STATEMENTOFACTUARIALOPINION

AnnualStatementofABCInsuranceCompany,FortheYearEndedDecember31 , 2013

Page1of6

IDENTIFICATION

I,Percy Jackson,amassociatedwithXYZActuarialResources,Inc. I amamemberoftheAmericanAcademyofActuaries ingoodstandingandmeetitsqualificationstandards.I amalsoaFellowoftheCasualtyActuarialSociety.IwasappointedbytheBoardofDirectorsofABCInsuranceCompany,Inc.("Company")onJanuary2 , 2013torenderthisopinion.

SCOPE

I haveexaminedthereserveslistedinExhibitA,asshownintheAnnualStatementoftheCompanyaspreparedforfilingwithstateregulatoryofficials,asofDecember31 , 2013andreviewedinformationprovidedtomeupthroughandincludingApril18,2014.TheitemsinthisScopeparagraphonwhichI amexpressinganopinion,reflecttheLossReserveDisclosureitems8 through13 inExhibitB.

Informingmyopiniononthelossandlossadjustmentexpensereserves,IreliedupondataandrelatedinformationpreparedbyagentsandofficersoftheCompany. Ievaluatedthedatauseddirectlyinmyanalysisforreasonablenessandconsistency.Myevaluationdidnotrevealanydatapointsmateriallyaffectingmyanalysisthatfelloutsideoftherangeofreasonablepossibilities.

Inperformingthisevaluation, I haveassumedthattheCompany{a)useditsbesteffortstosupplyaccurateandcompletedataand(b)didnotknowinglyprovideanyinaccuratedata.I alsoreconciledthegross(direct+assumed)andnetpaidlossandlossadjustmentexpenseamountsandgrossandnetcasereserveamountsasofDecember31 , 2013usedinmyanalysisagainstScheduleP-Part1oftheCompany'scurrentAnnualStatement.Thedifferences inourreconciliationwereduetothetreatmentofdeductiblesandcededreinsurance.Thesedifferencesinthereconciliationrepresentapproximately2%ofnetcasereserves.Inotherrespects,myexaminationincludedtheuseofsuchactuarialassumptionsandmethodsandsuchtestsofcalculationsasI considerednecessary.

Myreviewwaslimitedtoitems inExhibitAanddidnotincludeananalysisofanyincomestatementitemsorotherbalancesheetitems.Myopiniononthereservesisbasedupontheassumptionthatallreservesarebackedbyvalidassets,whichhavesuitablyscheduledmaturitiesand/oradequateliquiditytomeetcashflow requirements.

OPINION

This isaReasonableOpinion.

Inmyopinion,theamountscarriedintheScopeparagraphonaccountof theitemsidentified:

a.meettherequirementsoftheinsurancelawsof Arizona;

b.areconsistent withreservescomputedinaccordancewithacceptedlossreservingstandardsandprinciples;

c.makeareasonableprovisionintheaggregateforallunpaidlossandlossexpenseobligationsoftheCompanyunderthe termsofitscontractsandagreements.

Intheaggregate,theCompany'sstatedreservesonbothanetanddirectandassumedbasisarewithinareasonable rangeof myindependent reserveestimates,hencethestated reservesmakeareasonableprovisionfortheliabilitiesassociatedwiththespecifiedreserves.Inmyopinion,thereservesdescribedinthiscertificationareconsistentwithreservescomputed inaccordancewithstandardsandprinciplesestablishedbytheActuarialStandardsBoardandarefairlystated. Thisopinionappliestolossesandlossadjustment expensescombined.

TheCompanywritesnopoliciesorcontractsrelated tosingleorfixedpremiumpolicieswithcoverageperiodsofthirteenmonthsorgreaterwhicharenon-cancelableandnotsubjecttopremiumincrease.

RELEVANT COMMENTS

TheintendedpurposeofthisOpinionistocomplywithNAICAnnualStatementInstructions.TheintendedusersoftheOpinionare:

regulatorswithwhichitfilesitsAnnualStatement;

theCompany;and

AuditorsfortheCompany.

Thestatedbasesofthe reservespresentedinthisOpinionarefullnominalamountsconsistentwithStatutoryAccountingPrinciples(SAP);noadjustmentsaremadetoreflect eitherthetimevalueofmoneyortheriskofadversedeviation.NomaterialassumptionsthatwereusedindevelopingthisOpinionwereprescribedbylaworregulation.

a.RiskofMaterialAdverseDeviation

ThereisariskofmaterialadversedeviationintheCompany's lossandlossadjustmentexpensereserves.Riskfactorsmateriallyaffectinglossandlossadjustmentexpensereservesforthe Companyincludetherelatively shorttimetheCompanyhasbeeninoperation,thepotentialforfuturejudicialandlegislativechangestoincreasevariabilityinultimatelosses,andthesignificantlevelsofreinsuranceutilizedbytheCompanyandthecorrespondingsignificantamountofreinsurancerecoverableoncededreserves

ThematerialitythresholdIusedformakingthedeterminationofthesignificantriskofmaterialadverse deviationis5%ofsurplus,orapproximately$30,000.Thereasonforchoosinga5%materialitythresholdisitsconsistencywiththematerialitythresholdcommonlyusedinstatutoryfinancialexaminations.

b.OtherDisclosuresinExhibitB

ReservesareestablishedbytheCompanygrossofanticipatedsalvageandsubrogation.TheCompanydoesnotdiscountlossandlossadjustmentexpensereserves.TheCompanydoesnotparticipateinanyvoluntaryorinvoluntarypools.IhavereviewedtheCompany'sexposuretoasbestosandenvironmentalclaims.In myopinion,thereisa remotechanceofmaterialliability,sincetheCompanywritesonlynursinghomeprofessionalliability.

c.Reinsurance

BasedondiscussionswithCompany managementandareviewofScheduleFoftheannualstatement,Iamnotawareofanyreinsurancecontractthateitherhasbeenor shouldhavebeenaccountedforaslossportfoliotransfer, retroactivereinsurance orfinancialreinsurance.

IndicatedreservesonanetbasisreflectanticipatedrecoverablesfromseveralreinsurersaslistedinScheduleF,Part3oftheCompany's201 3AnnualStatement.There arenootherrecoverablescontemplatedinthisopinion.

Myopiniononthelossandlossadjustmentexpensereservesnetofcededreinsuranceassumesthatallcededreinsuranceisvalidandcollectible. TheCompanyhasrepresentedtomethatitknowsofnouncollectiblereinsurancecessions. TheCompanyreinsureswithOffshore Affiliated Inc.(OAI )whichappears tobebothunauthorizedandunratedandseveralLloyd'ssyndicates. Management has represented that all OAI collectibles are collateralized at a rate of 80% or more. Thereforecededlossreservesarealleitherwithcompaniesrated"A"orbetterbyAMBestorover80%collateralized. Noamountsaremorethan90daysoverdue. Therefore,reinsurancecollectabilitydoesnotappeartobeamaterialissue.

Ihave reviewedthePart2-PropertyandCasualtyInterrogatory #9regardingtherisktransferelementsofitsreinsurancecontracts.Furthermore,Idiscussed thecompany'sreinsuranceprogramwithmanagement. Ihavenotperformedanindependentevaluationoftherisktransferelementsofindividualcontractsbutrelyon management'srepresentationsthatthecreditforreinsuranceisconsistentwithSSAPNo.62-PropertyandCasualtyReinsurance.

d.IRISRatios

TheCompany'sresultsfor theIRISTestsforOne-YearReserveDevelopmenttoSurplusandEstimatedCurrentReserveDeficiencytoSurplusdonotproduceanyexceptionalvalues.TheCompanyresultfortheTwo-YearReserveDevelopmenttoSurplustestdoesproduceanunusualresultof27.1%.Thisresultisduetoadversedevelopmentinthe2007and2009reportyears.

e.MethodsandAssumptions

Therewere nosignificantchangesintheactuarialassumptionsand methodsfromthosepreviouslyemployed.Thereweremultipleminorchangesinassumptions regardingtheapplicationofreinsurance contractsbypolicyperiodandthetreatmentofdeductiblesbyreinsurancecontracts.

VARIABILITY

Inevaluatingwhetherthereservesmakeareasonableprovisionforunpaidlossesandlossexpenses,itisnecessarytoprojectfuturelossandlossadjustmentexpensepayments. Itiscertainthatactualfuturelossesandlossadjustmentexpenseswillnotdevelopexactlyasprojectedandmay,infact,varysignificantlyfromtheprojections. Further,myprojections makenoprovisionforextraordinaryfutureemergenceofnewclassesoflossesortypesoflossesnotsufficiently representedintheCompany'shistoricaldatabaseorwhicharenotyetquantifiable.

ACTUARIALREPORT

Anactuarialreportandanyunderlyingactuarial workpaperssupportingthefindingsexpressedinthis StatementofActuarialOpinionwillberetainedforaperiodofseven yearsandavailableforregulatoryexamination.

Thisstatementofopinionissolelyfortheuseof,and onlytoberelieduponby,theCompanyandthevariousstatedepartmentswithwhichitfilesitsAnnualStatement.

Date:April1,2014

SignatureofActuary

Percy Jackson,FCAS,MAAA

XYZActuarialResources,Inc.Address

Phone number

ExhibitA:SCOPE

LossReserves / Columnl Amount
1. / Reservefor UnpaidLosses(Liabilities,SurplusandOtherFunds / 1.
page,Col.1 , Line1) / 759,159
2. / ReserveforUnpaidLossAdjustmentExpenses(Liabilities,SurplusandOtherFundspage,Col.1 ,Line3) / 2. / 1 60,571
3. / ReserveforUnpaidLosses-DirectandAssumed{ScheduleP, / 3.
4. / Part1 ,SummaryTotalsfromCols.1 3and1 5,line12•1000)ReserveforUnpaidLossAdjustmentExpenses-Directand / 4. / 4, 299,000
Assumed(shouldequal ScheduleP,Part1 ,Summary Totalsfrom
Cols.17,19and21 ,Line12•1000)
5. / ThePage 3write-initemreserve,"RetroactiveReinsurance / 5.
ReserveAssumed" / 0
6. / OtherLossReserveitemsonwhichtheAppointedActuaryis / 6.
expressinganOpinion(listseparately) / 0

PremiumReservesColumn1

Amount

7. / ReserveforDirectandAssumedUnearnedPremiumsforLongDuration Contracts / $0
8. / ReserveforNetUnearnedPremiumsforLongDurationContracts / $0
9. / OtherPremiumReserveitemsonwhichtheAppointedActuary
isexpressinganOpinion{list separately) / $0

ExhibitB:DISCLOSURES

Column1Column2

Column3

Column4

1.NameoftheAppointedActuary

2.TheAppointedActuary'sRelationshiptotheCompany. EnterEorCbaseduponthefollowing:

EifanEmployeeor theCompanyorGroupCifaConsultant

3.TheAppointedActuaryhasthefollowingdesignation:

FifaFellowoftheCasualtyActuarialSociety (FCAS)

AifanAssociateoftheCasualtyActuarialSociety(ACAS)

MifnotamemberoftheCasualtyActuarialSociety,butaMemberoftheAmericanAcademyofActuaries(MAAA)approvedbytheCasualtyPracticeCouncil,asdocumentedwiththeattachedapproval letter.

OforOther

4.TypeofOpinion,asidentifiedintheOPINIONparagraph. EnterR,I,E,Q,orNbaseduponthefollowing:

RifReasonable

IifInadequateorDeficientProvision EifExcessiveorRedundantProvision

Q ifQualified.UseQ whenpartoftheOPINIONis Qualified.

NifNoOpinion

Jacksonw.

c

F

R

s.MaterialityStandardexpressed inUSdollars(UsedtoAnswerQuestion#6)s

6.AretheresignificantrisksthatcouldresultinMaterialAdverseDeviation?

30,000_

Yes [X)

No[ )

N/A[ )

7.StatutorySurplus(liabilities,Col.1 , Line35)

8.Anticipated netsalvageandsubrogationincludedasareductiontolossreservesasreportedinScheduleP(shouldequalPart1Summary,Col.23,

$650,000

line12•1000)So_

9.DiscountincludedasareductioninlossreservesandlossexpensereservesasreportedinScheduleP

9.1Non-tabularDiscount[Notes,line31823,(Amounts1 , 2,3,4)],

ElectronicFilingCols.7,8,9,&10$0

9.2TabularDiscount[Notes,ffne31A23,(Amounts12)],Electronic

10. / FilingCols.78
Thenetreservesforlossesandexpensesforthecompany'sshareofvoluntary / $ ----- / --
andinvoluntaryunderwritingpools'andassociations'unpaidlossesand
expensesthatareincludedinreservesshownontheliabilities,SurplusandOtherFundspage,LossesandLossAdjustmentExpenseslines. / $0
11. / Thenetreservesforlossesandlossadjustmentexpensesthatthecompany
carriesforthefollowingliabilitiesincludedontheliabilities,Surplusand
OtherFundspage,LossesandLossAdjustmentExpenseslines.•
11.1Asbestos,asdisclosedintheNotestoFinancialStatements(Notes,
Line32A03D,endingnetasbestosreservesforcurrentyear)
Electronic FilingCol.11 / $0

11.2 Environmental,asdisclosedintheNotestoFinancialStatements(Notes,Line320030,endingnetenvironmentalreservesforcurrent

year)ElectronicFilingCol.11$0

12.Thetotalclaimsmadeextendedlossandexpensereserve (SchedulePInterrogatories).

12.1Amount reportedaslossreserves$0

12.2Amountreportedasunearnedpremium reserves$0

13.OtheritemsonwhichtheAppointedActuaryisprovidingRelevantComment

(listseparately)$0

•Thereservesdisclosedinitem11above,shouldexcludeamountsrelatingtocontractsspecificallywrittentocoverasbestos andenvironmentalexposures. Contractsspecificallywrittentocovertheseexposures includeEnvironmentalImpairmentLiability(post1986),AsbestosAbatement,PollutionLegalLiability,Contractor'sPollution Liability,Consultant'sEnvironmentalLiability, andPollutionandRemediationLegalLiability.