Federated Update

Brian GroganAccount Executive

Federated Rural Electric Insurance Exchange

YEAR END 3/31/2010 2009

Total Assets $351.7 Million $368 Million

Surplus $109.9 Million $ 110 Million

Net Margins $ 12.5 Million $ 4.5 Million

Combined Loss & Expense Ratio 100.9% 98.2%

Finance Update

Property Inventory Valuation

Replacement Cost Value The amount it would take to replace

property with like property of the same quality and construction.

Property Inventory Valuation

Actual Cash Value Working rule-of-thumb definition:

replacement cost new at the time of loss, less depreciation.

Property Inventory Valuation

Book Value The dollar amount of property

shown in a company’s books.

Property Inventory Valuation

Market Value The amount that a piece of property

could be sold for in the open market.

Property Inventory Valuation

Insurance to value Making sure that the amount of

insurance that you carry is enough to cover all of your property at its Replacement Cost Value.

Extra Expense Coverage

Provides reimbursement for additional necessary expenses incurred because of an insured property loss.

$50,000 limit is automatically included in all ARB policies for Extra Expense Coverage. Higher limits are available

Extra Expense Coverage

Do I have enough coverage?

Federated Information Security Liability Program

Could This Happen to You A laptop within your organization containing

sensitive information is lost or stolen Sensitive information is accidentally sent to the

wrong fax number or email address A disgruntled employee steals sensitive

information and sells it to information thieves, or even a competitor

A hacker located in Nigeria hacks into your network and sells all of your customer data leading to customer identity fraud

A vendor whom you outsource services to has a breach to their network which also affects your customer base.

What are the Risks?

The key exposure is disclosure. Examples include the theft of customers’ names with social security numbers, credit card or bank account data; essentially any personally identifiable information.

Utility Companies also have significant exposures through their distribution / member connection and infrastructure systems.

Security & Privacy Liability

• Security Liability is where unencrypted computerized information or paper documents containing personally identifiable non-public information is acquired or accessed by an unauthorized person

• Privacy Liability is the violation of privacy

laws or regulations that permit individuals to control the collection, access, transmission, use, and accuracy of their personally identifiable financial information.

Direct Loss of Data Breaches

Coverage

Individual Policy limit s from 1 to 2 million

Security/Privacy Civil Liability Coverage is for 3rd party defenses

Employee Privacy Coverage Regulatory Defense and Penalties Notification Cost & Crisis

Management

Extended Security

Vendor Risk Management Security Certifications Insiders may be predators Responsibility rests with the data

collector Traditional insurance

Underwriting Process Quote Submission Process:• Basic Application- online• Underwriting examines the

security of the company and points out key concerns• Quotes turned around quickly• Insurance sits above the client’s

best efforts

Where do I go with

questions?

Visit our website:

www.federatedrural.com

Questions can be submitted

electronically when you request

a quote

Your Federated Account

Executive

Investing in the Future of Co-ops

Each year Federated sets aside a portion of our members’ premiums to be returned to statewide associations in support of the safety and training programs provided.

$2.3 Million

Thank You