Artisan and Truckers Casualty Company

Report of the Examination of Artisan and Truckers Casualty Company Mayfield Village, Ohio As of December 31, 2007 TABLE OF CONTENTS Page I. INTRODUCTION .................................................................................................................. 2 II. HISTORY AND PLAN OF OPERATION .............................................................................. 4 III. MANAGEMENT AND CONTROL ........................................................................................ 6 IV. AFFILIATED COMPANIES .................................................................................................. 8 V. REINSURANCE ................................................................................................................. 12 VI. FINANCIAL DATA .............................................................................................................. 13 VII. SUMMARY OF EXAMINATION RESULTS ....................................................................... 22 VIII. CONCLUSION.................................................................................................................... 23 IX. SUMMARY OF COMMENTS AND RECOMMENDATIONS.............................................. 24 X. ACKNOWLEDGMENT ....................................................................................................... 25 State of Wisconsin / OFFICE OF THE COMMISSIONER OF INSURANCE Jim Doyle, Governor Sean Dilweg, Commissioner Wisconsin.gov February 12, 2009 125 South Webster Street • P.O. Box 7873 Madison, Wisconsin 53707-7873 Phone: (608) 266-3585 • Fax: (608) 266-9935 E-Mail: ociinformation@wisconsin.gov Web Address: oci.wi.gov Honorable Sean Dilweg Commissioner of Insurance State of Wisconsin 125 South Webster Street Madison, Wisconsin 53703 Honorable Alfred W. Gross Chair, Financial Condition (E) Committee, NAIC Commissioner of Insurance Commonwealth of Virginia 1300 East Main Street Richmond, Virginia 23219 Honorable James J. Donelon Secretary, Southeastern Zone, NAIC Commissioner of Insurance State of Louisiana 1702 North 3rd Street Baton Rouge, Louisiana 70802 Commissioners: In accordance with the instructions of the Wisconsin Commissioner of Insurance, a compliance examination has been made of the affairs and financial condition of: ARTISAN AND TRUCKERS CASUALTY COMPANY Mayfield Village, Ohio and this report is respectfully submitted. I. INTRODUCTION The previous examination of Artisan and Truckers Casualty Company (the company or Artisan) was conducted in 2004 as of December 31, 2003. The current examination covered the intervening period ending December 31, 2007, and included a review of such 2008 transactions as deemed necessary to complete the examination. The examination was conducted in accordance with the NAIC Financial Condition Examiners Handbook, which sets forth guidance for planning and performing an examination to evaluate the financial condition and identify prospective risks of an insurer. This approach includes the obtaining of information about the company including corporate governance, the identification and assessment of inherent risks within the company, and the evaluation of system controls and procedures used by the company to mitigate those risks. The examination also included an assessment of the principles used and significant estimates made by management, as well as an evaluation of the overall financial statement presentation and management’s compliance with statutory accounting principles, annual statement instructions, and Wisconsin laws and regulations. The examination consisted of a review of all major phases of the company's operations, and included the following areas: History Management and Control Corporate Records Conflict of Interest Fidelity Bonds and Other Insurance Employees' Welfare and Pension Plans Territory and Plan of Operations Affiliated Companies Growth of Company Reinsurance Financial Statements Accounts and Records Data Processing The examinations of Progressive Casualty Insurance Company and affiliates were conducted concurrently with the examination of the company. The examiners from the Ohio Department of Insurance acted in the capacity as the lead state for the coordinated exams. 2 Emphasis was placed on the audit of those areas of the company's operations accorded a high priority by the examiner-in-charge when planning the examination. The company is annually audited by an independent public accounting firm as prescribed by s. Ins 50.05, Wis. Adm. Code. An integral part of this compliance examination was the review of the independent accountant's work papers. Based on the results of the review of these work papers, alternative or additional examination steps deemed necessary for the completion of this examination were performed. The examination work papers contain documentation with respect to the alternative or additional examination steps performed during the course of the examination. Actuarial Review by the Ohio Insurance Department The company is a participant of a reinsurance agreement with United Financial Casualty Company. An actuary on the staff of the Ohio Department of Insurance reviewed the adequacy of the company’s loss reserves and loss adjustment expense reserves. The results of her work were reported to the examiner-in-charge. As deemed appropriate, reference is made in this report to the actuary’s conclusion. 3 II. HISTORY AND PLAN OF OPERATION The company was incorporated on August 12, 1994, under the laws of the State of Florida, as Preferred Consumers Insurance Company. The company was a wholly owned subsidiary of PC Investment Company, which was owned by Progressive Casualty Insurance Company (Casualty). Casualty was a wholly owned subsidiary of The Progressive Corporation (TPC). On December 24, 1996, the company’s name was changed to Progressive Consumers Insurance Company. On March 21, 1997, all of the company’s issued and outstanding common stock was sold by PC Investment Company to TPC. On January 1, 2004, ownership of the company was transferred from TPC to Drive Insurance Holdings, Inc. On January 1, 2005, ownership of the company was transferred from Drive Insurance Holdings, Inc., to Progressive Commercial Holdings, Inc. The company redomesticated on May 19, 2006, from Florida to Wisconsin and changed its name to the one presently used on June 15, 2006. In 2007, the company wrote direct premium in the following states: Florida Illinois Ohio Colorado Oregon Wyoming Missouri Total $29,556,477 11,516,029 10,328,385 4,803,787 4,297,229 1,861,757 133,405 $62,497,069 47.3% 18.4 16.5 7.7 6.9 3.0 0.2 100.0% The company is licensed in Colorado, Florida, Illinois, Iowa, Maryland, Missouri, Nebraska, Ohio, Oregon, Wisconsin and Wyoming. The company does not have any employees or facilities. Management, operations and claims services are provided under a joint management services agreement with United Financial Casualty Company (UFCC). Under the terms of the agreement, the company provides UFCC with underwriting and loss adjustment services for specific business produced, and UFCC provides Artisan with similar services for other specific business produced. In exchange for these services, the companies charge management fees based on each company’s use of the other’s services. Tax allocations are established in accordance with a written federal income tax allocation agreement. Intercompany balances with affiliates are created in the ordinary course of 4 business, with settlements made on a quarterly basis. Written agreements with affiliates are further described in the section of this report titled “Affiliated Companies.” The company is a participant in a quota share reinsurance agreement with UFCC, whereby the company cedes 90% of its premiums, loss, loss adjustment and underwriting expenses to UFCC. See further discussion of the agreement in the section of this report titled “Reinsurance.” The following table is a summary of the net insurance premiums written by the company in 2007. The growth of the company is discussed in the “Financial Data” section of this report. Direct Premium $ 148,435 31,354 19,447,885 23,192,238 19,677,157 $62,497,069 $ Reinsurance Assumed $ Reinsurance Ceded $ 133,591 28,219 17,522,598 20,873,014 17,719,118 $56,276,540 Net Premium $ 14,844 3,135 1,925,287 2,319,224 1,958,039 $6,220,529 Line of Business Inland marine Other liability – occurrence Private passenger auto liability Commercial auto liability Auto physical damage Total All Lines 5 III. MANAGEMENT AND CONTROL Board of Directors The board of directors consists of five members. All directors are elected annually to serve a one-year term. The directors receive no compensation for their service on the board. All directors are employees of other Progressive companies. Members of the board may also be members of other boards of directors in the holding company system controlled by The Progressive Corporation. Currently the board of directors consists of the following persons: Name and Residence Patricia Bemer Highland Heights, Ohio Michael Bissler Munson Twp., Ohio William Kampf Moreland Hills, Ohio Michael Miller Rocky River, Ohio Jeanette Hisek Twinsburg, Ohio Principal Occupation HR Business Leader Term Expires 2009 Senior Controller, Commercial Auto 2009 Commercial Auto Marketing General Manager Regional Marketing Director 2009 2009 Director Regional Marketing 2009 Officers of the Company The officers serving at the time of this examination are as follows: 2007 Compensation $102 44 147 15 137 46 49 Name Jeanette Hisek Patricia Corwin Michael Bissler Margaret Rose Patricia Bemer Sandra Rihvalsky Eric Steiner Office President Secretary Treasurer Assistant Secretary Vice President Vice President Assistant Vice President * Total 2007 compensation of all officers is allocated based on the company’s net written premium. 6 Committees of the Board The company's bylaws allow for the formation of certain committees by the board of directors. The committees at the time of the examination are listed below: Executive Committee Michael Miller, Chair Jeanette Hisek William Kampf Patricia Bemer Investment Committee William Kampf, Chair Michael Miller Jeanette Hisek Patricia Bemer 7 IV. AFFILIATED COMPANIES Artisan is a member of a holding company system. Its ultimate parent is The Progressive Corporation. The abbreviated organizational chart below depicts the relationships among the affiliates in the direct succession of control of the company. A brief description of the significant affiliates follows the organizational chart. Organizational Chart As of December 31, 2007 The Progressive Corporation (OH) Progressive Commercial Holdings, Inc. (DE) National Continental Insurance Company (NY) Progressive Express Insurance Company (FL) Artisan and Truckers Casualty Company (WI) United Financial Casualty Company (OH) Commercial Resource Services Company (OH) The Progressive Corporation Progressive Commercial Casualty Company (OH) The Progressive Corporation is an Ohio-domiciled insurance holding company formed in 1965. The predecessor organization commenced business in 1937. The Progressive Corporation became publicly traded after an initial public offering in 1971, and its common stock is currently listed on the New York Stock Exchange. As of December 31, 2007, the audited financial statements of The Progressive Corporation reported assets of $18.8 billion, liabilities of $13.9 billion, and stockholder equity of $4.9 billion. Operations for 2007 produced net income of $1.2 billion on total revenues of $14.7 billion. 8 Progressive Commercial Holdings, Inc. Progressive Commercial Holdings, Inc., is a Delaware-domiciled insurance holding company formed in 2004 and owned by The Progressive Corporation. The company has virtually no expenses and revenue is solely from dividends from its subsidiaries and any gain/loss on the investments in subsidiaries. As of December 31, 2007, the unaudited financial statements of Progressive Commercial Holdings, Inc., reported assets of $701 million, liabilities of $10 million, and equity of $691 million. Net income for 2007 was $108 million on total revenues of $108 million. United Financial Casualty Company United Financial Casualty Company (UFCC), a property casualty insurer domiciled in Ohio, provides administrative services through affiliated agreements discussed below. As of December 31, 2007, the audited financial statements of UFCC reported assets of $1.8 billion, liabilities of $1.3 billion, and policyholders’ surplus of $416 million. Operations for 2007 produced net income of $118 million on premium earned of $1.3 billion. Agreements with Affiliates 1. Type: Parties: Effective: Terms: Consolidated Tax Allocation Agreement Artisan along with other members of the Progressive holding company system August 1, 2005 The agreement establishes that an estimated consolidated tax liability will be computed quarterly for The Progressive Corporation, with each member company’s recoverable or payable equal to the amount that the member company would have reported on a nonconsolidated basis. Settlements are to be made within ninety (90) days of each quarter in which The Progressive Corporation is required to make a federal income tax estimated payment. Cash Management Agreement Artisan, Progressive Casualty Insurance Company (Casualty) and other Progressive affiliates January 1, 1998 All cash receipts or disbursements attributable to Artisan and the other affiliates named in the agreement are deposited in or withdrawn from a centralized account (Cashier Account) that is managed by Casualty. Pursuant to the terms of the agreement, Artisan has a balance in this account that reflects its claim against or obligation to the Cashier Account. Casualty provides Artisan with monthly statements that show the month-end balances. Account balances are 2. Type: Parties: Effective: Terms: 9 considered loans and interest is payable or receivable to the company’s account depending on the balance. The provisions of an Interest Agreement to which Artisan is a party govern the rate of interest. Each participant to the agreement receives a quarter-end balance that represents a net amount against any other intercompany transaction. Settlements are to be in cash or readily marketable securities valued at market value. 3. Type: Parties: Interest Agreement Artisan, Progressive Casualty Insurance Company and other Progressive affiliates The company became a party to this agreement on October 15, 1980, retroactive to January 1, 1980. The original effective date of the agreement was January 1, 1977. This agreement establishes the variable interest rate that governs each entity’s participation in Casualty’s Cashier Account as noted in the Cash Management Agreement in #2 above. Interest is to be computed at the prevailing 90-day U.S. Treasury bill rate on the last day of each month rounded to the nearest quarter of a percent. Investment Services Agreement Artisan along with other participating affiliates and Progressive Capital Management Corp. (Progressive Capital). Progressive Capital was formerly known as PPLP Corporation, then Progressive Partners, Inc., until it changed its name to that currently used on June 8, 1998. July 16, 1992, as subsequently amended Progressive Capital provides investment management services to members of the Progressive holding company system named in the agreement. The agreement requires each of the participating companies to reimburse Progressive Capital for an equitable portion of the costs and expenses it incurs in providing its services. Progressive Capital does not charge any additional management fees to the participating companies. Licensing Agreement Artisan, Progressive Casualty Insurance Company and other Progressive affiliates May 1, 2002 Casualty grants its affiliates the right to use Casualty’s various proprietary marks. Joint Servicing (Cost Allocation) Agreement Artisan and United Financial Casualty Company January 1, 2005 Artisan provides UFCC with underwriting and loss adjustment services for specific business produced, and UFCC provides Artisan with similar services Effective: Terms: 4. Type: Parties: Effective: Terms: 5. Type: Parties: Effective: Terms: 6. Type: Parties: Effective: Terms: 10 for other specific business provided. In exchange for these services, the companies charge management fees based on each company’s use of the other’s services. 7. Type: Parties: General Agency Agreement Artisan and Progressive Alliances Insurance Agency, Inc., (Agency) and other Progressive affiliates October 1, 2007 Agency will act as participating companies’ respective general agent in the states of California, Kentucky, Louisiana, Washington and other such states as the parties may agree upon. Producers Agreement Artisan and Progressive Auto Pro Insurance Agency (TIS) and other Progressive affiliates December 1, 1998 TIS will act as an insurance agency for the participating companies. Effective: Terms: 8. Type: Parties: Effective: Terms: 11 V. REINSURANCE The company's only significant reinsurance contract is a quota share reinsurance agreement with UFCC, whereby the company cedes 90% of its premiums, loss, loss adjustment and underwriting expenses to UFCC. The contract contained proper insolvency provisions. Affiliated Ceding Contracts 1. Type: Reinsurer: Scope: Quota Share United Financial Casualty Company Personal and commercial automobile lines insurance (including motorcycle, motor home, travel trailer, boat and camper) issued by the company 10% of all paid losses, less salvage and subrogation, and loss adjustment expenses 90% of all paid losses, less salvage and subrogation, and loss adjustment expenses 90% of net written premium 90% of net operating expenses January 1, 2005 Agreement shall be in continuous force and effect until terminated. Either party can terminate agreement by giving 90 days’ prior written notice. Retention: Coverage: Premium: Commissions: Effective date: Termination: 12 VI. FINANCIAL DATA The following financial statements reflect the financial condition of the company as reported to the Commissioner of Insurance in the December 31, 2007, annual statement. Also included in this section are schedules that reflect the growth of the company, NAIC Insurance Regulatory Information System (IRIS) ratio results for the period under examination, and the compulsory and security surplus calculation. Adjustments made as a result of the examination are noted at the end of this section in the area captioned "Reconciliation of Surplus per Examination." 13 Artisan and Truckers Casualty Company Assets As of December 31, 2007 Net Admitted Assets $ 9,050,926 122,168 Assets Bonds Investment income due and accrued Premiums and considerations: Uncollected premiums and agents' balances in course of collection Deferred premiums, agents' balances, and installments booked but deferred and not yet due Reinsurance: Amounts recoverable from reinsurers Net deferred tax asset Write-ins for other than invested assets: State tax credits Florida hurricane catastrophe fund assets Prepaid expenses Miscellaneous other assets Total Assets $ 9,050,926 122,168 Nonadmitted Assets $ 2,426,698 96,874 2,329,824 16,847,575 7,587,156 469,251 16,847,575 7,587,156 407,867 61,384 100,625 71,982 115,710 2,676 $36,794,767 100,625 71,982 115,710 2,676 $276,644 $36,518,123 14 Artisan and Truckers Casualty Company Liabilities, Surplus, and Other Funds As of December 31, 2007 Losses Loss adjustment expenses Commissions payable, contingent commissions, and other similar charges Other expenses (excluding taxes, licenses, and fees) Taxes, licenses, and fees (excluding federal and foreign income taxes) Current federal and foreign income taxes Unearned premiums Advance premium Ceded reinsurance premiums payable (net of ceding commissions) Drafts outstanding Payable to parent, subsidiaries, and affiliates Write-ins for liabilities: Premium refund liability State plan liability Florida hurricane catastrophe fund liabilities Escheatable property Total liabilities Common capital stock Gross paid in and contributed surplus Unassigned funds (surplus) Surplus as regards policyholders Total Liabilities and Surplus $2,000,000 6,066,182 1,102,843 9,169,025 $36,518,123 $ 1,435,584 433,772 23,808 7,582 404,401 83,398 2,891,945 576,894 15,046,771 3,529,327 1,515,071 1,040,449 147,158 142,495 70,443 27,349,098 15 Artisan and Truckers Casualty Company Summary of Operations For the Year 2007 Underwriting Income Premiums earned Deductions: Losses incurred Loss expenses incurred Other underwriting expenses incurred Total underwriting deductions Net underwriting gain (loss) Investment Income Net investment income earned Net realized capital gains (losses) Net investment gain (loss) Other Income Net gain (loss) from agents or premium balances charged off Finance and service charges not included in premiums Write-ins for miscellaneous income: Interest income on intercompany balances Miscellaneous other income (expense) Finance and service charge revenue ceded Total other income Net income (loss) after dividends to policyholders but before federal and foreign income taxes Federal and foreign income taxes incurred Net Income $ $4,175,417 $2,588,179 504,713 1,217,410 4,310,302 (134,885) 367,417 (59,192) 308,225 (11,739) 476,010 103,982 (2,655) (428,409) 137,189 310,529 232,257 78,272 16 Artisan and Truckers Casualty Company Cash Flow For the Year 2007 Premiums collected net of reinsurance Net investment income Miscellaneous income Total Benefit- and loss-related payments Commissions, expenses paid, and aggregate write-ins for deductions Federal and foreign income taxes paid (recovered) Total deductions Net cash from operations Proceeds from investments sold, matured, or repaid: Bonds Cost of investments acquired (long-term only): Bonds Net cash from investments Cash from financing and miscellaneous sources: Dividends to stockholders Other cash provided (applied) Net cash from financing and miscellaneous sources Reconciliation: Net change in cash, cash equivalents, and short-term investments Cash, cash equivalents, and short-term investments: Beginning of year End of Year $ (177,487) 412,912 147,046 382,471 $ 2,519,507 1,455,210 272,776 4,247,493 (3,865,022) 24,222,399 20,486,246 3,736,153 800,000 928,869 128,869 - $ - 17 Artisan and Truckers Casualty Company Compulsory and Security Surplus Calculation December 31, 2007 Assets Less liabilities Adjusted surplus Direct annual premium: Lines other than accident and health Factor* Compulsory surplus (subject to a minimum of $3 million) Compulsory Surplus Excess (or Deficit) $36,518,123 27,349,098 9,169,025 $35,849,535 12.5% 4,481,192 $ 4,687,833 Adjusted surplus (from above) Security surplus: (140% of compulsory surplus, factor reduced 1% for each $33 million in premium written in excess of $10 million, with a minimum factor of 110%) Security Surplus Excess (or Deficit) $ 9,169,025 6,273,669 $ 2,895,356 *Pursuant to an order placed on the company compulsory surplus is the greater of (a) $3,000,000; or (b) 12.5% of direct premium written plus nonaffiliated assumed premium during the previous 12 months; or (c) 33 1/3% of net premium written during the previous 12 months. 18 Artisan and Truckers Casualty Company Reconciliation and Analysis of Surplus For the Four-Year Period Ending December 31, 2007 The following schedule is a reconciliation of total surplus during the period under examination as reported by the company in its filed annual statements: 2007 Surplus, beginning of year Net income Change in net deferred income tax Change in nonadmitted assets Capital changes: Paid in Surplus adjustments: Paid in Dividends to stockholders Surplus, end of year 2006 2005 2004 $9,849,603 78,272 306,052 (264,902) $9,691,223 921,992 (84,543) 20,931 $6,386,810 798,308 (76,535) 91,214 1,000,000 1,491,426 $ 7,028,463 443,889 93,857 (80,697) 401,298 (1,500,000) (800,000) $9,169,025 (700,000) $9,849,603 $9,691,223 $ 6,386,810 Artisan and Truckers Casualty Company Insurance Regulatory Information System For the Four-Year Period Ending December 31, 2007 The company’s NAIC Insurance Regulatory Information System (IRIS) results for the period under examination are summarized below. Unusual IRIS results are denoted with asterisks and discussed below the table. Ratio #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 #13 Gross Premium to Surplus Net Premium to Surplus Change in Net Premiums Written Surplus Aid to Surplus Two-Year Overall Operating Ratio Investment Yield Gross Change in Surplus Net Change in Adjusted Surplus (established in 2005) Liabilities to Liquid Assets Agents’ Balances to Surplus One-Year Reserve Development to Surplus Two-Year Reserve Development to Surplus Estimated Current Reserve Deficiency to Surplus 2007 682% 68 75* 0 77 3.4 (7) (7) 114* 25 0 0 0 2006 364% 36 (15) 0 75 4.1 2 2 87 7 1 (3) 2 2005 433% 43 (13) 0 82 3.3 52* 13 52 2 (4) (1) 1 2004 760% 75 (8) 0 78 4.0* (9) 134* 7 0 (2) 4 19 Ratio No. 3 reflects the percentage change in net premiums written from the prior year. The exceptional result in 2007 was a result of the company writing commercial automobile insurance in several states for the first time. Ratio No. 6 evaluates the yield on investments that an insurer recognizes during an operating year as investment income and realized gains compared to annual average cash and total invested assets. The exceptional result in 2004 was due to the company paying dividends to its parent late in the year which reduced the average invested assets. In addition, the company’s investment in municipal bonds negatively affected the calculated yield. The tax equivalent investment yield was 4.5% in 2004. Ratio No. 7 measures the improvement or deterioration in the insurer’s financial condition during the year by comparing changes in the policyholders’ surplus from year-to-year. The exceptional result in 2005 was due to a capital contribution of $2.5 million from its parent. Ratio No. 9 is a measure of the insurer’s ability to meet the financial demands that may be placed upon it and also provides a rough indication of the possible implications for policyholders if liquidation becomes necessary. The exceptional results in 2004 and 2007 were due to the company’s participation in a 90/10 quota share reinsurance agreement with UFCC. The ceded reinsurance premiums payable included in the numerator of the calculation includes the payable to UFCC for premiums ceded net of expenses, but the calculation excludes the reinsurance recoverable from reinsurers in the denominator which is predominately the result of Artisan’s paid losses and loss adjusting expenses that it expects to be reimbursed from UFCC per the reinsurance agreement. Including the recoverable in the denominator of the calculation would result in a normal ratio. Growth of Artisan and Truckers Casualty Company Surplus as Regards Policyholders $9,169,025 9,849,603 9,691,223 6,386,810 7,028,463 $ Year 2007 2006 2005 2004 2003 Admitted Assets $36,518,123 24,352,114 20,631,742 26,397,275 26,791,366 Liabilities $27,349,098 14,502,511 10,940,519 20,010,465 19,762,903 Net Income 78,272 921,992 798,308 443,889 1,131,366 20 Year 2007 2006 2005 2004 2003 Gross Premium Written $62,497,069 35,849,535 41,965,009 48,559,291 53,710,750 Net Premium Written $6,220,529 3,550,063 4,186,494 4,794,938 5,211,259 Premium Earned $4,175,417 3,693,305 4,300,642 4,979,686 5,324,881 Loss and LAE Ratio 74.1% 69.4 69.8 75.9 64.6 Expense Ratio 17.4% 14.6 17.5 17.7 16.8 Combined Ratio 91.5% 84.0 87.3 93.6 81.4 For the past few years, the overall personal lines market has been in a soft market cycle which has constrained growth. From 2003 to 2007, rates have generally moved downwards. In late 2007 and through 2008, rates have been rising across all books of business in personal lines. These rate increases have been in response to rising loss costs. These rate changes have generally been less than 5% during this period. There have been no significant changes in underwriting standards during 2003 through 2007. The company recently began writing private passenger automobile insurance through the Wisconsin independent agency channel. During the past two years, the company began writing commercial auto insurance in Colorado, Ohio, Oregon, Wisconsin, and Wyoming. Overall, the commercial auto business has declined due to recent economic events. There are less commercial policies due to the decline in small businesses and a smaller number of vehicles insured on existing policies. The company started writing commercial auto business in Wisconsin in 2008. Reconciliation of Surplus per Examination No adjustments were made to surplus as a result of the examination. The amount of surplus reported by the company as of December 31, 2007, is accepted. 21 VII. SUMMARY OF EXAMINATION RESULTS Compliance with Prior Examination Report Recommendations The previous examination of Artisan and Truckers Casualty Company conducted by the State of Florida resulted in no recommendations and no adjustments to surplus. Summary of Current Examination Results The current examination resulted in no adverse comments or recommendations. 22 VIII. CONCLUSION The company was incorporated on August 12, 1994, under the laws of the State of Florida, as Preferred Consumers Insurance Company. On March 21, 1997, all of the company’s issued and outstanding common stock was sold by PC Investment Company to TPC. On January1, 2004, ownership of the company was transferred from TPC to Drive Insurance Holdings, Inc. On January 1, 2005, ownership of the company was transferred from Drive Insurance Holdings, Inc., to Progressive Commercial Holdings, Inc. The company redomesticated on May 19, 2006, from Florida to Wisconsin and changed its name to the one presently used on June 15, 2006. The company does not have any employees or facilities. Management, operations and claims services are provided under a joint management services agreement with UFCC. Under the terms of the agreement, the company provides UFCC with underwriting and loss adjustment services for specific business produced, and UFCC provides Artisan with similar services for other specific business produced. In exchange for these services, the companies charge management fees based on each company’s use of the other’s services. Tax allocations are established in accordance with a written federal income tax allocation agreement. The company recently began writing private passenger automobile insurance through the Wisconsin independent agency channel. During the past two years, the company began writing commercial auto insurance in Colorado, Ohio, Oregon, Wisconsin, and Wyoming. The previous examination of Artisan and Truckers Casualty Company conducted by the State of Florida resulted in no recommendations and no adjustments to surplus. The current examination resulted in no adverse comments or recommendations. No adjustments were made to surplus as a result of the examination. The amount of surplus reported by the company as of December 31, 2007, is accepted. 23 IX. SUMMARY OF COMMENTS AND RECOMMENDATIONS The current examination resulted in no adverse comments or recommendations. 24 X. ACKNOWLEDGMENT The courtesy and cooperation extended during the course of the examination by the officers and employees of the company are acknowledged. In addition to the undersigned, the following representatives of the Office of the Commissioner of Insurance, State of Wisconsin, participated in the examination: Name David Jensen Title Financial Insurance Examiner Respectfully submitted, Rick Anderson Examiner-in-Charge 25