2019 Risk Managers Information MeetingFebruary 25, 2019

Policyholders’ Surplus (Pre-Distribution)

$1.2B

Distribution$75M

Net Combined Ratio

78.2%

Total Investment Return(1.04)%

2018 Highlights

Changing Currents

10-Year Surplus Growth

$1.135B at 12/31/18

5 Year Surplus Growth – 28% 10 Year Surplus Growth – 143%

Total Assets = $2.1B

Surplus planned to slowly decline over next 3-5 years

$0

$200

$400

$600

$800

$1,000

$1,200

2018201720162015201420132012201120102009

Changing Currents

Income Contribution (pre-tax) (in $ millions)

Surplus Contribution

326

804

(193)

(25)

Last 10 Years

Net UW Contribution Investment ReturnsAnnual Distribution Supplemental Distribution

Since 2009, 19% of surplus growth has been returned to the membership in cash distributions

Changing Currents

34

46

34

(5)

31

(17)

160

65

29

96

(50)

(40)

(25)

(20)

(20)

(25)

(100) (50) - 50 100 150 200 250

2018

2017

2016

2015

2014Net UW Contribution

Investment Returns

Annual Distribution

Supplemental Distribution

Loss Reserves – Carried vs. Indicated (in $ thousands, where applicable)

EIM Carried Reserves - $431M5.1% above Central Estimate

Low -$342M

Central -$411M

High -$478M

Actuarial Range

Reserve Adequacy

Changing Currents

-1.04%

3.73%

3.97%

4.23%

5.30%

6.70%

-0.91%

3.62%

3.72%

4.11%

4.81%

6.15%

One Year

Two Years

Three Years

Five Years

Seven Years

Ten Years

Benchmark ReturnAnnualized Total Return

Changing Currents

Investment Performance

Strategic Investment AllocationTotal Investment Portfolio = $1.7B

25% 25% 25% 25% 25%

35% 40% 45% 50% 52%

25% 20% 15% 10% 8%

15% 15% 15% 15% 15%

2019 2020 2021 2022 2023

Target Allocation Changes Ahead

Equities Taxable Bonds Tax-Exempt Bonds Alternatives

Changing Currents

2018 IAC Survey ResultsEIM Capitalization

14%

86%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Adquately capitalizedOver-capitalized

Changing Currents

$966M

$169M

$0

$200

$400

$600

$800

$1,000

$1,200

TVaR = $250M

“A” Minimum

$716M

Risk Capacity – ability to withstand a 1/200 entity-wide TVaR and maintain an “A” rating by AM Best

Available Surplus

Changing Currents

Capital Adequacy

$18 $20 $20 $20 $25 $40

$50 $50 $50 $60 $60

$25 $25 $25

$25 $25

$- $10 $20 $30 $40 $50 $60 $70 $80 $90

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Annual Distribution Supplemental Distribution Anticipated Supplemental

DistributionsWhere have we been and where are we going?(in millions)

Changing Currents

Policyholders’ SurplusGlidepath (in $ millions)

Changing Currents

1,135 1,134 1,132 1,123 1,113

50 50 50 60 60 25 25 25 25 25

168% 158% 155% 148% 141%

0%

25%

50%

75%

100%

125%

150%

175%

200%

200

400

600

800

1,000

1,200

2018 2019 2020 2021 2022

Surplus Annual Distribution Supplemental Distribution Risk Capacity

“A” Rating by AM Best since 1993

10 Year Combined Ratio (including distributions) = 89%

10 Year Expense Ratio – 9%

10 Year Investment Return = 6.7%

10 Year Return on Surplus = 7.3%

Gross Claims Paid Over 10 Years = $1.5B

Well Positioned to Meet the Challenges of Changing Currents

Changing Currents

Overview of 2017 Policy Limits

Underwriting – Capacity and Attachment Points

Current Capacity Minimum Attachment

General Liability $ 100,000,000 $ 25,000,000

D&O / General Partners 50,000,000 35,000,000

Fiduciary 25,000,000 35,000,000

Property 35,000,000 Excess of underlying deductibles

Cyber 5,000,000 25,000,000 or Excess of underlying deductibles

EIM can provide additional general liability capacity based upon member needs and risk profile

Changing Currents

2018 IAC Survey ResultsShould EIM Offer Higher Limits or Lower Attachment Points?

41%61%

59%39%

0%10%20%30%40%50%60%70%80%90%

100%

Higher Limits Lower Attachment Points

YesNo

Changing Currents

2018 IAC Survey ResultsShould EIM Offer Additional Lines of Business?

81%

19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

YesNo

Additional lines suggested:

• Crime• Statutory Workers’ Comp• T&D• D&O Side A

Changing Currents

2018 IAC Survey ResultsInterest Level if EIM/AEGIS/NEIL/OCIL Could Offer Capacity Excess of $135M

9%

42%

49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Very InterestedSomewhat InterestedNot Interested

Changing Currents

Additional Limits – Meeting Member Needs in 2018

Changing Currents

$125M in additional capacity deployed to EIM Members

Total Capacity Participants Total New Capacity

$115M NEIL $15M

$130M EIM/EIS/NEIL $30M

$125M EIM/NEIL $25M

$140M EIM/NEIL $40M

$115M EIM $15M

18

• Retention rate has never fallen below 95%• 76% of membership has been with EIM at least 10 years • Majority of members operate as Electric, Gas or Combined Facilities

Underwriting – Member Retention Rates

25%

35%

45%

55%

65%

75%

85%

95%

2007 -2008 2009 - 2010 2011 - 2012 2013 2014 2015 2016 2017 2018

Changing Currents

19

Total member count at 12/31/18 = 153

Underwriting – Membership Mix

61

41

21

7

86

432

4931 - Electric & Other Services - 39%

4939 - Combination Utilities NOC - 27%

4932 - Gas & Other - 14%

4911 - Electric Service (ISO/RTO) - 5%

1382 - Exploration and Production - 5%

4941 - Water/Distribution - 4%

4923 - Natural Gas Transmission - 3%

Changing Currents

Underwriting – New Member Business

NEW MEMBERS: STP Nuclear Operating Company American States Water Company PUD No. 1 of Snohomish County Ameren Corporation GenOn Energy, Inc. GenOn Mid-Atlantic Equitrans Midstream Omaha Public Power District

Changing Currents

Underwriting – New Submission Activity

Total New Business premium written (all lines) = $7,429,342

Changing Currents

Submissions by Line of Business (since 1/1/18)

0

2

4

6

8

10

12

14

GL D&O/Fiduciary Property Cyber

8

1

7 7

6

1

6 6

Not WrittenWritten

Gross Written Premium (in millions)

2018 Gross Written Premium = $222M

Changing Currents

$0

$50

$100

$150

$200

2014 2015 2016 2017 2018

1 2 2 34 4 4 4 3

25 23 23 20 2334 33 28 25 25

144 153163

175 166

Cyber Fiduciary Property D&O GL

Cyber

Wildfire (California and beyond)

Climate Change

Renewables/Battery Storage/Distributed Generation

Emerging Issues

Changing Currents

ENERGY SCHOOL

Week of October 29, 2018 at Florida State University

Changing Currents

Changing Currents

2018 IAC Survey ResultsEnergy Insurance Services

5%13%

33%

33%

31%

42%

19% 25%

0%

25%

50%

75%

100%

Considered risk management solutionsinvolving EIS

Offers an important value-added service toEIM members

Strongly AgreeAgreeNeutralDisagreeStrongly Disagree

Changing Currents

2018 Captive of the Year

First Cyber Policy

Cat Bond – Reinsurance

Record breaking premium

MARS – Multi-line Agg. Ret. Stop-loss

$0

$100

$200

$300

$400

2015 2016 2017 2018

Written PremiumsIn millions

NET CEDED

$7.3B in Limits

63 Policies

15 MBPs

Changing Currents

2018 Review

2019 Looking Forward

• Medical Stop Loss • Retiree Medical (MBP 15)• Risk Data Modeling• New MBPs • Reinsurance Markets

– Wildfire– Pollution– Aggregate Stop-loss– Pandemic

Changing Currents

2019 Program Advisory Committee Meetings and Conference

November 4, 2019 to November 7, 2019

The Sanctuary at Kiawah Island, SC

Changing Currents

Category 1Highly improbable that claim will impact EIM Requires only periodic review to ensure claim is not

adversely developing

Category 2 Requires a monitoring expense reserve and specific

actions

Category 3Meets the accepted requirements for setting specific loss

reserve (expense and indemnity)

Claim Categories

Changing Currents

2017 Cat 1 Cat 2 Cat 3 Total

General Liability 541 15 12 568D&O / GP 58 5 0 63Fiduciary 2 0 0 2Property 15 5 79 99Total 616 25 91 732

2018 Cat 1 Cat 2 Cat 3 TotalGeneral Liability 519 18 11 548D&O / GP 61 6 0 67Fiduciary 2 0 0 2Property 15 8 64 87Total 597 32 75 704

Open Claims

Changing Currents

GL Payments Total $1.38B Inception to Date

Gross Payments by Type (in $ millions)

460.3

378.4

326.3

100.0 86.3

23.0 1.1 0.4 0.3 Explosion

Wildfires

Pollution

Flooding

Electric Contact

Wrongful Termination

Bodily Injury - Thirdparty

Failure to Supply

Auto Accident

Changing Currents

D&O/Fiduciary Payments Total $749M Inception to Date

Gross Payments by Type (in $ millions)

245.0

162.5 112.0

108.6

63.8 42.6

14.6 Securities Violations

Accounting Irregularities

Manipulative Trading/False Reporting

Corporate & Other Mismanagement

Mergers & Acquisitions

Fiduciary

Nuclear Plant Construction

Changing Currents

Property Payments Total $325M Inception to Date

Gross Payments by Type (in $ millions)

187.0 63.1

34.2

32.1

3.5 3.0 1.6

Machinery & Equipment

Hurricane

Property - Other

Flood

Wind

Fire

Explosion

Changing Currents

Total Payments Total $2.45B Inception to Date

Gross Payments by Type (in $ millions)

1,376 749

325

General Liability

D&O/Fiduciary

Property

Changing Currents

Changing Currents

2019 and beyond: Claims meetings with members starting the second half of 2019 to discuss

EIM claims administration and field any questions about claims topics.These meetings should help identify emerging issues and ensure a collaborative and successful claims administrative process.

Claims Department UpdatesStaffing: Two new staff positions since mid-2015 Claims Attorney, Melissa Puglia Claims Associate, Betsy Santana

These changes allowed EIM to transition many claim activities to in-house management.Panel Counsel: RFP during 2017 followed by full implementation of a panel counsel system in 2018These changes provide greater flexibility for regional and LOB expertise and have significantly reduced claims-related legal expenses.

3.1 3.0

1.9

1.5

1.1

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

2014 2015 2016 2017 2018

Past Five Years Counsel Fees – Liability Claims(in millions)

Changing Currents

Continuing to see Explosions, Wildfire and Sudden Polluting Events as the major claims in the EIM layer

Recent cases of single fatality/injury plaintiffs with large settlements or verdicts

Defense costs on major cases significantly impacting underlying coverage, particularly on D&O claims

"Tagalong" D&O claims for catastrophic events that historically impacted GL only

Changing Currents

Waves of Continuity vs. Changing Tides

Casualty NEIL reinsures 80% of $20M excess of $30M on D&O with NEIL with no

aggregate limit Until 2018, OCIL reinsured EIM in various quota share capacities excess

of $75M on GL NEIL and OCIL participate on EIM’s XOL reinsurance programProperty and Cyber EIM has fronted for NEIL on property-related coverages since 2001 NEIL provides reinsurance on EIM’s property book EIM fronts for $25M of NEIL Cyber on an excess and quota-share basis

Reinsurance - Mutual Partners

Mutual Retained Profits (Past 10 Years) = $142M

Shared Focus

Losses = $247M

Premiums = $389M

Changing Currents

$87M Aggregate D&O Limit

(max $29M each loss)

$240M Aggregate GL Limit

(max $80M each loss)

$5M Per Loss, Per Policy Retention

$80M GL AAD $58M D&O AAD

Coverage Notes:

Aggregate Contract Limit: $327M

GL Aggregate: $240M xs $80M

D&O Aggregate: $87M xs $58M• Inuring: NEIL placement (80% of

$20M xs $30M Per Policy)

Reinsurance – 2019 Casualty Program

EIM retains $15M excess of $85M each and every loss

Changing Currents

Ceded Premium Trend – Casualty Excess of Loss ($ in millions)

Liability Reinsurance Spend(in millions)

$165.0 $170.0 $172.0 $173.0 $173.0

$34.0 $37.1 $40.2 $42.0 $45.4

$0

$40

$80

$120

$160

$200

2015 2016 2017 2018 2019

Net Writtenpremium

Ceded writtenpremium

21.8%20.6% 24.3%

Represents % of ceded to written subject premium

26.2%23.4%

Changing Currents

Reinsurance Leverage

63.6%59.8%

47.1%

54.0%

45.5%

30.0%32.9%

2012 2013 2014 2015 2016 2017 2018

EIM has become less reliant on commercial reinsurance

Changing Currents

ERM

Asset

Insurance

Strategic

Operations

Changing Currents

Enterprise Risk ManagementRisk Monitoring

No data breach/cyber attacks to date

External reviews TSC Advantage Enterprise Security Assessment and Penetration Testing Top 16% of clients examined Strategic feedback

Johnson Lambert Disaster Recovery Strategy Review SOC 1 Type II Report

Cyber Security

Changing Currents

Changing Currents

Underwriting Expanded GL limits Additional Cyber capacity Three-year policy term 2018 IAC Survey

Financial Increased annual distribution Reallocated investment portfolio Reduced EIM counsel fees Maintained existing reinsurance structure

Operations Shored up cyber security (internal) Updated disaster recovery plan Created EIM counsel panel Expanded ERM metrics

Adapting to Changing Currents

2016 2017 2018 2019

Original Plan

Actual Original Plan

Actual Original Plan

Revised Plan

Surplus $1028M $1037M $1169M $1062M $1135M $1088M $1134M

Net Loss Ratio 68% 90% 59% 90% 72% 90% 90%

Net Expense Ratio 7% 9% 8% 8% 6% 8% 8%

Net Premium Earned $140M $140M $144M $144M $156M $149M $152M

Investment Total Return 5% 4% 9% 4% (1)% 4% 4%

3-Yr Surplus Growth (pre-distribution)

21% 12% 28% 12% 27% 12% 12%

Risk Capacity 135% 100% 188% 100% 168% 100% 150%

Stability for the Future

Changing Currents

2019 Risk Managers Information MeetingFebruary 25, 2019