STATE OF CONNECTICUT INSURANCE DEPARTMENT

ORDER ADOPTING REPORT OF EXAMINATION

I, Katharine 1. Wade, Insurance Commissioner of the State of Connecticut, having fully

considered and reviewed 'the Examination Report (the "Report") of the Genesis Insurance

Company (the "Company") as of December 31, 2014, do hereby adopt the findings and

recommendations contained therein based on the following findings and conclusions,

1. I, Katharine 1. Wade, as the Insurance Commissioner of the State of Connecticut, and as such is charged with the duty of administering and enforcing the provisions of Title 38a of the Connecticut General Statutes ("CGS").

2. The Company is a domestic insurer authorized to transact the business of insurance in the State of Connecticut.

3. On May 5,2016, the verified Examination Report of the Company was filed with the Connecticut Insurance Department ("Insurance Department").

4. In accordance with Section 38a-14(e)(3) of the CGS, the Company was afforded a period of thirty (30) days within which to submit to the Insurance Department a written submission or rebuttal with respect to any matters contained in the Report.

5. On May 20, 2016, the Company filed a written submission indicating that they were in agreement with all of the recommendations contained in the Report. A copy of the Report is attached hereto and incorporated herein as Exhibit A.

www.ct.gov/cid P.O. Box 816 • Hartford, CT 06142-0816

An Equal Opportunity Employer

NOW, THEREFORE, it is ordered as follows:

1. That the Report of the Company hereby is adopted as filed with the Insurance Department.

2. That the Company shall comply with all of the recommendations set forth in the Report, and that failure by the Company to so comply shall result in sanctions or administrative action as provided by Title 38a of the COS.

Dated at Hartford, Connecticut, this 31sl day of May, 2016.

Katharine L. Wade Insurance Commissioner

Exhibit A

EXAMINATION REPORT

OF

GENESIS INSURANCE COMPANY (NAIC #38962)

AS OF

DECEl\ffiER 31, 2014

BYTRE

CONNECTICUT INSURANCE DEPARTMENT

TABLE OF CONTENTS Page

Salutation 1

Scope 'of Examination 1

History 2

Organizational Chart 4

Management and Control 5

Related Party Agreements 6

Insurance Coverages 7

Territory and Plan of Operation 7

Reinsurance 8

Information Technology Controls 8

Accounts and Records 8

Financial Statements 9 Assets 9 Liabilities, Surplus and Other Funds 10 Statement of Income 11

Loss and Los s Adjustment Expenses 12

Common Capital Stock 13

Gross Paid in and Contributed Surplus 13

Unassigned Funds (Surplus) 13

Subsequent Event 13

Conclusion 13

Signature 14

May 5,2016

The Honorable Katharine L. Wade Commissioner of Insurance State of Connecticut Insurance Department 153 Market Street Hartford, Connecticut 06103

Dear Commissioner Wade:

In compliance with your instructions and pursuant to the requirements of Section 38a-14 of the General Statutes of the State of Connecticut (CGS), the undersigned has made a financial examination of the condition and affairs of the

GENESIS INSURANCE COMPANY

(hereinafter referred to as the Company or GTC), a corporation with capital stock, incorporated under the laws of the State of Connecticut and having its statutory home office and its main administrative office located at 120 Long Ridge Road, Stamford, Connecticut. The report on such examination is submitted herewith.

SCOPE OF EXAMINATION

The previous examination of the Company was conducted by the Financial Regulation Division of the Connecticut Insurance Department (Department), as of December 31, 2009. The current examination, which covers the period from January 1, 2010, to December 31, 2014, was conducted at the statutory home office of the Company.

1\s part of the examination planning procedures, the Department reviewed the following materials submitted by the Company:

• Board of Director (Board) minutes from 2010 through 2015; • statutory audit reports completed by the Company's independent certified public

accountants, Deloitte and Touche, LLP (D&T) from 2010 through 2014; • Management's Discussion and Analysis from 2010 through 2014; • Statements ofActuarial Opinion from 2010 through 2014; • documentation supporting Section 404 of the Sarbanes-Oxley Act of2002; • Annual Statements filed with the Department from 2010 through 2014; and • reports of the Internal Audit Department from 2010 through 2015.

A comprehensive review was made of the financial analysis files and documents submitted to the Financial Analysis Unit of the Department, reports from the National Association of Insurance Commissioners (NAle) database, as well as the independent audit reports all of which indicated no material concerns with respect to financial condition or regulatory compliance issues.

GENESIS INSURANCE COMPANY

Workpapers prepared by D&T in connection with its annual statutory audit were reviewed and relied upon to the extent deemed appropriate.

INS Regulatory Insurance Services, Inc. (INS) was engaged by the Department to provide accounting services in conducting the examination.

The examination was conducted on a full scope, comprehensive basis in accordance with the procedures outlined in the NAIC Financial Condition Examiners Handbook (the Handbook). The Handbook requires that we plan and perform the examination to evaluate the financial condition and identify prospective risks of the Company by obtaining information about the Company, including corporate governance, identifying inherent risks within the Company, and evaluating system controls and procedures used to mitigate those risks. An examination also includes assessing the principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation, management compliance with the NAIC Accounting Practices & Procedures Manual and the NAIC Property and Casualty Annual Statement Instructions.

All accounts and activities ofthe Company were considered in accordance with the risk-focused examination process.

Comments in this report are generally limited to exceptions noted or to items considered to be of a material nature.

Failure of items in this report to add to totals or for totals to agree with captioned amounts is due to rounding.

HISTORY

The Company was incorporated on April 6, 1976, under the laws of the State of Connecticut as Phoenix General Insurance Company. It was licensed in the State of Connecticut on November 27, 1976, and commenced business on December 1, 1981. Initially, the Company operated as a professional reinsurer and after 1986, as a personal lines insurer. Effective October 1, 1989, the Company's name was changed to Genesis Insurance Company.

On October 2, 1989, all of the outstanding capital stock was acquired by General Reinsurance Corporation (GRC) from P.M. Holdings Inc., a downstream holding company of Phoenix Mutual Life Insurance Company.

On December 21, 1998, Berkshire Hathaway Inc. (EH) acquired General Re Corporation (GRN) in a stock swap valued at $22 billion.

The Company provides commercial casualty and property, primary and excess-of-loss insurance coverages principally for larger insureds that have elected to manage and retain risk using significant self-insured retentions or deductibles. Potential applicants for coverage include municipalities and school districts, with the remainder representing manufacturers, retailers and other classes of commercial business. All of the business is produced through retail and specialty brokers.

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GENESIS INSURANCE COMPANY

Genesis Management and Insurance Services Corporation provides underwriting, operational and claims support for the Company. Certain other administrative, investment, legal, and human resources are provided directly by General Reinsurance Corporation (GRC) and other affiliates.

On February 15, 2006, Genesis informed the Department that they would be closing the Genesis Directors and Officers Division. The Company also filed a plan of withdrawal with the Property and Casualty Division of the Department.

The Company merged with Fairfield Insurance Company (FIC), an affiliate company, effective December 31, 2012. The merger was part of GRN's strategy of business simplification and to achieve increased efficiencies. The Department approved this transaction on August 15, 2012. As part of this merger, FIC entered into a Loss Portfolio Agreement with GRC effective January 1,2012. The Department approved the agreement on July 18,2012.

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GENESIS INSURANCE COMPANY

ORGANIZATIONAL CHART

The following is a summary organizational chart of the Company and its parent and affiliated compani es as of December 31, 2014:

B.erksh ire Hathaway ln c,

[BRK) I I Gene:r31 R'e Corporation

I {GRN;) I I

I I I I General Rei nstnrance Far.aday Ha~cfin&S N>ew England: JI.sset United States A',dation­

C~~p'::Jrati ':J'n Limit:.ed M3n~ment Undervrriters lnc, [GRe) [FUL) (GR-NEAM) {USALJ)

I I I I I

Gef1 ~ral Star G~neral Star Genesis Genernl General General Re Indemnh y National tnsurance Rein su ra nc. Reinsuranc:! Lif '" O::Jmpany In surance Company Australia ,"'6 Corp::Jratian

{GSI) Company [Gle) Lt d. [GRAS} [GRL) [GSN) [GRA)

; ;

Faraday Rei nsurance

- Co. Limited (FRE)

Gen e 1"al R:e insurnnc:>

- Ufe: Australia Ltd. {G Rl..IIl

Genoeral Reinsuranc=!

- Africa Ltd. {GRS.!!!.)

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GENESIS JNSURANCE COMPANY

MANAGEMENT AND CONTROL

Annual Stockholders Meetings

The bylaws provide that there shall be an annual meeting of the stockholders for the election of directors and for the transaction of such other business that may come before such meeting. Special meetings of the stockholders may be called by the Board, the Chairman of the Board (Chairman), or the president. The presence at any meeting, in person or by proxy, of the holders of record of a majority of the shares issued and outstanding and entitled to vote shall constitute a quorum for the transaction ofbusiness.

Board of Directors

The number of directors shall be established by the Board or stockholders but shall not be less than five (5).

A meeting of the Board shall be held for organization, for the election of officers and for the transaction of such other business that may come before such meeting. Special meetings may be called by the Chairman, the president or any two directors.

A majority of the total number of members of the Board as constituted from time to time, but not less than three (3), shall constitute a quorum for the transaction of business. The Board may appoint standing committees and/or special committees, each consisting of at least two directors, to perform such duties as the Board shall determine.

Members of the Board serving the Company as of December 31, 2014, were as follows:

Director Title and Principal Business Affiliation

Robert Maffett Jones Chief Executive Officer and President, Genesis Insurance Company

Franklin Montross IV Chairman, Genesis Insurance Company Chairman and Chief Executive Officer, General Reinsurance Corporation Chairman, Chief Executive Officer and President, General Re Corporation

Edward Michael Nosenzo Senior Finance Manager, Group Finance, General Reinsurance Corporation

Victoria Jo Seeger Director and Chief Underwriter, Genesis Insurance Company

5

GENESIS lNSURANCE COWANY

Damon Nicholas Vocke Senior Vice President, General General Reinsurance Corporation Executive Vice President, General General Re Corporation

Counsel

Counsel a

and Secretary,

nd Secretary,

Officers

The elected officers shall be the Chairman, a president, a treasurer, and a secretary. All shall hold office for one year.

The executive officers serving the Company as ofDecember 31,2014, were as follows:

Franklin Montross IV Chairman Robert M. Jones Chief Executive Officer and President Solan B. Schwab Secretary William G. Gasdaska, JI. Treasurer

RELATED PARTY AGREEMENTS

The Company has the following intercompany agreements in place:

Master Services Agreement Effective August 1, 2014, and approved by the Department, substantially all GRN entities entered into a Master Services Agreement (MSA) which superseded existing management and inter-company service agreements. The MSA was intended to replace, in a single agreement, the many inter-affiliate service agreements that were in place between and among various GRN entities.

Investment Management Agreement The Company has an Investment Management Agreement with its affiliate, General Re-New England Asset Management Inc. (GR-NEAM). This agreement became effective on December 15, 2004, and provides that GR-NEAM will perform certain investment management services for GIC in return for an annual management fee. This agreement was subsequently amended as of January 1, 2009.

Tax Allocation Agreement The Company is party to a consolidated federal income tax return agreement with a group of approximately seven hundred other BH affiliates. The consolidated tax liability is allocated among affiliates in the ratio that each affiliate's separate return tax liability bears to the sum of the separate return tax liabilities of all affiliates that are members of the consolidated group. This agreement was subsequently amended as of March 14, 2011, with Departmental approval.

6

GENESIS INSURANCE COMPANY

Short-Term Investment Pool The Company is participating in a short-term investment pool which is governed by an agreement with affiliated companies, whereby participants pool funds and invest principally in commercial paper and certificates of deposit.

INSURANCE COVERAGES

GRN maintains fidelity bond coverage through various insurers. The financial institution fidelity bond coverage protects GRN and its subsidiaries for a single loss liability limit of $10,000,000 and an aggregate amount of $20,000,000, with a single loss deductible amount of $10,000,000 against loss resulting from dishonest or fraudulent acts of its directors, officers and employees. The Company's computer/crime coverages are self-insured with GRN with an aggregate limit of $20,000,000 with a deductible of $10,000,000. GRN and its subsidiaries are further protected by a commercial excess and umbrella policy with a limit of$15,000,000.

In addition to the fidelity bond insurance, the Company and its affiliates maintain insurance coverages with various insurance carriers including the following:

Company Coverage

Federal Insurance Company Financial Institution Bond, Commercial Excess and Umbrella Insurance and Business Auto

Great Northern Insurance Company General Liability and Property Insurance and Workers' Compensation

TERRlTORY AND PLAN OF OPERATION

The Company is licensed in all U.S. states, the District of Columbia and Puerto Rico to write property and casualty insurance focused on specialty and alternative forms of risk. GIC sources business through retail agents, wholesale brokers and program administrators.

GIC is a leading insurer of governmental accounts that retain significant amounts of insurable risk. The Company writes specialized commercial insurance policies on an admitted basis throughout the u.s. A significant portion of the Company's business is written as excess or large deductible insurance supporting alternative risk transfer programs for individual and group policyholders. The Company also writes primary insurance for mid-sized or large commercial accounts in specialty classes. The Company's business is distributed through retail and specialty brokers servicing specialty insurance or qualified self-insurers in the alternative risk transfer market. Operations are administered from the main office in Stamford, CT and supported by regional production offices in Atlanta, Chicago and San Francisco.

7

GENESIS INSURANCE COWANY

REINSURANCE

Reinsurance Ceded Effective January 1, 2005, the Company became a party to a 50% loss portfolio reinsurance agreement and a 50% quota share reinsurance agreement with affiliated insurance companies. The reinsurers for both agreements are Columbia Insurance Company (20%) and National Indemnity Company (80%). As additional security, BH provided a net worth maintenance agreement to GRC which further guarantees these two reinsurance agreements.

The Company also ceded to an affiliated reinsurance company, 100% of the small amount of the long term care business it wrote, which is non cancelable and is now in run-off.

In connection with the merger of FIC into GIC which was effective December 31, 2012, FIC entered into a loss Portfolio Transfer (LPT) with GRC. The 100% LPT arrangement, effective January 1, 2012, ceded all net liabilities i.e. loss, allocated loss adjustments expense and unallocated loss adjustments expense. As a result, FIC's net outstanding reserves are zero.

Effective December 7, 2014, the Company became party to a casualty (Ski Paragon) excess of loss reinsurance contract. The contract is a per policy 100% quota share agreement with 80% participation. There were no ceded reserves as of December 31, 2014.

INFORMATION TECHNOLOGY CONTROLS

The scope of the GlC Information Technology (IT) review was modified to focus solely on the responses to the Information Technology Planning Questionnaire (ITPQ), the 2014 CPA work papers and a limited follow-up on the previous examination findings and recommendations.

Due to the modified scope noted above, the result of the review of the GIC IT General Controls was that no reliance would be placed on IT controls.

ACCOUNTS AND RECORDS

The Company utilizes System Analysis and Program Development general ledger software as the basis of financial statement reporting. Booke Seminar's The Complete Package software is utilized for Annual Statement preparation and statutory filings .. In addition, the Company's investment manager, GR-NEAM, uses "Complete Asset Management Reporting and Analytic" software for investment accounting and reporting services.

The Company's core insurance operations accounting application, GenServe, IS used to administer underwriting, policy, claims, and premium processing.

Wheatley Insurance Systems application is used to house the Company's runoff business. This includes the runoff business associated with the FIC merger that was effective December 31, 2012.

8

GENESIS INSURANCE COMPANY

FINANCIAL STATEMENTS

The following statements represent the Company's financial position, as filed by the Company as ofDecember 31, 2014. No adjustments were made to surplus as a result of the examination.

ASSETS

$

1

Ledger Assets

11,261,577 23,568,736

156,729,264 3,000

251,221

2

Nonadmitted Assets

$

3

Net Admitted

Assets

11,261 ,577 23,568,736

156,729,264 3,000

251,221

Bonds Common stocks Cash, cash equivalents and short-term investments Receivable for securities Investment income due and accrued Premiums and considerations: Uncollected premiums and agents' balances in the

course of collection Deferred premiums, agents' balances and

tnstallments booked but deferred and not yet due Reinsurance: Amounts recoverable from reinsurers

494,675

70,922

1,506,441

$15,936 478,739

70,922

1,506,441 Aoqreqate write-ins for other than invested assets 591,863 207,043 384,820

Total $.194,477,699 ~222 ,979 S194.254.72.Q

9

GENESIS INSURANCE COMYANY

LIABILITIES, SURPLUS AND OTHER FUNDS

Losses $40,513,222 Loss adjustment expenses 8,871,746 Taxes, licenses and fees 5,000 Current federal and foreign income taxes 5,042 Net deferred tax liability 1,746,852 Unearned premiums 6,404,494 Ceded reinsurance premiums payable (net of ceding commissions) 1,223,159 Remittances and items not allocated 172,854 Provision for reinsurance 736,000 Payable to parent, subsidiaries and affiliates 1,546,553 Aooreoate write-ins for liabilities 357,212

Total liabilities 61,582,134

Common capital stock Gross paid in and contributed surplus Unassigned funds (surplus)

3,500,000 70,500,000 58,672,586

Surplus as regards policyholders 132,672,586

Totals $194,2_54,720

10

GENESIS INSURANCE COMPANY

STATEMENT OF INCOME

UNDERWRITING INCOME Prem iums earned

DEDUCTIONS Losses incurred Loss adjustment expenses incurred Other underwriting expenses incurred

$11,955,493

5,482,139 907,841

3,360,085 Total underwriting deductions 9,750,065

Net underwriting gain (loss) 2,205,428 INVESTMENT INCOME

Net investment income earned Net realized capital gains (losses)

877,148 6,081

Net investment gains 883 ,229

OTHER INCOME Net gain (loss) from agents' or premium balances charged off (13,037) Total other income (13,037)

Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes

Dividends to policyholders 3,075,620

0

Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes

Federal and foreign income taxes

3,075,620 793,170

Net income 2,282,450

CAPITAL AND SURPLUS ACCOUNT Surplus as regards policyholders, December 31 prior year 142,926,627

Net income 2,282 ,450 Change in net unrealized capital gains or (losses) less capital gains tax 1,067,918 Change in net deferred income tax (64,473) Change in nonadmitted assets (15,936) Change in provision for reinsurance 476,000 Dividends to stockholders (14,000,000) Change in surplus as regards policyholders for the year (10,254,041'

Surplus as regards policyholders, December 31 current year $132672 586

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GENESIS INSURANCE COMP ANY

LOSSES AND LOSS ADJUSTMENT EXPENSES (LAB) $49.384,968

The following items are included in the captioned account:

Losses $40)513,222 LAB $ 8,871,746

$49.384,968

The Department performed a risk-focused actuarial analysis of the loss and LAB reserves of the Company, as of December 31,2014. The Department's review was conducted based upon the prevailing standards and principles of the Casualty Actuarial Society and the American Academy of Actuaries.

The review included, but was not limited to, the following:

• the Company's 2014 Annual Statement; • the 2014 Statement of Actuarial Opinion (SAO); • the 2014 Actuarial Opinion Summary; and • the 2014 Actuarial Report accompanying the SAO.

Reserving Risk Key actuarial financial reporting risks were reviewed and tested. As a result of the risk assessment process, the Department performed additional testing regarding reserve adequacy as it relates to the determination of the loss and LAB reserves including assessing the appropriateness of the methodologies, assumptions and computations. The Department's review of loss and LAB reserves was performed by reserving segment as depicted in the Actuarial Report; this included independent reserve analyses for selected reserve segments, recalculations and qualitative reviews.

Pricing and Underwriting Risk Key risks related to the actuarial pricing process were reviewed and tested. As a result of the risk assessment process, the Department performed additional testing of selected pricing reviews regarding the appropriateness of the methodologies and assumptions and considered the use of these actuarial analyses by the underwriters.

Conclusion Based upon the risk-focused assessment and review procedures, no material concerns were noted which affected the Company's ability to manage its reserving, and pricing and underwriting risk.

12

GENESIS INSURANCE CO:MPANY

COMMON CAPITAL STOCK $3,500,000

At December 31,2014, there were 3,500,000 shares authorized, issued and outstanding, having a par value of $1 per share. All shares are owned by GRC.

GROSS PAID IN AND CONTRIBUTED SURPLUS $70,5QQ..QQQ

During the period under examination there was an increase of $24,000,000 in 2012 due to the merger ofFIC into GIC.

UNASSIGNED FUNDS (SURPLUS) $58,672.586

The following exhibit reflects the balance of tills account during the five year period under review:

--2010

.$60,505,532

2011 $58,678,940 2012 * $61,167,920 2013 $68,926,627 2014 $58,672,586

* GIC's unassigned funds of $66,614,603 and FIC's negative surplus of ($5,446,683) were merged together for a total of $61,167,920.

SUBSEQUENT EVENT

The Company will be re-domesticating to the state of Delaware during the first half of 20 16.

CONCLUSION

As of December 31, 2014, the Company reported admitted assets of $194,254,720, liabilities of $61 ,582,134, and surplus of $132,672,586. During the period under examination, admitted assets increased $7,650,250, liabilities decreased $24,101,510, and surplus as regards policyholders increased $31,751,760.

13

GENESIS INSURANCE COMPANY

SIGNATURE

In addition to the undersigned, the following members of the Department participated in the examination: Joseph Marcantonio, AFE, CISA, AES; Mark Murphy, CFE; Susan Pulaski, CPA; Susan Gozzo-Andrews, FCAS, MAAA, RPLU+; and the professional services fum of INS.

I, Michael Daniels, CFE, do solemnly swear that the foregoing report on examination is hereby represented to be a full and true statement of the condition and affairs of the subject insurer as of December 31, 2014, to the best of my information, knowledge and belief.

Respectfully submitted,

/JJiJ-I Michael Daniels, CFE Examiner-In-Charge State of Connecticut Insurance Department

State of Connecticut ss

County of Hartford

Subscribed and sworn before me, Pa+-r-lC ( G (6u..-f-{-er , Notary Public

on this ---,S=:...-I'_G._ day of mCU:j , 2016.

PcXt2ceMe.-~ Notary Public

My Commission Expires S-ep-JeGYlbC/" 2:,(.J , ;;x::.>\. i?

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