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Financial Services and Insurance Group

CVF formed a new division, the Financial Services and Insurance Group ("FSIG") in the fall of 2007.  FSIG is spearheaded by two industry veterans: Anthony (Tony) Valencourt and Albert Swanke, Jr. who combined, have over 70 years of experience providing a variety of financial services to companies in the financial services and insurance industries.

FSIG specializes in insurance and related financial institutions. The scope of FSIG’s investment banking and corporate finance advisory activities is broad and varied. FSIG’s target market is North America and its offshore markets.

Services

FSIG’s investment banking services fall into four segments: (i) General Corporate Finance Advisory, (ii) Transaction Execution, (iii) Analysis, Valuation and Risk Assessment, and (iv) Expert Witness. The General Corporate Finance Advisory segment comprises eight services:

General Strategic Advisory

This service is intended as an overview assessment. Typical topics covered include:

• Overall business assessment

• Product evaluation

• Product mix evaluation

• Distribution assessment

• Competitive positioning

• Growth assessment

• Profitability assessment

• Financial options

• Market options

• Acquisition options

• Divestiture options

• Corporate governance assessment

•  Long-term viability assessment

• Restructuring and repositioning options (as applicable)

Sector and Market Advisory

This service blends macro and micro considerations. Acting primarily through its own internal resources, FSIG is able to advise on the following industry sectors:

• Life, Annuities and Health

• Property and Casualty

• General Life and P+C Reinsurance

• Specialty Reinsurance and Transformers

• Premium Finance Companies and Premium Finance Receivables

• State Catastrophe and Residual Market Facilities

• Asset Managers and Investment Advisors

• Financial Guarantors and Monolines

• Title Insurers

• Mortgage Insurers

• Intermediaries (Agents, Brokers, MGA’s, MGU’s)

• Process Companies (TPA’s)

• Commercial and Consumer Finance Companies

• Leasing Companies

• Structured Credit, Derivatives and Securitization Vehicles

• Holding Companies of Risk-Bearing Entities

• Securities Broker-Dealers (some external resources would be retained as needed)

• Banks (some external resources would be retained as needed)

CAPITAL STRUCTURE ADVISORY

 The primary components of this service are as follows:

• Capital structure maximization (eg: maximum leveraging of capital and judicious minimization of WACC through appropriate tranching within the capital structure)

• Advice on each capital structure tranche

• Intercompany and holding company dividending capacity

• Financial flexibility options

• Ratings implications

• Regulatory implications

• Tax implications (some external resources would be retained as needed)

• Stacking multiplier implications (eg: SAP Schedule Y – Part One)

• Valuation implications

STRUCTURAL ADVISORY

 The focus of this service is the proper positioning of operating entities within a group with a mind to:

• Maximizing underwriting capital

• Facilitating intercompany dividending capacity

• Minimizing IMR, AVR and RBC factors (primarily on the Life side)

• Maximizing premium pricing and the profitability benefits that can be derived from intercompany pooling arrangements

• Achieving a neutral-to-favorable regulatory and ratings outcome

• Maximizing distribution (to the extent applicable)

GENERAL VALUATION

REGULATORY, ACCOUNTING AND RATING AGENCY ADVISORY

FSIG provides the following services with a combination of internal and external resources:

• NAIC advisory (internal and external resources)

• State-level regulatory advisory (internal and external resources)

• Bermuda and offshore regulatory advisory (internal and external resources)

• U.S. SAP accounting advisory (internal resources)

• U.S. GAAP insurance accounting (internal resources mainly)

• Rating agency advisory with:

• A.M. Best

• Standard and Poors

• Moody’s

• Fitch

• Weiss

TRANSACTION EXECUTION

 FSIG advises on, structures and shepherds the execution of the following types of investment banking transactions for companies in the insurance and related sectors:

•  Mergers and Acquisitions

• Joint Venture and Strategic Affiliations

• Strategic and Financial Divestitures

• Highly Leveraged Acquisitions (LBO’s)

• Capital Raising – General Corporate Debt

• Capital Raising – Structured Debt

• Capital Raising – Mezzanine and Preferred Equity

• Capital Raising – Common Equity

• Capital Raising – Surplus Debentures and Notes

• Certain Types of Securitizations (assuming critical mass):

• Partial DAC Financing

• Sale of Non-Admitted FFE

• Sale of 90-Day Statutorily Past-Due Receivables

• XXX and AXXX Reserve Defeasance

• Certain Types of Regulatory Reserve Defeasance

• FSIG will selectively advise on derivative transactions and hedging strategies, and on that ISDA and CSA agreements that document them but it will not play the role of an intermediary nor will it become a counterparty in any of them.

ANALYSIS, VALUATION AND RISK ASSESSMENT; EXPERT WITNESS

Through its internal resources and many years’ experience of performing these services internally for banks, investment banks and insurance private equity firms, FSIG is fully equipped to perform the following services on the analytical and assessment side:

• Full and comprehensive fundamental analysis of companies in the insurance and other related sectors enumerated in this presentation

• Comprehensive valuation 

• Asset quality assessment 

• ALM and shock liquidity assessment 

• Non-actuarial reserve adequacy assessment 

• Reinsurance risk assessment 

• Counterparty risk assessment 

• Event risk and risk aggregation assessment 

• Credit risk assessment 

• Market risk assessment 

• Operating company solvency assessment 

• Holding company solvency assessment 

• Regulatory and ratings risk assessment

 (FSIG retains external resources for certain other services such as taxes and actuarial.)

FSIG principals will serve as expert witnesses in areas of core competences and will procure third-party expert witnesses in areas outside those of their core competences.