PEOPLE’S TRUST INSURANCE COMPANY

EXAMINATION REPORT OF

PEOPLE'S TRUST INSURANCE COMPANY

NAIC Company Code: 13125

DEERFIELD BEACH, FLORIDA as of

December 31, 2015

BY THE

FLORIDA OFFICE OF INSURANCE REGULATION

TABLE OF CONTENTS

LETTER OF TRANSMITTAL ........................................................................................................... -

SCOPE OF EXAMINATION....................................................................................................... 1

SUMMARY OF SIGNIFICANT FINDINGS ................................................................................. 2

CURRENT EXAMINATION FINDINGS ............................................................................................ 2 PRIOR EXAMINATION FINDINGS ................................................................................................. 2

COMPANY HISTORY ................................................................................................................ 2

GENERAL ................................................................................................................................ 2 DIVIDENDS .............................................................................................................................. 3 CAPITAL STOCK AND CAPITAL CONTRIBUTIONS.......................................................................... 3 SURPLUS NOTES ..................................................................................................................... 3 ACQUISITIONS, MERGERS, DISPOSALS, DISSOLUTIONS AND PURCHASE OR SALES THROUGH REINSURANCE ......................................................................................................................... 3

CORPORATE RECORDS ......................................................................................................... 4

CONFLICT OF INTEREST............................................................................................................ 4

MANAGEMENT AND CONTROL.............................................................................................. 4

MANAGEMENT ......................................................................................................................... 4

DIRECTORS.............................................................................................................................. 5

SENIOR OFFICERS .................................................................................................................. 5

AFFILIATED COMPANIES ........................................................................................................... 6

SIMPLIFIED ORGANIZATIONAL CHART ................................................................................ 7

MANAGING GENERAL AGENCY CONTRACT................................................................................. 8 MANAGEMENT SERVICES AGREEMENT ...................................................................................... 8 SERVICES AGREEMENT ............................................................................................................ 8 COST ALLOCATION AGREEMENT ............................................................................................... 9

TERRITORY AND PLAN OF OPERATIONS............................................................................. 9

TREATMENT OF POLICYHOLDERS .............................................................................................. 9

REINSURANCE......................................................................................................................... 9

REINSURANCE ASSUMED.......................................................................................................... 9 REINSURANCE CEDED .............................................................................................................10

ACCOUNTS AND RECORDS ..................................................................................................10

MANAGEMENT AGREEMENT .....................................................................................................10 COMMITMENT AGREEMENT......................................................................................................11 DC ADVISORY CONSULTING SERVICES AGREEMENT .................................................................11 INSTITUTIONAL MASTER CUSTODY AGREEMENT........................................................................11 BROKER SERVICES AGREEMENT..............................................................................................11 INDEPENDENT ADJUSTER/ESTIMATOR SERVICES AGREEMENT...................................................11 MASTER SERVICES AGREEMENT..............................................................................................12 CLAIMS ADMINISTRATION AGREEMENT .....................................................................................12

INFORMATION TECHNOLOGY REPORT ...............................................................................12 STATUTORY DEPOSITS .........................................................................................................13 FINANCIAL STATEMENTS......................................................................................................14 ASSETS ...................................................................................................................................15 LIABILITIES, SURPLUS AND OTHER FUNDS .......................................................................16 STATEMENT OF INCOME AND CAPITAL AND SURPLUS ACCOUNT .................................17 RECONCILIATION OF CAPITAL AND SURPLUS...................................................................18 COMMENTS ON FINANCIAL STATEMENTS..........................................................................19

LIABILITIES .............................................................................................................................19 CAPITAL AND SURPLUS ...........................................................................................................19 SUBSEQUENT EVENTS ..........................................................................................................20 SUMMARY OF RECOMMENDATIONS....................................................................................21 LETTER OF CREDIT .................................................................................................................21 CONCLUSION ..........................................................................................................................22

February 3, 2017

David Altmaier Commissioner Office of Insurance Regulation State of Florida Tallahassee, Florida 32399-0326

Dear Commissioner:

Pursuant to your instructions, in compliance with Section 624.316, Florida Statutes, Rule 69O138.005, Florida Administrative Code, and in accordance with the practices and procedures promulgated by the National Association of Insurance Commissioners (NAIC), we have conducted an examination as of December 31, 2015, of the financial condition and corporate affairs of

People's Trust Insurance Company 18 People's Trust Way

Deerfield Beach, FL 33441

hereinafter referred to as the "Company." Such report of examination is herewith respectfully submitted.

SCOPE OF EXAMINATION

This examination covered the period of January 1, 2011 through December 31, 2015 and commenced with planning at the Florida Office of Insurance Regulation (Office) on July 19, 2016 to July 21, 2016. The fieldwork started on July 25, 2016, and concluded as of February 3, 2017. The Company was last examined on a limited-scope basis by representatives of the Office. The last full-scope examination covered the period of January 1, 2010, through December 31, 2010.

The examination was a single state examination conducted in accordance with the NAIC Financial Condition Examiners Handbook. The Handbook requires that the examination be planned and performed to evaluate the financial condition, assess corporate governance, identify current and prospective risks of the Company, and evaluate system controls and procedures used to mitigate those risks. An examination also includes identifying and evaluating significant risks that could cause an insurer's surplus to be materially misstated both currently and prospectively.

All accounts and activities of the Company were considered in accordance with the risk-focused examination process. This may include assessing significant estimates made by management and evaluating management's compliance with Statements of Statutory Accounting Principles (SSAP).

This examination report includes significant findings of fact, as mentioned in Section 624.319, Florida Statutes, and general information about the insurer and its financial condition. There may be other items identified during the examination that, due to their nature (for example, subjective conclusions or proprietary information), are not included within the examination report but separately communicated to other regulators and/or the Company.

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SUMMARY OF SIGNIFICANT FINDINGS

Current Examination Findings

The following is a summary of material adverse findings, significant non-compliance findings or material changes in the financial statements.

Letter of Credit The Company was not in compliance with Rule 69O-144.005 6(d)(2) and (e)(1), Florida Administrative Code, as the Amlin Letter of Credit did not contain the Evergreen Clause requiring no less than sixty (60) days notice prior to expiration date or nonrenewal, nor did it contain the requirement that the agreement be governed by the laws of the State of Florida.

Prior Examination Findings

There were no findings, exceptions, or corrective action to be taken by the Company for the examination as of December 31, 2010.

COMPANY HISTORY

General

The Company was incorporated in Florida on January 17, 2008, and commenced business on March 6, 2008.

The Company was authorized to transact insurance in Florida on March 6, 2008, and is currently authorized for the following coverage(s) as of December 31, 2015:

Homeowners Multiple Peril Allied Lines

Fire Other Liability

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Dividends The Company did not declare or pay any dividends during the period of this examination.

Capital Stock and Capital Contributions

As of December 31, 2015, the Company's capitalization was as follows:

Number of authorized common capital shares Number of shares issued and outstanding Total common capital stock Par value per share

1,000,000 1,000,000 $1,000,000

$1.00

Control of the Company was maintained by its parent, People's Trust Holdings, LLC (PTH), which owned one hundred percent (100%) of the stock issued by the Company. PTH in turn was ninetynine percent (99%) owned by George W. Schaeffer as sole trustee of the George W. Schaeffer Living Trust and one percent (1%) by GWS 2, Inc. PTH contributed $31.9 million in cash to the Company as of December 31, 2015.

Surplus Notes

The Company issued surplus notes to PTH in the amounts of $12.0 million on September 20, 2012, $2.0 million on August 17, 2013, $15.0 million on February 28, 2014, and $10.0 million and $15.0 million on February 18, 2015. All surplus notes earn interest at six percent (6%) per annum with no stated maturity. As of December 31, 2015, the Company did not request nor did the Office approve interest payments on principal surplus notes, and no payments were accrued or paid.

Acquisitions, Mergers, Disposals, Dissolutions and Purchase or Sales through Reinsurance

The Company had no acquisitions, mergers, disposals, dissolutions and purchase or sales through reinsurance during the period of this examination.

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CORPORATE RECORDS The recorded minutes of the Shareholder(s), Board of Directors (Board) and certain internal committees were reviewed for the period under examination. The recorded minutes of the Board documented its meetings and approval of Company transactions and events, in compliance with the NAIC Financial Condition Examiners Handbook adopted by Rule 69O-138.001, Florida Administrative Code, including the authorization of investments, as required by Section 625.304, Florida Statutes. Conflict of Interest The Company adopted a policy statement requiring periodic disclosure of conflicts of interest in accordance with the NAIC Financial Condition Examiners Handbook adopted by Rule 69O138.001, Florida Administrative Code.

MANAGEMENT AND CONTROL Management The annual shareholder meeting for the election of directors was held in accordance with Section 628.231, Florida Statutes. Directors serving as of December 31, 2015, are shown on the following page.

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