upholding authority of Texas Attorney General to assert class claims under the Insurance Code
How later courts described this case
- upholding authority of Texas Attorney General to assert class claims under the Insurance Code
Written by the judges who cited it.
The opinion
ACCEPTED
03-15-00436-CV
6131184
THIRD COURT OF APPEALS
AUSTIN, TEXAS
7/20/2015 10:39:40 AM
JEFFREY D. KYLE
CLERK
No. 03-15-00436-CV
In the Third Court of Appeals FILED IN
Austin, Texas 3rd COURT OF APPEALS
AUSTIN, TEXAS
7/20/2015 10:39:40 AM
CHARLES O. “CHUCK” GRIGSON, JEFFREY D. KYLE
Appellant, Clerk
v.
THE STATE OF TEXAS; THE TEXAS DEPARTMENT OF
INSURANCE; THE TEXAS COMMISSIONER OF INSURANCE;
and FARMERS GROUP, INC. ET AL.,
Appellees.
On Appeal from the 261st Judicial District Court, Travis County, Texas
Cause No. D-1-GV-02-002501
APPELLEES’ JOINT RESPONSE TO APPELLANT GRIGSON’S
EMERGENCY MOTION TO STAY THE SENDING OF CLASS NOTICE
Marcy Hogan Greer Joshua R. Godbey
State Bar No. 08417650 State Bar No. 24049996
mgreer@adjtlaw.com joshua.godbey@texasattorneygeneral.gov
ALEXANDER DUBOSE JEFFERSON & Ryan S. Mindell
TOWNSEND LLP State Bar No. 24089707
515 Congress Ave., Suite 2350 ryan.mindell@texasattorneygeneral.gov
Austin, Texas 78701 Jennifer S. Jackson
Telephone: 512-482-9300 State Bar No. 24060004
Telecopier: 512-482-9303 jennifer.jackson@texasattorneygeneral.gov
OFFICE OF THE ATTORNEY GENERAL
M. Scott Incerto P.O. Box 12548
State Bar No. 10388950 Austin, Texas 78711-2548
scott.incerto@nortonrosefulbright.com Telephone: (512) 475-4209
NORTON ROSE FULBRIGHT US LLP Fax: (512) 477-2348)
98 San Jacinto Blvd., Suite 1100
Austin, Texas 78701 COUNSEL FOR PLAINTIFFS-APPELLEES, THE
Telephone: 512-474-5201 STATE OF TEXAS, THE TEXAS DEPARTMENT OF
Telecopier: 512-536-4598 INSURANCE, AND THE TEXAS COMMISSIONER
OF INSURANCE
COUNSEL FOR DEFENDANTS-APPELLEES
THE FARMERS PARTIES
TO THE HONORABLE COURT OF APPEALS:
Appellees, the State of Texas, the Texas Department of Insurance and the
Texas Commissioner of Insurance (jointly, “the State”) and the Farmers Parties 1
(together with the State, the “Settling Parties”) file this Joint Response, asking the
Court to deny Appellant Grigson’s Emergency Motion to Stay the Sending of
Class Notice (“Motion to Stay”). The Settling Parties additionally request that the
Court consider and grant, on an expedited basis, their Joint Motion to Dismiss
Appeal for Lack of Appellate Jurisdiction and Request for Expedited
Consideration of Motion (“Motion to Dismiss”).
PRELIMINARY STATEMENT
Having failed to defeat preliminary approval of the settlement in this 12-
year-old case, 2 Appellant Charles O. “Chuck” Grigson (“Grigson”) has now filed a
baseless interlocutory appeal of the district court’s Order of Preliminary Approval.
Bootstrapping off that improper appeal, Grigson filed his Motion to Stay, asking
the Court to prevent the Settling Parties from finally informing the approximately
1
Farmers Group, Inc., Fire Underwriters Association, Farmers Underwriters Association,
Farmers Insurance Exchange, Fire Insurance Exchange, Texas Farmers Insurance Company,
Mid-Century Insurance Company of Texas, Mid-Century Insurance Company, Farmers Texas
County Mutual Insurance Company, Truck Insurance Exchange, and Truck Underwriters
Association
2
See the “Background Facts” provided in the Appellees’ Joint Motion to Dismiss Appeal for
Lack of Appellate Jurisdiction and Request for Expedited Consideration of Motion, which are
incorporated here by reference. Those facts in the Motion to Dismiss and stated here are in the
personal knowledge of the undersigned, and so, no affidavit in support is needed. TEX. R. APP.
P. 10.2.
-1-
1.8 million class members about the settlement. In his Motion to Stay, Grigson
makes several conclusory, incorrect arguments that are all premised on the
propriety or success of his interlocutory appeal. Because, as demonstrated in the
Settling Parties’ Motion to Dismiss, there is no conceivable basis for an
interlocutory appeal in this case, Grigson’s Motion to Stay must also fail. There is,
in short, no reason to unnecessarily stay class notice, 12 years overdue, for an
improper appeal over which this Court lacks jurisdiction.
ARGUMENT
I. Grigson Cannot Appeal the Preliminary Approval Order and Therefore
Cannot Obtain a Stay of Class Notice
Grigson baldly asserts that he is appealing the “order entered on July 6, 2015
certifying a settlement class action.” Motion to Stay, at 2 ¶ 1 (emphasis added).
That statement is completely false. The Order from which Grigson purports to
appeal does not, at any point, certify a class. So, it is not surprising that Grigson
does not—and cannot—cite any part of the Order of Preliminary Approval
(“Preliminary Approval Order”) to support his claim that it “certified” the
settlement class action in this case.
The Preliminary Approval Order, on its face, neither certifies nor refuses to
certify a class, as demonstrated in the Settling Parties’ Motion to Dismiss (the
arguments of which are incorporated here by reference). Instead, the Preliminary
Approval Order expressly recognizes that the settlement classes were certified in
2003, in an order that was subsequently affirmed by the Texas Supreme Court and
-2-
this Court. See Motion to Stay, Ex. A: Order of Preliminary Approval (July 6,
2016) at 2, ¶ 2 (explaining that the district court “has previously certified” the
settlement classes at issue (emphasis added)); see also Farmers Grp., Inc. v. Lubin,
222 S.W.3d 417, 420, 427-28 (Tex. 2007) (upholding authority of Texas Attorney
General to assert class claims under the Insurance Code); Lubin v. Farmers Grp.,
Inc., No. 03-03-00374-CV, 2009 WL 3682602, at *26-32 (Tex. App.—Austin
Nov. 6, 2009, no pet.) (considering and rejecting intervenors’ objections to
certification of the settlement classes in this case). Those long-ago certified
settlement classes have remained unchanged for the past 12 years.
These facts are fatal to the Motion to Stay. Texas law is clear that an
interlocutory appeal is permitted only from an order that “certifies or refuses to
certify a class in a suit brought under Rule 42.” See TEX. CIV. PRAC. & REM. CODE
§ 51.014(a)(3). The order Grigson attempts to appeal didn’t do that. The clear
lack of appellate jurisdiction over Grigson’s attempted appeal also requires denial
of Grigson’s Motion to Stay. With no basis to appeal, Grigson has no basis to stay
the proceedings in this case, nor is he entitled to block class notice.
II. Whether the Final Hearing Occurs as Scheduled Has No Bearing on
Whether Class Notice Should Be Stayed
Grigson also argues, without explanation, that due to his “appeal” the final
fairness hearing in this case cannot be held as scheduled, and thus, the issuance of
class notice “will misinform and confuse the putative class and interfere with [the]
-3-
Court’s jurisdiction.” Motion to Stay at 2, ¶ 2. Once again, that is simply not the
case.
The final fairness hearing can go forward as scheduled if this Court
considers and grants the Settling Parties’ Motion to Dismiss on an expedited basis,
which would render Grigson’s Motion to Stay baseless and moot. But, even if the
final hearing cannot occur on the currently scheduled date for whatever reason, the
Preliminary Approval Order deals expressly with that possibility, such that a stay is
unnecessary. Under the Preliminary Approval Order, the district court “expressly
retains the power to adjourn” the hearing without any further notice. Motion to
Stay, Ex. A: Order of Preliminary Approval (July 6, 2016) at 9, ¶ 15. The Class
Notice that has been approved by the district court and will be sent to absent class
members also expressly informs class members that the date of the final fairness
hearing may be moved. In a paragraph clearly labeled “When and where will the
Court decide whether to approve the Settlement?” the approved class notice
identifies the currently scheduled date and then states that the “Settlement
Hearing . . . may be moved to a different date or time without additional notice”
and advises class members to visit the settlement website or to call a toll-free
phone number to check for any changes to the hearing date. Motion to Stay, Ex.
A: Order of Preliminary Approval (July 6, 2016) at Ex. 1, p.9, ¶ 21. The sending
of Class Notice therefore would neither “misinform” nor “confuse” class members,
as Grigson claims. See Motion to Stay at 2, ¶ 2. To the contrary, the Class Notice
-4-
is designed, as a required and necessary step of the settlement approval process, to
benefit absent class members by informing them of the existence and the material
terms of the settlement and by triggering the ability of the members to participate,
be heard, and make their own decisions about the settlement. 3 And, as is common
in class action cases, they are informed of the currently scheduled date for the final
fairness hearing as well as the fact that the date could change. 4
III. Class Notice Will Be Paid by the Defendants-Appellees Farmers Parties
and Will Have No Adverse or Irreparable Effect on Class Members
Grigson’s final argument in support of his Motion to Stay is that, should he
somehow succeed on the merits of his interlocutory appeal of the Preliminary
Approval Order, sending class notice will be a “waste of policyholder money.”
Motion to Stay at 3, ¶ 3. And yet again, Grigson’s conclusory and unsupported
argument is readily shown to be untrue.
First, Grigson’s theory that sending notice would be a “waste of
policyholder money” is premised on the assumption that notice would have to be
re-sent, in the event the Court considers his appeal and the date for the fairness
hearing has to be moved. But, as explained above, the Class Notice already
contemplates the potential for moving that hearing date, and notifies class
3
See TEX. INS. CODE § 541.266; TEX. R. CIV. P. 42(e)(1)(B).
4
There are many non-appellate reasons why a final hearing would need to be rescheduled after
the issuance of class notice (e.g., court conflict, work or personal conflict of an attorney, natural
disaster, etc.) but that does not mean that, in each of those situations, the entire class notice is
defective and must be re-sent.
-5-
members that it may be moved. Thus, the costs of sending out notice would not be
wasted in this case, even if the date of the fairness hearing ultimately is moved.
Second, Grigson’s claim that the costs of notice “will be paid with
policyholder money” such that sending the notice would somehow injure
policyholders, see Motion to Stay at 3, ¶ 3, 5 is thoroughly refuted by the
undisputed evidentiary record upon which the district court based its Preliminary
Approval Order. It is undisputed that the costs of notice are being paid by the
Farmers Parties. Grigson’s argument is that the Farmers Exchanges are reciprocal
insurance exchanges which are “owned” by the policyholders, such that the
Exchanges’ surplus funds out of which certain costs will be paid are (he claims)
“policyholder money.” 6 The evidence is clear and undisputed, however, that
policyholders do not have ownership rights over the surplus of the Exchanges.
Instead—as established through the testimony and declaration of Ron Myhan,
Chief Financial Officer of the Farmers Exchanges, both of which are part of the
record—policyholders of the Exchanges, like Grigson, do not “possess” the surplus
5
Grigson’s reference to this Court’s 2003 stay order (Ex. C to Grigson’s Motion to Stay) is
inapposite because, as this Court will recall, the appellants at the time were appealing the district
court’s decision to certify the settlement classes, and the primary issue before the Court at that
time was whether the Attorney General could bring and certify this class action at all without
naming individual class members as representatives. See Lubin v. Farmers Grp., Inc., 222
S.W.3d 417, 420 (Tex. 2007).
6
Appellees Farmers Insurance Exchange, Fire Insurance Exchange, and Truck Insurance
Exchange are the “Farmers Exchanges” or “Exchanges,” which are reciprocal or interinsurance
exchanges that insure the policies. TEX. INS. CODE ANN. § 942.001, et seq.
-6-
funds of the Exchanges. Ex. 1, 7/2/2015 Hearing Tr. 50:7-51:14; Ex. 3 at 27,
Farmers Defs.’ Ex. 11 ¶ 8.7
Moreover, despite being given ample opportunity in both his briefing and at
the preliminary approval hearing, Grigson has failed to substantiate his allegation
that payments by the Exchanges will adversely affect policyholders. Instead, that
unsupported contention is again refuted by evidence in the record. The Exchanges
have a $5.6 billion surplus. Ex. 1, 7/2/2015 Hearing Tr. 53:13-15. Grigson’s
argument that incurring the cost of approximately $2.5 million to send out class
notice would somehow negatively impact policyholders is facially absurd. In any
event, the Settling Parties demonstrated—through the testimony of David Mattax,
the Texas Commissioner of Insurance; the declarations and testimony of the
Exchanges’ CFO, Ron Myhan; and other evidence offered in support of
preliminary approval—that even the Exchanges’ payment of the $84.6 million
settlement from reserves set aside from their $5.6 billion surplus will have no
material adverse effect on surplus, rates, or the class members who are currently
policyholders of the Exchanges. See Ex. 2, 7/1/2015 Hearing Tr. 97:7-98:7, 101:1-
104:6; Ex. 1, 7/2/2015 Hearing Tr. 46:9-51:18, 53:13-55:8; Ex. 3, Portion of
Exhibits from Preliminary Approval Hearing. If payment of the $84.6 million
7
Myhan also testified that, in addition to the Exchanges, Defendant-Appellee Farmers Group,
Inc. will be paying a portion of the class notice costs, just as it will be reimbursing the Exchanges
for a portion of the settlement amount. Ex. 1, 7/2/2015 Hearing Tr. 26:15-30:3. Grigson does
not contend that money paid by Farmers Group, Inc. is “policyholder money.”
-7-
settlement will not materially affect policyholders, then there can be no question
that the $2.577 million in estimated class notice costs (only 3% of the settlement
value, and less than 0.05% of the value of the Exchanges’ surplus) will have no
adverse effect on policyholders either.
It is instead Grigson’s Motion for Stay—premised on a groundless
interlocutory appeal and incorrect, conclusory arguments—that will adversely
affect the approximately 1.8 million class members who have effectively been shut
out of the settlement approval process for the past 12 years, receiving neither
notice that the settlement exists nor the opportunity to participate and be heard. No
more delay in this 12-year case should be allowed. Grigson had the full
opportunity to participate at the preliminary approval hearing, and he failed in his
opposition—a failure that is not appealable. The other absent class members are
now due class notice and entitled to be informed as soon as practicable.
CONCLUSION
For all these reasons, the Court should deny Appellant Grigson’s Emergency
Motion to Stay the Sending of Class Notice. The Settling Parties request all other
relief to which they are justly entitled.
-8-
Date: July 20, 2015 Respectfully submitted,
/s/ M. Scott Incerto
Marcy Hogan Greer
State Bar No. 08417650
mgreer@adjtlaw.com
ALEXANDER DUBOSE JEFFERSON & TOWNSEND LLP
515 Congress Avenue, Suite 2350
Austin, Texas 78701-3562
Telephone: (512) 482-9300
Facsimile: (512) 482-9303
M. Scott Incerto
State Bar No. 10388950
scott.incerto@nortonrosefulbright.com
NORTON ROSE FULBRIGHT US LLP
98 San Jacinto Blvd., Suite 1100
Austin, Texas 78701
Telephone: 512-474-5201
Telecopier: 512-536-4598
Darryl W. Anderson
State Bar No. 24008694
darryl.anderason@nortonrosefulbright.com
Geraldine W. Young
State Bar No. 24084134
geraldine.young@nortonrosefulbright.com
NORTON ROSE FULBRIGHT US LLP
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Telephone: 713-651-5151
Telecopier: 713-651-5246
ATTORNEYS FOR APPELLEES FIRE UNDERWRITERS
ASSOCIATION, FARMERS GROUP, INC., FARMERS
UNDERWRITERS ASSOCIATION, FARMERS INSURANCE
EXCHANGE, FIRE INSURANCE EXCHANGE, TEXAS
FARMERS INSURANCE COMPANY, MID-CENTURY
INSURANCE COMPANY OF TEXAS, MID-CENTURY
INSURANCE COMPANY, FARMERS TEXAS COUNTY
MUTUAL INSURANCE COMPANY, TRUCK INSURANCE
EXCHANGE, TRUCK UNDERWRITERS ASSOCIATION
-9-
Respectfully submitted,
KEN PAXTON
Attorney General of Texas
CHARLES E. ROY
First Assistant Attorney General
JAMES E. DAVIS
Deputy Attorney General for Civil Litigation
ROBERT O’KEEFE
Division Chief
Financial Litigation, Tax, and Charitable Trusts Division
/s/ Joshua R. Godbey
JOSHUA R. GODBEY
Assistant Attorney General
LEAD ATTORNEY
State Bar No. 24049996
Telephone: (512) 475-4209
joshua.godbey@texasattorneygeneral.gov
RYAN S. MINDELL
Assistant Attorney General
State Bar No. 24089707
Telephone: (512) 936-1721
ryan.mindell@texasattorneygeneral.gov
JENNIFER S. JACKSON
Assistant Attorney General
State Bar No. 24060004
Telephone: (512) 463-9917
jennifer.jackson@texasattorneygeneral.gov
Financial Litigation, Tax, and Charitable Trusts Division
P.O. Box 12548
Austin, Texas 78711-2548
Fax: (512) 477-2348)
ATTORNEYS FOR PLAINTIFFS-APPELLEES, THE STATE
OF TEXAS, THE TEXAS DEPARTMENT OF INSURANCE,
AND THE TEXAS COMMISSIONER OF INSURANCE
-10-
CERTIFICATE OF SERVICE
On July 20, 2015, I electronically filed the Appellees’ Joint Response to
Appellant Grigson’s Emergency Motion to Stay the Sending of Class Notice with
the Clerk of the Court using the eFile.TXCourts.gov electronic filing system which
will send notification of such filing to the following (unless otherwise noted
below).
Joe K. Longley Michael J. Woods
Philip K. Maxwell 8620 N. New Braunfels, Ste. 522
1609 Shoal Creek Blvd. # 100 San Antonio, TX 78217
Austin, TX 78701 MichaelJWoods@sbcglobal.net
Joe@JoeLongley.com
phil@philmaxwell.com Pro Se Intervenor/Objector
Counsel for Appellant Charles O.
“Chuck” Grigson
Joseph C. Blanks
P.O. Box 999
Doucette, TX 75942
blanxlex@gmail.com
Counsel for Intervenor Gerald and
Lesly Hooks
/s/ M. Scott Incerto
M. Scott Incerto
-11-
CERTIFICATE OF COMPLIANCE WITH TEX. R. APP. P. 9.4(i)
I certify that the foregoing document contains 1,754 words and complies
with the word limit set forth in Texas Rule of Appellate Procedure 9.4(i).
/s/ M. Scott Incerto
M. Scott Incerto
-12-
No. 03-15-00436-CV
In the Third Court of Appeals
Austin, Texas
CHARLES O. “CHUCK” GRIGSON,
Appellant,
v.
THE STATE OF TEXAS; THE TEXAS DEPARTMENT OF
INSURANCE; THE TEXAS COMMISSIONER OF INSURANCE;
and FARMERS GROUP, INC., ET AL.,
Appellees.
On Appeal from the 261st Judicial District Court
Travis County, Texas
Cause No. GV-202501
APPENDIX TO
APPELLEES’ JOINT RESPONSE TO APPELLANT GRIGSON’S
EMERGENCY MOTION TO STAY THE SENDING OF CLASS NOTICE
Exhibit 1 7/2/2015 Preliminary Approval Hearing Transcript (certified)
Exhibit 2 7/1/2015 Preliminary Approval Hearing Transcript (certified)
Exhibit 3 A Portion of the Exhibits from the Hearing on Preliminary
Approval: State/Plaintiff’s Exhibits 10, 11, and 12 and Farmers
Defendants’ Exhibits’ 11, 12, and 18 (certified)
-13-
Exhibit 1
TO APPELLEES’ JOINT RESPONSE TO APPELLANT GRIGSON’S
EMERGENCY MOTION TO STAY THE SENDING OF CLASS NOTICE
1
1 REPORTER'S RECORD
VOLUME 2 OF 2 VOLUMES
2 TRIAL COURT CAUSE NO. D-1-GV-02-002501
3 STATE OF TEXAS, THE TEXAS ) IN THE DISTRICT COURT
DEPARTMENT OF INSURANCE, )
4 AND THE TEXAS )
COMMISSIONER OF )
5 INSURANCE, )
Plaintiffs, )
6 )
VS. )
7 )
)
8 FARMERS GROUP, INC., )
FARMERS UNDERWRITERS ) TRAVIS COUNTY, TEXAS
9 ASSOCIATION, FIRE )
UNDERWRITERS ASSOCIATION, )
10 FARMERS INSURANCE )
EXCHANGE, FIRE INSURANCE )
11 EXCHANGE, TEXAS FARMERS )
INSURANCE COMPANY, )
12 MID-CENTURY INSURANCE )
COMPANY OF TEXAS, AND )
13 FARMERS TEXAS COUNTY )
MUTUAL INSURANCE COMPANY, )
14 Defendants. ) 261ST JUDICIAL DISTRICT
15 -------------------------------------------------
16
HEARING ON JOINT MOTION FOR
17 PRELIMINARY APPROVAL OF SECOND AMENDED
SETTLEMENT AGREEMENT
18
19 --------------------------------------------------
20 On the 2nd day of July, 2015, the following
21 proceedings came on to be heard in the above-entitled
22 and numbered cause before the Honorable Scott H.
23 Jenkins, Judge presiding, held in Austin, Travis County,
24 Texas;
25 Proceedings reported by machine shorthand.
2
1 A P P E A R A N C E S
2
FOR THE PLAINTIFFS, THE STATE OF TEXAS, THE TEXAS
3 DEPARTMENT OF INSURANCE, AND THE TEXAS COMMISSIONER OF
INSURANCE:
4
JOSHUA GODBEY
5 SBOT NO. 24049996
RYAN MINDELL
6 SBOT NO. 24089707
JENNIFER JACKSON
7 SBOT NO. 24060004
Assistant Attorney General
8 OFFICE OF THE ATTORNEY GENERAL
P.O. Box 12548
9 Austin, Texas 78711-2548
(512) 475-4209
10
11
FOR DEFENDANTS FIRE UNDERWRITERS ASSOCIATION, FARMERS
12 GROUP, INC., FARMERS INSURANCE EXCHANGE, FIRE INSURANCE
EXCHANGE, TEXAS FARMERS INSURANCE COMPANY, MID-CENTURY
13 INSURANCE COMPANY OF TEXAS, MID-CENTURY INSURANCE
COMPANY, FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY,
14 TRUCK INSURANCE EXCHANGE, AND TRUCK UNDERWRITERS
ASSOCIATION:
15
M. SCOTT INCERTO
16 SBOT NO. 10388950
NORTON ROSE FULBRIGHT
17 98 San Jacinto Boulevard, Suite 1100
Austin, Texas 78701
18 (512) 474-5201
19 DARRYL ANDERSON
SBOT NO. 24008694
20 NORTON ROSE FULBRIGHT
1301 McKinney, Suite 5100
21 Houston, Texas 77010-3095
(713) 651-5151
22
MARCY HOGAN GREER
23 SBOT NO. 08417650
ALEXANDER, DUBOSE, JEFFERSON & TOWNSEND
24 515 Congress Avenue, Suite 2350
Austin, Texas 78701
25 (512) 482-9300
3
1 A P P E A R A N C E S
(CONTINUED)
2
3
FOR INTERVENORS GERALD HOOKS AND LESLY HOOKS:
4
JOSEPH BLANKS
5 SBOT NO. 02456770
LAW OFFICE OF JOSEPH C. BLANKS
6 P.O. Box 999
Doucette, Texas 75942
7 (409) 837-9707
8
9 FOR INTERVENOR MICHAEL J. WOODS:
10 MICHAEL J. WOODS, PRO SE
8620 N. New Braunfels #522
11 San Antonio, Texas 78217
(210) 822-1560
12
13
FOR INTERVENOR CHARLES O. "CHUCK" GRIGSON:
14
JOE K. LONGLEY
15 SBOT NO. 12542000
LAW OFFICE OF JOE K. LONGLEY
16 1609 Shoal Creek Boulevard, Suite 100
Austin, Texas 78701
17 (512) 477-4444
18 PHILIP K. MAXWELL
SBOT NO. 13254000
19 LAW OFFICE OF PHILIP K. MAXWELL
1609 Shoal Creek Boulevard, Suite 100
20 Austin, Texas 78701
(512) 947-5434
21
22
23
24
25
4
1 I N D E X
2 VOLUME 2
3
HEARING ON JOINT MOTION FOR
4 PRELIMINARY APPROVAL OF SECOND AMENDED
SETTLEMENT AGREEMENT
5
JULY 2, 2015
6
7 DEFENDANT FARMERS' WITNESSES
8 Direct Cross Vol.
9 RONALD MYHAN
By Mr. Incerto 5 2
10 By Mr. Mindell 51 2
By Mr. Maxwell 56 2
11 By Mr. Incerto 105 2
12
Page Vol.
13
14 Defendants Farmers rest................... 107 2
15 All parties close......................... 107 2
16 Statements by Mr. Blanks (in lieu of
opening statements earlier)............ 108 2
17
Statements by Mr. Woods................... 109 2
18
Statements by Ms. Greer................... 110 2
19
Court's Ruling............................ 116 2
20
Adjournment............................... 135 2
21
Court Reporter's Certificate.............. 136 2
22
23
24
25
26
1 A. Of course the Exchanges, you know, write the
2 policies, bill the insureds, and we have -- we receive
3 the premium payments in cash, and they were put in the
4 surplus. So we were thinking, okay, if we have the cash
5 and if the Department of Insurance thinks we're 12 to
6 18 percent overcharging and we've settled at 6.8, we
7 will return part of that 12 to 18 percent in terms of
8 the 6.8 to the policyholders since we're holding the
9 money to start with.
10 Q. And then anything over 6.8 percent that's
11 actually, at least in the view of the State, to be
12 excessive will be retained by the Exchanges; is that
13 correct?
14 A. Yes, it will.
15 Q. One of the terms in the 2015 supplement of the
16 settlement agreement is that FGI will reimburse the
17 Exchanges for attorney-in-fact fees that it collected on
18 these returned premiums.
19 A. Of course.
20 Q. Are you familiar with that?
21 A. Yes, I am.
22 Q. Do you believe that's fair?
23 A. Of course.
24 Q. Now, this term is in the 2015 agreement. My
25 question is, is this something that had been discussed
27
1 before 2014, 2015?
2 A. Yeah, briefly, only because it was assumed from
3 day one that the management fee would be returned for
4 these premiums.
5 Q. What do you mean by day one?
6 A. Right when we were negotiating the settlement
7 going, okay, this is what it is, I think we were
8 actually thinking that this would be -- you know, it was
9 such a process to get to a settlement considering,
10 you know, the environment at that time, we figured this
11 would be paid out pretty quickly and we were making
12 plans, okay, this is how it gets taken out of premium,
13 returned to the policyholders, and at the same time the
14 management fee gets returned, so it was kind of a given
15 that it would be returned. It wasn't debated at all.
16 Q. I want to make sure, are we talking about the
17 2002 time period with the original settlement?
18 A. Yes.
19 Q. Because we're dealing with such a long period
20 of time, I guess I need to ask you to be as specific as
21 you can with these times.
22 A. Absolutely.
23 Q. So there were discussions you're saying between
24 the Exchanges and FGI regarding returning the management
25 fee in connection with the original settlement?
28
1 A. Yes.
2 Q. Had any amount been specifically calculated at
3 that time?
4 A. Not the amount, but the understanding was -- it
5 was just like we do with all the other lines of
6 business. I mean, you go back to that. The line of
7 business that's affected, get the management fee for
8 that line of business and cal -- it's generally a math
9 exercise. Just calculate the management fee on the
10 settlement amount of premium, and that's the amount that
11 comes back.
12 Q. Mr. Myhan, with respect to the current
13 settlement, has the amount of attorney-in-fact fees to
14 be reimbursed by FGI on the return premiums been
15 calculated?
16 A. Yes, it has.
17 Q. Who would -- who supervised that calculation?
18 A. That'd be me.
19 Q. And with respect to that calculation, can you
20 share with us what you determined is the amount of fees
21 to be reimbursed for the return of premiums?
22 A. Yes. We've calculated 8.4 million, you know,
23 with the current settlement that's out there.
24 Q. Okay. Now, is that a number that includes
25 expenses for class administration as well as a number
29
1 that includes a portion of the fund that's set out to
2 fund the credit usage notice class?
3 A. Absolutely. As the supplement was being
4 discussed with the board, talking in terms of the
5 extra -- even though the extra 10 million isn't a return
6 of premium per se and, you know, some of these other
7 elements aren't returns of premium, the board and the
8 audit committee as we were discussing it going, well,
9 this is really -- we're just sharing this with FGI in
10 terms of, okay, put this behind us and, you know, moving
11 on and running a profitable business in Texas, and so,
12 you know, why doesn't -- why shouldn't FGI participate
13 in each element of this? And we go, yeah, that's a good
14 idea. And there was no pushback from FGI once I went to
15 them and said, hey, this is what we're thinking, and
16 they go okay.
17 So, you know -- so basically the
18 $10 million, supplemental payment, thicker notice
19 amount, the administrative costs, all that that were
20 just a part of the management fee to each to kind of
21 give a placeholder in terms of each group participating
22 in the outcome here. So that gives you the 8.4 million
23 when you get all done with all those components.
24 Q. Technically class administration does not
25 return a premium, but is there some contribution being
30
1 made there?
2 A. Yes. We're just applying the management fee to
3 each of the amounts even if they're not premium related.
4 Q. Can you tell me how you calculated the amount
5 of management fee to be returned?
6 A. Basically, for the homeowners book during these
7 years, the management fee was -- over this period was
8 9.17 percent. And so basically we're applying that
9 rate, you know, specific to the line of business to,
10 you know, the settlement here.
11 Q. Mr. Leaman testified in 2003 that the overall
12 management fee for that year was about 11 percent. Do
13 you recall that testimony?
14 A. Yes, I do.
15 Q. And is that accurate in your view?
16 A. Yes, it is. We had actually a year or so
17 before this reduced just the homeowners management fee.
18 Really as the Texas mold started to accelerate,
19 you know, FGI wanted to help the Exchanges' capital
20 position somewhat, so we reduced -- they reduced it a
21 bit there. Plus we have -- you know, I think Stephen
22 Leaman quoted the overall management fee, so we have
23 other books of business that have different management
24 fees. So, for example, you know, the commercial book
25 requires a lot more management company touching. It's
45
1 But the other two really don't have any hard and fast
2 like leverage ratio type of things, but generally they
3 would like us to kind of keep the surplus notes about at
4 the level they're at now.
5 THE COURT: So back when you were at the
6 2 billion to 2.7 billion ratio -- 2 billion of which was
7 notes right?
8 THE WITNESS: Uh-huh.
9 THE COURT: Did your notes get downgraded?
10 THE WITNESS: They -- we were -- yeah, we
11 were in conversations with all three rating agencies at
12 the time, and yeah, we were getting downgrades from all
13 three during 2002, 2003.
14 THE COURT: Just wanted to make sure I
15 understood this. Go ahead.
16 Q. (BY MR. INCERTO) Mr. Myhan, you mentioned
17 earlier that gross written premium today is about
18 18 billion.
19 A. Uh-huh.
20 Q. Is that a good number for 2014?
21 A. Yes, it is.
22 Q. How much -- how many billions in claims did the
23 Exchanges pay out in 2014?
24 A. Well, each year it kind of varies based on
25 what's happening, but if we -- you know, we've been
46
1 averaging right about 100 combined ratio for the
2 enterprise over this last few years, and so that would
3 be 11 to 12 billion of claims paid each year, plus two
4 to three billion of loss adjustment expense, the claims
5 adjusters' salaries. It also includes legal expenses,
6 things like that. Probably about 3 billion in agents'
7 commissions, and then expenses too, but -- you know, so
8 big numbers.
9 Q. How would you characterize the financial
10 strength of the Exchanges today compared to 2002?
11 A. Oh, we're much, much stronger.
12 Q. In your opinion as CFO, will payment of the
13 settlement in this case have any material impact on the
14 Exchanges' ability to pay claims?
15 A. No, absolutely not.
16 Q. Will it have any material impact on the overall
17 financial strength of the Exchanges?
18 A. No, it will not.
19 Q. Will it have any material impact on its
20 ratings?
21 A. No. It's too small.
22 Q. Will it have any material impact -- or will it
23 have any impact in terms of increasing rates for
24 policyholders?
25 A. Well, as we heard yesterday, you know,
47
1 obviously it won't from our perspective, but it would be
2 impossible to actually have that happen since it's based
3 on -- you know, we file our rates based on the claims
4 experience and then we try to project what those losses
5 will be going forward and then come up with a premium
6 amount that would cover that, and this doesn't affect
7 losses -- I mean, it doesn't affect premium -- I'm
8 sorry. It doesn't affect losses at all. And even if
9 you did have a way to do that, this is a regulated
10 industry where it's -- you know, that element would
11 never be allowed by any of the regulators.
12 Q. When this case arose in 2002 and settlement
13 discussions ensued, did the Exchanges set up a reserve
14 for the costs that they were projecting or estimating
15 going forward?
16 A. Yeah, at that time we thought this would be
17 settled fairly quickly. So once a settlement was
18 reached in principle, we went ahead and set up a reserve
19 at that time.
20 Q. What was the estimated amount of reserve?
21 A. I believe that was around $73 million,
22 something in that ballpark.
23 Q. Okay. My question is -- I want to talk to you
24 about reserves. Is there a difference between reserves
25 that are set by the Exchanges written in connection with
48
1 claims that are filed by policyholders versus reserves
2 set up on a lawsuit like this?
3 A. Oh, very much so. The reserves set up for
4 claims, et cetera is kind of just a matter of operations
5 really. The claims reps out in the field, you know,
6 they're busy working every day to pay claims. It rolls
7 through our systems, you know, the paids and the
8 reserves that they're setting up. And then our
9 actuaries look at those patterns and try to predict,
10 okay, what are the losses that haven't been reported yet
11 but have been incurred, and it's kind of a math
12 exercise. It gives us -- and that's the preponderance
13 of our -- I think we have about 8 billion of those types
14 of reserves sitting out there now.
15 The legal reserves are kind of more of
16 a -- you know, separately more judgment. For us it's
17 kind of -- you know, we abide by the statutory
18 accounting principles. That's what the Exchanges are
19 governed by. So it becomes a discussion, is this
20 probable and measurable in terms of what this is. And
21 for us it has to be, you know, fairly material. We
22 don't want to keep track of, you know, a thousand
23 different cases, so we try to say, okay, anything,
24 you know, that's material, say if it's going to hit us
25 for maybe more than five million dollars, let's kind of
49
1 set up a reserve for that. And that's -- you know, this
2 was a -- this was a big one and a high profile one, so,
3 you know, we went ahead and set up a reserve for this.
4 Really, you know, my group sets it up by discussing with
5 the legal department in terms of what we think it's
6 going to be.
7 Q. Are the reserves separate from the surplus?
8 A. Yes. So we set a reserve up and we incur that
9 expense when we set up the reserve, and it comes out of
10 surplus at that time. So this -- that initial reserve
11 came out of 2002 or 2003 surplus. And then when the
12 amendment came along we bumped the reserve up for the
13 amount that it's at now, and it came out of the 2014
14 surplus I guess, just the extra for the 10 million and
15 the other stuff.
16 Q. So what would be the impact on the surplus?
17 Let's assume with me that this settlement is paid in
18 four months' time. What would be the impact on the
19 surplus?
20 A. If it's the amount that's in the amendment
21 right now, there would be no impact to surplus. It's
22 been fully reserved.
23 Q. Are the policyholders owners of the Exchanges?
24 A. In a sense they are.
25 Q. In what sense?
50
1 A. In a sense where upon liquidation their claims
2 get paid first and, you know, they would, you know, be
3 in line there as owners of the Exchanges. They also
4 have a voice in electing the board of governors as their
5 representatives to represent them as policyholders of
6 the Exchanges.
7 Q. Can a policyholder of the Exchanges decide that
8 they want to possess a portion of the surplus? Is that
9 possible?
10 A. No. They pay their premiums. And, you know,
11 so it's a little different if you're -- if you think of
12 ownership you think of like I own stock in a company or
13 something, where if there's a big loss your stock would
14 be worth pennies on the dollar or something. Well, here
15 you pay your premium and, you know, if we have,
16 you know, a billion-dollar catastrophe, you know, we
17 don't ask you for money back. It's just, yep, you paid
18 your premium and, you know, but that's the extent of
19 your liability really.
20 Q. If a subscriber to the Exchanges decides to go
21 purchase insurance from a different company and not from
22 the Exchanges --
23 A. What? Oh, okay.
24 Q. -- can they continue? Do they have any further
25 rights in the surplus or access to the Exchanges upon
51
1 termination in their insurance contract?
2 A. No. Once they move on they're no longer
3 affiliated. They're no longer a member of the
4 Exchanges.
5 Q. Do they have continued liability to the
6 Exchanges?
7 A. No, they do not.
8 Q. With respect to homeowners and auto
9 policyholders of the Exchanges, do they receive
10 dividends from the surplus?
11 A. Not for auto and fire, no.
12 Q. Do they have any rights to borrow against or to
13 somehow take advantage of the increase in surplus?
14 A. No, they do not.
15 Q. In your opinion as CFO, does payment of this
16 settlement by the Exchanges affect in any material way
17 the policyholders' interest in the surplus?
18 A. It will not.
19 MR. INCERTO: I'll pass the witness, Your
20 Honor.
21 CROSS-EXAMINATION
22 BY MR. MINDELL:
23 Q. Mr. Myhan, you mentioned earlier that you lose
24 money in the arbitrage between your reserve notes and
25 your investments on that money. Why is that?
52
1 A. Well, the surplus notes are so deeply
2 subordinated they go into a bit of a premium. Now, if
3 we had to actually go into the markets during 2002,
4 there would have been a whopping premium or probably
5 nobody would have bought them at all because of our
6 financial ratings were under fire at the time.
7 But in a stable market like it is now,
8 we're -- we have a lot of capital. The rating agencies
9 have given us good ratings. So when people look to buy
10 these notes from us now, you know, we'd get a better
11 deal on them. But it still is going to be more than
12 what we could actually invest those proceeds in.
13 For example, the Exchanges always have
14 a -- you know, we've always had a very conservative
15 investment philosophy, so our duration generally, which
16 means -- you know, we invest in bonds that are three
17 years in duration roughly, so we don't make any big bets
18 on things going either way, and so these notes are
19 longer duration, so they cost a little more, plus
20 they're subordinated. So the difference between what we
21 invested in and what we're paying in interest, there's
22 always a difference.
23 Q. And why are your surplus investments so
24 conservative?
25 A. You know, generally we keep -- you know, going
53
1 back to 2002 as an example, you know, that was also a
2 time during a lot of the turmoil in investment markets.
3 The tech bubble had just burst. There was lots of
4 things going on. So we're aware of that, so we --
5 you know, we kind of model our investments in terms of
6 long horizons in terms of what's possible, good and bad.
7 And so we -- for that reason we don't make hedging -- we
8 don't make any big bets on something happening or not.
9 We kind of hedge our bets and keep a very conservative
10 profile, which got us through 2008 in fine fashion,
11 where a lot of our peers had significant impairments and
12 had some problems.
13 Q. You mentioned there's approximately 5.6 billion
14 in the surplus now. Is that across all the Exchanges?
15 A. Yes, that's all three Exchanges added together.
16 Q. And why do the Exchanges pool their surplus?
17 A. Well, the Exchanges all participate in a
18 pooling of interest reinsurance arrangement. We started
19 that in 1985. So it allows each of the Exchanges and
20 all of our subsidiaries, by the way, who participate in
21 the pooling agreement to have a mix of business which
22 includes all the Farmers business. So not to get into
23 any accountant geek stuff here, because I do have some
24 sympathy for my audience, and people would be taking
25 their own lives if I got into detail on this, but --
54
1 THE COURT: It just diversifies your risk.
2 THE WITNESS: Yes. We add all the
3 premiums together at Farmers Exchange and then it gets
4 ceded out to the pooling participants. So each of the
5 Exchanges, no matter what they write on a direct basis,
6 end up with a mix of business that includes auto and
7 home and some commercial. For example, in Texas, if we
8 didn't have that in place, the companies in Texas would
9 have long been bankrupt, but they were able to cede all
10 these losses into the pool, and, you know, Farmers
11 Insurance of Ohio picked up some, Farmers Insurance of
12 Washington picked up some, the three Exchanges picked up
13 some. It diluted it, so we were able to keep them all
14 together.
15 So it dilutes the risk and also helps us
16 manage the capital, because then you don't have -- like
17 the Texas companies would have been, you know, belly up
18 at that point. It actually costs us money to move money
19 around in terms of dividends and different things.
20 There's taxes to be paid and things. So it's a more
21 efficient way of also managing the capital for all the
22 entities. And you can see it in the rating agencies
23 where they rate the Farmers pool and then give the same
24 rating to all -- you know, they have a big list of all
25 the companies and just go down the list and give them
55
1 all the same rating because that's the rating of the
2 Farmers pool. Does that make sense to everybody?
3 THE COURT: It probably helps in selling
4 the notes, too, doesn't it?
5 THE WITNESS: Yes. Yeah, it makes it
6 easier and more transparent to figure out what we're
7 doing.
8 THE COURT: I get it.
9 Q. (BY MR. MINDELL) You testified a lot about the
10 challenges that some of the Exchanges faced in 2002 and
11 2003. Were the Exchanges ever in any danger of
12 liquidation during that time?
13 A. We were very close, yes, if this would have
14 kept going. In our discussions with the California
15 Insurance Department, there was an understanding that if
16 our risk based capital levels -- I'm going to throw out
17 some accounting geek stuff here, but if it fell below
18 250 percent, we could probably count on them denying
19 interest to the bondholders, and that's -- what that is
20 is like they have a minimum level of capital for your
21 liquidated, and we needed two and a half times that at
22 least to stay in business for the surplus notes, and we
23 ended I think 2002 with Farmers Exchange at a
24 251 percent RBC level, and that was after we had
25 initiated a quota share program to take some of the
136
1 REPORTER'S CERTIFICATE
2
3 THE STATE OF TEXAS )
4 COUNTY OF TRAVIS )
5 I, Chavela V. Crain, Official Court
6 Reporter in and for the 53rd District Court of Travis
7 County, State of Texas, do hereby certify that the above
8 and foregoing contains a true and correct transcription
9 of all portions of evidence and other proceedings
10 requested in writing by counsel for the parties to be
11 included in this volume of the Reporter's Record, in the
12 above-styled and numbered cause, all of which occurred
13 in open court or in chambers and were reported by me.
14 I further certify that this Reporter's Record of
15 the proceedings truly and correctly reflects the
16 exhibits, if any, offered in evidence by the respective
17 parties.
18 WITNESS MY OFFICIAL HAND this the 12th day of July,
19 2015.
20
/s/ Chavela V. Crain
21 Chavela V. Crain
Texas CSR 3064, RMR, CRR
22 Expiration Date: 12/31/2015
Official Court Reporter
23 53rd District Court
Travis County, Texas
24 P.O. Box 1748
Austin, Texas 78767
25 (512) 854-9322
Exhibit 2
TO APPELLEES’ JOINT RESPONSE TO APPELLANT GRIGSON’S
EMERGENCY MOTION TO STAY THE SENDING OF CLASS NOTICE
1
1 REPORTER'S RECORD
VOLUME 1 OF 2 VOLUMES
2 TRIAL COURT CAUSE NO. D-1-GV-02-002501
3 STATE OF TEXAS, THE TEXAS ) IN THE DISTRICT COURT
DEPARTMENT OF INSURANCE, )
4 AND THE TEXAS )
COMMISSIONER OF )
5 INSURANCE, )
Plaintiffs, )
6 )
VS. )
7 )
)
8 FARMERS GROUP, INC., )
FARMERS UNDERWRITERS ) TRAVIS COUNTY, TEXAS
9 ASSOCIATION, FIRE )
UNDERWRITERS ASSOCIATION, )
10 FARMERS INSURANCE )
EXCHANGE, FIRE INSURANCE )
11 EXCHANGE, TEXAS FARMERS )
INSURANCE COMPANY, )
12 MID-CENTURY INSURANCE )
COMPANY OF TEXAS, AND )
13 FARMERS TEXAS COUNTY )
MUTUAL INSURANCE COMPANY, )
14 Defendants. ) 261ST JUDICIAL DISTRICT
15 -------------------------------------------------
16
HEARING ON JOINT MOTION FOR
17 PRELIMINARY APPROVAL OF SECOND AMENDED
SETTLEMENT AGREEMENT
18
19 --------------------------------------------------
20 On the 1st day of July, 2015, the following
21 proceedings came on to be heard in the above-entitled
22 and numbered cause before the Honorable Scott H.
23 Jenkins, Judge presiding, held in Austin, Travis County,
24 Texas;
25 Proceedings reported by machine shorthand.
2
1 A P P E A R A N C E S
2
FOR THE PLAINTIFFS, THE STATE OF TEXAS, THE TEXAS
3 DEPARTMENT OF INSURANCE, AND THE TEXAS COMMISSIONER OF
INSURANCE:
4
JOSHUA GODBEY
5 SBOT NO. 24049996
RYAN MINDELL
6 SBOT NO. 24089707
JENNIFER JACKSON
7 SBOT NO. 24060004
Assistant Attorney General
8 OFFICE OF THE ATTORNEY GENERAL
P.O. Box 12548
9 Austin, Texas 78711-2548
(512) 475-4209
10
11
FOR DEFENDANTS FIRE UNDERWRITERS ASSOCIATION, FARMERS
12 GROUP, INC., FARMERS INSURANCE EXCHANGE, FIRE INSURANCE
EXCHANGE, TEXAS FARMERS INSURANCE COMPANY, MID-CENTURY
13 INSURANCE COMPANY OF TEXAS, MID-CENTURY INSURANCE
COMPANY, FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY,
14 TRUCK INSURANCE EXCHANGE, AND TRUCK UNDERWRITERS
ASSOCIATION:
15
M. SCOTT INCERTO
16 SBOT NO. 10388950
NORTON ROSE FULBRIGHT
17 98 San Jacinto Boulevard, Suite 1100
Austin, Texas 78701
18 (512) 474-5201
19 DARRYL ANDERSON
SBOT NO. 24008694
20 NORTON ROSE FULBRIGHT
1301 McKinney, Suite 5100
21 Houston, Texas 77010-3095
(713) 651-5151
22
MARCY HOGAN GREER
23 SBOT NO. 08417650
ALEXANDER, DUBOSE, JEFFERSON & TOWNSEND
24 515 Congress Avenue, Suite 2350
Austin, Texas 78701
25 (512) 482-9300
3
1 A P P E A R A N C E S
(CONTINUED)
2
3
FOR INTERVENORS GERALD HOOKS AND LESLY HOOKS:
4
JOSEPH BLANKS
5 SBOT NO. 02456770
LAW OFFICE OF JOSEPH C. BLANKS
6 P.O. Box 999
Doucette, Texas 75942
7 (409) 837-9707
8
9 FOR INTERVENOR MICHAEL J. WOODS:
10 MICHAEL J. WOODS, PRO SE
8620 N. New Braunfels #522
11 San Antonio, Texas 78217
(210) 822-1560
12
13
FOR INTERVENOR CHARLES O. "CHUCK" GRIGSON:
14
JOE K. LONGLEY
15 SBOT NO. 12542000
LAW OFFICE OF JOE K. LONGLEY
16 1609 Shoal Creek Boulevard, Suite 100
Austin, Texas 78701
17 (512) 477-4444
18 PHILIP K. MAXWELL
SBOT NO. 13254000
19 LAW OFFICE OF PHILIP K. MAXWELL
1609 Shoal Creek Boulevard, Suite 100
20 Austin, Texas 78701
(512) 947-5434
21
22
23
24
25
4
1 I N D E X
2 VOLUME 1
3
HEARING ON JOINT MOTION FOR
4 PRELIMINARY APPROVAL OF SECOND AMENDED
SETTLEMENT AGREEMENT
5
JULY 1, 2015
6
7 Page Vol.
8 Announcements............................ 25 1
9
INTERVENOR GRIGSON'S WITNESSES
10
Direct Cross Vol.
11
PATRICK KEEL
12 By Mr. Maxwell 33 1
13 Page Vol.
14 Opening Statement by Mr. Godbey.......... 60 1
15 Opening Statement by Mr. Woods........... 78 1
16
PLAINTIFF STATE'S WITNESSES
17
Direct Cross Vol.
18
DAVID MATTAX
19 By Mr. Godbey 83 1
By Mr. Incerto 99 1
20 By Mr. Longley 106 1
21
22
23
24
25
5
1 I N D E X
VOLUME 1 - CONTINUED
2
HEARING ON JOINT MOTION FOR
3 PRELIMINARY APPROVAL OF SECOND AMENDED
SETTLEMENT AGREEMENT
4
JULY 1, 2015
5
6 DEFENDANT FARMERS' WITNESSES
7 Direct Cross Vol.
8 SHANNON WHEATMAN
By Ms. Greer 160 1
9 By Mr. Maxwell 174 1
By Mr. Blanks 189 1
10 By Ms. Greer 200 1
By Mr. Maxwell 202 1
11 By Mr. Blanks 217 1
12
13 PLAINTIFF STATE'S WITNESSES
14 Direct Cross Vol.
15 DAVID MATTAX (CONTINUED)
By Mr. Longley 219 1
16 By Mr. Blanks 252 1
By Mr. Woods 266 1
17 By Mr. Incerto 283 1
By Mr. Longley 290 1
18 By Mr. Woods 295 1
19
Page Vol.
20
Adjournment............................... 300 1
21
Court Reporter's Certificate.............. 301 1
22
23
24
25
6
1 VOLUME 1 - CONTINUED
2
3 ALPHABETICAL WITNESS INDEX
4
Direct Cross Vol.
5
KEEL, PATRICK
6 By Mr. Maxwell 33 1
7 MATTAX, DAVID
By Mr. Godbey 83 1
8 By Mr. Incerto 99 1
By Mr. Longley 106 1
9
MATTAX, DAVID (CONTINUED)
10 By Mr. Longley 219 1
By Mr. Blanks 252 1
11 By Mr. Woods 266 1
By Mr. Incerto 283 1
12 By Mr. Longley 290 1
By Mr. Woods 295 1
13
WHEATMAN, SHANNON
14 By Ms. Greer 160 1
By Mr. Maxwell 174 1
15 By Mr. Blanks 189 1
By Ms. Greer 200 1
16 By Mr. Maxwell 202 1
By Mr. Blanks 217 1
17
18
19
20
21
22
23
24
25
97
1 break now. How's that sound?
2 THE COURT: Okay. I'd like a break now,
3 so we'll all break now for 15 minutes.
4 (Recess taken)
5 THE COURT: You may resume.
6 MR. GODBEY: Thank you, Your Honor.
7 Q. (BY MR. GODBEY) Commissioner Mattax, will the
8 payment of this settlement have any effect on the amount
9 of premiums the Exchanges can charge in the future?
10 A. No.
11 Q. Why not?
12 A. Premiums are determined on a prospective basis,
13 so anything that this settlement does with respect to
14 payment of claims will not be able to be recouped, if
15 you will, in a future rate increase.
16 Q. Are the Exchanges now subject to rate
17 regulation in the state of Texas?
18 A. Yes.
19 Q. Can you briefly explain what that means?
20 A. Well, in Texas you have what's called a file
21 and use system, which means you can file your rates and
22 use them, but the commissioner of insurance can
23 disapprove of those rates. And so the Department of
24 Insurance regularly reviews rates, and if they have
25 issues with them, it lets the companies know. So the
98
1 companies can either withdraw their rates or file new
2 rates that are more in conformance with what the TDI
3 actuaries think are appropriate.
4 Q. Is there any way for a rate regulated entity to
5 use a settlement payment such as this to increase rates
6 in the future?
7 A. No, that would not be permitted.
8 Q. Commissioner Mattax, were you in the courtroom
9 when Mr. Woods gave his opening statement?
10 A. For some of it, yes. I was aware that I was
11 about to testify, so I ran out real quick.
12 Q. Did you hear Mr. Woods make a claim that one of
13 his concerns with the settlement is that the prospective
14 rate reduction that has already been given by Farmers to
15 policyholders does not also include the return of
16 management fee that has been negotiated in the
17 supplement?
18 A. Well, if it was a prospective rate reduction,
19 there wouldn't be a management fee collected because the
20 rates wouldn't have been charged, so I don't think I
21 understand the argument. You're talking about the
22 prospective rate reduction that's already occurred.
23 Q. That's correct.
24 A. Right.
25 Q. The concern that Mr. Woods seems to have
301
1 REPORTER'S CERTIFICATE
2
3 THE STATE OF TEXAS )
4 COUNTY OF TRAVIS )
5 I, Chavela V. Crain, Official Court
6 Reporter in and for the 53rd District Court of Travis
7 County, State of Texas, do hereby certify that the above
8 and foregoing contains a true and correct transcription
9 of all portions of evidence and other proceedings
10 requested in writing by counsel for the parties to be
11 included in this volume of the Reporter's Record, in the
12 above-styled and numbered cause, all of which occurred
13 in open court or in chambers and were reported by me.
14 I further certify that this Reporter's Record of
15 the proceedings truly and correctly reflects the
16 exhibits, if any, offered in evidence by the respective
17 parties.
18 WITNESS MY OFFICIAL HAND this the 13th day of July,
19 2015.
20
/s/ Chavela V. Crain
21 Chavela V. Crain
Texas CSR 3064, RMR, CRR
22 Expiration Date: 12/31/2015
Official Court Reporter
23 53rd District Court
Travis County, Texas
24 P.O. Box 1748
Austin, Texas 78767
25 (512) 854-9322
*
Exhibit 3
TO APPELLEES’ JOINT RESPONSE TO APPELLANT GRIGSON’S
EMERGENCY MOTION TO STAY THE SENDING OF CLASS NOTICE
1
1 REPORTER'S RECORD
VOLUME 1 OF 1 VOLUME
2 TRIAL COURT CAUSE NO. D-1-GV-02-002501
3 STATE OF TEXAS, THE TEXAS ) IN THE DISTRICT COURT
DEPARTMENT OF INSURANCE, )
4 AND THE TEXAS )
COMMISSIONER OF )
5 INSURANCE, )
Plaintiffs, )
6 )
VS. )
7 )
FARMERS GROUP, INC., )
8 FARMERS UNDERWRITERS )
ASSOCIATION, FIRE ) TRAVIS COUNTY, TEXAS
9 UNDERWRITERS ASSOCIATION, )
FARMERS INSURANCE )
10 EXCHANGE, FIRE INSURANCE )
EXCHANGE, TEXAS FARMERS )
11 INSURANCE COMPANY, )
MID-CENTURY INSURANCE )
12 COMPANY OF TEXAS, AND )
FARMERS TEXAS COUNTY )
13 MUTUAL INSURANCE COMPANY, )
Defendants. ) 261ST JUDICIAL DISTRICT
14
-------------------------------------------------
15
A PORTION OF THE EXHIBITS FROM
16 THE HEARING ON JOINT MOTION FOR
PRELIMINARY APPROVAL OF SECOND AMENDED
17 SETTLEMENT AGREEMENT
(STATE/PLAINTIFF'S EXHIBITS 10, 11 AND 12
18 AND FARMERS DEFENDANTS' 11, 12 AND 18)
19 --------------------------------------------------
20 On the 1st day of July, 2015, the following
21 proceedings came on to be heard in the above-entitled
22 and numbered cause before the Honorable Scott H.
23 Jenkins, Judge presiding, held in Austin, Travis County,
24 Texas;
25 Proceedings reported by machine shorthand.
2
1 A P P E A R A N C E S
2
FOR THE PLAINTIFFS, THE STATE OF TEXAS, THE TEXAS
3 DEPARTMENT OF INSURANCE, AND THE TEXAS COMMISSIONER OF
INSURANCE:
4
JOSHUA GODBEY
5 SBOT NO. 24049996
RYAN MINDELL
6 SBOT NO. 24089707
JENNIFER JACKSON
7 SBOT NO. 24060004
Assistant Attorney General
8 OFFICE OF THE ATTORNEY GENERAL
P.O. Box 12548
9 Austin, Texas 78711-2548
(512) 475-4209
10
11
FOR DEFENDANTS FIRE UNDERWRITERS ASSOCIATION, FARMERS
12 GROUP, INC., FARMERS INSURANCE EXCHANGE, FIRE INSURANCE
EXCHANGE, TEXAS FARMERS INSURANCE COMPANY, MID-CENTURY
13 INSURANCE COMPANY OF TEXAS, MID-CENTURY INSURANCE
COMPANY, FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY,
14 TRUCK INSURANCE EXCHANGE, AND TRUCK UNDERWRITERS
ASSOCIATION:
15
M. SCOTT INCERTO
16 SBOT NO. 10388950
NORTON ROSE FULBRIGHT
17 98 San Jacinto Boulevard, Suite 1100
Austin, Texas 78701
18 (512) 474-5201
19 DARRYL ANDERSON
SBOT NO. 24008694
20 NORTON ROSE FULBRIGHT
1301 McKinney, Suite 5100
21 Houston, Texas 77010-3095
(713) 651-5151
22
MARCY HOGAN GREER
23 SBOT NO. 08417650
ALEXANDER, DUBOSE, JEFFERSON & TOWNSEND
24 515 Congress Avenue, Suite 2350
Austin, Texas 78701
25 (512) 482-9300
3
1 A P P E A R A N C E S
(CONTINUED)
2
3
FOR INTERVENORS GERALD HOOKS AND LESLY HOOKS:
4
JOSEPH BLANKS
5 SBOT NO. 02456770
LAW OFFICE OF JOSEPH C. BLANKS
6 P.O. Box 999
Doucette, Texas 75942
7 (409) 837-9707
8
9 FOR INTERVENOR MICHAEL J. WOODS:
10 MICHAEL J. WOODS, PRO SE
8620 N. New Braunfels #522
11 San Antonio, Texas 78217
(210) 822-1560
12
13
FOR INTERVENOR CHARLES O. "CHUCK" GRIGSON:
14
JOE K. LONGLEY
15 SBOT NO. 12542000
LAW OFFICE OF JOE K. LONGLEY
16 1609 Shoal Creek Boulevard, Suite 100
Austin, Texas 78701
17 (512) 477-4444
18 PHILIP K. MAXWELL
SBOT NO. 13254000
19 LAW OFFICE OF PHILIP K. MAXWELL
1609 Shoal Creek Boulevard, Suite 100
20 Austin, Texas 78701
(512) 947-5434
21
22
23
24
25
4
1 VOLUME 1
2 EXHIBIT INDEX
3
4 STATE/PLAINTIFF'S
NO. DESCRIPTION OFFERED ADMITTED VOL.
5
10 Jurat; Assets; 31 32 1
6 Liabilities, Surplus and
Other Funds; and Statement
7 of Income pages from the
2014 Annual Statement of
8 Fire Insurance Exchange
filed with the Texas
9 Department of Insurance
10 11 Jurat; Assets; 31 32 1
Liabilities, Surplus and
11 Other Funds; and Statement
of Income pages from the
12 2014 Annual Statement of
Farmers Insurance Exchange
13 filed with the Texas
Department of Insurance
14
12 Jurat; Assets; 31 32 1
15 Liabilities, Surplus and
Other Funds; and Statement
16 of Income pages from the
2014 Annual Statement of
17 Truck Insurance Exchange
filed with the Texas
18 Department of Insurance
19
20
21
22
23
24
25
5
1 VOLUME 1 - CONTINUED
2 EXHIBIT INDEX - CONTINUED
3
FARMERS DEFENDANTS'
4 NO. DESCRIPTION OFFERED ADMITTED VOL.
5 11 Declaration of R. Myhan, 30 31 1
May 29, 2015 (Exhibit to
6 Farmers' Reply in Support
of Joint Motion for
7 Preliminary Approval)
8 12 TDI Reports on Surplus 30 31 1
of Farmers Exchanges
9 (Exhibit to Farmers' Reply
in Support of Joint Motion
10 for Preliminary Approval)
11 18 Declaration of Samuel 30 31 1
Issacaroff (Exhibit to
12 Farmers' Reply in Support
of Joint Motion for
13 Preliminary Approval)
14
15
16
17
18
19
20
21
22
23
24
25
6
1 STATE OF TEXAS )
2 COUNTY OF TRAVIS )
3
4 I, Chavela V. Crain, Official Court Reporter in and
5 for the 53rd District Court of Travis County, State of
6 Texas, do hereby certify that the following exhibits
7 constitute true and complete duplicates of the original
8 exhibits, excluding physical evidence, offered into
9 evidence during the Hearing on Joint Motion for
10 Preliminary Approval of Second Amended Settlement
11 Agreement in the above-entitled and numbered cause as
12 set out herein before the Honorable Scott Jenkins, Judge
13 of the 53rd District Court of Travis County, State of
14 Texas, occurring on July 1 and 2, 2015.
15 WITNESS MY OFFICIAL HAND on this the 16th day of
16 July, 2015.
17
18 /s/ Chavela V. Crain
Chavela V. Crain
19 Texas CSR 3064, RMR, CRR
Expiration Date: 12/31/2015
20 Official Court Reporter
53rd District Court
21 Travis County, Texas
P.O. Box 1748
22 Austin, Texas 78767
(512) 854-9322
23
24
25
State/Plaintiff's Exhibit 10
Texas Department of Insurance
Financial Regulation Division- Financial Analysis Section, Mail Code 303·1A
333 Guadalupe • P. 0. Box 149104, Austin, Texas 78714·9104
512-676·6885 telephone • 512490-1008 fax • www.tdl.texas.gov
STATE OF TEXAS §
§
COUNTY OF TRAVIS §
The Commissioner of Insurance, as the chief administrative and executive officer and
custodian of records of the Texas Department of Insurance has delegated to the
undersigned the authority to certify the authenticity of documents filed with or
maintained by or within the custodial authority of the Financial Analysis Section of the
Texas Department of Insurance.
Therefore, I hereby certify that the attached document is a true and correct copy of the
document described below. I further certify that the document described below is filed
with or maintained by or within the custodial authority of the Financial Analysis Section
of the Texas Department of Insurance.
The certified document consists of a complete copy of pages 1, 2, 3, and 4 of the
Annual Statement, filed by FIRE INSURANCE EXCHANGE, as of December 31, 2014.
IN TESTIMONY WHEREOF, witness my hand and seal of office at Austin, Texas, this
24th day of June, 2015.
DAVID C. MATTAX
COMMISSIONER OF INSURANCE
*~ 'cr---
BY·.AMYGARA
ASSISTANT CHIEF ANALYST
FINANCIAL ANALYSIS
. "": ~ . . .·.·•
~--~~~~--1~1~1.1:~~~~-2~·----~~~-
.~IJIOfJ.~Oillct ·4&80Wil!hlia'~
·.(Sii'Cel:arid.~ ...
-~J:
p~~~q~~!,tt~
·- · -. . .
-C~«~SII!a,~and~.C«fe)'.
p;Q.Box¥02
(amtMIL~~P.Q.!!~
(Aiea_ ~t) (T~pliDjlo N~)
Weodland HillS •.CA: US :91'365
j.
- . .. ~li!jei!irCA<US'!KJ0.1(t
~i····
· ·~a.Cclcla~ ITGIOPfiori4 ~., ·
:~.-
ofFICERS
. GdN!!na!l!: .
.. .. . .. totch~ ..
a. II INS an origlnai tiling? ....................... Yes( X J Nol }
b. nno.
FebR.UII)', 2015 1. ~' ~.. amendment n:.nnbet.-. _
:;, Oallt111od ........ .
3. IIIU!Ill)er 01 pago& allachlld .
Keith Et.ldns.tlil)':e
I1IOYeml:el1. 2D17
·o:rcor 01 A~F;~c;t ••eo:lrd 01 Govo!T'Or& A IICCa'Y ~.lblic: or O'JIII' olfocor "'"pletllg lr.is cenif.caw ~..,on;
a. lder:l·:'f Ill :1W ~ IOhO I'QMC lhe CICQmer.: to 10"*1\ ri't
c:enlfQ~~t I allac:h«, -.d t"C:I h ~'\l:hU-va. liOCOo.lr8C1, C< ~
ollloaiOOOIIllllfll
by.
(1) AofhGn'l Jj!F!!ft!i Qt!Sunli!!
Pf.a~tc.tUCt-
proved to me 0'1 tile beSI$ ol sa!islactory evidence to be
the person wno appearad befc:11 me,
a1111
.•~....:}~.,ua~s:;_~e.L!:I'foo~r_ _ __
(2J _ __.o~Pf!!;io
pioved lO ~r.e on lho basis of ntisfDC'Uiry eo~idence to be
e\0 person Who appoated befot'o me.
al1d
(3) Ron;)'d Gf!lQQf)' Myt!i)n
...-.cts.,-
provect tc me en the basis of subslocwry evidence :o be
lllo perscn "Ai!O appeared Dofo-e mo
ANNUAL.STATEMENT FOR THE YEAR 2014 OF THE f'IRE INSURANCE EXCHANGE
ASSETS
...
·1~ ~~:o, -------,-,..,.----,--~--S~)Z..· 21i11,688t-...--..,...... .__...,.._...Jm!OIJ'.,.~;a;......,....,....,...~-iM..,",'jij;,'M2
~ :;=:i:=
:22~:~-~.------~~~----~~--~--l~--~--~r----------r--------~r-~----~
"'--:---''---~----__..;..;---._:__~1----1.o12,ss1.639 t----''-----....;..-I-.__.....~;CJJ2~1;B:If -..;.;_~_,ou;~.*
3_:. ~rz.uarvai·~~B):.
i2.~:~-...~:·· ..
4.. Real estate (SchecUe A):
4.1 PRiperlles OCCI.IPed by thG company (laaa $
enc:umlnnces) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ + ____,:tM,432 1---------- t-_ __....3K
....,432
4.2 Pnlpelfas held fer u. prodUcdon of b:lomo (less
s oncumbranccs) -------·t------1-------t------t-----
4..3 Plqxw1fes held fer saJe (1esa $
encumllrallces) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-I----~11.31S t------ t-----~lJ1.,31S t-----115,141
5. Cash($ _ _..s.225~,(1Jl,fi!IS ,ScheckdoE·P81t 1).cashequlvalents
($ , Schodulo E- Past 2) and shi:IIMarm
lrnleGner1Ss ($ _ __...13.714,188 , Sc:heclllo DA) ----lt----"7.1t-,811,874 1------ t----"~-.811,874 J---....11Riluo,,058,.!11)
e. Connc:aJoans(lnc:lullngS pWu~nno;es>-+------ r------ t------t------
7. DerlvaiMs(Sc:heduleDB)------------1----- r - · - - - - - - 1 - - - - - - - - - - 1 - - - - -
8. aherlnvestodassaiS(SdlociloBA) _ _ _ _ _ _ _ _ _ _ _ _ -1------- t------1-------1------
9. Rac:ciMIIiafarleCUitllcD _ _ _ _ _ _ _ _ _ _ _ _ _ _......_______ I - - - - - - t--------1------
10. Soculllos lerdngl'8irMisUidc:ollaterlll assecs (Sc:hcDJio 01.) _ _ _ _1------- t------1---......;_---- a----·5.2t1,3D
1t. Aggragslowrllo.fnsfarlnwiAidassds---------t----- r------ t------1------
&lbtGials. Clllh and lnvo$ted assets (Unes 1 to 11)------+--1.754.045,!M9 1------ --1.7&4,045,949 _1,849,&17,192
12.
13. 11&la plants loa. dmlgecl oft (lor TIUo Insurers
only) -----------------·------1-·----- t------1------
14. hlesfrnanllncomacbt andaccrued----------f---3,079,000 1 - - - - - - t----·3.019,010 r---3.517,187
15. Pnlmi&lns and COII:slduiaJiuiias:
15.1 Uncolloded pramfuma and aganiS' balances In tho course of ................
~'1-_ _ _ 28,008,559 1----..J
§,519,-429 ",519,131 1----..17,,814,755
15.2 Deferred pombDs, agonls' balances and lnslalmenls booked bul
deferred and notyi!C cbt (lndudlng$ _ _ _1,448,068
eemedWW~b~Jodpaniums) _ _ _ _ _ _ _ _ _I----'"Ml""'•093•500 1 - - - - - - ----2f1.093,58» J---....i"Al~,444,CIJ5
15.3 Accrulld ~premiums 1111,951 180,951 119,331
18. Ralnsunlnca:
18.1 AmcultsrectMiW8bl& from relnsul'als ---------,l----181,932,·t14 1------- ___187,932,474 t----184,413,599
18.2Fundalleldbyrxdaposlledwl!hralnsulad c o m p a n l o s - - - - 1 1 - - - - - 1------- t------l------
16.30dleraro:uDnalvablaunderrafns&nncecanrracla _ _ _ - t - - - - - t------- t - - - - - - 1 - - - - - -
17. Amountsl'el:8lvatllorela!fngl0unlnsuredplans _ _ _ _ _ _ _ i--·---
r------1------1------
18.1 CUmlnlrederalandlon!lgnlncometaxi8CC'IIInlbleandlnterasllhereon _ _ 6,802,247 1-------
t----·8,802,247 . __ _...
:V.,158,918
18.2 Nelc1Gterred111x111$81 :M,s:B - - - - - - 8,53& 17,351.910
19. Guatanlyflnb racalvablo OTCift depOIIl 108,214 106,214 1 - - - - -
20. Elecrrcri:dalapocesslnQ ecppmcntand s o f t w a r e - · - - - - - 1 - - - - - 1------- --·---- 1------
21. FumfturD and Gqll!pmenl, lnc:lud!ng hoallh cate delivery assets
1.1 ) - - - - - · - - - - · - - 1------1------ t------ 1-------
22. 1----·-- 1 - - - - - - 1 - - · - - -
Hal adjuslmelllln assols and l!ablltlosduo to lorelgn exdlange rates ____ - - - - - - · -
23. Rocclwblostromparent.IAJbGidlarlosandaftlla:Ze$ --29,424.648 t----- ___29,424,648 t--_ _.m,...656,882
at. Health care 1.1 .. ) ando#ler amounts receivable- • --------· - - - - - - 1------
25. Aggregate write-Ina lor olher than lnvosled assets-----·---·--··- __... 20.l!02.507 · · - · · - - - - - - _ ____20,l!02,507 _ _ _15,716,210
26. Tolal assets CD:duclng Sepatafo Accounta. Segregated AccoCin1s and
Protected Cell Accaunls (lJnes 12 to 25) - - - - - - - -.........~ __.J.,'1JJ7 ,265,671 _____ 5,519,429 _..2,281,746,242 _ _ 2,254.162,187
a. Fmn Sopatate Accc~unU. Segregated Accoutlt8 and Protected cea
AcccuU------·----------·--·-- - - · - - - ,_..____ ------1-------
28. Total IUnes 26 and 27l 2 287,265 671 5519429 2 281 746.242 2.254 762 187
_____ ____ _____
DETAILS OF WJUrE.INS
1101. -------·-----·--·-·-··-···------··..--. ··--------·-- ·-·--····-·..··--··--·· .... . ..
------·-----··--·-··---·-..--·-·-··-····-·-····-· ··--·-..----· -···---··-···----·· ·--..---- ----·--
_____ __
1102.
1103. ----------··..---·-·--··········-············-··--·· ................. _..____ ·····-··---..·------··· ··--·--··----
~- ..
1198. Summary of remolnlng wrllo-ins for Une 11 from overflow page ..· - - -..-· · · - - ·..··-··-········ -······--····-····---· · · · · · - - · · - · - - - - - - - - · - - ·
U99. Tocals (IJnes 1101 thrU 1103 dus 1198)(Une 11 above)
2501. f~Jiilies an3 ckposils in pool& and IS&OCialicns ............................._ .•.... ··-···-·-..20.202.507 ·--·-··--··----·· ____20,202,507 ,_ ____15,716,2111
2502.
2503.
2598. Summary of remaining writo-ins for Une 251rom awrftow page ..-·-·--···· -··-·····-·-····-····- •.. ····-·---·----·- · · - · · · - - - - 1-·-·-----·
2599. TOials (llnes2501 thru 2503 plus2S98){Une 25 aboVe) 20,202,507 20,l!02,507 15,776.210
2
ANNUAL STATEMENT. FOR THE YEAR 2014 OF THt. FIRE INSURANCE EXCHANGE
.·LiABILITIES, ·suRPLUS,ANo- OTHER ·FuN·os
. ·~-.r~.,.~ra!t·~~~~~.!l.:· .. · ·. · · ·
. 2; .. ~-~$*1pa.tcl.~~)!a~~~F.P.~1.;Column6),_
· · --------r-.,_...·_.·:. . .::.;: '. ··_·:.~::l:_._·
3! ~~-~~~~~~~~-~&f-····· :. . . " .... ···. 150!313;915· ~153.7~~-.m
4.. . ~-~-~~andolherslmllard*go.s.,..._':"'""'".-~..,.,..-~~~~...,.-~~--.-.-:---~ 1----.------.
~ . C~tWUpens8s c~ t8Xcis;~8ridtoea)-'-"-..;.;..;;_.;.;.;-...-...-:...--:.--~----;_..--t..-~-'---1,03);n&~ . ·w,392
8,\: ...-~~~c~i.balancikQ!gnlncancttiDea, 4.1M1;isil..___--..4~~281·
·7:t. ~fadii~-~~~-~~s· ·..-. :. .- .... onrea!bodcapilalgalns (IQsaes})-.....,...1--,...,__..,.._,..,. .,...,.,..,.-:""'~~-
. 1~. :Ne#~~Ja:~·.:;;:,···;.;,.;··:.; .· . .;.·;._-...;.·-~··.;:.;.~·~·-~·...:··.=...·~.!..;__:..::.:....:....;.._.;..:..;.....:..:....;..:__;...~~__.;.~..;_..;.;_~.;.;.--.;.;.;.;._;;.:..;__
8. 8cnDwed money$ and lnlDrasllheruori$ - - - - -
9. Uneamed prenlbM CPwt 1A. Una 38. Cobnn 5) Culler deducllng unearned JX8IIIkJms klf ceded roJnsurance of
s ___2,515,382,563 and JncJudk1g warranty I8SeMIS of$ and acccued accident and
hoallh expodenco ralllll rebldslncludrng S far medlca.lloD rD11o ~ porlho Public Hoallh
Servlc&AcO--------------------------t----=~.784.451 1--449,7119,719
10. Advllnco pernlum 1R,473,200 -11,004,278
11. DMdends doctanld and lq)Q1d:
11.1Stockholdeni-------------------------+------1------
11.2Palqtloldela _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _, _ _ ___.231,743 ZD,743
12. Codod relnsunlnce premUns pa)l8blct (net d coding commissions) ~.833,3n 1----'1-:10l,768,5M
13. FundshDklbyccmpanyunderranurancofntalles (SchedtD F, PaltS, Column 19) 154,005 1,415,002
14. AmounZa 'dhhold or retained by company ror accxxn or Cllllare _8,755
·~ ~and~~~---------------------------------lr----------~--------
18. Provlslan tarrelnswance(lncblrv$ C8I1IJiod) ~ F, Part 8) ---------1--------"~~;QQ<:A,791 1--__.,",718,754
17. Nea adjustman1s In assets and llablllllesdueto fonJlgn axchangD rates _ _ _ _ _ _ _ ------4i------t--------
18. ~~-----------------------------------------------+---------~--------
19. Payablotoparent,subsktlalloaandallillaUis _ _ _ _ _ _ _ _ _ _ _ _ _ ----------·-+----- ~-------
2D. ~-----------------------------------------------~~--------~-------
21. Payablotorsoc:urlltos---------·-----------------··--1--~~.393.347._______
22. Payabeebsoadleslendlng _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-+------1---.il"'..211,300
2L ~=~~wdw~~---------------------------------·1----------~---------
24. C.apltalnolol s
and lnlenl:sl1henl0n s -----
~ ~~tar~----------------------------------------~--~~~M~3&~3$~~·~----~7~~349~
a Tolllllabllllaexdudlngpratac:ted callllatllllltos (Unos 11hraugh 25}--------------------1---1,5m,&96,042 1--1,533,507,991 •
28.
~~·~-------------------------------------------1---------~--------~
8. Tocallablllloa(Lbos28and21) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _._ _-JI--•·s10,&96,012 1-1,533,507,991
29. ~wri!e-lnslcr speclalaurplua funds-------------------· · - - - - - · - - = - - - 1 - - - - - - - -
aa ~~~-----------------------------------------------~---------l----------
31. Prelenudcapllaletoc:k _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _l-------- J--------
32. Aggnlgalawrile-lns tar oltwlhanlplldal SVIplus funds _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __,__ _ _ _ _ _ J--------
33. Surpluanokla---------------------------------·- ___100,622,050 ____159,622,050
~.
ss. ~~~ud~~--------------------------------------1·----------·---------
Unassigned funds (GUip!us) _ _ _ _ _ _ _ _ _ _ _ _ _,
-----------·- _ _610,428,150 1-----"AAtiUI,632,139
38. Less lreauyltodc, at cost
38.1 sharos common (value Included In Line 30$ --------- )- - - - -------
38.2 lharesJQlenud (value n:tudedln Line 31 $ >-----11------ 1--------
37. Surplus as rogants~ (Unes291o 3S,Iess 36) (Page 4, Une39) -·----------···--·1---_.:.:Tl:.:..l::::050~200~_ _.::72:.!11::::254~189~
38. TOTALS CPana 2. Uno 28, Ccl3) 2,281.746 242 2,254 762,187
DETAILS OF WRITE-INS
2501. Claia:s paymtls aadD af1er dlla-pracessing close_ •98.403,048) ___(101,943,419)
2502..thcalhcd drafls and chec:lcs pending cscheaiiiiCnl -·----------~·-···-·-·-·..- - - · - - - · · - ______ 51,568.507. _ _ _52.390,190
2503. Acccmts payable .__32.748,5112 ____ro,:li0,459
2598. Summary of remaking wriiCHna ror Uno 25 rrom overflow page--·--·····---···------·-·---····--···---······... ·--·---···(201,396) ___.,.43,043,881)
'_2599~
T«"als RJnes 25011tw 2503 Dlus 2598ltuna 25 Bllcvel IM 289 356) 1 763 349
2901. ·-..·-··----·-····----····-·--....···---·-··.. -········-··--·-····..·--·--···-- ----·..·-····-······-- ·-·--·-----
2902.
2903.
··-------··--·--·--·--·-------·- -··----·- ------
2998. Summ81Yol remaining wrfto.lns lor Uno29 from overftow page--------..--·--·------·-·-- -·--···------- ------
2999. Totals runes 2901 IJIIU 2903 Dlus 2998lltlne 29 abovel
3201. - - - - - - - - - - - - - · - - - - - - - · · · · - · - · · - · · - · - · · · - - - - - - · - - · - · · · · · · - - - - · · · · - · - · - - · - · - · ---·-········---- 1 - - - - - - - - - - 1
3202. ---------------·-·-··- ..-····-----·-·-·····-·····-···-··---...........................- ..........................._ ......................- ............ ·······--·-·-·······-··...
3203. -·--·------------------·-······"·-···---·--·--·····-·---..-·--··----··-····- -··----······-·------ - - - - - - - - -
3298. Summary ol remaining wrlfo.lns fat Une 32 from overftow page···------·--··-.......................................-·--··············.. ·-·---- .................................._ ..... ·-···-·-·····-·-·-····
3299. TOials rUnes 3201111ru 3203 dus 3298}(Une 32 abovel
3
ANNUAL STATEMENT FOR THE YEAR 2014 OF THE ARE INSURANCE EXCHANGE
STATEMENT OF INCOME
UNDERWRmNG rHCOUE
1.. ~eamod(Part1, Unit35. CcbM 4l.__.._'-----------------"-----'-"--+-.;...;.J·t,018,&97,5118 f..o--1.029,332,282.
DEDUCTIONS:
.2o LOsses JnC:urred (Palt'2, Lfne 35. Cdtmn 7)--..·_ _....__.;....;...;~--'~-.;..____.;'-'---'--....;.;;..~~...-....J-..__~grrDI,73:J,6l& 1;17,181,-MS
3. taa~8ilpiii'IS8Sincurrild(Past3.Lht25.CCb'M 1} . 102,432,128 ~1,284,96t
4. OChw~~·lncUrrad(Pwt3.Une25,Cdumn2) ~--143 ·'li<I:~SI;OM
·s.· ~~b~dcKlli:dons 1518115) .
a.·. ToeDI~~{on.21twaugh5) . 1~ rs:m · 1 oa 7111.61
~ ::::::~~~==)~.-~-·~·-,-mna~.---u.~e~~~Une~~~~--~-~-~-------~---~---~-~-------------~-------~-~---~~-------~----~~~-----
,, . 'm.m.185)~,..448;m)
IHVESliiEHT INCOME
9. Net lnvestmantlncome eamod (&hlbft ol Nat Investment Income, Uno 17) _ _ _ _ _ _ _ _ _ _ _+ ___ 4,8]8,218 I-8,2Zi,IJ18
10. Net realzed capital gains or (las&es) less~ gains tax o1 $ 50,187 (Exhlbll of Cap!!al
~~)) ____________________________________-{___ _11~~~~-~·3G~----_!9~~~W7~
11. NetlrMis:lmllcl1galn(loa)(Unes9 + 1 0 l - - - - - - - - - - - - - - - - - - - - + - - - - = » " , f f i i , $ 1 a - -_ __.171 ,511,CS!
OTHER INCOME
12. Net gain (loss) flam agent1' or premium balances charged oft {amount recovarud
$ 619,785 ~chargedoft$ 8,299,157 >----------4----ln4,619,3l2)·~--·"n,8!15,232)
13. Finance and 60Mco c:hargcs nollncludeclln premiums 18,818,320 17,195,1fi8
14. Aggragale wriiD-Ins for mbcallaneous Income 7. 1:B,9111 1,193,(61
15. Toralalta'Jncome(Unes 121hnlugh 14) 18,015 929 11.093 !m
18. Natlnconlo bBfcn dMdoncls 1D poac,tloldcn, after capllal gains tax and bu1ole ol olher loclcmd and foralgn Income taxes
(I.Ns8+11+16) 3,192,311 U,19:J,413
17. DMdlndsfDpalqtlddera . 43 140 7l.1115
18. Net lnccmo. allot dlvldencii1D pollc:yhoCders. eliot capllal gains tax and beforo all olhor todenll and IDnllgn lnc:omG taxes
(LN18mhlali1e17) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.._ _ _3,749,1711---M,12D,168
19. Federal an:llarelgn Income fBXDs lnlunld 13.018 2131 1 410 841
20. Nellncomct (line 18mlnua LinD 19)(1D Une22) _________,___________ 1---..!!8~7fri:!!!'J!!
,·444~1-----!12~109!!!J:9'li!!!....J
CAPITAL AND SURPLUS ACCOUNT
21. SUrpeua as regards~ Decamber 31 prior year (Page 4, LbJ 39, CoUnn 2) 1?1,254,189 1---...IOFRI....,,218,256
22. Nellncome (fnlm Une 20) - - - - - - - - - - - - - · - - - - - - - - _ _ _8,187,444 1?,JIS,927
Zl. Netln1nrlfenl(1o)from ProtecmdCelacc:ouniBi _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ +-----J-----
24. Oalge In net unrea!tzed capllal oalns or (lcmes) less c:apllal galna &al( of S _ _ _ 12,971,161 ------1---...!.!42,631,854 ~--;;;JOI\R,132,331
25. Changelnneturnallzedtaralgnexchangoc:aPial galn(loss) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~---- --1-----
28. Qlangefnnetdalemldh:omolalC '4.021,272) 1,9:9,562
'ZI. am.., fn nonadmllted asseiS (Elchlbll of Nonadmitted Assets, Line 28, CoL 3) ----------f--~".CITl,fiJ7 {152,111)
28. OlanQe In~ for relnaurance (Page 3. Line 16, Column 2 minus Column 1) 3,118,963 i-----f2,128,131)
29. Oa1go In SUIJIIus I1CICBa 1,1m,OOJ __J13,7m,CXX!)
30. SurJilus (CXillblluf8diD)wllhdtawn fiOm prul8ded calla _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-1------ 1------
31. CWnulallv8effoclolchangosln~plndples--------·------·---~----- ~----
32. C3flbl changes:
32.1Pmdln--------------------·----------·------------f--------~-----
32-2Transfemldfromsurptus(Stock DIYidand) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -1------ ~-----
~T~ID~------------------------------------1---------~-----
33. Surplus edJuslmenta:
33.1~fn-------------------------------·-------I·----------~------
33.2TransbrodiDQIIllllll (S1rlek0Mdend) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.__ _ _ _ _ ~----
33.3Transfemldfrcmcapltal ______________________________,_.••________ - - - - - - - - · - - - - -
34. NelremiUanca fromor(fD)HomeOillce---·----------·---------- t------ ~----
35. DivldendsloiiOC:Icholdcn------·-----·····------·--------·---· · - - - - - ~-·---
S6. Change In 1reasury IIDCk (Paue 3, Unea S6.1 and 36.2, Column 2 minus Column 1) - - - · - - - - - - - - - - - - - · - - - - - - - - -
Aggrugalewrite-lns for gains and losses in surplus _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.J_._ ___J(!,!2.=!842~4&'5!2ij_ _~2~842~'8~
1--·-----
:rr.
38. Chango In surplus as regards polcyholders for lhD ~(tines 2211nclgh 37) -···---······---·---·-··-··-·-J.--_.;::49:.:.::,796=0:.::10~---=59::..r.03S==!m=-l
S9. SurJ11ua as regards J)CIIic:)tiDida December 31 current~ (Une 21 plus Uno 38) (Page 3, Uno 37) 711,19,200 7l1,254, 189
DETAD.S OF WRfTE.UIS
0501. Pooled sfalo ot I.R) progrm IIICOIIC --·--·--····-------···---···-···-·······-~-··-··-··-·--··-·-·-··--·--··-··- _ _ _ (518, 115) 1---·---
0502. ------------------·---·-··..---·-·-----··-·········------ ------4 ------1
0503. -----------------···-······--···---------·-----·----·-···-··-------·-···- ----·---- ---·----
0598. Summary of remaining wrlle-lns for Une Slrom overlloW page--·······..···-·--..........................--··--·--·---····· ..·--·-····· - - - - - - - - - · - ·..· · · · - - -
0599. Totals (lines OS011tlru 0503 dus 0598XUne 5 abow) (518 115}
1401. lliscellancaus inca10 -----··--·-······--····..---················-·-·······-···-:...........-····--······-····-··-··-···---- -·-----·-·7. 135,9111 1--·····..-1,193.056
1402.
1403. ·-·----------·----·····--···-··· ......------·············---··-··-·--··-··-·"·---··· ..·--···-·..··-·-----·- ··---·----·-··-1--------
1498. Surnmary of remaining write-ins lor Une 14frurn overflow page .................................................- ...............- ............ ··-·······.. ·· ··-····-·······-·····--·...-... --··----···--·
1499. Tolals (lines 1401 lhlu 1403 J)lus 1498)(Uno 14 above) 7, t35 !liD 1,193,056
3701. Pooled share of ~~~authorized reinsurance .........·-····-..··--·-········ ......................................................... - ......... ------..··· ·-·-·-·-- (2.842,4&'5) ···--·-......2,842,'8
3702.
3703. ------··----··-·-···..··--·..--············ ..····---............................................._.. _....................................... ········--···----··.. -·--·------·-·-·-
~
3798. Summary Dl remaining "Wflle.ins for Line :r71rom overftow page ..............................................- ...............................- ............._ .............·--··-- -·-·······--·---·--
3799. Totals rUnes 3701 fhru 3703 o1us 3798l1Une :r7 abovel (2 842 485) 2,842 9S1
4
State /Plaintiffs Exhibit 11
Texas Department of Insurance
Financial Regulation Division • Financial Analysis Section, Mail Code 303-1 A
333 Guadalupe • P. 0. Box 149104, Austin, Texas 78714-9104
512-676-6885 telephone • 512-490-1008 fax • www.tdi.texas.gov
STATE OF TEXAS §
§
COUNTY OF TRAVIS §
The Commissioner of Insurance, as the chief administrative and executive officer and
custodian of records of the Texas Department of Insurance has delegated to the
undersigned the authority to certify the authenticity of documents filed with or
maintained by or within the custodial authority of the Financial Analysis Section of the
Texas Department of Insurance.
Therefore, I hereby certify that the attached document is a true and correct copy of the
document described below. I further certify that the document described below is filed
with or maintained by or within the custodial authority of the Financial Analysis Section
of the Texas Department of Insurance.
The certified document consists of a complete copy of pages 1, 2, 3, and 4 of the
Annual Statement, filed by FARMERS INSURANCE EXCHANGE, as of December 31,
2014.
IN TESTIMONY WHEREOF, witness my hand and seal of office at Austin, Texas, this
24th day of June, 2015.
DAVID C. MATTAX
COMMISSIONER OF INSURANCE
BY:~~
AMYGARCI
~~
ASSISTANT CHIEF ANALYST
FINANCIAL ANALYSIS
~
~
PR9PERTY AND CASUALT'( CO~P.AtJIES·· ASSOCI,I\T[ON EDI110~
AN.NUAL STATEMENT
FOR THE VEAA"ENDE[) DECEMBE~:S1. 2014
OF ntE CO~IDmON ~D AFFI\IRS OF THE
FARMERS INSURAN.CE EXCH.ANGE, FARMERS GROUP INC., DBA:
FARMERS: UNDE.RWRITERS· ASSOCIATION, ATTORNEY-IN-FACT
NAicGflr..,OodL\ . Ooo9 _qgg:_ NAIC:(;~COdt ..m2L Emp!OyWsiDNurrilier GS-2575893
~~ (Priol)
Organlud.Uildcu lho I..Awt « Callbnla State of Doltlicilo or PDit Of Enlry Callrctria.
Co!mtrvofllOmldio Uliiid Slatei or Amedca
lt!eOrporaiedfOtgmllzQd _ _ _ _ ___..:0312811==jj:l:::B:..__ _ _ __ Comm!IIICedBualness _ _ _ _ _ _0410611=::::::..:.:928=-------
S1af&r.ary Heme Ofllca '46!!9'Wilslilnt BGufova.iij Los An!Jilei CA. us 90010
I
(StrQot and Nu~be!), (City or Towm, Slalu, COUnllyand Zip Coda)
Los'Ansel!s. CA. ys 900to
'(CIIyorTavm. s~. C:O\If'IIIY.8nd.Z.PC'ode) (Area CodoJ,{Telepliono Number)
P.O. Bole 4402 woodianct HlDs • CA, us st3~
(strailfarid NUmbGf' or P.0.. BGx)
Prlm&IV~ of E!Oaka and Reeordl
(CitY. ~·Town, smra. C:Outmiand2lp Coda) (Area Coda~ (Tolcphono Nunibllt}
lnramat Wet!Sifo Address
(FAXNumbol)
OFFICERS
PrealttoCJt;ceo _ _ _ ___..:Jetlt!!r=::.u;Jom::.z:.:=::Dal!!y=--·-----
~ry~~-----=~~n~E~WAA~o~~~N~-----
Q1H:EIJ
Sooa RotietU.Indqu!st= CFO TI8&Wnll
DIRECTORS OR lHUSTEES
Alan Roy Gltincri_..o .,
Dalo Anne MM!n -
Donn!!!l Reid "
Sl!@i Rtr!Smil!l ••. CJ:IIoJoe!Wallace••. Jclm Ts!JeQiao Wuo ·~
Sllltocif
Caunlyof
Cilfllorilia'
----~lcs~Anqe::==,.. =------ :ss:
Doron Eug$\1 Hohl
President. CEO So=rllal)'
a. rs :his an original l!~ng?. _ ................
SU~cribed and sworn to before me this b. 11110,
February, 2015 .
~- t, S1alo tho amerdmonl numbot........
Eaki~Public
131b 2. Oalo li'cd .................................
3. N\lfllber of paQe, attactaL.
Kolltt
November 1, 2017
'OIIic:er ot Allomct)'-ln-F~w. ••Board ot Gavemors
by,
(1) ,Jeirmv Jolin Qnfr.r
"-"'IVW
PfOYBd to mB on tllB bBSis of sotislactory evidence 10 bo
lho person who oppoered before me,
~~··
~
.
KEITH EAKINS ·eo·
Commission 112044162
. NotarY Public • California I
I and
C2} Qpmn Euggno Holll
-d~
J •
i o , o ,MJ co~m. EXf':• Nov t.02~ttl
los Angeles CCWI11 :!: prolted to mo on l.'lo bosis of sallsfactory evldenco w bo
tho person who appoarod beloro mo.
and
proved to moon tile basis ol satis10d0ry evldenoo to be
lhe peDon who appeun~d bef«o rno.
ANNUAL STATEMENT FOR THE YEAR 2014 OF THE FARMERS INSURANCE EXCHANGE
ASSETS
1. Bonds (SchecUe D) _ _ _ _ _....,-_ _ _ _ _ _ _ _ ---5,724,078,561 t - - - - - - - ___s,J24,078.,$1 __.,_5,857,4St,10B
2. Sioc:ks (Schedulo D):
2.1 Preterredstoc:ka..____ _--'_ _ _ _ _ _ _ _ _ +------ t------ t------ t - - - - -
2.2 Commonstoc:ka _ _~-----------+---"·953,346,148 f----4!953,348, M8 r---4.8,147,747
3. Mmgage loans on real atazo (Sc:hackde B):
3.1 f l r s U e n s - - , - - - - - - - - - - - - - · - - 1 - - - - - t - - - - - - - .__ _ _ _ _ t------,___,.
3201hertlm,tlnitllens'-----,----------+-···--- t-------~ t - - - - - - t--..,--.....,...-
"· Real eAite ~A):
4.1 Properties OCCIIpled by tho company (less$
enc:umbrances) - - - - - - - · - - - - - - - - · - - ____...Ji3,4m,211 - · - · · - - - - - ___ _..fi3,481,211 _ _ _64,961,329
42 Prqlerlles held for tho producllon of Income (less
$ ~>-------t-------- t - - - - - - - - t - - - - - - - - r - - - - - - - -
".3 Properlles held tor sale (les8 $ - - - - - -
encumbrances) _ _ _ _ _ _ _ _ _ _ _ _ _.._ _ _ _ _ 162,253 t - - - - - - - - t----162.253 t------_.ll..,tl,,3110
5. Cash($ __(184,8911,847), Sc:hoGJie E • Patt 1), cash oquWalenta
($ , Schedulo E • Part 2) and shorHerm
lrlveSnera ($ _.114,181,4&0 , ScllociJio DA) (10,537 ,387)t-------- t----1nn,,u,537 ,381) f----,{262.543,3:11)
6. Corlactloans(lncludlng$ pamlumnolea).-- - · - - - - t - - - - - - f-·----- t------
7. Derfvallves(Sd1ecluleDB)-----------+------ t------ t-----'38...,.,,245 t------
a. OthorlnvestDd 8laata ~ BA) ~.cm.ffil t - - - - - - t---.J.~ON,093,ffi1 t--..10~-:.s,125
9. Recelvableforsocurllles ·- t---........143,821,815 _,. _______ -~.821,875 r---1,900,048
10. Securltios lancing reiiMisled c:o11atera1 assecs (Schedule 01.) _ _ _ _ · - - · - - - r--48,649,018
11. Aggragalo wrb-lns lor lnwsted aasala t - - - - · - - - --· 585, '100
12. Sublc1als, Clllh and lnveltod aas®s (Unes 1 to 11) . _ _ 10,944 ,442. 718 __,.______ t---.10,944,442, 718 r--10,401,4SI,87S
13. Tille plants - $ dtatged oft (far Tlllo lnsutars
14.
~
lnveslmentlnc:amedueandac:auad
..- t - -..-·..- - - - --.. -----1------- t--------
...45,500,823 __,.___ 1,907,738 --~.673.015
'---45,554,837
15. Premiums and consldela11ons;
15.1 llnc:laQec:tQd pumtuma and agen1s' balanoea In tho courBG of c:oliDdlorl .~.:m. 113 _38,1114 ,059 l----2<42,313,115 I----J18,954,113
dafarrad and nol,.
152 Defemld premiums, agents' balancos and lnstallmenla booked but
cbt (Including$ _ _ _9,977,1J12
Gamed butunbilled pumiums) _ _ _ _ _,_ _ _ _ _ r--2,658,697 ,015 t - - - - - ~.658,697,015 __2,832,768,906
15.3Aa:n.ledratrospedlllepamlums ____1,248,m7 :-1,248,m7 1,ZJ1,387
16. Reinsuranclt:
16.1 Amounls J8CIIMir8ble from ralnsunn - - · - - - - - · - · - _ _ J00,348.745 t---·----- _ __JIXJ,348,745 _ __642,CXI5,215
162Fundaheld byordeposlredwllhrulnsuteclcompanJes _ _ _ _t - - - - - t------ r - · - - - - - t - - - - - -
16.3 Other amounla I8CeiYalll& under ralnsunlnca conlnlda_ ........ _....... t---·----- t------
17. .Amountarecelveblo relallng to uninsured plans.. ...... - - - - - - - ___.._ _ _ _ _ -·----
18.1 eumn fadanll and fonllgn Income eax
recoverable and lnlaresllheraon _ r---taS.mz
,562 11fi,m2,5&2 _ __!i64, 116 m.
18.2 Neldofemldtaxassat _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _..:413,845,01!1 ___..._57,969,981 :----...'li5,875,005 _ _...311,812,248
19. Guaranlyfundaracelvallloorondeposlt _ _ __322,591 - · - · - - - · r----.322.591 ~1.791
20. Bac:rronlc data prucesaiv equipment and software 1-· !M8,401
21. Fumltur& and equipment, lnc:ludng health cant delivery assota
(S ) - • ----22.805,416 _ _ __.22,805,416 - - - - - : - - · - - - -
22. Nal ~In assets and llablldes duo 10 fonlign exdlange rates ___.. __,._____ -·------
23. Rec:elwiJio$ from parent, GUbsldlalfes and allllltdes _____149,926,887 .............._______ _ ___..149,926,887 - - - - - - -
24. Heallh care($ ) andOihef amounts receivable_ t----·..· · - - - - - - · - - - - - - - - - - t-------
25.. Aggregate wrila.fns for Olher lhan lnve&ted assets--------............
·-···-...638.033 ,922 --·--.....229 ,457.548 _ _ _a.s76,374 __,__;m,m,CSJ
28. Total assets exduding Sepatato Accounta, Segregated Acccunts and
Ptoteded CaD Aocoun1s (Lines 12 to 25) -- _ _ 15,941,531,594 ____350,224.741 _ _ 15,591,316,853 _15,557 ,125,612
'0. Fcom Sepatale .Accclunts. Segrega1od Accounls and Prolected Cal
Accounts ..._._ ..____________......... ----·-·-·-.............. ·-·····.......___,..........._ .._____ ....,...._ --------
28. Total tUnes 2S and m 15,941.531,594 350,224.741 15,591,316,853 15.557 125.612
DETAILS OFWJUTE.INS
Other Invested assets - - - - - - - - - -....·-----..- ........ _ ............_ ........................................... - .... --·----........_ ......- ....._.585,1SJ
1101.
1102.
1103.
----------·-------------..- ,. __ --
......................... ..·-··-----.._____ ,._ ---------
1198. Summary ol remalnlng wrtle-ins tor Uno 11 1rt1m overflow page .......___ .. ..................................... ...- ..........--......... _ .._____ ..._ ..___ ..... - .....- .........._.
1199. Totals 1Unes 1101 ttwu 11031)1us 1198)(Une 11 abcMt) 585 160
2501. ln:uance-o:apany omed I lie Insurance-ash value . -............................ ____;100,591,384 --·-·---·-..- _ _ _;100,591,384 I--·-..;161,449,4ZI
2502. &siness-omed I lie insurancH:aSh value ·-··~-..------···--·····- .._ ..........11.494,813 _ ...............- -..........- ..............17,494,673 - ........... _.J6,347,629
2503. Garanly ftiiCis reco-mable/policyhJider surdarge~ - - - -......... ----··-·-490,117 ._ ............._ _......... - · - · - ·....-490,117 ---·---··..· - ·
2598. Summat)' of remaining writo-lns for Uno 251rom OYOO!ow page ___...... .._....... 229 ,457,548 ·-····oo•o..229. 457,548 .......... ,_____,.,_____ - ............- .........__ _
2599. TOials(Unes25011tuu25031)1us2588)(Uno25abcMt) 638,033,922 229,457,548 G,576,374 m.197,5
~
'
2
ANNUAL STATEMENT FOR THE YEAR 2014 OF THE FARMERS INSURANCE EXCHANGE
LIABILITIES, SURPLUS AND OTHER· FUNDS
1. t.osaos(Part~~~.~~__,....----,_,....,...,...-.....,.,....,..,.----__,..-------f~~_a..,.,311,193,666 ~U6i,S13,tis1
2. Refnsutarlc:e payable an paid 1csaes ai1d loss~~ (Schedule F, Palt t, Column 6) lm,!IIK,395 .1Rl,821J,IM8
3. LGaadlustment~<Pari2A,·t.m35.Coiumn9) · · .:· .~1,043,783,m2 .:...-.-:.1,008;147,431
... ~payable. COI'IIIngentoommb&lonsandalhar slmlfarchmgos.,.... -----------··-----1--.,....--.,....--.,....-----,
5. Olber exPenses (eici:ludlng taxes; licenses and t8es) 16,121,595 _13,892,686
a Taxos.llcansel and fees. (e=ludlng federal and fotaign Income taxao) 'l!i,351,8s2 ~13,162, •
7.1 CUrrent federal ant foreign lncamD taXes (InclUding$ - - - - - on reallzecl capilal gains ( l o s s o s ) ) - - - J - - - - - - 1------
72 NOtdoiuntld tax llabiity..;.·~_;.;._;_...;:.;.._.;.;.;;._~~......;.~;._;.;..:..._;.;._,_......;._,_'"_..;._ _ _ _ _ _.;__ - - - - - ~_,;......;....;.._; _ _,.,;,;.
8. Bcrrawed money$ and lniDr8St thereon$ - - - - -
9. Unoamed prvmlum$ (Part 1A. Uno 38, Column 6) (atlor doduc;1lng unoamod premiums lor ceded relnsuranco ol
$ ____8,008.574, 710 and Including warranty raseMIS of$ and acccued acc:ldont and
hoallh experience rallng refunds Including $
fer medical loss rallo reba%8 per the Public Healltl
Selvlce.Act) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _,_ _ _ _ _ + __ 3,351,714,702 1-3.103,621,189
10. Advance premium ",265,1ZJ f----78.550,520
11. OMdends declared and unpaid:
11.1 Stodcholdefs _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.__ _ _ _ _ J------
112 Pollcyholdera . _ _ 1,592,124 1,592,124
12. Coded RJ!nsur'llnce pranWms payable (net of ceding commissions) --643,1(6,957 ~.637 ,100
13. Funds held by company under ralnsuranco Walles (Scheclde F, Part 3. Column 19) _1,958,000,711 l____2,444,950,f11/
14. Amounm wllhhelcl or ru1a1nec1 by company ror accaunt ot Olhera _ _ _ _ 2 ,811.749 3,589,936
15. Aomlllances and l'lem8 nol allccaled 27,188,3)1 'ill,749,835
1e. Provision ror re1nsunu1co (Jncldng s CGI1IIIocl) {Sc:tlcdlle F, Part 8) - - - - - - - - - ___ __!!6,874 _ _ _ _ _st,113
17. Net adjustments In assail and llabllltlaackJeto rotalgn exchange ra!el------··-------1--·---- ..______
18.
19.
Dmb~----------------------------------l---------~---------
Payable 10 parent.subsldlarlos and aflillatos_._ _ _ _ _ _ _ _ _ _.._ _ _ _ _ _ _ _ _ _ - - - · - - - _ _61,496,129
2a ~--------------------------·-------------------------+----------~------
21. Payablel'oraecurlles-·-------------·-------··--------~-----=M,836,853 ...__ _ _ __
22. Payable rcr securllies lending _ _48,649,076
23. Llabllityforamaunlsheldooderunlnsuredplans _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _._l-_ _ _ _ _ 1------
24. CapltBlnotea$ - - - - - andln1erest1hefoon$ - - - - - - - - - - - - - - - - - - · - - - - -
~- ~~ror~-----------------------·---------1----~~~m~m5~-----~~1~~~s~M
28.T0181 Dal:lllftles excluding III'OI8C*ld collllatilllfes (1Jnos tlhnlugh 25>---------..
------··-1-.11,0,1150,909 r--11,677,404,569
~- ~cd~----------------------------------------1~--------~--------~
28.. Totalllabllliea (lms 28 and 27J------------·- ·----·---·----t--··11,«S,850,009 r--11.1177,404,519
29. Aggregale writcHns lar apodal aurplus funds. 45,649,976 f - - - -45,849,978
3a ~~~-------------------------------------------~--------~-------
31. Prefuntldcepftelatodl _______________________________ ----------· J - - - - - - -
32. Aggregafowrfle.lns lcrolhet!hanspecial surplus lunds ----------------------+----- 1-------
33. Surpluanotes ______________________________.__________ _2,004,536,999 I-1,845,472,CXlO
34. Grosspaldlnandc:on!ribuledsurplus __________________________ - · - - - - - I - - - - -
ss. Unasaignodfunds(tuplua) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _,_ _ _ _ _ f __..2,131,268,969 f-1.!!88,599,127
38. Leas treasuly stock, Bl cost:
36.1 shares common (value Included In Uno so S
36.2 lhlws preferred (value Included In Line 31 $ ..__ ) - - - - - - - - - - - - - - - - - - -
:rr. Surplus as regards pallc:)'tlolder (Unes 2910 35,1esa 36) (Page 4, Uno 39) - - - - - - - - - - - · - · · 4 181,455 944 3 879 721,103
38. TOTALSIP-2,Lino28.Ccl3) 15,591,DI,853 15,551' 125,672
DETAILS OF WRJTE.INS
2501. Claim payants mde after dal~racessing close . _ _ _ _ (ZT7,707,112)~255,184,491)
2502. Accanls payable----·---·-·-·---------·---·-..- ...··-·----·-···--- .,____184,:m,094 f--·--3)1,251, 113
2503. lh:ashed cltalls and c:hec:ks pending esdleabralt - - - - - - - · - - - -..- _ _ 44,818,294 f-.-.-33,100,100
2598. SUtnm81yof remaining wrfte.lns for Uno 25 from CMiftlow pogo - - - - · · · - - - - · · · - · - · - _ _ 89,729,009 _ ___77,918,192
2599. Totals fUnes 25011hru 2503 ne 25 above\ 41, tn 885 57,173 514
2901. haeue cb! to SSHJ MG. tm net delerred tar ·--··--..· - - _ _45,649,918 _ _ _45,649,918
2902. ···--.................._ _ _ _..__.._________,....._ _ _.,__..................._,_,...............- .............._.......-......-..............- .._..__,..,_......__ ····-··--..-·-··-·--
2903. ·--·------------·-·- ----·--- -----·--
2998. Summmy ol remaining wrlte-ms for Line 29 from OYBI'flowpoge - · · · - - · · - - · - - - · - · - · · · - -..· - - - · - - - - - - · · - - - - - - - -
2999. Totals runes 2901 ttvu 2903 plus 2998)(Une 29 above) 45,649,976 45,649,916
3201. -----------------------·-----------·-..·--·····-·--·- - - - - · - -----..-
_ _
·------·-..·--..--..................... ....-....... ...._.___ .. ..__ ·--··--··..·--..·--...... __ ...........- ........-.
3202.
3203.
3298.
·-------------·--··--·--·..·-----·-----·----..·-· -·----- ,_
Sunvruuyol remaillng wrlle-lns lor Une32 from CMII'!Iow page--··----------·-·------·-- --·---- - - - - · -
, ,
.. ___ __
,
3299. TOials CLines 3201 lhtU 3203 plus 3298)(Une 32 allow)
3
ANNUAL STATEMENT FOR THE YEAR 2014 OF THE FARMERS INSURANCE EXCHANGE
STATEMENT OF INCOME
UNDERWRITIHG INCOME
1. Premluma earned (Pall1, Line 35, Column 4·'--------------·-----+--..J7,Q29,CIIS,663 ~.102.421,194
DEDUC110HS:
2. l.ossaslnc:urrad(Part2.Lino35.Cclumn7) _ _ _ _ _ _ _ _ _ _ _ _ _ _,_ _ _ _ _ _ _,__a,918,93B,312 ___4,049,141,132
3. Loss adJustmenl11lCp8118881ncured (P8113, Line 25; Column 1) 1M,464,165 fDl,131,&19
... Olhet undelwriUna 8'1p1111S81lncumld (Part 3, Une 25, Column 2) ') .533.848,001 ~.452,012.572
5. AggregafewritH!s fatundolwrlllng dclcltcllons ~3;575,409)~·- - - - -
8. Total~·~ {unos21hnlugt1S).;..__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-i---L:.7·!!155!:!!.~615~.~14!!1.L--.!7!.!,199~321~,9!B12:.J
7. Netlnccmeofprotectedcella;.;_...;_...;.__ _ _ _ _ _ _ _ _ _ _,____ - - - · - - - - - - ' - ; - - - - - - ~----
8. Net undenwllfng ~or (loss) (Uno 1 minus Une 6 pluu Line 7) '126,589,418) f----....L96,!m,1UI)
INYESTIIEHT INCOME
9. Net lnves1ment Income eamecl (Exhibit of Net lnwstment Income, Une 17) ----·-·-·..· · - - - - · - - - · - - f---.J4,382,58D r-___102,28UIIB
10.
Gains (losses))____________________
Net realized c:apftal gains or (losses) less c:apllal galna tax of S _ _ _5,!113,419 (Exhibit of Capllal
9 135 750 f28 1123438)
11. Netlnvostnenlgaln(losa) (Unes 9+ 1 0 ) - - - - - - - - - - -..- - - - - · - - - - - • - B 3 , 5 1 8 , D ._._ _J7't~,461,310
OTHER INCOME
12. Net gain (loss) lram agents' or premium balances charged oil (amount recoverud
$ _ _ _4,22!1,513 amounldtargedoll$ ___57,282,163 )-·---------~·--~52.9811,250) ~.046,228)
13. Ananco and aorYieo c:hulgos not lndudod In pr'CiftiUns 114,668,410 1---122,190,182
14. ror
Aggregate writtHna miscellaneous 1nc:ome (73,066,4:&) (41,138,127)
15. TOialolherlncome(Unes 121hrough 1 4 ) - - - - - - - - - - - - - - · - - - _ _ _ _,_ _ _...,:f~.:.11:.&::BI=..:2l9:::.:,c~lf--.....:ll~lm=:•=821:!..1
1
18. Net lncame beloru dividends 1o polleyholdenl, alter capital gains tax and before all olhcr federal and foreign Income taxes
(llnes8+ 11 + 15) ~54.457,431)1---3,567,019
17. DMclendaCO~ ---------· 2971iD 501 6112
18. Nellncomo, aftof ciMdencb to pollcyholdera. aftof capllal gains tax and before all olhot fedeiBI and lorolgn Income taxes
(Uno 16 minus L.klo 17) · - - - - - __J54,755.11l6) .__ _ _3,Cii5,411
19. Federal and hnlgn 1ncomo caxes 1nc:urrac1 ..·----·-·..·-----··· l'!il,m 4111 cs1 938 rm
20. Net Income (lfne 18 mlnul Line 19)(10 Une 22) 2.412 316 55 001.924
CAPITAL AND SURPLUS ACCOUNT
21. SurPus as ragalds pallc)t1oldals, December 31 priol year (Page 4, Une 39, Column 2) -·----·----··..··----·--·-···· ___3,819,121,103 1--3,150,799,663
22. Nellncome(lrom line 20) ..- - - ·..··---····--·-..- - - - - - · - ___2,412,316 .___55,003,924
23. Nellranstera(to)from Prolec18dCel ~------------·------..· · - - - - - - - - - - - - - - - 1--·---·
24. Change In net unrealized caPial gslns or (loaes) less capital gains tax or s __.._7 ,125.829 ... _ _ _169,505,714 1.':11,148,192
25. Change In netunuallzadfaru91 exdlange c:apltat gain (lOss) ------------+------ 1------
.......
r
26. Change In nut defomld h:ame tax .....- - - - · - - - · - - - · _ ___{8,1Xll,194) _ _ __(18,623,126)
27. Qlango In nanadmiUed assets (Exh!bll of Nonadmllted Assets. Line 28. Col. 3) ---I24.444,629) l-----l7,361.&)
28. Qmnge in puvlslon for relnalrance (Page 3. Line 18, Column 2 minus Column 1) -·····--·--..-·..· · - - - - - _ _ _ 14,2:9 I-·--_JI,662
29. QlangelniiUIJIIUSnat9S · · - - - - · - - - - _ _ _J59,064,999 l____j38,318,CXIO)
30. Surplus (contrlbutadto)wllhdlawn 11om p'Ot8Cled cella _ _ _.._ _ _ _ _,_ _ _ _ _ _ _ _ _ _ _ +----·- 1 - - - - - -
31. Curnulallw elfect ofc:hangos In accounllng principles · - - - - - · - -..-·....________, ________ 1-·-----
32. Capftld changes:
32.1 P a i d ' " - - - - - - - - - - - - - - -..- - - - - - · - - - - · -..---........_ _ _ _,.. - - · - - · - - · - - - - - -
32.2Transterred from surplus (Siock Oivldand)-----------·-----·------1------ l-------
f--··-----
32.3Transfemldtosurplus _ _ _ _ _ _ _ _ _ _ _ _ _ _ _,_..._, ______..,..._ _ _ _ _ ..- - - - - · -
33. Surplus adJu,slmen18:
33.1 Paid In - · - - - - _ .._ _ _ _ _ ~----
33.2 Tranaterrud to c:apQal (S1ock OMdand) ___________..._ .............--···-·-.........- - - · · - - ....- ....· · - - - f---..- · - - -
33.3Tranalemld llomcapllal .......· - - - - · · · - · -.._ .. _ _ _ - - - - - · - 1------
34. Not remitlances from or (CO) Home Office .....---··-···--.. ---···-·- ·----- 1-·------
35. Olvldendstosloekholdets - - - - - - - · - ·..- - - · - · · - · · - - ·.....................- . - ·..·-----·-·- - - - · - - · - r - - - - - - - -
36. Change In lr8asUJy stock (Page 3,1Jnes 36.1 and 36.2. Column 2 minus Column 1) - - - - · - · - - · · - · - · - - - - - - - - - - 1-------
37. Aggrega~o wrifo.lns ror ga1ns anc1 1ossea rn surp~us - · - - -..······--·-·--·····...- ............................._··········--···J---~3•..,::t52:::.c!!M~--.....::3:a.:1.:::19~531=-l
38. Qutn;e 1n surplus as regards pollc:yhcldefs ror lhe l/981 (Unes 221hrough 37) ----·---..--·--·....·---·---·-.. J---=::31:.!:1•.t:734~840=-+---=128=92:.:1~440~
39. Surplua as rugards pa(lcyt1olders. Oec:ember 31 curren1 year (line 21 plus Line 38) (Page 3, Une 37} 4.181,455,944 3,819.721,103
DETAILS OF WRIT&IHS
0501. Pooled shuo af LJD ptagru inca~~e - - - - - - - - - -......................_ _ _ _ _·-·-·------·· ____j3,575,409)1-·------
0502. - - - - - - - -..- - . - -..···--··--···--·-·...........- ..........................................................................._ ...............~ ·-·--····..--·--·····- f--··..··....- ........- ..
0503.. --------------------····-···-·····..·-·-····----..··-··--·-..--..... -------- -··------
0598. SUmmary of remaining wrlt&-ins for Une 5 from overflow page---·..·-·-·-·--..-·-····· ......_ .............----·········--.......- ...... ··-----··--···--·· -···-·-·----··--
0599. T01als fllnes 0501 thru 0503 Dlus 0598KUne 5 above) 13.515 4(&)
1.W1. lnletesl ~ an hnls held···-·----··---·----····----........_............................___ ..... - .......__,169,320,922) r--·-.....169,057 ,841)
1402. Uiscollaneous (CJpCnSe)/incc:mc ···-·---·--..- ...................................................................................................·-······-··-.. .. ...._ .........12,673, 128) ................ 28,219,498
1403. Prmiu;s for ~ I ife insurance - -..·----....................... _ ...............................- ......................... - .. ·-··-·-·-11183.058) 1--·-·--(121,673)
1498. Summary of remaining write-Ins lor Line 141ram overflow page .........................................................- .................._................... •...- ......._ ... ( 189,332) _ ................... ( 178,711)
1499. Totals fl.lne$ 140111w 1403 plus 1498)1Une 14 above) (73.066 4:&) 141138,727
3701. Pooled 51are of II'RUlhorized reinsurance .........- ...···---............._ .............._ ....................................-··----·-·.. ·····--·- ....______2.312,314 ______.._JJ14,429
3702. Net proceeds lrcn ~wned life insurance ..............- -.......................................................................................................- ............_JJS0,6110 ___ ............2.315,091
3703. - - - · - - · -.. --··----······--·-··---·-..···---·-···--·-·.........- ........................................ "····---··· ............. ·---··..··-······-- -·--..- - - · - - -
3798. Summary of remaining~ tor Line 371rorn overflow page .........................- -........................................... _ ........................._ ..........--.........- _ ..........._,...._ _ _
3799. Totals fllnes 3701 llw 3703 Dlus 3798Kllne 37 abovel 3,152 !!14 3 119 531
4
State/Plaintiffs Exhibit 12
...
., ...
Texas Department of Insurance
Financial Regulation Division- Financial Analysis Section, Mail Code 303-1A
333 Guadalupe • P. 0. Box 149104, Austin, Texas 78714-9104
512-676-6885 telephone • 512-490-1008 fax • www.tdi.texas.gov
STATE OF TEXAS §
§
COUNTY OF TRAVIS §
The Commissioner of Insurance, as the chief administrative and executive officer and
custodian of records of the Texas Department of Insurance has delegated to the
undersigned the authority to certify the authenticity of documents filed with or
maintained by or within the custodial authority of the Rnancial Analysis Section of the
Texas Department of Insurance.
Therefore, I hereby certify that the attached document is a true and correct copy of the
document described below. I further certify that the document described below is filed
with or maintained by or within the custodial authority of the Financial Analysis Section
of the Texas Department of Insurance.
The certified document consists of a complete copy of pages 1, 2, 3, and 4 of the
Annual Statement, filed by TRUCK INSURANCE EXCHANGE, as of December 31,
2014.
IN TESTIMONY WHEREOF, witness my hand and seal of office at Austin, Texas, this
24th day of June, 2015.
DAVID C. MATTAX
BY~~~ANCE
.AMYGAR
ASSISTANT CHIEF ANALYST
FINANCIAL ANALYSIS
PROPERTY AND CASUALTY COMPANIES• A$SOCI~TION, EQO,'IO.N
ANNUAL STATEMENT.
FORTtfEYEARENDED DECEMBER.91~2014
OF Ti-fe CONDIJlON AND AFFAI~ bFTI:IE
TRUCK INSURANCE EXCHANGE, TRUCK UNDERWRITERS
. . , .ASSOCIATION, ATTORNEY-IN-FACT
NAlC ~ CoCb _!!Q§!L J!!§!_ NAIC cCmpany Code 2;709 Employel'tl iD Number
!Cilirtmf lPIIOI)
Oiganlzod inlet the Laws of ------.::Celli=OI'I'la=--""":":'-:-~~S!ato ci:Domicile cw Port of Entry California
QN~d~~ -----------------~~~~s~~~·~o~lkM~m~~--------------------------------
CDfllrnEtneed Business _ _ _ _ _ _ _..::021051=:.:'=935~--------
li'.c:O~---------..::D21D&=:.:1::935=-·- - - - - -
Siilluttlly Homo Olfibd 4660 Wllshir. Bou!tvaJd
(SII\iet and Nl.itnblr) (City D1' Town, ~te. Counlry and 21p Oc1clo)
~ A!!C!!les ,'CA. us 90010
~9f!Y at Town, Stakt, COullUY&hd ~Code)
Malf Addrella P.O.b4g WOOdland Hllls i OA; USS1365
(Sirl:el and Number or P.O. Box)
PrlmfJY~Qna(B.!Io~~f!~. 4680 WilshiiO Boulevard
(Stttlt and Numbor)
to. Ani!!!!!. CA. US90010
(FAXN!Imbo~
OFFICERS
::::.r...::Jam==:!!~De=Santls=~!.lt-1- - - -
Pi:a&iden1 _ _ _-..:JAmhony=· CFO, TrCCJ~un:r _____---:R:.::o~nald=.;;O:.:.!'!QO!Y::a::~mn.~:::::.-----
~ --------=Dof:::':.:lt'I::.:EPa!::':x::.!IO::.'.:.z:HoHc:.._______
OTHER
SCotl RObert llndgui!1' ·Vlco Preside Ill
DIRECTORS OR TRUSTEES
KeMoltiWavn! Biln!l!ty •• Fmnlt Anthor.v Bonotto .. Thomas David Brown"
Roi'IMI L!e Mam:no~• G!uy Randolph !!arl!q ••
OtllD Joel WJIII&ce ••
s:a-.oot C.llfamla n..
-------,Lcis~.::An!M'="·=-Itt=-.- - - - - So:10;
CaUnl.Yor
Doron Eugeno Hchl
Socra:ary
a. Ia lllis an original fiUng? .. ·-. Vos( X I Nr.[ I
b. Hno,
Ftbruary. 2015 1. SIII!D the Dlllendment 11\lmber.__ .....
2. Oats filed_. ________ _
3. Number of pages attached....._._..
A Alllll)l I'W~ or olhltd.le« ~ting t'Acmib1e vw~~~ Orir ..
!he lclal:lly of !he imMcu;t whl siP1.,. dC:u"nent 10 ~ lt:h
c:Ditlo'lcalelsalla:md,andr,OIIIIlo~ ~. 01 ~OI:dly
af lhul doaimlnl
b'J,
(1l Amhonv Jllmtl! DeSumis
1& .
000
KEITH EAKJNS
on
Commission# 2044162
nsoo:
~
provod to mo on !he basiS of sa:lsfedory evidonce to be
lho person who eppaar11d before mo,
~
:
· Notary Public - ~ilamfa
Los AngeltJs·~ounty .
J.. end
(2, Oomr Eugsns Hohl
j • ·; •. . rorm. N'r:s-NoY 201tl
JA'J 1.
,._CIIS;grw,
proved m 1'118 on lho bosls ol S!JIIsfectoly ovlder.co to be
Cho perscn who appoarcd befOfo mo.
and
(3)_!!~--·
MlmodS;nct
provt!d to mo on the basis of solisfDC!Ory evidence to be
tho pefSOtl who appeared before mo.
ANNUAL STATEMENT FOR THE YEAR 2014 OF THE TRUCK INSURANCE EXCHANGE
ASSETS
"'
" 1.
2.
~(SchecllleD) _ _ _ _ _ _...,..__ _ _ _ _ _ _
SlockS (SdledUie D):
__B55,5ff1,573 t - - - - - t--.--.JJIW>~,.51J1,573 t--..J7M
__ ,448,863
2.1 Prafemldllocks.....__ _ _ _ _ _ _ _ _ _ _ _ _ ~------- J------t------ ...,_____
2.2Cciinmonsroc:ks _ _"--_....;.;..._ _....____.______ I---Jlll,109,260 t------- t--_,71r1...,,.109.29) ...,__..~1liiR.g,,89S,Oto
3. Mol1gage kiana an J8lll as1ata (~ 8):
3.-1 flnltllens.-:.-:-.--~--:--:------------11----- t - - - - - - t--:------ t------
3.20bw~a.~~----~-------------+-----t--------t---------t---------
.... Real es&ldo (Sc:hetit A):
4,1 Pluperllos occ:upled bot Ulo company (leas$
enc:umtnnces)--------------~---_.J•J:R,122 · - - - - - - 1----...89!1.122 ...,__ _..,.~m_,-142
4.2 Properlles heJd for Ulo production of Income (less
$ encumbrances) -------t------- J------1------ t - - - - -
4.3 Prop8l1les held tar sale (lesa $
encumbrances) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____ ,._54,161 - - - - - · - _____ _54,161 - 294,234
5. Cash($ ___(81,187 ,111), Sc:heckdo E- Part 1), cash equlvalen1s
($ , Schedule E • Palf 2) and shorHerm
lrMI&Irnanb ($ ---14,195,598 , Scbeclllo OA) - - - · f---(41,571,515)...,_ _ _ _ _ ,..___(41,511,515) ~31,594,019)
6. Ccnnlictloana(lnduclng$ pamlum notes)·--·----- t------ J------- t - - - - - -
7. Dllrlva1Nes(Sc:hedule0B) ________________ - · - · · · - - - - - · - - - - - - - - - - t-----11,815
a Olharlnvosllldassaiii(SchecUoBA) _ _ _ _ _ _ _ _._ _- f - - - - - t - - - - - - 1 - - - - - - - ...,_ _ _ __
9. Recelvalllotarsecurllles • ----8,450,000 - - · - - - - - _ _ _ _8,450,000 - - · - - -
10. Securllles lendng reinvested collateral assets (Schedule 01.) _ _ _ _ - - · · - - · - - · - - - - - - - ___ _:11,553,538
11. Aggregale~ for Invested assets -·----- t------
. ------·-
12.Subto1als,caahancllnvoltedaatota(llnos1 to 11) •.____________1,591,52B,906 - · - - - - · · - - ··--1.591,528,906 _1,496,410,583
13. 11Uo plants less $ dlarged ott (for Tlllo lnsunn
ont,) . - - - - - - f----·--·-- - - · - - - - - - - · - - -
14.. lrlvo5fn'lnlncomecfueanclaccrued ...• 4,637,185 - - _ _ 4,631,185 f--·--3,968,743
15. Prumlums and cansldenl1lons:
15.1 Uncollededprernlumaandegenls'balanceslntflocourseofc:ollectlon _ _,.-33,008,740 t----·5,703,409 _--Z/,905,331 t----,.4:;?11,200,938
15.2 Deferred prumb'ns. agen1a' balances and fnstallments booked but
This text is long and has been trimmed here. Open the source document for the complete record.