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Clarification of the Description of the Extraordinary Dividend in the Policyholder Information Statement

On page 2 (Important Information) and page 9 (Question 23) of the Policyholder Information Statement (the “PIS”) that was sent to Record Date Policyholders, it sets forth the following:

Upon the completion of the proposed transaction, the issuance by [Medical Liability Mutual Insurance Company (“MLMIC”)] of an extraordinary dividend to [National Indemnity Company (“NICO”)] in the amount of $1.905 billion, after which MLMIC commits to maintain at least the capital and surplus necessary to maintain MLMIC’s company action level risk-based capital ratio (a financial metric used in New York Insurance Law Section 1324) above 350%.

The basis upon which the $1.905 billion dividend amount was determined was on MLMIC’s authorized control level risk-based capital and not its company action level risk-based capital.  As a result, the reference to “company action level” should be deleted and the relevant sentences on page 2 and page 9 of the PIS should be revised to reflect that change.  It is also being revised to clarify that NICO not MLMIC intends to keep sufficient capital in MLMIC so that its risk-based capital ratio does not fall below 350%.  The revised language for page 2 and page 9 is as follows:

Upon the completion of the proposed transaction, the issuance by MLMIC of an extraordinary dividend to NICO in the amount of $1.905 billion, after which NICO intends to keep sufficient capital in MLMIC so that MLMIC has at least the capital and surplus necessary to maintain its risk-based capital ratio (a financial metric used in New York Insurance Law Section 1324) above 350%.

If you have any questions about this clarification, please call 1-888-467-9074 from 9 a.m. to 4 p.m., Eastern Time, Monday through Friday.

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