undiscounted reserves as of June 30, 2009, are for workers’ compensation.

TOTAL ESTIMATED RESERVES

WC76%

GL20%

AL4%

Notes: GL - General Liability AL - Auto Liability WC - Workers’ Compensation



Results of Calculations (continued)

To give perspective on the prospective funding levels relative to the historical trend in ultimate losses and loss rates, we prepared the following exhibits by type of coverage. In each graph the bar chart shows estimate ultimate losses by accident year for both past and future years. The scale on the left-hand side of the graph should be used with the bars. The line graph shows the historical and projected loss rate, and the scale on the right-hand side should be used to read the values.

W O R K ER S' C O M PEN SA TIO NU LTIM A TE LO SSES AN D LO SS RA TES

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

A CCID ENT Y EA R

ULT

IMA

TE L

OSS

ES($

AM

T IN

'000

)

1 .00%

2.00%

3.00%

LOSS

RA

TE(L

OSS

ES A

S %

OF

PAY

RO

LL)

G E N E R A L L I A B I L I T YU L T I M A T E L O S S E S A N D L O S S R A T E S

0

5 0 0

1 ,0 0 0

1 ,5 0 0

2 ,0 0 0

2 ,5 0 0

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

A C C I D E N T Y E A R

ULT

IMA

TE L

OSS

ES

($A

MT

IN '0

00)

0 .0 0 %

0 .5 0 %

1 .0 0 %

LOSS

RA

TE

(LO

SSES

AS

% O

F PA

YR

OLL

)




AUTO LIABILITYULTIMATE LOSSES AND LOSS RATES

0

200

400

600

800

1,000

1,200

1,400

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

ACCIDENT YEAR

ULT

IMA

TE L

OSS

ES($

AM

T IN

'000

)

$0

$300

$600

$900

LO

SS R

AT

E

(DO

LL

AR

S O

F L

OSS

PE

R V

EH

ICL

E)




Sovereign Immunity Limits

The State currently enjoys sovereign immunity protection which limits liability claims to $250,000 per person / $1,000,000 per occurrence. These limits were set in 1990 and at that time represented a significant increase from the previous limits of $75,000 per person / $300,000 per occurrence. It is our understanding that the change was made in keeping with the original principle of the legislation to provide just and equitable compensation to claimants. To this end the State has attempted in the past to maintain the immunity limits at a relative dollar value in keeping with inflation.

It has now been 19 years since the current sovereign immunity limits were set, and the State, in keeping with the above ideals, might want to assess the sufficiency of the current limits.

The Consumer Price Index (CPI) published by the U.S. Bureau of Labor Statistics is a widely used measure to establish relative value over time. We note that the CPI has increased by 71.3% since 1990. This would suggest an increase of a similar magnitude in the sovereign immunity limits to approximately $425,000 per person / $1,700,000 per occurrence is appropriate in order to adjust the limits for the effects of inflation. Furthermore, to allow for additional inflation between now and the actual implementation period of revised limits, an adjustment of the sovereign immunity limits to $500,000 per person / $2,000,000 per occurrence is recommended.

We estimate that adoption of the recommended limits would increase the State’s annual expected losses by 0.8% to 3.5%, assuming the State adjusted its retention to $500,000 as well. Below is the estimated impact of such a change to the projected funding level for 2009/2010 claims.

Impact of Proposed Change in Sovereign Immunity Limits

For Fiscal Year 2009/2010 Claims (000’s)

Range of Projected Ultimate

Losses at Proposed Limits

Impact of Change in

Limits Coverage

Projected Ultimate Losses at Current Limits

Low High Low High General Liability $1,373 $1,384 $1,421 $11 $48 Automobile Liability $347 $350 $359 $3 $12 Total $1,720 $1,734 $1,780 $14 $60

As shown in the table above, the estimated dollar impact of the proposed change in sovereign immunity limits on the cost of claims occurring during fiscal year 2009/2010 is between $14 thousand and $60 thousand. Please see Appendix D for expected liability losses for each of the next five fiscal accident years assuming alternate sovereign immunity limits.



Attached Exhibits

Estimated Funding Levels for Outstanding Liabilities at June 30, 2009

We prepared Exhibits I-III estimate the total reserves at June 30, 2009 by coverage: • Exhibit I - Workers' Compensation • Exhibit II - General Liability • Exhibit III - Automobile Liability



Attached Exhibits (continued)

There are 4 pages to each of the Exhibits I-III. Each page relates to the following: • Page 1 shows how we estimated the loss reserves as of June 30, 2009 before

considering future investment income and the margins necessary to raise the confidence levels higher than the expected level. To estimate the loss reserves, we used ultimate losses that are based on the ultimates suggested by the various approaches previously described.

• Page 2 shows the calculation of ultimate losses using the ILDA and the

PLDA. • Page 3 shows the calculation of the ultimate losses using the BFILA and the

BFPLA. • Page 4 (Pages 4A – 4D) shows the calculation of the historical incurred loss

and paid loss development factors. Projected Funding Levels for Future Accident Years We prepared the attached Exhibits IV-VI to estimate the prospective funding levels for fiscal years 2009/2010, 2010/2011, 2011/2012, 2012/2013, and 2013/2014. • Exhibit IV- Workers' Compensation • Exhibit V - General Liability • Exhibit VI - Automobile Liability This pages shows the estimation of ultimate losses for prospective fiscal years 2009/2010, 2010/2011, 2011/2012, 2012/2013, and 2013/2014.



Attached Exhibits (continued)

Appendices We prepared Appendices A-C to show why our undiscounted reserves changed from those estimated last year. Specifically, the exhibits show the calculation and analysis of the change in undiscounted reserves from June 30, 2008 to June 30, 2009 for workers' compensation, general liability, and automobile liability, respectively. Please refer to page 1 of Appendices A, B and C. Page 2 of Appendices A, B and C shows the comparison of total ultimate losses for claims prior to fiscal year 2008/2009, using loss information at June 30, 2008 and June 30, 2009. Page 3 of Appendices A, B and C shows the comparison of paid losses for claims prior to fiscal year 2008/2009, using loss information at June 30, 2008 and June 30, 2009. We prepared Appendix D to show projected General Liability and Automobile Liability losses assuming alternate sovereign immunity limits.


SUMMARY EXHIBITPAGE 1 OF 9

STATE OF VERMONTSELF-INSURANCE PROGRAM ACTUARIAL REVIEW

SUMMARY OF UNDISCOUNTED RESERVES BY CONFIDENCE LEVELALL COVERAGES COMBINED

AS OF JUNE 30, 2009(AMTS IN THOUSANDS)

UNDISCOUNTED LOSS RESERVES AS OF JUNE 30, 2009COVERAGE EXPECTED 60% CONFIDENCE 70% CONFIDENCE 75% CONFIDENCE

LEVEL LEVEL LEVEL LEVEL(1) (2) (3) (4)

WORKERS' COMPENSATION $19,112 $19,685 $21,023 $21,788

GENERAL LIABILITY 4,946 5,094 5,391 5,589

AUTOMOBILE LIABILITY 1,061 1,103 1,252 1,337

TOTAL $25,119 $25,882 $27,666 $28,714

COVERAGE 80% CONFIDENCE 85% CONFIDENCE 90% CONFIDENCE 95% CONFIDENCELEVEL LEVEL LEVEL LEVEL

(5) (6) (7) (8)

WORKERS' COMPENSATION $22,743 $23,890 $25,419 $27,713

GENERAL LIABILITY 5,787 6,034 6,331 6,825

AUTOMOBILE LIABILITY 1,432 1,538 1,676 1,856

TOTAL $29,962 $31,462 $33,426 $36,394

Notes:(1) - See Summary Exhibit, Page 2, Column (1).(2) - (4) - See Summary Exhibit, Page 2, Column (5) for that confidence level.(5) - (8) - See Summary Exhibit, Page 3, Column (5) for that confidence level.

O:\State of Vermont\2009\ALL2009\SUMMARY19/14/2009 2:56 PM



SELF-INSURANCE PROGRAM ACTUARIAL REVIEWAS OF JUNE 30, 2009

CALCULATION OF ESTIMATED RESERVES BY CONFIDENCE LEVELALL COVERAGES

($AMOUNTS IN THOUSANDS)

Expected Confidence LevelMargin Amount

Undiscounted on UndiscountedCoverage Reserves Reserves

(1) (2)

Workers' Compensation (WC) $19,112 $0General Liability (GL) 4,946 0

Automobile Liability (AL) 1,061 0

Total $25,119 $0

Undiscounted Margin Amount UndiscountedReserves at on Undiscounted Reserves at

Coverage Expected Level Reserves 60% Conf. Level(3) (4) (5)=(3)+(4)

Workers' Compensation (WC) $19,112 $573 $19,685General Liability (GL) 4,946 148 5,094

Automobile Liability (AL) 1,061 42 1,103

Sub Total $25,119 $763 $25,882



Workers' Compensation (WC) $19,112 $1,911 $21,023General Liability (GL) 4,946 445 5,391


Sub Total $25,119 $2,547 $27,666





Sub Total $25,119 $3,595 $28,714

75% Confidence Level



O:\State of Vermont\2009\ALL2009.xls\ULT_LOSSES9/14/2009 12:56 PM




AS OF JUNE 30, 2009CALCULATION OF ESTIMATED RESERVES BY CONFIDENCE LEVEL

ALL COVERAGES($AMOUNTS IN THOUSANDS)





Sub Total $25,119 $4,843 $29,962



Workers' Compensation (WC) $19,112 $4,778 $23,890General Liability (GL) 4,946 1,088 6,034


Sub Total $25,119 $6,343 $31,462





Sub Total $25,119 $8,307 $33,426





Total $25,119 $11,275 $36,394

Notes:(3) = Summary Exhibit, Page 2, Column (1).(4) - Per AMI calculation.(5) = (3) + (4).





O:\State of Vermont\2009\ALL2009.xls/ULT_LOSSES_29/14/2009 12:56 PM




AS OF JUNE 30, 2009RECOMMENDED FUNDING BY CONFIDENCE LEVEL

FOR FISCAL YEAR 2009/2010 ACCIDENTSALL COVERAGES - CURRENT RETENTION


Projected Margin AmountUndiscounted on Undiscounted

Coverage Ultimate Losses Ultimate Losses(1) (2)


Automobile Liability (AL) 347 0

Total $9,500 $0

Projected Margin Amount Proj. Net UndiscountedUndiscounted on Undiscounted Ultimate Losses

Coverage Ultimate Losses Ultimate Losses @75% Conf. Level(3) (4) (5)


Automobile Liability (AL) 347 90 437

Total $9,500 $1,357 $10,857



Workers' Compensation (WC) ($3) $1,945 $1,942General Liability (GL) 1,373 $302 1,675

Automobile Liability (AL) 347 $156 503

Total $1,717 $2,403 $4,120





Total $9,500 $4,283 $13,783

Notes:(1) - From Exhibits IV, V & VI for WC, GL and AL, respectively, - Page 1, Column (1), 2009/2010.(2), (4), (7) & (10) - Per AMI calculation, based on Monte Carlo simulations.(5) = (3) + (4); (8) = (6) + (7); (11) = (9) + (10)




Expected Level

O:\State of Vermont\2009\ALL2009.xls\PROJ+19/14/2009 12:56 PM











Total $9,815 $0





Total $9,815 $1,404 $11,219



Workers' Compensation (WC) $8,018 $2,005 $10,023General Liability (GL) 1,436 $316 1,752


Total $9,815 $2,483 $12,298





Total $9,815 $4,425 $14,240





Expected Level












Total $10,131 $0





Total $10,131 $1,449 $11,580





Total $10,131 $2,563 $12,694





Total $10,131 $4,567 $14,698





Expected Level












Total $10,459 $0





Total $10,459 $1,496 $11,955





Total $10,459 $2,646 $13,105





Total $10,459 $4,714 $15,173





Expected Level












Total $10,797 $0





Total $10,797 $1,544 $12,341





Total $10,797 $2,731 $13,528





Total $10,797 $4,865 $15,662





Expected Level




RETENTION AMOUNT OF $250,000Expected Expected Undiscounted

Self-Funded Unlimited Retention FundingPeriod Funding Factor Amount at

Amount $250,000 Retention(1) (2) (3)

7/1/09-6/30/10 $7,780 0.798 $6,2087/1/10-6/30/11 8,018 0.798 6,3987/1/11-6/30/12 8,255 0.798 6,5877/1/12-6/30/13 8,500 0.798 6,7837/1/13-6/30/14 8,752 0.798 6,984

RETENTION AMOUNT OF $500,000Expected Expected Undiscounted


Amount $500,000 Retention(4) (5) (6)

7/1/09-6/30/10 $7,780 0.882 $6,8627/1/10-6/30/11 8,018 0.882 7,0727/1/11-6/30/12 8,255 0.882 7,2817/1/12-6/30/13 8,500 0.882 7,4977/1/13-6/30/14 8,752 0.882 7,719

RETENTION AMOUNT OF $1,000,000Expected Expected Undiscounted


Amount $1,000,000 Retention(7) (8) (9)

7/1/09-6/30/10 $7,780 0.935 $7,2747/1/10-6/30/11 8,018 0.935 7,4977/1/11-6/30/12 8,255 0.935 7,7187/1/12-6/30/13 8,500 0.935 7,9487/1/13-6/30/14 8,752 0.935 8,183

Notes:(1), (4) & (7) - Per Exhibit IV, Col. (1).(2), (5) & (8) - Based on NCCI excess loss factors for Vermont.(3) = (1) x (2); (4) = (5) x (6); (9) = (7) x (8).

WORKERS' COMPENSATIONAS OF JUNE 30, 2009

(AMTS IN THOUSANDS)


DEVELOPMENT OF FUTURE FUNDING AMOUNTS FOR ALTERNATE RETENTIONS $250,000, $500,000 and $1,000,000 RETENTION LIMITS

O:\State of Vermont\2009\Retention_Vermont_063009\WC9/14/2009 3:26 PM


EXHIBIT IPAGE 1 OF 4


CALCULATION OF SELECTED ULTIMATE LOSSESWORKERS' COMPENSATION


NET

ALL APPROACHES COMBINEDILDA PLDA BFILA BFPLA SELECTED PAID LOSS

ACCIDENT ULTIMATE ULTIMATE ULTIMATE ULTIMATE ULTIMATE LOSSES RESERVESYEAR* LOSSES LOSSES LOSSES LOSSES LOSSES @6/30/2009 @6/30/2009

(1) (2) (3) (4) (5) (6) (7)

1990 $1,887 $1,887 $1,887 $1,887 $1,887 $1,887 $01991 3,402 3,402 3,402 3,402 3,402 3,402 01992 4,720 4,720 4,720 4,720 4,720 4,720 01993 5,768 5,774 5,768 5,772 5,770 5,768 21994 4,809 4,809 4,809 4,809 4,809 4,395 4151995 2,987 2,995 2,990 3,003 2,994 2,974 201996 5,831 5,802 5,823 5,802 5,814 5,164 6501997 3,880 3,922 3,886 3,935 3,906 3,846 601998 4,471 4,470 4,471 4,470 4,470 4,347 1231999 5,816 5,853 5,797 5,818 5,821 5,649 1722000 4,320 4,387 4,351 4,431 4,372 4,202 1712001 5,525 5,596 5,531 5,600 5,563 5,309 2542002 5,109 4,889 5,154 4,889 5,010 4,389 6212003 5,070 4,796 5,141 4,796 4,951 3,979 9722004 8,092 7,778 7,990 7,660 7,880 6,907 9732005 6,329 5,950 6,402 6,112 6,198 5,112 1,0862006 7,864 7,238 7,809 7,267 7,544 5,832 1,7122007 5,268 5,468 5,662 6,145 5,903 3,875 2,0282008 7,700 7,648 7,777 7,822 7,737 4,023 3,7142009 7,836 7,467 8,686 8,326 8,079 1,938 6,140

TOTAL $106,685 $104,849 $108,055 $106,666 $106,831 $87,719 $19,112

Notes:(1), (2), (3) & (4)- Ultimate incurred losses calculated from Exhibit I, Pages 2 and 3.(5) = Selected based on (1), (2), (3) & (4).(6) - Per STATE OF VERMONT.(7) = (5) - (6).* All Accident years end on 6/30 of the stated year.

O:\State of Vermont\2009\WC2009.xls\SELECTED9/14/2009 12:58 PM




CALCULATION OF LOSS RESERVES - LOSS DEVELOPMENT APPROACHWORKERS' COMPENSATION


NET

INCURRED LOSS DEVELOPMENT APPROACHINCURRED LOSS ULTIMATE ESTIMATED

ACCIDENT LOSSES DEVLPMT INCURRED PAYROLL LOSS LOSSYEAR* @6/30/2009 FACTORS LOSSES (IN $000'S) RATE RESERVES

(1) (2) (3) (4) (5) (6)

1990 $1,887 1.000 $1,887 $95,389 0.020 $01991 3,402 1.000 3,402 232,209 0.015 01992 4,720 1.000 4,720 228,263 0.021 01993 5,768 1.000 5,768 224,939 0.026 01994 4,809 1.000 4,809 231,569 0.021 4151995 2,981 1.002 2,987 239,997 0.012 131996 5,802 1.005 5,831 249,420 0.023 6661997 3,846 1.009 3,880 260,959 0.015 351998 4,405 1.015 4,471 255,623 0.017 1241999 5,696 1.021 5,816 278,640 0.021 1672000 4,203 1.028 4,320 311,490 0.014 1192001 5,333 1.036 5,525 325,133 0.017 2162002 4,889 1.045 5,109 351,909 0.015 7202003 4,796 1.057 5,070 365,489 0.014 1,0902004 7,486 1.081 8,092 384,794 0.021 1,1852005 5,727 1.105 6,329 405,943 0.016 1,2172006 6,953 1.131 7,864 422,603 0.019 2,0322007 4,445 1.185 5,268 445,704 0.012 1,3922008 5,825 1.322 7,700 458,542 0.017 3,6772009 4,742 7,836 460,921 0.017 5,897

TOTAL $97,716 $106,685 $18,966

PAID LOSS DEVELOPMENT APPROACHPAID LOSS ULTIMATE ESTIMATED


(7) (8) (9) (10) (11) (12)

1990 $1,887 1.000 $1,887 $95,389 0.020 $01991 3,402 1.000 3,402 232,209 0.015 01992 4,720 1.000 4,720 228,263 0.021 01993 5,768 1.001 5,774 224,939 0.026 61994 4,395 1.003 4,809 231,569 0.021 4151995 2,974 1.007 2,995 239,997 0.012 211996 5,164 1.013 5,802 249,420 0.023 6371997 3,846 1.020 3,922 260,959 0.015 771998 4,347 1.028 4,470 255,623 0.017 1221999 5,649 1.036 5,853 278,640 0.021 2032000 4,202 1.044 4,387 311,490 0.014 1852001 5,309 1.054 5,596 325,133 0.017 2872002 4,389 1.073 4,889 351,909 0.014 5002003 3,979 1.095 4,796 365,489 0.013 8172004 6,907 1.126 7,778 384,794 0.020 8702005 5,112 1.164 5,950 405,943 0.015 8382006 5,832 1.241 7,238 422,603 0.017 1,4062007 3,875 1.411 5,468 445,704 0.012 1,5932008 4,023 1.901 7,648 458,542 0.017 3,6252009 1,938 7,467 460,921 0.016 5,529

TOTAL $87,719 $104,849 $17,130

Notes:(1), (2), (4), (7), (8) & (10) - Per STATE OF VERMONT.(2) & (8) - Per State's historical loss patterns. (3) = (1) x (2); (9) = (7) x (8). If ultimate incurred losses in (9) are less than the incurred losses in (1), we use the losses in (1).

For the most recent year, we used the Loss Rate Approach.(5) = (3) / (4), (11) = (9) / (10). For the most recent year, it is the average of prior years.(6) = (3) - (7); (12) = (9) - (7).* All Accident years end on 6/30 of the stated year.

O:\State of Vermont\2009\WC2009.xls\LDA9/14/2009 12:58 PM




CALCULATION OF ULTIMATE LOSSES - BORNHUETTER-FERGUSON APPROACHWORKERS' COMPENSATION


NET

BORNHUETTER-FERGUSON INCURRED LOSS APPROACHESTIMATED EXPECTED EXPECTED % INCURRED ULTIMATE

ACCIDENT LOSS PAYROLL ULTIMATE OF LOSSES IBNR LOSSES INCURREDYEAR* RATE ($ '000s) LOSSES UNREPORTED RESERVES @6/30/2009 LOSSES

(1) (2) (3) (4) (5) (6) (7)

1990 0.017 $95,389 $1,667 0.0% $0 $1,887 $1,8871991 0.017 232,209 4,059 0.0% 0 3,402 3,4021992 0.017 228,263 3,990 0.0% 0 4,720 4,7201993 0.017 224,939 3,932 0.0% 0 5,768 5,7681994 0.017 231,569 4,048 0.0% 0 4,809 4,8091995 0.017 239,997 4,195 0.2% 8 2,981 2,9901996 0.017 249,420 4,360 0.5% 22 5,802 5,8231997 0.017 260,959 4,562 0.9% 41 3,846 3,8861998 0.017 255,623 4,468 1.5% 66 4,405 4,4711999 0.017 278,640 4,871 2.1% 100 5,696 5,7972000 0.017 311,490 5,445 2.7% 148 4,203 4,3512001 0.017 325,133 5,683 3.5% 197 5,333 5,5312002 0.017 351,909 6,151 4.3% 265 4,889 5,1542003 0.017 365,489 6,389 5.4% 345 4,796 5,1412004 0.017 384,794 6,726 7.5% 504 7,486 7,9902005 0.017 405,943 7,096 9.5% 674 5,727 6,4022006 0.017 422,603 7,387 11.6% 856 6,953 7,8092007 0.017 445,704 7,791 15.6% 1,216 4,445 5,6622008 0.017 458,542 8,015 24.4% 1,952 5,825 7,7772009 0.017 460,921 8,057 49.0% 3,944 4,742 8,686

TOTAL $10,339 $97,716 $108,055

BORNHUETTER-FERGUSON PAID LOSS APPROACHESTIMATED EXPECTED EXPECTED % PAID ULTIMATE

ACCIDENT LOSS PAYROLL ULTIMATE OF LOSSES LOSS LOSSES ** INCURREDYEAR* RATE ($ '000s) LOSSES UNPAID RESERVES @6/30/2009 LOSSES

(8) (9) (10) (11) (12) (13) (14)

1990 0.017 $95,389 $1,667 0.0% $0 $1,887 $1,8871991 0.017 232,209 4,059 0.0% 0 3,402 3,4021992 0.017 228,263 3,990 0.0% 0 4,720 4,7201993 0.017 224,939 3,932 0.1% 4 5,768 5,7721994 0.017 231,569 4,048 0.3% 12 4,395 4,8091995 0.017 239,997 4,195 0.7% 29 2,974 3,0031996 0.017 249,420 4,360 1.3% 56 5,164 5,8021997 0.017 260,959 4,562 2.0% 89 3,846 3,9351998 0.017 255,623 4,468 2.7% 122 4,347 4,4701999 0.017 278,640 4,871 3.5% 169 5,649 5,8182000 0.017 311,490 5,445 4.2% 229 4,202 4,4312001 0.017 325,133 5,683 5.1% 291 5,309 5,6002002 0.017 351,909 6,151 6.8% 418 4,389 4,8892003 0.017 365,489 6,389 8.7% 554 3,979 4,7962004 0.017 384,794 6,726 11.2% 753 6,907 7,6602005 0.017 405,943 7,096 14.1% 1,000 5,112 6,1122006 0.017 422,603 7,387 19.4% 1,435 5,832 7,2672007 0.017 445,704 7,791 29.1% 2,269 3,875 6,1452008 0.017 458,542 8,015 47.4% 3,799 4,023 7,8222009 0.017 460,921 8,057 79.3% 6,388 1,938 8,326

TOTAL $17,618 $87,719 $106,666

Notes:(1) & (8) - Exhibit I, Page 2 of 4, Columns (5) and (11). These Loss Rates are selected.(2), (6), (9) & (13) - Per STATE OF VERMONT.(3) = (1) x (2); (10) = (8) x (9).(4) = (1 - (1/ILDF)); (11) = (1 - (1/PLDF)).(5) = (3) x (4); (12) = (10) x (11).(7) = (5) + (6); (14) = (12) + (13). If ultimate incurred losses in (14) are less than the incurred losses in (6), we used the incurred losses in (6).* All Accident years end on 6/30 of the stated year.

O:\State of Vermont\2009\WC2009.xls\BFA9/14/2009 12:59 PM


EXHIBIT IPAGE 4A OF 4

INCURRED LOSS DEVELOPMENTACCIDENT

YEAR* 12 24 36 48 60 72 84 96 108 120 132 144

1990 1,603 1,783 1,7631991 3,228 3,268 3,324 3,3131992 4,548 4,491 4,626 4,644 4,6981993 5,332 5,423 5,567 5,679 5,705 5,7121994 3,811 4,055 4,085 4,102 4,126 4,144 4,3181995 2,706 2,697 2,785 2,847 2,882 2,934 2,953 3,0281996 4,370 4,662 4,735 4,775 4,940 5,002 5,082 5,722 5,7921997 3,322 3,608 3,795 3,751 3,864 3,847 3,860 3,861 3,848 3,8481998 3,015 3,567 3,661 4,037 4,061 4,279 4,329 4,389 4,397 4,397 4,4051999 1,678 3,410 4,357 4,571 4,907 5,626 5,756 5,716 5,752 5,726 5,6962000 1,510 2,975 3,370 4,003 4,163 4,141 4,073 4,240 4,183 4,2032001 2,124 3,420 5,203 5,353 5,285 4,304 5,396 5,396 5,3332002 1,524 3,626 4,179 4,536 4,352 4,457 4,527 4,8892003 2,855 4,408 4,682 4,658 4,784 4,765 4,7962004 3,380 5,681 6,155 6,897 6,981 7,4862005 3,807 4,877 5,346 5,349 5,7272006 4,234 5,611 5,848 6,9532007 3,313 4,323 4,4452008 4,066 5,8252009 4,742

LOSS DEVELOPMENT FACTORS12 24 36 48 60 72 84 96 108 120 132 144

ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TOYEAR* 24 36 48 60 72 84 96 108 120 132 144 156

1990 1.112 0.989 1.0001991 1.013 1.017 0.997 1.0091992 0.987 1.030 1.004 1.012 1.0021993 1.017 1.026 1.020 1.005 1.001 1.0171994 1.064 1.008 1.004 1.006 1.004 1.042 1.1151995 0.997 1.032 1.023 1.012 1.018 1.006 1.026 0.9831996 1.067 1.015 1.009 1.035 1.012 1.016 1.126 1.012 1.0021997 1.086 1.052 0.988 1.030 0.996 1.003 1.000 0.997 1.000 0.9991998 1.183 1.026 1.103 1.006 1.054 1.012 1.014 1.002 1.000 1.0021999 2.032 1.278 1.049 1.073 1.147 1.023 0.993 1.006 0.996 0.9952000 1.971 1.133 1.188 1.040 0.995 0.983 1.041 0.986 1.0052001 1.610 1.522 1.029 0.987 0.814 1.254 1.000 0.9882002 2.379 1.153 1.085 0.959 1.024 1.016 1.0802003 1.544 1.062 0.995 1.027 0.996 1.0072004 1.681 1.084 1.121 1.012 1.0722005 1.281 1.096 1.000 1.0712006 1.325 1.042 1.1892007 1.305 1.0282008 1.433

AVERAGE 1.656 1.158 1.077 1.039 1.005 1.047 1.021 1.004 1.011 1.027 1.009 1.0163 YR AVG. 1.354 1.055 1.103 1.037 1.031 1.092 1.040 0.993 1.001 0.997 1.005 0.995

AVG EXCL HI & LO 1.638 1.129 1.073 1.041 1.012 1.029 1.017 1.003 1.010 1.018 1.007 1.005INDUSTRY (NCCI VT) 1.302 1.079 1.023 1.017 1.021 1.008 1.004

PRIOR SELECTED 1.481 1.117 1.046 1.022 1.020 1.020 1.010 1.010 1.008 1.006 1.006 1.006SELECTED 1.482 1.116 1.048 1.023 1.022 1.022 1.011 1.009 1.008 1.007 1.006 1.006

CUMULATIVE 1.959 1.322 1.185 1.131 1.105 1.081 1.057 1.045 1.036 1.028 1.021 1.015* All Accident years end on 6/30 of the stated year.

DEVELOPMENT MONTHS

STATE OF VERMONT

(AMTS IN THOUSANDS)NET

SELF-INSURANCE PROGRAM ACTUARIAL REVIEWCALCULATION OF THE LOSS DEVELOPMENT FACTORS


O:\State of Vermont\2009\WC2009.xls\TRI_INC19/14/2009 12:59 PM


EXHIBIT IPAGE 4B OF 4


YEAR* 156 168 180 192 204 216 228 240 252 264 276 288

1990 1,763 1,783 1,794 1,897 1,897 1,897 1,887 1,8871991 3,343 3,351 3,389 3,387 3,387 3,402 3,4021992 4,707 4,722 4,726 4,728 4,718 4,7201993 5,810 5,784 5,812 5,768 5,7681994 4,813 4,810 4,814 4,8091995 2,977 2,988 2,9811996 5,802 5,8021997 3,846199819992000200120022003200420052006200720082009


ACCIDENT TO TO TO TO TO TO TO TO TO TO TO TOYEAR* 168 180 192 204 216 228 240 252 264 276 288 ULT.

1990 1.012 1.006 1.057 1.000 1.000 0.995 1.0001991 1.002 1.011 1.000 1.000 1.004 1.0001992 1.003 1.001 1.000 0.998 1.0011993 0.995 1.005 0.992 1.0001994 0.999 1.001 0.9991995 1.004 0.9981996 1.000199719981999200020012002200320042005200620072008

AVERAGE 1.002 1.004 1.010 1.000 1.002 0.9983 YR AVG. 1.001 1.001 0.997 0.999 1.002

AVG EXCL HI & LO 1.002 1.003 1.000 1.000INDUSTRY (NCCI VT)

PRIOR SELECTED 1.004 1.003 1.002 1.000 1.000 1.000SELECTED 1.004 1.003 1.002 1.000 1.000 1.000 1.000

CUMULATIVE 1.009 1.005 1.002 1.000 1.000 1.000 1.000 1.000* All Accident years end on 6/30 of the stated year.

DEVELOPMENT MONTHS

STATE OF VERMONT




O:\State of Vermont\2009\WC2009.xls\TRI_INC29/14/2009 12:59 PM


EXHIBIT IPAGE 4C OF 4

PAID LOSS DEVELOPMENTACCIDENT

YEAR* 12 24 36 48 60 72 84 96 108 120 132 144

1990 1,535 1,567 1,7351991 3,225 3,282 3,311 3,3121992 4,327 4,364 4,563 4,670 4,6941993 5,246 5,329 5,532 5,643 5,666 5,6911994 3,541 3,900 3,959 4,027 4,073 4,122 4,2151995 2,660 2,682 2,757 2,821 2,843 2,909 2,924 2,9291996 3,857 4,465 4,635 4,737 4,905 4,961 5,007 5,047 5,0941997 2,887 3,325 3,562 3,726 3,816 3,836 3,841 3,844 3,844 3,8451998 2,166 2,924 3,350 3,847 3,970 4,183 4,239 4,331 4,336 4,340 4,3471999 780 2,384 3,493 4,171 4,385 4,945 5,275 5,621 5,626 5,633 5,6492000 792 2,432 3,201 3,533 3,910 3,997 4,034 4,063 4,176 4,2022001 1,355 3,288 4,327 4,818 5,028 5,209 5,265 5,296 5,3092002 1,068 2,566 3,584 3,998 4,150 4,240 4,341 4,3892003 1,312 2,637 3,205 3,689 3,804 3,902 3,9792004 1,612 3,915 5,262 6,128 6,542 6,9072005 1,389 3,296 4,482 4,956 5,1122006 1,390 3,708 5,025 5,8322007 1,143 2,899 3,8752008 1,731 4,0232009 1,938



1990 1.021 1.107 1.0061991 1.018 1.009 1.000 1.0071992 1.009 1.046 1.023 1.005 1.0031993 1.016 1.038 1.020 1.004 1.004 1.0031994 1.101 1.015 1.017 1.011 1.012 1.022 1.0261995 1.008 1.028 1.023 1.008 1.023 1.005 1.002 1.0131996 1.158 1.038 1.022 1.036 1.011 1.009 1.008 1.009 1.0091997 1.152 1.071 1.046 1.024 1.005 1.001 1.001 1.000 1.000 1.0001998 1.350 1.146 1.148 1.032 1.054 1.013 1.022 1.001 1.001 1.0021999 3.057 1.465 1.194 1.051 1.128 1.067 1.066 1.001 1.001 1.0032000 3.072 1.316 1.104 1.107 1.022 1.009 1.007 1.028 1.0062001 2.426 1.316 1.113 1.044 1.036 1.011 1.006 1.0022002 2.403 1.397 1.116 1.038 1.022 1.024 1.0112003 2.010 1.216 1.151 1.031 1.026 1.0202004 2.429 1.344 1.165 1.067 1.0562005 2.372 1.360 1.106 1.0312006 2.667 1.355 1.1612007 2.536 1.3372008 2.324

AVERAGE 2.530 1.346 1.141 1.075 1.041 1.036 1.020 1.014 1.014 1.009 1.017 1.0083 YR AVG. 2.509 1.351 1.144 1.043 1.035 1.018 1.008 1.010 1.003 1.001 1.004 1.007

AVG EXCL HI & LO 2.556 1.347 1.139 1.070 1.035 1.031 1.016 1.012 1.011 1.008 1.006 1.007INDUSTRY (NCCI VT) 2.370 1.260 1.080 1.066 1.040 1.018 1.012 1.144



DEVELOPMENT MONTHS

STATE OF VERMONT




O:\State of Vermont\2009\WC2009.xls\TRI_PAID19/14/2009 1:00 PM


EXHIBIT IPAGE 4D OF 4


YEAR* 156 168 180 192 204 216 228 240 252 264 276 288

1990 1,746 1,767 1,781 1,887 1,887 1,887 1,887 1,8871991 3,336 3,353 3,361 3,380 3,381 3,402 3,4021992 4,709 4,711 4,712 4,718 4,718 4,7201993 5,708 5,765 5,767 5,768 5,7681994 4,325 4,346 4,372 4,3951995 2,966 2,973 2,9741996 5,139 5,1641997 3,846199819992000200120022003200420052006200720082009



1990 1.012 1.008 1.059 1.000 1.000 1.000 1.0001991 1.005 1.002 1.006 1.000 1.006 1.0001992 1.000 1.000 1.001 1.000 1.0011993 1.010 1.000 1.000 1.0001994 1.005 1.006 1.0051995 1.003 1.0001996 1.005199719981999200020012002200320042005200620072008

AVERAGE 1.006 1.003 1.014 1.000 1.002 1.0003 YR AVG. 1.004 1.002 1.002 1.000 1.002

AVG EXCL HI & LO 1.006 1.002 1.004 1.000INDUSTRY (NCCI VT)



DEVELOPMENT MONTHS

STATE OF VERMONT




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EXHIBIT IIPAGE 1 OF 4


CALCULATION OF SELECTED ULTIMATE LOSSESGENERAL LIABILITYAS OF JUNE 30, 2009




(1) (2) (3) (4) (5) (6) (7)

1991 $630 $630 $630 $630 $630 $630 $01992 1,230 1,230 1,230 1,230 1,230 1,230 01993 858 858 858 858 858 858 01994 441 441 441 441 441 441 01995 449 449 449 449 449 449 01996 1,047 1,047 1,047 1,047 1,047 1,047 01997 622 639 622 642 622 621 11998 488 488 488 488 488 488 01999 1,045 1,045 1,045 1,045 1,045 1,045 02000 1,267 1,267 1,267 1,267 1,267 1,267 02001 1,118 1,184 1,116 1,159 1,144 1,054 912002 695 673 706 673 687 406 2802003 773 824 790 874 815 663 1532004 1,700 1,622 1,651 1,553 1,632 1,199 4332005 720 819 782 943 816 551 2652006 2,179 1,753 1,996 1,753 1,920 897 1,0232007 621 427 838 914 700 162 5372008 1,102 1,423 1,222 1,370 1,279 348 9312009 1,291 1,291 1,400 1,328 1,327 95 1,232

TOTAL $18,274 $18,108 $18,578 $18,662 $18,396 $13,450 $4,946

Notes:(1), (2), (3) & (4) - Ultimate incurred losses calculated from Exhibit II, Pages 2 & 3.(5) = Selected based on (1), (2), (3) & (4).(6) - Per STATE OF VERMONT.(7) = (5) - (6).* All Accident years end on 6/30 of the stated year.

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CALCULATION OF LOSS RESERVES - LOSS DEVELOPMENT APPROACHGENERAL LIABILITYAS OF JUNE 30, 2009




(1) (2) (3) (4) (5) (6)

1991 $630 1.000 $630 $232,209 0.003 $01992 1,230 1.000 1,230 228,263 0.005 01993 858 1.000 858 224,939 0.004 01994 441 1.000 441 231,569 0.002 01995 449 1.000 449 239,997 0.002 01996 1,047 1.000 1,047 249,420 0.004 01997 622 1.000 622 260,959 0.002 11998 488 1.000 488 255,623 0.002 01999 1,045 1.000 1,045 278,640 0.004 02000 1,267 1.000 1,267 311,490 0.004 02001 1,104 1.013 1,118 325,133 0.003 642002 673 1.033 695 351,909 0.002 2892003 728 1.061 773 365,489 0.002 1102004 1,553 1.095 1,700 384,794 0.004 5012005 625 1.151 720 405,943 0.002 1692006 1,753 1.243 2,179 422,603 0.005 1,2812007 427 1.455 621 445,704 0.001 4582008 575 1.916 1,102 458,542 0.002 7552009 407 1,291 460,921 0.003 1,195

TOTAL $15,921 $18,274 $4,824



(7) (8) (9) (10) (11) (12)

1991 $630 1.000 $630 $232,209 0.003 $01992 1,230 1.000 1,230 228,263 0.005 01993 858 1.000 858 224,939 0.004 01994 441 1.000 441 231,569 0.002 01995 449 1.000 449 239,997 0.002 01996 1,047 1.000 1,047 249,420 0.004 01997 621 1.029 639 260,959 0.002 181998 488 1.000 488 255,623 0.002 01999 1,045 1.000 1,045 278,640 0.004 02000 1,267 1.000 1,267 311,490 0.004 02001 1,054 1.124 1,184 325,133 0.004 1312002 406 1.180 673 351,909 0.002 2662003 663 1.244 824 365,489 0.002 1622004 1,199 1.353 1,622 384,794 0.004 4232005 551 1.487 819 405,943 0.002 2682006 897 1.746 1,753 422,603 0.004 8562007 162 2.333 427 445,704 0.001 2642008 348 4.089 1,423 458,542 0.003 1,0752009 95 1,291 460,921 0.003 1,195

TOTAL $13,450 $18,108 $4,658

Notes:(1), (2), (4), (7), (8) & (10) - Per STATE OF VERMONT.(2) & (8) - Per State's historical loss patterns. (3) = (1) x (2); (9) = (7) x (8). If ultimate incurred losses in (9) are less than the incurred losses in (1), we use the losses in (1).

For the most recent year, we used the Loss Rate Approach.(5) = (3) / (4), (11) = (9) / (10). For the most recent year, it is the average of prior years.(6) = (3) - (7); (12) = (9) - (7).* All Accident years end on 6/30 of the stated year.

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CALCULATION OF ULTIMATE LOSSES - BORNHUETTER-FERGUSON APPROACHGENERAL LIABILITYAS OF JUNE 30, 2009



ACCIDENT LOSS PAYROLL ULTIMATE OF LOSSES IBNR LOSSES INCURREDYEAR* RATE ($ '000s) LOSSES UNREPORTED RESERVES @6/30/2009 LOSSES

(1) (2) (3) (4) (5) (6) (7)

1991 0.003 $232,209 $650 0.0% $0 $630 $6301992 0.003 228,263 639 0.0% 0 1,230 1,2301993 0.003 224,939 630 0.0% 0 858 8581994 0.003 231,569 648 0.0% 0 441 4411995 0.003 239,997 672 0.0% 0 449 4491996 0.003 249,420 698 0.0% 0 1,047 1,0471997 0.003 260,959 731 0.0% 0 622 6221998 0.003 255,623 716 0.0% 0 488 4881999 0.003 278,640 822 0.0% 0 1,045 1,0452000 0.003 311,490 919 0.0% 0 1,267 1,2672001 0.003 325,133 959 1.3% 12 1,104 1,1162002 0.003 351,909 1,038 3.2% 33 673 7062003 0.003 365,489 1,078 5.7% 62 728 7902004 0.003 384,794 1,135 8.7% 98 1,553 1,6512005 0.003 405,943 1,198 13.1% 157 625 7822006 0.003 422,603 1,247 19.5% 244 1,753 1,9962007 0.003 445,704 1,315 31.3% 411 427 8382008 0.003 458,542 1,353 47.8% 647 575 1,2222009 0.003 460,921 1,360 73.0% 993 407 1,400

TOTAL $2,658 $15,921 $18,578


ACCIDENT LOSS PAYROLL ULTIMATE OF LOSSES LOSS LOSSES ** INCURREDYEAR* RATE ($ '000s) LOSSES UNPAID RESERVES @6/30/2009 LOSSES

(8) (9) (10) (11) (12) (13) (14)

1991 0.003 $232,209 $650 0.0% $0 $630 $6301992 0.003 228,263 639 0.0% 0 1,230 1,2301993 0.003 224,939 630 0.0% 0 858 8581994 0.003 231,569 648 0.0% 0 441 4411995 0.003 239,997 672 0.0% 0 449 4491996 0.003 249,420 698 0.0% 0 1,047 1,0471997 0.003 260,959 731 2.8% 21 621 6421998 0.003 255,623 716 0.0% 0 488 4881999 0.003 278,640 822 0.0% 0 1,045 1,0452000 0.003 311,490 919 0.0% 0 1,267 1,2672001 0.003 325,133 959 11.0% 106 1,054 1,1592002 0.003 351,909 1,038 15.3% 158 406 6732003 0.003 365,489 1,078 19.6% 211 663 8742004 0.003 384,794 1,135 26.1% 296 1,199 1,5532005 0.003 405,943 1,198 32.8% 392 551 9432006 0.003 422,603 1,247 42.7% 533 897 1,7532007 0.003 445,704 1,315 57.1% 751 162 9142008 0.003 458,542 1,353 75.5% 1,022 348 1,3702009 0.003 460,921 1,360 90.6% 1,232 95 1,328

TOTAL $4,723 $13,450 $18,662

Notes:(1) & (8) - Exhibit II, Page 2 of 4, Columns (5) and (11). These Loss Rates are fitted values.(2), (6), (9) & (13) - Per STATE OF VERMONT.(3) = (1) x (2); (10) = (8) x (9).(4) = (1 - (1/ILDF)); (11) = (1 - (1/PLDF)).(5) = (3) x (4); (12) = (10) x (11).(7) = (5) + (6); (14) = (12) + (13). If ultimate incurred losses in (14) are less than the incurred losses in (6), we used the incurred losses in (6).* All Accident years end on 6/30 of the stated year.

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EXHIBIT IIPAGE 4A OF 4


YEAR* 12 24 36 48 60 72 84 96 108 120 132 144

1990199119921993 8471994 434 4341995 444 444 4451996 1,028 1,028 1,041 1,0521997 563 536 574 574 5751998 1,044 1,037 786 786 449 4881999 1,091 1,192 1,256 987 983 1,0452000 1,469 1,692 1,538 1,252 1,325 1,2672001 1,042 1,054 811 902 1,029 1,1042002 532 624 564 568 360 6732003 1,543 797 835 869 1,206 7282004 492 719 949 1,014 1,337 1,5532005 139 450 462 690 6252006 263 569 1,568 1,7532007 85 355 4272008 364 5752009 407



1990199119921993 1.0001994 1.000 1.0071995 1.000 1.001 1.0021996 1.000 1.013 1.010 1.0001997 0.951 1.072 1.000 1.001 1.0821998 0.993 0.758 1.000 0.571 1.0861999 1.092 1.053 0.786 0.996 1.0622000 1.151 0.909 0.814 1.058 0.9562001 1.011 0.770 1.112 1.141 1.0732002 1.174 0.902 1.008 0.634 1.8692003 0.516 1.049 1.040 1.388 0.6042004 1.460 1.320 1.069 1.319 1.1612005 3.231 1.026 1.494 0.9062006 2.159 2.755 1.1182007 4.173 1.2032008 1.579

AVERAGE 2.520 1.364 1.181 1.036 1.096 0.870 1.174 0.925 1.005 0.929 1.020 1.0183 YR AVG. 2.637 1.661 1.227 1.088 1.186 0.783 1.275 0.972 0.984 0.878 1.032 1.028

AVG EXCL HI & LO 2.695 1.183 1.120 0.986 1.107 0.878 1.062 0.932 0.999 1.004 1.004 1.003INDUSTRY 1.673 1.310 1.161 1.087 1.043 1.040 1.027 1.019 1.023 1.016 1.014 1.012



DEVELOPMENT MONTHS

STATE OF VERMONT



GENERAL LIABILITYAS OF JUNE 30, 2009

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EXHIBIT IIPAGE 4B OF 4


YEAR* 156 168 180 192 204 216 228 240 252 264 276 288

19901991 605 631 630 630 6301992 1,227 1,227 1,227 987 1,227 1,2301993 847 847 847 847 8581994 437 437 436 4411995 446 446 4491996 1,052 1,0471997 622199819992000200120022003200420052006200720082009



19901991 1.044 0.998 1.001 1.0001992 1.000 1.000 0.804 1.243 1.0021993 1.001 1.000 1.000 1.0131994 1.001 0.999 1.0111995 0.999 1.0071996 0.995199719981999200020012002200320042005200620072008

AVERAGE 0.999 1.002 0.965 1.085 1.002 1.0003 YR AVG. 0.998 1.002 0.938 1.085

AVG EXCL HI & LO 1.000 1.000 1.006 1.013INDUSTRY 1.010 1.009 1.008 1.008 1.007

PRIOR SELECTED 1.000 1.000 1.000 1.000 1.000 1.000SELECTED 1.000 1.000 1.000 1.000 1.000 1.000

CUMULATIVE 1.000 1.000 1.000 1.000 1.000 1.000 1.000* All Accident years end on 6/30 of the stated year.

DEVELOPMENT MONTHS

STATE OF VERMONT




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EXHIBIT IIPAGE 4C OF 4


YEAR* 12 24 36 48 60 72 84 96 108 120 132 144

1990199119921993 6211994 338 3381995 326 326 3261996 869 869 882 1,0521997 393 393 438 574 5741998 226 226 226 449 449 4881999 422 422 842 985 983 1,0452000 963 993 993 1,237 1,325 1,2672001 526 632 632 867 979 1,0542002 143 403 460 484 261 4062003 223 550 704 750 893 6632004 127 519 684 848 1,003 1,1992005 16 204 386 469 5512006 177 233 744 8972007 75 278 1622008 203 3482009 95



1990199119921993 1.0001994 1.000 1.0081995 1.000 1.000 1.3671996 1.000 1.015 1.193 1.0001997 1.000 1.114 1.309 1.000 1.0821998 1.000 1.000 1.984 1.000 1.0861999 1.000 1.995 1.169 0.998 1.0622000 1.031 1.000 1.246 1.071 0.9562001 1.202 1.000 1.373 1.129 1.0762002 2.823 1.143 1.052 0.540 1.5552003 2.462 1.281 1.065 1.191 0.7422004 4.090 1.318 1.240 1.183 1.1952005 13.021 1.896 1.216 1.1732006 1.314 3.195 1.2052007 3.7012008

AVERAGE 5.532 2.218 1.553 1.153 1.094 0.931 1.385 1.063 1.210 1.077 1.056 1.0913 YR AVG. 2.508 2.546 1.220 1.140 1.146 0.885 1.310 1.105 1.313 1.124 1.093 1.150




DEVELOPMENT MONTHS

STATE OF VERMONT




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EXHIBIT IIPAGE 4D OF 4


YEAR* 156 168 180 192 204 216 228 240 252 264 276 288

19901991 455 495 512 630 630 6301992 989 989 989 987 1,227 1,2301993 621 621 847 847 8581994 340 437 436 4411995 446 446 4491996 1,052 1,0471997 621199819992000200120022003200420052006200720082009



19901991 1.088 1.036 1.229 1.001 1.0001992 1.000 1.000 0.998 1.243 1.0021993 1.000 1.364 1.000 1.0131994 1.284 0.999 1.0111995 0.999 1.0071996 0.995199719981999200020012002200320042005200620072008

AVERAGE 1.056 1.092 1.011 1.162 1.002 1.0003 YR AVG. 1.093 1.123 1.003 1.162

AVG EXCL HI & LO 1.000 1.032 1.006 1.229INDUSTRY 1.016 1.016 1.012 1.012 1.010 1.010



DEVELOPMENT MONTHS

STATE OF VERMONT




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EXHIBIT IIIPAGE 1 OF 4


CALCULATION OF SELECTED ULTIMATE LOSSESAUTOMOBILE LIABILITY


NET



(1) (2) (3) (4) (5) (6) (7)

1991 $413 $413 $413 $413 $413 $413 $01992 203 203 203 203 203 203 01993 506 506 506 506 506 506 01994 113 113 113 113 113 113 01995 301 302 301 302 301 301 01996 1,198 1,201 1,198 1,199 1,199 1,198 11997 460 462 460 462 461 460 11998 189 190 190 192 190 189 11999 220 221 221 223 221 219 22000 740 745 739 742 741 735 62001 277 280 279 284 280 275 52002 421 427 421 428 424 416 82003 807 795 801 795 799 545 2552004 359 371 361 375 367 350 172005 329 317 331 317 324 144 1802006 279 265 285 265 273 200 742007 216 269 233 334 263 171 922008 225 437 267 444 343 182 1622009 304 353 374 470 375 119 257

TOTAL $7,562 $7,870 $7,697 $8,067 $7,799 $6,738 $1,061

Notes:(1), (2), (3), & (4) - Ultimate incurred losses calculated from Exhibit III, Pages 2, & 3.(5) = Selected based on (1), (2), (3), & (4).(6) - Per STATE OF VERMONT.(7) = (5) - (6).* All Accident years end on 6/30 of the stated year.

O:\State of Vermont\2009\AL2009.xls\SELECTED9/14/2009 1:06 PM




CALCULATION OF LOSS RESERVES - LOSS DEVELOPMENT APPROACHAUTOMOBILE LIABILITY


NET


ACCIDENT LOSSES DEVLPMT INCURRED NO. OF LOSS LOSSYEAR* @6/30/2009 FACTORS LOSSES VEHICLES RATE RESERVES

(1) (3) (4) (5) (6) (7)

1991 $413 1.000 $413 1,688 0.245 $01992 203 1.000 203 1,699 0.120 01993 506 1.000 506 1,353 0.374 01994 113 1.000 113 1,307 0.086 01995 301 1.000 301 1,397 0.215 01996 1,198 1.000 1,198 1,307 0.916 01997 460 1.000 460 1,556 0.296 01998 189 1.002 189 1,930 0.098 01999 219 1.004 220 1,930 0.114 12000 735 1.006 740 2,171 0.341 42001 275 1.008 277 2,141 0.130 22002 416 1.011 421 1,944 0.216 52003 795 1.016 807 1,719 0.470 2632004 350 1.027 359 1,719 0.209 92005 317 1.039 329 1,545 0.213 1852006 265 1.055 279 1,591 0.175 792007 201 1.076 216 1,810 0.119 452008 183 1.228 225 1,809 0.125 432009 165 304 1,807 0.168 185

TOTAL $7,304 $7,562 $823


ACCIDENT LOSSES DEVLPMT INCURRED NO. OF LOSS LOSSYEAR* @6/30/2009 FACTORS LOSSES VEHICLES RATE RESERVES

(8) (10) (11) (12) (13) (14)

1991 $413 1.000 $413 1,688 0.245 $01992 203 1.000 203 1,699 0.120 01993 506 1.000 506 1,353 0.374 01994 113 1.001 113 1,307 0.087 01995 301 1.002 302 1,397 0.216 11996 1,198 1.003 1,201 1,307 0.919 41997 460 1.004 462 1,556 0.297 21998 189 1.007 190 1,930 0.099 11999 219 1.010 221 1,930 0.114 22000 735 1.013 745 2,171 0.343 102001 275 1.017 280 2,141 0.131 52002 416 1.026 427 1,944 0.220 112003 545 1.041 795 1,719 0.462 2502004 350 1.061 371 1,719 0.216 212005 144 1.086 317 1,545 0.205 1732006 200 1.192 265 1,591 0.166 652007 171 1.571 269 1,810 0.148 982008 182 2.405 437 1,809 0.242 2562009 119 353 1,807 0.195 235

TOTAL $6,738 $7,870 $1,132

Notes:(1), (2), (5), (8), (9) & (12) - Per STATE OF VERMONT.(3) & (10) - Per State's historical loss patterns. (4) = [ (1) - (2) ] x (3); (11) = [ (8) - (9)] x (10). If ultimate incurred losses in (11) are less than the incurred losses in (1), we use the losses i

For the most recent year, we used the Loss Rate Approach.(6) = (4) / (5), (13) = (11) / (12). For the most recent year, it is the average of prior 8 years.(7) = (4) - (8); (14) = (11) - (8).* All Accident years end on 6/30 of the stated year.

O:\State of Vermont\2009\AL2009.xls\LDA9/14/2009 1:07 PM




CALCULATION OF ULTIMATE LOSSES - BORNHUETTER-FERGUSON APPROACHAUTOMOBILE LIABILITY


NET


ACCIDENT LOSS NO. OF ULTIMATE OF LOSSES IBNR LOSSES INCURREDYEAR* RATE VEHICLES LOSSES UNREPORTED RESERVES @6/30/2009 LOSSES

(1) (2) (3) (4) (5) (6) (7)

1991 0.248 1,688 $419 0.0% $0 $413 $4131992 0.248 1,699 422 0.0% 0 203 2031993 0.248 1,353 336 0.0% 0 506 5061994 0.248 1,307 324 0.0% 0 113 1131995 0.248 1,397 347 0.0% 0 301 3011996 0.248 1,307 324 0.0% 0 1,198 1,1981997 0.248 1,556 386 0.0% 0 460 4601998 0.248 1,930 479 0.2% 1 189 1901999 0.248 1,930 479 0.4% 2 219 2212000 0.248 2,171 539 0.6% 3 735 7392001 0.248 2,141 531 0.8% 4 275 2792002 0.248 1,944 482 1.1% 5 416 4212003 0.248 1,719 427 1.6% 7 795 8012004 0.248 1,719 427 2.6% 11 350 3612005 0.248 1,545 383 3.8% 14 317 3312006 0.248 1,591 395 5.2% 21 265 2852007 0.248 1,810 449 7.1% 32 201 2332008 0.248 1,809 449 18.6% 83 183 2672009 0.248 1,807 448 46.6% 209 165 374

TOTAL $393 $7,304 $7,697


ACCIDENT LOSS NO. OF ULTIMATE OF LOSSES LOSS LOSSES INCURREDYEAR* RATE VEHICLES LOSSES UNPAID RESERVES @6/30/2009 LOSSES

(8) (9) (10) (11) (12) (13) (14)

1991 0.248 1,688 $419 0.0% $0 $413 $4131992 0.248 1,699 422 0.0% 0 203 2031993 0.248 1,353 336 0.0% 0 506 5061994 0.248 1,307 324 0.1% 0 113 1131995 0.248 1,397 347 0.2% 1 301 3021996 0.248 1,307 324 0.3% 1 1,198 1,1991997 0.248 1,556 386 0.4% 2 460 4621998 0.248 1,930 479 0.7% 3 189 1921999 0.248 1,930 479 1.0% 5 219 2232000 0.248 2,171 539 1.3% 7 735 7422001 0.248 2,141 531 1.7% 9 275 2842002 0.248 1,944 482 2.5% 12 416 4282003 0.248 1,719 427 3.9% 17 545 7952004 0.248 1,719 427 5.7% 25 350 3752005 0.248 1,545 383 7.9% 30 144 3172006 0.248 1,591 395 16.1% 64 200 2652007 0.248 1,810 449 36.3% 163 171 3342008 0.248 1,809 449 58.4% 262 182 4442009 0.248 1,807 448 78.5% 352 119 470

TOTAL $952 $6,738 $8,067

Notes:(1) & (8) - Exhibit III, Page 2 of 4, Columns (5) and (11). These Loss Rates are fitted values.(2), (6), (9) & (13) - Per STATE OF VERMONT.(3) = (1) x (2); (10) = (8) x (9).(4) = (1 - (1/ILDF)); (11) = (1 - (1/PLDF)).(5) = (3) x (4); (12) = (10) x (11).(7) = (5) + (6); (14) = (12) + (13). If ultimate incurred losses in (14) are less than the incurred losses in (6), we used the incurred losses in (6).* All Accident years end on 6/30 of the stated year.

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EXHIBIT IIIPAGE 4A OF 4


YEAR* 12 24 36 48 60 72 84 96 108 120 132 144

1990199119921993 4551994 72 721995 266 266 2661996 1,159 1,159 1,159 1,1201997 409 409 409 503 5031998 221 221 151 228 228 1891999 254 177 177 240 240 2192000 442 411 667 682 704 7352001 431 380 233 301 301 2752002 454 406 404 442 442 4162003 431 888 683 433 776 7952004 221 488 511 511 367 3502005 100 244 199 228 3172006 74 251 264 2652007 128 172 2012008 212 1832009 165



1990199119921993 1.0001994 1.000 1.0001995 1.000 1.000 1.1451996 1.000 1.000 0.967 1.0351997 1.000 1.000 1.231 1.000 0.9151998 1.000 0.682 1.510 0.999 0.8291999 0.697 1.000 1.357 1.001 0.9102000 0.929 1.624 1.022 1.032 1.0452001 0.882 0.612 1.292 0.998 0.9162002 0.896 0.994 1.095 1.000 0.9412003 2.059 0.769 0.634 1.793 1.0232004 2.212 1.046 1.000 0.719 0.9532005 2.435 0.814 1.147 1.3892006 3.396 1.054 1.0002007 1.345 1.1682008 0.865

AVERAGE 2.051 1.228 0.962 0.924 1.076 1.127 0.992 0.997 1.111 1.028 0.959 1.0193 YR AVG. 1.869 1.012 1.049 0.914 1.280 1.105 0.987 1.102 1.185 1.047 0.932 1.032




DEVELOPMENT MONTHS

STATE OF VERMONT



AUTOMOBILE LIABILITYAS OF JUNE 30, 2009

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EXHIBIT IIIPAGE 4B OF 4


YEAR* 156 168 180 192 204 216 228 240 252 264 276 288

19901991 393 393 393 313 393 4131992 153 153 153 206 206 2031993 455 455 416 455 5061994 72 118 118 1131995 304 304 3011996 1,159 1,1981997 460199819992000200120022003200420052006200720082009



19901991 1.000 1.000 0.796 1.256 1.0511992 1.000 1.000 1.350 1.000 0.9871993 1.000 0.913 1.095 1.1111994 1.628 0.999 0.9581995 1.001 0.9891996 1.034199719981999200020012002200320042005200620072008

AVERAGE 1.133 0.980 1.101 0.969 1.122 1.0513 YR AVG. 1.221 0.967 1.134 0.969

AVG EXCL HI & LO 1.012 0.996 1.048INDUSTRY 1.000 1.000 1.000 1.000 1.000

PRIOR SELECTED 1.000 1.000 1.000 1.000 1.000 1.000SELECTED 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000

CUMULATIVE 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000* All Accident years end on 6/30 of the stated year.

DEVELOPMENT MONTHS

STATE OF VERMONT




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EXHIBIT IIIPAGE 4C OF 4


YEAR* 12 24 36 48 60 72 84 96 108 120 132 144

1990199119921993 4411994 71 711995 257 257 2571996 1,043 1,043 1,043 1,1201997 402 402 402 503 5031998 117 117 129 228 228 1891999 171 171 171 240 240 2192000 221 221 526 682 704 7352001 170 202 202 301 301 2752002 123 381 399 442 442 4162003 143 143 393 407 526 5452004 35 58 304 367 367 3502005 37 47 73 99 1442006 142 121 200 2002007 120 171 1712008 134 1822009 119



1990199119921993 1.0001994 1.000 1.0001995 1.000 1.000 1.1841996 1.000 1.000 1.074 1.0351997 1.000 1.000 1.253 1.000 0.9151998 1.000 1.102 1.761 0.999 0.8291999 1.000 1.000 1.406 1.001 0.9102000 1.000 2.381 1.297 1.032 1.0452001 1.188 1.000 1.488 0.998 0.9162002 3.090 1.046 1.108 1.000 0.9412003 1.000 2.747 1.035 1.294 1.0342004 1.653 5.249 1.206 1.001 0.9532005 1.272 1.544 1.356 1.4552006 0.853 1.650 1.0002007 1.425 1.0002008 1.360

AVERAGE 1.313 2.089 1.880 1.145 1.071 1.381 1.047 1.091 1.161 1.032 0.981 1.0273 YR AVG. 1.213 1.398 1.187 1.164 1.118 1.174 1.079 1.118 1.269 1.054 0.968 1.045




DEVELOPMENT MONTHS

STATE OF VERMONT




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EXHIBIT IIIPAGE 4D OF 4


YEAR* 156 168 180 192 204 216 228 240 252 264 276 288

19901991 359 359 359 313 393 4131992 150 150 150 206 206 2031993 441 441 416 455 5061994 71 118 118 1131995 304 304 3011996 1,159 1,1981997 460199819992000200120022003200420052006200720082009



19901991 1.000 1.000 0.871 1.256 1.0511992 1.000 1.000 1.377 1.000 0.9871993 1.000 0.943 1.095 1.1111994 1.673 0.999 0.9581995 1.001 0.9891996 1.034199719981999200020012002200320042005200620072008

AVERAGE 1.142 0.986 1.108 0.994 1.122 1.0513 YR AVG. 1.236 0.977 1.143 0.994

AVG EXCL HI & LO 1.012 0.996 1.048INDUSTRY 1.002 1.002 1.001 1.001 1.001 1.001



DEVELOPMENT MONTHS

STATE OF VERMONT




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EXHIBIT IV


CALCULATION OF PROJECTED LOSSESWORKERS' COMPENSATION


NET

PROJECTED ULTIMATE LOSSESSELECTED

ACCIDENT ULTIMATE PAYROLL LOSSYEAR* LOSSES (IN $000'S) RATE

(1) (2) (3)

1990 $1,887 $95,389 0.0201991 3,402 232,209 0.0151992 4,720 228,263 0.0211993 5,770 224,939 0.0261994 4,809 231,569 0.0211995 2,994 239,997 0.0121996 5,814 249,420 0.0231997 3,906 260,959 0.0151998 4,470 255,623 0.0171999 5,821 278,640 0.0212000 4,372 311,490 0.0142001 5,563 325,133 0.0172002 5,010 351,909 0.0142003 4,951 365,489 0.0142004 7,880 384,794 0.0202005 6,198 405,943 0.0152006 7,544 422,603 0.0182007 5,903 445,704 0.0132008 7,737 458,542 0.0172009 8,079 460,921 0.018

(PROJ.)2009/2010 $7,780 444,406 0.018(PROJ.)2010/2011 $8,018 451,233 0.018(PROJ.)2011/2012 $8,255 457,712 0.018(PROJ.)2012/2013 $8,500 464,302 0.018(PROJ.)2013/2014 $8,752 471,003 0.019

Notes:(1) - Exhibit I, Page 1, Column (5). For the projection years (1) = (2) x (3)(2) - Per STATE OF VERMONT.(3) = (1) / (2). For the projection years (3) is the trended average of prior years* All Accident years end on 6/30 of the stated year

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EXHIBIT V


CALCULATION OF PROJECTED LOSSESGENERAL LIABILITYAS OF JUNE 30, 2009



ACCIDENT ULTIMATE PAYROLL LOSSYEAR* LOSSES (IN $000'S) RATE

(1) (2) (3)

1991 630 232,209 0.0031992 1,230 228,263 0.0051993 858 224,939 0.0041994 441 231,569 0.0021995 449 239,997 0.0021996 1,047 249,420 0.0041997 622 260,959 0.0021998 488 255,623 0.0021999 1,045 278,640 0.0042000 1,267 311,490 0.0042001 1,144 325,133 0.0042002 687 351,909 0.0022003 815 365,489 0.0022004 1,632 384,794 0.0042005 816 405,943 0.0022006 1,920 422,603 0.0052007 700 445,704 0.0022008 1,279 458,542 0.0032009 1,327 460,921 0.003

(PROJ.)2009/2010 $1,373 444,406 0.003(PROJ.)2010/2011 $1,436 451,233 0.003(PROJ.)2011/2012 $1,500 457,712 0.003(PROJ.)2012/2013 $1,568 464,302 0.003(PROJ.)2013/2014 $1,638 471,003 0.003

Notes:(1) - Exhibit II, Page 1, Column (5). For the projection years (1) = (2) x (3).(2) - Per STATE OF VERMONT.(3) = (1) / (2). For the projection years (3) is the trended average of prior years.* All Accident years end on 6/30 of the stated year.

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EXHIBIT VI


CALCULATION OF PROJECTED LOSSESAUTOMOBILE LIABILITY


NET


ACCIDENT ULTIMATE VEHICLE LOSSYEAR* LOSSES COUNT RATE

(1) (2) (3)

1991 $413 1,688 0.2451992 203 1,699 0.1201993 506 1,353 0.3741994 113 1,307 0.0871995 301 1,397 0.2161996 1,199 1,307 0.9171997 461 1,556 0.2961998 190 1,930 0.0991999 221 1,930 0.1152000 741 2,171 0.3422001 280 2,141 0.1312002 424 1,944 0.2182003 799 1,719 0.4652004 367 1,719 0.2132005 324 1,545 0.2092006 273 1,591 0.1722007 263 1,810 0.1452008 343 1,809 0.1902009 375 1,807 0.208

(PROJ.)2009/2010 $347 1,825 0.190(PROJ.)2010/2011 $361 1,843 0.196(PROJ.)2011/2012 $376 1,862 0.202(PROJ.)2012/2013 $391 1,880 0.208(PROJ.)2013/2014 $407 1,899 0.214

Notes:(1) - Exhibit III, Page 1, Column (5). For the projection years (1) = (2) x (3).(2) - Per STATE OF VERMONT.(3) = (1) / (2). For the projection years (3) is the trended average of prior years.* All Accident years end on 6/30 of the stated year.

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APPENDIX APAGE 1 OF 3

1. Estimated undiscounted reserves at 6/30/2008 $17,121

2. Loss payments during AY 2009 for accident years 2008 and prior ($4,836)

3. Change in estimated ultimate losses for accident years 2008 and prior $687 due to re-evaluation at 6/30/2009

4. Estimated ultimate losses for AY 2009 $8,079

5. Loss payments during AY 2009 for accident year 2009 ($1,938)


Notes:(1) - Per AMI's 2008 Actuarial Report, Appendix D, Page 1, Item (6)(2) - Total from Appendix A, Page 3 of 3, Column (3). (3) - Total from Appendix A, Page 2 of 3, Column (3). (4) - See Exhibit I, Page 1 of 4, Column (5) for accident year 2009.(5) - Per STATE OF VERMONT.(6) - Sum of (1) through (5).

RECONCILIATION TO PRIOR YEAR'S RESERVE ESTIMATE - UNDISCOUNTED


ANALYSIS OF RESERVE CHANGE WORKERS' COMPENSATION


NET

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INCREASEACCIDENT OR

YEAR* @6/30/2008 @6/30/2009 DECREASE(1) (2) (3)

1990 $1,887 $1,887 01991 3,402 3,402 (1)1992 4,718 4,720 21993 5,768 5,770 21994 4,819 4,809 (9)1995 3,005 2,994 (12)1996 5,825 5,814 (11)1997 3,927 3,906 (22)1998 4,484 4,470 (13)1999 5,853 5,821 (32)2000 4,376 4,372 (4)2001 5,640 5,563 (77)2002 4,798 5,010 2122003 4,970 4,951 (19)2004 7,565 7,880 3152005 6,132 6,198 662006 6,996 7,544 5482007 6,355 5,903 (452)2008 7,546 7,737 191

TOTAL $98,066 $98,753 $687

Notes:(1) - Sum of Exhibit I, Page 1, Column (5) for of the 2008 AMI Actuarial Report(2) - Exhibit I, Page 1 of 4, Column (5).(3) = (2) - (1).* All Accident years end on 6/30 of the stated year.


COMPARISON OF ESTIMATED ULTIMATE LOSSES AS OF JUNE 30, 2009

WORKERS' COMPENSATION

ESTIMATED ULTIMATE LOSSES


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INCREASEACCIDENT OR

YEAR* @6/30/2008 @6/30/2009 DECREASE(1) (2) (3)

1990 $1,887 $1,887 $01991 3,402 3,402 01992 4,718 4,720 21993 5,768 5,768 01994 4,372 4,395 231995 2,973 2,974 11996 5,139 5,164 251997 3,845 3,846 11998 4,340 4,347 71999 5,633 5,649 162000 4,176 4,202 252001 5,296 5,309 132002 4,341 4,389 482003 3,902 3,979 772004 6,542 6,907 3662005 4,956 5,112 1562006 5,025 5,832 8072007 2,899 3,875 9762008 1,731 4,023 2,292

TOTAL $80,945 $85,781 $4,836

Notes:(1) - Sum of Exhibit I, Page 1, Column (6) for of the 2008 AMI Actuarial Report(2) - Exhibit I, Page 1 of 4, Column (6).(3) = (2) - (1).* All Accident years end on 6/30 of the stated year.

PAID LOSSES

STATE OF VERMONT

COMPARISON OF PAID LOSSESAS OF JUNE 30, 2009

SELF-INSURANCE PROGRAM ACTUARIAL REVIEW

WORKERS' COMPENSATION(AMTS IN THOUSANDS)

NET

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APPENDIX BPAGE 1 OF 3


2. Loss payments during AY 2009 for accident years 2008 and prior ($554)

3. Change in estimated ultimate losses for accident years 2008 and prior $13 due to re-evaluation at 6/30/2009

4. Estimated ultimate losses for AY 2009 $1,327

5. Loss payments during AY 2009 for accident year 2009 ($95)


Notes:(1) - Per AMI's 2008 Actuarial Report, Appendix E, Page 1, Item (6)(2) - Total from Appendix B, Page 3 of 3, Column (3). (3) - Total from Appendix B, Page 2 of 3, Column (3). (4) - See Exhibit II, Page 1 of 4, Column (5) for accident year 2009.(5) - Per STATE OF VERMONT.(6) - Sum of (1) through (5).


NET



ANALYSIS OF RESERVE CHANGE GENERAL LIABILITY

O:\State of Vermont\2009\GL2009.xls/RECON9/14/2009 1:05 PM



INCREASEACCIDENT OR

YEAR* @6/30/2008 @6/30/2009 DECREASE(1) (2) (3)

1991 $630 $630 $01992 1,227 1,230 31993 847 858 111994 436 441 51995 446 449 31996 1,052 1,047 (5)1997 575 622 471998 449 488 391999 983 1,045 612000 1,325 1,267 (58)2001 1,056 1,144 892002 381 687 3062003 1,231 815 (416)2004 1,405 1,632 2272005 850 816 (34)2006 1,819 1,920 1012007 967 700 (267)2008 1,377 1,279 (98)

TOTAL $17,056 $17,069 $13

Notes:(1) - Sum of Exhibit II, Page 1, Column (5) for of the 2008 AMI Actuarial Report(2) - Exhibit II, Page 1 of 5, Column (5).(3) = (2) - (1).* All Accident years end on 6/30 of the stated year.


COMPARISON OF ESTIMATED ULTIMATE LOSSES AS OF JUNE 30, 2009GENERAL LIABILITY



O:\State of Vermont\2009\GL2009.xls\ULT_COMPARE9/14/2009 1:06 PM



INCREASEACCIDENT OR

YEAR* @6/30/2008 @6/30/2009 DECREASE(1) (2) (3)

1991 $630 $630 $01992 1,227 1,230 31993 847 858 111994 436 441 51995 446 449 31996 1,052 1,047 (5)1997 574 621 471998 449 488 391999 983 1,045 612000 1,325 1,267 (58)2001 979 1,054 752002 261 406 1452003 893 663 (230)2004 1,003 1,199 1962005 469 551 812006 744 897 1532007 278 162 (115)2008 203 348 145

TOTAL $12,801 $13,355 $554

Notes:(1) - Sum of Exhibit II, Page 1, Column (6) for of the 2008 AMI Actuarial Report(2) - Exhibit II, Page 1 of 5, Column (6).(3) = (2) - (1).* All Accident years end on 6/30 of the stated year.

PAID LOSSES

STATE OF VERMONT



GENERAL LIABILITY(AMTS IN THOUSANDS)

NET

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APPENDIX CPAGE 1 OF 3

1. Estimated undiscounted reserves at 6/30/2008 $929

2. Loss payments during AY 2009 for accident years 2008 and prior ($70)

3. Change in estimated ultimate losses for accident years 2008 and prior ($55) due to re-evaluation at 6/30/2009

4. Estimated ultimate losses for AY 2009 $375

5. Loss payments during AY 2009 for accident year 2009 ($119)


Notes:(1) - Per AMI's 2008 Actuarial Report, Appendix F, Page 1, Item (6)(2) - Total from Appendix C, Page 3 of 3, Column (3). (3) - Total from Appendix C, Page 2 of 3, Column (3). (4) - See Exhibit III, Page 1 of 4, Column (5) for accident year 2009.(5) - Per STATE OF VERMONT.(6) - Sum of (1) through (5).


NET



ANALYSIS OF RESERVE CHANGE AUTOMOBILE LIABILITY

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INCREASEACCIDENT OR

YEAR* @6/30/2008 @6/30/2009 DECREASE(1) (2) (3)

1991 $393 $413 $201992 206 203 (3)1993 455 506 501994 118 113 (5)1995 304 301 (3)1996 1,159 1,199 401997 503 461 (42)1998 228 190 (37)1999 240 221 (19)2000 704 741 382001 301 280 (20)2002 442 424 (18)2003 776 799 232004 370 367 (3)2005 228 324 952006 287 273 (13)2007 307 263 (44)2008 458 343 (114)

TOTAL $7,478 $7,424 ($55)

Notes:(1) - Sum of Exhibit III, Page 1, Column (5) for of the 2008 AMI Actuarial Report(2) - Exhibit III, Page 1 of 4, Column (5).(3) = (2) - (1).* All Accident years end on 6/30 of the stated year.


COMPARISON OF ESTIMATED ULTIMATE LOSSES AS OF JUNE 30, 2009

AUTOMOBILE LIABILITY



O:\State of Vermont\2009\AL2009.xls\ULT_COMPARE9/14/2009 1:09 PM



INCREASEACCIDENT OR

YEAR* @6/30/2008 @6/30/2009 DECREASE(1) (2) (3)

1991 $393 $413 $201992 206 203 (3)1993 455 506 501994 118 113 (5)1995 304 301 (3)1996 1,159 1,198 391997 503 460 (43)1998 228 189 (39)1999 240 219 (22)2000 704 735 322001 301 275 (25)2002 442 416 (26)2003 526 545 182004 367 350 (17)2005 99 144 452006 200 200 02007 171 171 02008 134 182 48

TOTAL $6,550 $6,620 $70

Notes:(1) - Sum of Exhibit III, Page 1, Column (6) for of the 2008 AMI Actuarial Report(2) - Exhibit III, Page 1 of 4, Column (6).(3) = (2) - (1).* All Accident years end on 6/30 of the stated year.

PAID LOSSES

STATE OF VERMONT



AUTOMOBILE LIABILITY(AMTS IN THOUSANDS)

NET

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APPENDIX D

GENERAL LIABILITY

Self-Funded CURRENT ALTERNATE 1: ALTERNATE 2:Period $250,000 PER PERSON $425,000 PER PERSON $500,000 PER PERSON

$1,000,000 PER OCCURRENCE $1,700,000 PER OCCURRENCE $2,000,000 PER OCCURRENCE(1) (2) (3)

7/1/09-6/30/10 $1,373 $1,396 $1,4037/1/10-6/30/11 1,436 1,460 1,4677/1/11-6/30/12 1,500 1,525 1,5327/1/12-6/30/13 1,568 1,594 1,6027/1/13-6/30/14 1,638 1,665 1,673

AUTOMOBILE LIABILITY

Self-Funded CURRENT ALTERNATE 1: ALTERNATE 2:Period $250,000 PER PERSON $425,000 PER PERSON $500,000 PER PERSON

$1,000,000 PER OCCURRENCE $1,700,000 PER OCCURRENCE $2,000,000 PER OCCURRENCE(4) (5) (6)

7/1/09-6/30/10 $347 $353 $3547/1/10-6/30/11 361 367 3697/1/11-6/30/12 376 382 3847/1/12-6/30/13 391 397 3997/1/13-6/30/14 407 414 416

Notes:(1), (4) - Per Exhibit V and Exhibit VI, Col. (1).(2), (3), (5) & (6) - Based on Monte Carlo simulation.

GENERAL LIABILITY AND AUTOMOBILE LIABILITYAS OF JUNE 30, 2009

(AMTS IN THOUSANDS)

SOVEREIGN IMMUNITY LIMITS


FUTURE FUNDING AMOUNTS AT ALTERNATE SOVEREIGN IMMUNITY LIMITS

SOVEREIGN IMMUNITY LIMITS

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O:\State of Vermont\2009\GLOSSARY.doc PAGE 1

Glossary of Terms

Accident Year

Attributing to a given year the total cost of losses which occur in that year.

Bornhuetter-Ferguson Approach (BFA)

Approach which combines reported and paid losses with the expected unreported and unpaid losses to estimate ultimate losses.

Case Reserve

Estimate of unpaid loss on reported claims.

Discount Reserve

The present value, calculated at selected interest rates and payout patterns, of the payment of outstanding losses.

Expected Loss

Exposures multiplied by the loss rate.

Exposure Extent of risk and/or possibility of loss (for workers' compensation the exposure is payroll in hundreds, for general liability it is expenditure in thousands, and for auto liability it is the number of vehicles).

IBNR Reserve

Reserve for claims incurred but not reported and for future changes to the case reserves.

Incurred Loss

Paid loss plus the case reserve.

Loss Adjustment Expenses (LAE)

Loss adjustment expenses may be broken down into: Allocated and Unallocated loss adjustment expenses (ALAE and ULAE). ALAE expenses are expenses (other than in-house administrative) for claims handling which can be identified as pertaining to a specific claim (such as outside legal expense). ULAE expenses are general administrative expenses such as salaries of employees.


Glossary of Terms (continued)

O:\State of Vermont\2009\GLOSSARY.doc PAGE 2

Loss Development

Refer to the increase in number of claims, paid and incurred losses from a given accident year. The number of claims “develop” because in some cases, significant delay in the reporting losses occurs. Paid losses “develop” because claims are paid over several years. Incurred losses “develop” because of the increase in reported claims and because initial reserves tend to be inadequate at settlement.

Loss Development Approach (LDA)

Methods under which historical claim data are recorded and used to estimate the future development of existing claims.

Loss Rate

The value of losses per unit of exposure.

Paid Loss Amount paid on open and closed claims.

Ultimate Loss

The incurred loss plus the IBNR reserve. The ultimate loss is the estimate of the total cost to settle all claims in the accident year.

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