Discount

Number of years Free Cash flow Growth rate Discount rate

multiplier DCF
0 $5,017,830
1 $5,268,722 1.05 1.15 0.87 $4,581,497
2 $5,532,158 1.05 1.15 0.76 $4,183,106
3 $5,808,765 1.05 1.15 0.66 $3,819,358
4 $6,099,204 1.05 1.15 0.57 $3,487,240
5 $6,404,164 1.05 1.15 0.50 $3,184,001
6 $6,724,372 1.05 1.15 0.43 $2,907,132
7 $7,060,591 1.05 1.15 0.38 $2,654,338
8 $7,413,620 1.05 1.15 0.33 $2,423,526
9 $7,784,301 1.05 1.15 0.28 $2,212,784
10 $8,173,516 1.05 1.15 0.25 $2,020,368
Total FCF available over 10 years = $31,473,349
Terminal value after 10 years = $16,162,945.85
Current book value at 10% discount = $63,900,000
Total number of shares including 50% dillutio 12,045,308
Intrinsic Value per share = $9.26

NOTES 1. Sold off company owned and franchised agencies in 2004 and 2005
2. Decided to reduce automobile business and increase property and casualty business in 2005
3. Mobile home coverage capped at 10% of total exposure in 2005
4. Inhouse adjusters and legal team for claims settlement
5. State owned insurance company provided mandate to compete with private insurance from 2
6. Soft market in 2007 in Florida due to competition from Citizen
7. Highly dependent on Florida economy for growth and profitability
8. Approx 212 insurance companies operating in Florida in 2008
9. Biggest risk is catastrophic hurricane…..Conc in Florida market…..High Expense ratios
10. CAGR of shareholder equity from 2001 - 2009E = 22.28%
11. CAGR of book value per share from 2001 - 2009E = 13.85%

2003 2004 2005

Premium in $ % Premium in $ % Premium in $

Gross Premiums written
Automobile $49,298,000 67.50% $24,239,000 24.10% $20,665,000
Federal flood $0 0.00% $0 0.00% $0
Homeowners $16,804,000 23.00% $62,400,000 62.00% $75,741,000
Mobile home $1,739,000 2.40% $1,513,000 1.50% $441,000
Commercial General
Liability $5,151,000 7.10% $12,510,000 12.40% $22,593,000
Total gross premiums
written $72,992,000 100.00% $100,662,000 100.00% $119,440,000
Ceded Premiums
Automobile $ 19,498,000 88.30% -$992,000 -6.40% -$5,000
Federal flood $ - 0.00% $0 0.00% $0
Homeowners $ 2,593,000 11.70% $14,932,000 96.40% $31,111,000
Mobile home $ - 0.00% $1,546,000 10.00% $308,000
Commercial General
Liability $ - 0.00% $0 0.00% $0
Total ceded premiums $ 22,091,000 100.00% $15,486,000 100.00% $31,414,000

Net written premiums

Automobile $29,800,000 58.60% $25,231,000 29.60% $20,670,000
Federal flood $0 0.00% $0 0.00% $0
Homeowners $14,211,000 27.90% $47,468,000 55.70% $44,630,000
Mobile home $1,739,000 3.40% -$33,000 0.00% $133,000
Commercial General
Liability $5,151,000 10.10% $12,510,000 14.70% $22,593,000
Total net premiums $50,901,000 100.00% $85,176,000 100.00% $88,026,000

Net Premiums/Gross
Premiums 69.74% 84.62% 73.70%

2003 2004 2005 2006 2007

Total number of
homeowners policy in force 40125 42418 36241
Average policy premium for
homeowners $1,571 $1,849 $2,727 $2,769
Average policy premium for
mobile homeowners $315 $346 $334 $0
Average risk in force per
policy for homeowners $500,000 $500,000 $750,000 $750,000

Average risk in force per

policy for mobile
homeowners $30,000 $30,000 $30,000 $0
Max risk in force per policy
for homeowners $900,000 $900,000 $1,350,000 $1,350,000

Average risk in force per

policy for mobile
homeowners $60,000 $60,000 $60,000 $0

Average policy rate increase

for property and casualty
segment 22.40% 14.90% 38.30% -15.20%
Average policy premium for
commercial liability $648 $763 $826 $989

Average risk in force per

policy for commercial
liability $200,000 $200,000 $200,000 $200,000

Max risk in force per policy

for commercial liability $2,000,000 $2,000,000 $2,000,000 $2,000,000

Average risk in force per

policy for mobile
homeowners

Average policy rate increase

for property and casualty
segment

Geographic distribution of Commercial Liability Premiums

2003 2004 2005
Amount % Amount % Amount
Alabama
Arkansas
California
Florida $5,067,000 98.40% $10,727,000 85.70% $18,293,000
Georgia $84,000 1.60% $793,000 6.40% $1,258,000
Kentucky
Louisiana $0 0.00% $990,000 7.90% $3,042,000
Maryland
South Carolina
Texas
Virginia

TOTAL $5,151,000 100.00% $12,510,000 100.00% $22,593,000

Combined ratio 2003 2004 2005 2006 2007

Loss ratio 67.40% 117.70% 65.40% 54.80% 54.60%

Expense ratio 25.70% 23.10% 35.30% 42.50% 38.90%
Combined ratio 93.10% 140.80% 100.70% 97.30% 93.50%

Book Value 2001 2002 2003 2004 2005

Shareholders equity $14,209,000 $18,098,000 $32,046,000 $24,977,700 $46,683,649
Dilluted shares 5,022,938 6,211,625 6,628,076
Book value per share $3.13 $4.03 $5.89 $4.13 $6.02

Fully dilluted net income

per share from continuing
operations -$0.26 $1.13 $1.85 -$2.33 $1.67
Net premiums earned $20,256,000 $26,915,000 $42,285,000 $66,241,000 $82,963,000
Total revenue $30,928,000 $33,991,000 $53,588,000 $76,571,000 $94,669,000
Premiums as a % of total
revenue 65.49% 79.18% 78.91% 86.51% 87.63%
Loss and LAE $16,155,000 $15,987,000 $27,509,000 $74,993,000 $48,336,000
Total expenses $32,782,000 $25,206,000 $39,937,000 $98,777,000 $78,899,000
Loss and LAE as % of total
expenses 49.28% 63.43% 68.88% 75.92% 61.26%

Operating Profit / Loss

before tax and extra
ordinary gains -$1,854,000 $8,785,000 $13,651,000 -$22,206,000 $15,770,000
Dividends paid $1,242,678 $1,902,000 $2,339,000
Profit/Loss after one - time
items

Income without one time

items and with dividends
paid before taxes $14,893,678 -$20,304,000 $18,109,000
Free cashflow (Operating -
financing) $6,742,627 -$12,821,419 $11,382,683
SAP based Reserves $37,390,000 $25,733,000
SAP actual losses $80,775,000 $56,024,000

Free Cashflow = Profit

before taxes+
Amortization+Depreciation-
Capital expenses $8,739,807 -$13,822,000 $11,122,000
Expenses:
Losses and LAE 41,868 47,619 4 4,400 48,336 74,993
Operating and underwriting expenses 7,102 12,684 1 3,160 8,219 8,140
Salaries and wages 7,428 6,732 7 ,011 6,384 6,134
Interest expense - 173 6 56 1,398 1,087
Policy acquisition costs, net of amortization 14,760 19,420 1 7,395 14,561 8,423
Total expenses 71,159 86,627 8 2,622 78,899 98,777
 Average free cash flow from 2003 - 2009E

casualty business in 2005

th private insurance from 2007

igh Expense ratios

2005 2006 2007 2008 2009

Premium in Premium
% Premium in $ % Premium in $ % $ % in $ %

17.30% $6,064,000 4.00% $1,867,000 1.40% $487,000 0.60%

0.00% $0 0.00% $0 0.00% $3,263,000 3.70%
63.40% $114,388,000 74.90% $99,502,000 74.50% $60,709,000 68.70%
0.40% $0 0.00% $0 0.00% $0 0.00%

18.90% $32,213,000 21.10% $32,222,000 24.10% $23,790,000 27.00%

100.00% $152,665,000 100.00% $133,591,000 100.00% $88,249,000 100.00%

 0.00% $0 0.00% $0 0.00% $0 0.00%
0.00% $0 0.00% $0 0.00% $3,263,000 9.40%
99.00% $67,520,000 100.00% $44,551,000 100.00% $31,291,000 90.60%
1.00% $0 0.00% $0 0.00% $0 0.00%

0.00% $0 0.00% $0 0.00% $0 0.00%

100.00% $67,520,000 100.00% $44,551,000 100.00% $34,554,000 100.00%

23.40% $6,064,000 7.20% $1,867,000 2.10% $487,000 0.90%

0.00% $0 0.00% $0 0.00% $0 0.00%
50.70% $46,868,000 55.00% $54,952,000 61.70% $29,418,000 54.80%
0.20% $0 0.00% $0 0.00% $0 0.00%

25.70% $32,213,000 37.80% $32,222,000 36.20% $23,790,000 44.30%

100.00% $85,145,000 100.00% $89,041,000 100.00% $53,695,000 100.00%

55.77% 66.65% 60.84%

2008 2009

30884

$2,016

$0

$750,000

$0

$1,350,000

$0

-11.30%
 $798

$200,000

$2,000,000

2006 2007 2008 2009

% Amount % Amount % Amount % Amount %
$26,000 0.08% $117,000 0.49%
$12,000 0.05%
$23,000 0.07% $269,000 1.13%
81.00% $22,965,000 71.29% $21,192,000 65.77% $16,011,000 67.30%
5.50% $1,805,000 5.60% $1,023,000 3.17% $568,000 2.39%
$9,000 0.03% $8,000 0.03% $1,000 0.00%
13.50% $5,743,000 17.83% $5,595,000 17.36% $4,481,000 18.84%
$2,000 0.01%
$77,000 0.24% $182,000 0.57% $70,000 0.29%
$1,604,000 4.98% $4,127,000 12.81% $2,252,000 9.47%
$10,000 0.03% $46,000 0.14% $7,000 0.03%

100.00% $32,213,000 100.00% $32,222,000 100.00% $23,790,000 100.00%

2008 2009

69.10%
43.90%
113.00% 0.00%

2006 2007 2008 2009E

 $66,193,000 $81,257,000 $76,231,000 $71,000,000
8,085,722 8,030,205 8,030,205 8,030,205
$8.38 $10.32 $9.51 $8.84

$1.72 $2.65 -$0.31 -$0.80

$89,348,000 $99,224,000 $65,130,000 $50,240,000
$103,915,000 $119,132,000 $67,357,000 $60,839,000

85.98% 83.29% 96.69% 82.58%

$44,400,000 $47,619,000 $41,868,000 $38,620,000
$82,622,000 $86,627,000 $71,159,000 $67,749,000

53.74% 54.97% 58.84% 57.00%

$21,293,000 $32,505,000 -$3,820,200 -$8,531,000

$4,290,000 $5,758,000 $5,697,000 $1,927,225

$5,800,000

$25,583,000 $32,463,000 $1,876,800 -$6,603,775

$14,026,000 $11,712,000 -$13,600,000 -$4,400,000

$27,259,000 $39,589,000 $52,094,000
$50,571,000 $54,992,000 $46,185,000

$13,541,000 $21,170,000 -$2,411,000 -$3,215,000