Grantor Trust Model

Delta AirlinesNovember 1, 2010

Our Solution

The Main Benefits Are:

• Predictable Spending On Healthcare Liabilities For 3 Years

• Prepaid Healthcare For 3 Years

• Surplus Fund Moving Forward

2

33

Future Claims Compatibility Model

$210,220,866

$240,984,895

$235,857,557

$240,984,895

$230,730,218

$225,602,880

$217,911,873

$199,966,189

$192,275,182$197,402,520

$182,020,506$189,711,513

$150,000,000

$160,000,000

$170,000,000

$180,000,000

$190,000,000

$200,000,000

$210,000,000

$220,000,000

$230,000,000

$240,000,000

$250,000,000

Q3

10

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2

12

Q3

12

Q4

12

Q1

13

Q2

13

Future 36 month (2010 to 2013) spend projected $2.563 Billion

Trend for the period = 8%

Total Spending Projection $2.563 Billion

Flow of Funds DiagramTrust Certificates

Flow of Funds Diagram-Trust Certificates Cash Out

Trust Agreement“Trust”

•All cash invested in accordance with established investment policy

•No cash disbursed for claim payments or administrative fees unless coverage ratio adequate

Debt Service

Claim Payments

AdministrativeFees

Cash ProceedsFrom Loan

Employer Monthly

RemittancePayments

Cash In

4

Interest Income

55

Advanced Funding Model Self Insured

Employer’s ObligationRemittance = $ 68,096,486

Fixed for 36 Months36-Month Spend$2,451,473,512

Fully Collateralized‘Aaa’ Rated Grantor Trust

Issues Debt

Trust Pays

Principal& Interest

VariableCosts

FixedCosts

Variable Costs = 85 to 95%Fixed Cost = 5 to 15%Surplus = 0 to 25%

FIXED Financing Rate FIXED Investment Rate

2.00% 2.50%

InvestmentSurplus = $196 Million

Risk Trend +$108 Million

$304 Million

Years 4-6Tax-Free

Rolling Surplus

Budgetability / PredictabilityArbitrage (Investment Opportunity)Non-Balance Sheet – Footnoted on P & LCurrent IBNR removed from Balance Sheet

$2,563 Billion

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Remittance PaymentCompatibility Model

$235,857,557

$240,984,895

$230,730,218

$225,602,880

$210,220,866

$217,911,873

$199,966,189

$192,275,182

$197,402,520

$182,020,506$189,711,513

$150,000,000

$160,000,000

$170,000,000

$180,000,000

$190,000,000

$200,000,000

$210,000,000

$220,000,000

$230,000,000

$240,000,000

$250,000,000

Q3

10

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2

12

Q3

12

Q4

12

Q1

13

Q2

13

Using the One Global Model the "Remittance Payment" is Year 1 = $186M QT / $62M MOYear 2 = $204M QT / $68M MOYear 3 = $222M QT / $74M MO

36 Month Difference of $112 Million

Total Spending Projection $2.451 Billion

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Adjusted Remittance with Arbitrage Compatibility Model

$182,020,506

$230,730,218

$197,402,520

$189,711,513 $192,275,182

$199,966,189

$210,220,866

$225,602,880

$240,984,895 $240,984,895

$235,857,557

$150,000,000

$160,000,000

$170,000,000

$180,000,000

$190,000,000

$200,000,000

$210,000,000

$220,000,000

$230,000,000

$240,000,000

$250,000,000

Q3

10

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2

12

Q3

12

Q4

12

Q1

13

Q2

13

With a Lending Rate of 2% and the Investment Return to the Trust at 2.50%

Income generated to the trust is $196 Million.

Total Spending Projection $2.255 Billion - $196 Million Returned to the Trust

88

Data Directed Healthcare Trend Shift® Management

Data Analytics & Data Directed Healthcare Trend Shift® Management

OGR’s partners have run Analytics against a big part of our Trillion Dollars of Healthcare Claims Data Base

With Oversight From:

Dr. Mark Percival, Managing Partner of the Trend Shift ® Resources, (a PFR Company).

Erik Watts, Chairman of Health Data Resources (a PFR Company).  

Potential to Reduce the $460 Million spend at Delta by over $200 Million dollars. 

Health Data Resources and LifeStrive® have products that achieve this result.  

99

Data Directed Healthcare Trend Shift® Management

Phase 1: Data Analytics

It’s all about the important data you have----Claims Data,

"The Data you have is Important, the Data you don't have is Vital".  

Companies like Delta are paying approximately 22% of their claims cost for

Physician VisitsLabs Pathology  

This could equate to $460 Million over 36 months for Delta Airlines.  

1010

Data Directed Healthcare Trend Shift® Management

Phase 2: Data Directed Healthcare Trend Shift® Management

The Milken Institute provides some interesting statistics

Approximately 70% of all physician office visits are unnecessary – with phone access 

The Data Directed Healthcare Trend Management Process of One Global is:  

CollectProtectUtilize

Potential to Reduce the $460 Million spend at Delta by over $200 Million dollars. 

OGR uses “Data Directed Trend Shift® Management", to work toward Reverse Trend

Goal: Achieve Risk Trend Reversal in future years.

 

1111

Data Directed Healthcare Trend Shift® Management

Phase 3: Trend Shift® Results

$182,020,506

$225,602,880

$230,730,218

$210,220,866

$197,402,520

$240,984,895

$235,857,557

$240,984,895

$189,711,513

$199,966,189

$192,275,182

$150,000,000

$160,000,000

$170,000,000

$180,000,000

$190,000,000

$200,000,000

$210,000,000

$220,000,000

$230,000,000

$240,000,000

$250,000,000

Q310

Q410

Q111

Q211

Q311

Q411

Q112

Q212

Q312

Q412

Q113

Q213

Data Directed Trend Shift System

Data Analytics Combined with Our Health and Risk Trend Data Management System can bring additional dollars to the Trust.

Projection = $108 Million

Total Spending Projection $2.147 Billion Million - $108 Million Returned to the Trust

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Surplus Growth

$19,092,186

$39,257,720

$60,528,425

$82,936,870

$106,280,560

$130,823,914

$156,601,706

$183,649,520

$211,746,087

$241,180,356

$271,990,306

$304,214,793

$-

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

Surplus Growth

1313

Trend Expectations Compared to One Global Model

Prior 36 Month Spend ($1,700,000,000) *Assumption Medical Inflation Factor % 8.00%   3 YR Projection Total ($2,563,669,094)  OGPFR 3 YR Total (Remittance Payments) ($2,451,473,512)  Difference +$112,195,582 

Surplus +$196,075,125

Claim Audit & Data Analytics +$5,526,780  Health and Risk Trend Data Management System +$102,612,890

  Total Returned to the Trust +$304,214,793  Net 36 Month Spending ($2,147,258,719)  Prior Period 36 Month Spending ($1,700,000,000) *Assumption  Increase/(Decrease) Over Prior Period +$447,258,719  Percentage Increase Over Prior Period 20.83%  Net Trend 6.25%     

Banking Relationships

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Next Steps

• Phase I: Actuarial Analysis, Assessment and Report • Phase II: Vendor Negotiation, Funding and Implementation• Phase III: Implementation• Phase IV: Operational Cost Reduction/Surplus Management

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Phase II – Next Steps

• Develop and Review Implementation Plan (Week 5)

• Client Internal Approvals (Week 5)

• Negotiate Discounts With Carriers (Week 5)

• Solicit and Secure Financing (Weeks 5 – 8)

• Prepare Trust and Other Documents (Weeks 5 – 8)

• Establish Trust and Appoint Trustee (Weeks 5 – 8)

• Close Transaction (Week 8)

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Phase III

• Ongoing Management– Quarterly Reviews

• Trustee• Healthcare Administrator• Lender• Client• Surplus Management

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Summary

The One Global Funding Model is strategically designed to address the liabilities found in• Fully Insured Benefit Plans• Self Funded Employers (private and public)• Worker’s Comp Programs• Other Post Employment Benefits (OPEB)

Benefits of the OGR Funding Model:• Establishes predictable spending for three years...not thirty days• Measured savings in both the variable and fixed cost environments• We establish a level monthly remittance/premium equivalent that best fits your cash flow needs• Use of the capital market to pre-fund healthcare and workers' compensation

expenditures in three-year increments• Unlike "letters or lines of credit" the OGR Funding Model does not put your assets at risk• Investment income earned inside of Trust

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