HISTORY AND MISSION

Temporary Services Insurance Ltd. (TSIL) was created to meet the needs of businesses to obtain adequate insurance coverage at affordable rates. The founders of TSIL perceived that the commercial insurance industry was not responsive to the basic insurance needs of the staffing industry.

Through numerous meetings, consisting primarily of typical business owners, TSIL was formed in 1993. With the assistance of Captive Resources’ experience in the formation and ongoing administration of offshore insurance companies, the original members of TSIL sought to create a more customized, affordable insurance alternative. In forming TSIL, the goal of these business owners was to increase buying power and allow member companies many of the same advantages of control generally afforded to only the largest of companies.

The mission of TSIL is to provide the highest quality insurance protection and services for its shareholders. By bonding together to create true sharing of risk, the shareholders can control their insurance costs and avoid the volatility of the general insurance industry. Additional benefits are created through the increased assurance of coverage, the stabilization of premiums and the improved management of risk through effective loss control.

TSIL, through the active participation of its shareholders, will endeavor to provide the long-term security of a well-managed offshore insurance company. To meet this goal, only those providers of services that can meet the highest standards of excellence shall be associated with TSIL. From the very beginning, only known experts in their respective field of insurance support services were used in the formation of TSIL.

The philosophy of TSIL emphasizes that insurance is a manageable cost. Through the understanding of insurance as a business, TSIL shareholders have unveiled the mystique of the insurance industry and the indiscriminate nature by which costs are determined. Based upon this simple yet powerful concept, TSIL has grown to a company approaching $70,000,000 in annual premiums in almost 15 full years of operation. Through ownership in TSIL, shareholders have indeed taken control of their insurance destiny.

STRUCTURE AND SHAREHOLDERS INVOLVEMENT

The company is licensed and managed in the Cayman Islands to reinsure risks from the issuing insurance company, Zurich American Insurance Company, that is licensed and provides coverage in the United States. The type of coverage written by TSIL is Workers’ Compensation.

The company requires that each shareholder also appoint a director to the TSIL Board of Directors. Every shareholder, regardless of premium size, has one vote. A simple majority governs. TSIL shareholder responsibilities include controlling losses, participating in board meetings, and educating other high quality companies about the captive concept. Management strength lies in a strong committee structure and the individual involvement of all directors during frequent meetings held both in the Cayman Islands and other locations outside the United States. Presently, the committees and their primary responsibilities are:

	Executive.  Comprised of officers, committee chairpersons and designated members at large. Focus is to develop long-range plans for the company based on strategic analysis.
	Finance.  Review the company’s interim and audited financial statements and monitors each member’s compliance with their financial obligations to the company. Also advises the board on policies for the investment of the company’s assets.
	Underwriting.  Advises the board on desirable risks to be assumed and ensures that these risks are adequately underwritten.
	Risk Control.  Sets loss control goals for the members. Reviews the ‘watchlist’ and works with members to meet the required loss control and claims management goals of TSIL.
	Membership Development Committee.  Develops new strategies for membership growth. Also assists members in educating prospective candidates about TSIL and the benefits of ownership.
	Nominating Committee.  Recommends to the Board of Directors future officers and committee chairpersons for a two-year term.

SUPPORT STRUCTURE/RESPONSIBILITIES

There are many component parts of a successful program. TSIL uses the best professionals, each with a defined set of tasks, that as a whole create the best program for its members. This set of professionals encompasses the following:

	Captive Resources, LLC. (Consultant). The consultant, as an independent contractor, has the ultimate responsibility to the Board of Directors to see that all decisions of the Board are carried out by its support structure members. They are involved as a nonvoting member in all executive meetings and assist the President and Executive Board in the planning of these meetings.
	Gallagher Basset Services, Inc. and Risk Control Services, Inc. (Loss Prevention Services) Serious emphasis is placed by the shareholder insureds within their own companies on good loss prevention practices. It is realized that through good loss prevention, claims can be prevented, which directly lowers costs in the captive. The Company has its own Risk Control Committee, which develops standards and goals that members must strive to achieve. Gallagher Basset and RCS are hired as an independent contractors by the Company to periodically visit each member’s facilities to assist in achieving these standards and rate, on a point system, a shareholder insured’s progress toward these goals.
	Arthur J. Gallagher Houston/Tampa, The Holmes Organization, McElrath & Parrish, Mesirow Insurance Services, Inc., Millennium Corporate Solutions, Odell Studner, Security Insurance Services, Silverstone, Wachovia Insurance Services and WILLIS-GA (Insurance Brokers). The insurance broker, as an independent contractor, is responsible for all insurance aspects of the Insurance Program including coordination of policy issuance, billing and premium collection, placement of coverage not available in TSIL, and certificates of insurance.
	Kensington Management (Underwriting Manager). The underwriting manager is responsible for managing the day-to-day operations of the company and is, therefore, located in the Cayman Islands. This primarily consists of managing the financial operations of the company and accounting for all financial transactions. They also prepare and maintain the corporate and statutory records including minutes of meetings and advise the members on developments in insurance and fiscal matters as they affect insurance companies in the Cayman Islands.
	Zurich American (Fronting Company). The Program Insurance Company issues the actual policies that “insure” the shareholders of the Company. The Fronting Carrier is a licensed and rated insurance carrier, which takes care of all the legal requirements of providing insurance for the shareholders.
	Zurich American (Aggregate Reinsurance Carrier). The aggregate reinsurer assumes risk of loss after an overall aggregate amount of claims are borne by the captive. It receives a premium for its participation in these layers and pays all claims thereafter.
	Zurich American (Specific Reinsurance Carrier). The specific excess reinsurer assumes the risk of loss excess of $400,000 per occurrence level.
	Pinnacle Actuarial Resources (Actuarial Firm). The actuarial firm, as an independent contractor, takes historical loss and exposure data supplied by the shareholders and compiled by the broker and, after trending and developing this data, sets a “loss pick” for each member upon which the member’s final premium is based.
	Gallagher Basset Services, Inc. (Claims Administration Service). The Third Party Administrator utilizes its national network of adjusting professionals to negotiate and settle all claims against its shareholder insureds.
	McDermott, Will & Emery (Attorney).
	Pricewaterhouse Coopers (Auditors). While the financial reports are prepared by the Cayman Island managers, Kensington Management, they are audited by Pricewaterhouse Coopers in accordance with U.S. generally accepted accounting principles.

PREMIUM DEVELOPMENT

TSIL has developed an experience rated formula to be used in calculating a member’s premium for each year. It is primarily based on a member’s expected losses for the upcoming policy year, as projected by the actuary’s review of the member’s claims and exposure history.
The following is a brief outline.

	The intent of the formula is that each member pays a premium to fund for its expected ultimate losses but it allows for risk sharing and risk shifting amongst the entire membership for ‘shock losses’ (i.e. infrequent large claims over $100,000).
	To develop a member premium, each member’s previous five-year loss and payroll history is collected and the data is then trended and developed by TSIL’s actuarial firm. They then produce what they believe a member’s predictable losses will be, plus what should be reserved for ‘shock losses’ which together becomes the member’s loss fund.
	Next, the operating costs of the program such as excess reinsurance, fronting costs, claims service, brokerage, etc. are calculated for each member. These costs are fixed percentages of total premium for all accounts.
	Finally, the contributions of that member to the loss fund and operating costs are added together, producing their premium for each year.
	In addition to premium charges, a member can be assessed up to a maximum pre-determined amount if his actual losses exceed his loss fund contributions for the policy year.

SUMMARY

TSIL, through the active participation of its shareholders, endeavors to provide the long-term security of a well-managed insurance company. The preceding is an overview of the Company only, and complete details of all operations are available. Through the TSIL program, shareholders have indeed taken control of their insurance destiny.

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