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					                   Privatization Update Fact Sheet
                             January 2008


Background

     BrickStreet Mutual Insurance Company is a private, West Virginia-based
      company offering workers’ compensation insurance to West Virginia
      businesses.

     A bill signed into law by Gov. Joe Manchin in February 2005 moved the
      workers’ compensation management from a state-run system into the private
      market. BrickStreet, which officially began operation January 1, 2006, is
      owned by West Virginia’s 36,000 businesses.

     BrickStreet was designated in legislation to be the state’s exclusive provider of
      legally required workers’ compensation insurance for a two and a half year
      period. On July 1, 2008, the workers’ compensation market opens to other
      private carriers.

     This dramatic change to a 92-year-old system was made because the former
      system had accumulated unfunded liabilities of more than $3.1 billion. In
      2005, West Virginia was one of only five states with a monopolistic state fund.

     As part of the transition, the state of West Virginia loaned BrickStreet $200
      million, in the form of a Surplus Note, to begin operations. BrickStreet has
      made an initial payment to the West Virginia Offices of the Insurance
      Commissioner of $15 million toward settlement of the note.

     A second payment of $40 million will be paid on July 1, 2008.

     Once the Surplus Note is paid in full, if BrickStreet makes a profit, it can pay
      dividends to policyholders. However, until the Surplus Note is paid off,
      BrickStreet is prohibited by the terms of the note from paying dividends to
      policyholders.

     The Surplus Note is scheduled to be paid in full in 10 years. But if BrickStreet
      has sufficient reserves and makes a profit, with permission from the West
      Virginia Insurance Commissioner, the debt can be paid off early.



                                          
       The interest rate on the Surplus Note increases from its current 1.5 percent to
        prime effective January 1, 2009.


BrickStreet 360/Streamlined Team Approach

       BrickStreet has introduced a new organizational structure that allows for
        enhanced customer service. The structure features eight multi-functional
        business teams organized by industry and premiums, including coal,
        government, small, large and standard accounts.

       This team approach is called BrickStreet 360 and it’s our guarantee to give our
        customers an on-site team of adjusters, underwriters, return-to-work
        specialists, investigators and risk management professionals, supported by
        doctors, nurses and legal advisors. This comprehensive team ensures
        expedited, accurate service.

       All touch points with the policyholder – underwriting, claims, medical case
        management, loss control and premium audit – are brought together under
        one director and the claims are processed right here in West Virginia.


Rates

       Since privatizing the West Virginia workers’ compensation system, BrickStreet
        policyholders have experienced an average 27.5 percent decrease in their
        workers’ compensation rates.

       In the aggregate, between 2006 and 2007, workers’ compensation rates
        across the nation experienced a 9.6 percent decrease. For this same time
        period, rates in West Virginia decreased by 27.5 percent.

       According to a 2006 study conducted by the state of Oregon, privatization has
        brought West Virginia’s workers’ compensation rates in line with those across
        the nation.


Claims Processing

       In 2003, 52,000 workers’ compensation claims were filed. Through November
        2007, BrickStreet received 37,880 claims.
      The average time between receiving a claim and ruling on that claim has been
       reduced to five business days.
      Many of BrickStreet’s claims are ruled on within 30 days of receipt, versus 60
       to 90 days under the former system.


Fraud Investigations

      For 2006 and 2007, BrickStreet’s Special Investigations Unit documented an
       estimated $6 million in direct savings to policyholders from actions taken as a
       result of their investigations.

      To date, BrickStreet’s Special Investigations Unit has referred 141 cases to
       the Offices of the West Virginia Insurance Commissioner for possible civil
       and/or criminal action.

      The Special Investigations Unit received an average of 42 referrals per month
       in 2007.


The Safety & Loss Control

      BrickStreet operates Safety Source, an online tool available to many
       policyholders that provides access to safety audits and check lists, programs
       policies and procedures, safety presentations and a resource library.

      Since March 20, 2007 more than 340 policyholders registered with Safety
       Source and the site cataloged more than 9,000 hits.


New Corporate Headquarters

      In October 2007, BrickStreet completed the company’s move to its new
       headquarters in downtown Charleston, W.Va.

      The new building consolidates operations from three separate leased office
       locations into one centralized office, allowing better efficiency and promoting
       the 360 Team environment.

      Consolidating to a new corporate headquarters will result in significant savings
       to policyholders.

      BrickStreet has regional offices in Wheeling and Martinsburg.

				
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