ANNUAL REPORT 2015 Shelter Insurance Companies

BUILT ON STRENGTH BUILDING FORTOMORROW

®

Contents

2 A Word to Our Policyholders

4 Company News

12 Dedication to Our Communities

19 Company Overview

32 Directors & Officers

Mission Statement Shelter Insurance® will be a dynamic group of Companies focused on providing financially secure insurance protection and services to individuals and businesses, a quality working environment, emphasis on easy-to-use services, a commitment to continuous improvement, and a passion for pleasing our customers.

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 1 Reflections from the Chair of Shelter’s Board of Directors The theme of this year’s Annual Report is Built on Strength…Building for Tomorrow. I believe this theme is perfect for a year that included significant physical changes to Shelter’s facilities as well as the continued building of new brands and Companies within our group. The commitment to innovation within our Companies is only possible because of the strong financial foundation Shelter enjoys today.

On behalf of the Board of Directors, we applaud the spirit of innovation building in our agents and employees, led by our Management Team. In this report you’ll learn more about our foray into the world of Agile development processes from an IT perspective. We’re updating and improving our facilities, providing employees a more modern Don McCubbin, Chairman of the workspace that improves energy efficiencies and ergonomics. The Companies and brands Board of Directors, retired from we’re building will improve our geographic expansion efforts and our new product Shelter in 2012 as an Executive distribution opportunities will expand growth potential significantly. Best of all, we’re Vice President. He had 45 years of managing these new initiatives while achieving the best levels of customer service we service in various roles with Shelter have ever provided, as well as continuing our tradition of outstanding financial results. and has served on the Board of Directors since 2003. We will continue to build upon the hard work started nearly 70 years ago. I’m confident the current Management Team, employees and agents will build on that foundation of strength for many years to come. Don McCubbin Chair of Shelter's Board of Directors 2015 Board of Directors Retirees

J. Donald Duello Barry L. McKuin Chair and Director Vice Chair and Director

Don Duello retired after more than Barry McKuin retired after more 17 years of service on Shelter's Board than 15 years of service on Shelter's of Directors. After more than 32 years Board of Directors. as an employee, Don Duello retired as Chief Executive Office in 2007.

2 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT MessageMessage from from President President and and CEO CEO Rick Rick Means Means:

The Shelter Insurance Companies continued I continue to communicate our vision statement to employees and to enjoy unprecedented growth and financial agents, using the analogy of a four-legged stool – with each leg stability in 2015. We are building on our foundation representing a core value. The four legs of the stool include: of financial strength and a tradition of sound 1. First and foremost, we sell insurance. management practices as we encourage innovative 2. We are a service organization. Day in and day out we ideas for our future. It’s truly an exciting time to be provide top notch service. part of the Shelter team. 3. We support the communities we live in by being a good corporate citizen. 4. Our most important value is to do the right thing. The growth in policy count in 2015 combined with a moderate storm season and better than expected catastrophe results has Our communication efforts with this message are resonating and led us to one of the strongest financial positions we’ve ever I hear references to it frequently in meetings, presentations and experienced. We ended the year with more than $1.4 billion even individual conversations. in Shelter Mutual and General direct written premium – an

increase of more than four percent. Our system of establishing Two members of our Board of Directors retired from the Board voluntary catastrophe reserves is still unique in our industry and in 2015 – Don Duello and Barry McKuin. Their leadership the combination of our severe weather and earthquake reserves through the years has helped Shelter through the best and worst provides more than $180 million of surplus set aside in the event of times. They have earned a respected place in the history of of major disasters. Shelter policyholders can rest assured that our our Company. We also welcome our newest board members surplus is extremely strong with almost $1.8 billion. Even in an H. Baker Kurrus and Matt Moore and congratulate our newly interest rate environment that remains low and negatively impacts elected Board Chair Don McCubbin. our investment efforts, we have managed exceptionally strong financial results. I’d like to thank our policyholders for their continued trust. We understand the significance of that responsibility. I also thank Our agents and employees remain our greatest asset and their our retirees for the foundation they’ve given us with their years hard work is the reason Shelter is strong and growing for the of service. We must also thank the employees and agents for their future. We continue to retain exceptional individuals not only ongoing efforts and commitment to innovation. As we build due to our innovative new projects, but also to our exceptional together upon the foundation we’ve been given, we will see an benefits programs. In addition to the many financial reports even stronger future emerge. shown here, you’ll also see how Shelter teams across our operating territory gave back to the communities they live in. I am overwhelmed by their generous spirits. Rick Means President & CEO

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 3 Shelter Develops Say Insurance™ for Direct- AmShield Insurance™ - to-Consumer Auto Insurance Building a New Company Shelter Insurance® began work in 2014 on a new auto AmShield Insurance™ insurance product to be offered through an online site and continued to build a call center. In 2015 a name and other branding materials upon the foundation were prepared as well as the many systems that will support started in 2014 for this the sale and service of insurance when it is launched in new Shelter Company. 2016. The new brand will do business under the name AmShield will sell policies through Say Insurance™ and is designed to appeal to a specific target market that prefers to do independent agents starting in the business directly with insurance carriers. western United States. Product offerings include auto, homeowners, renters, An interdepartmental Shelter team made significant progress in 2015 on an interactive condo and more. Coverage will be sold website for product sales and self-service. Major technological upgrades currently in using ISO policy forms and a new policy progress to Shelter’s customer service center will enhance our ability for direct sales administration system is being built to as well. Cutting-edge customer service and marketing software were reviewed and support the business. purchased and are being implemented for the launch. Team members from Actuarial, Underwriting, Claims, Accounting, Marketing and other departments are all working An interdepartmental Shelter team on the new project. Several new positions were created and hired in 2015 including a continues adapting the policy Marketing Manager, a Marketing Production Coordinator and others. These positions administration system, billing processes, claims handling, marketing, independent are specifically dedicated to the Say Insurance™ team. agent recruitment, training and much more. A.M. Best rated AmShield A Shelter continues to work with advertising agency, Barkley, based in Kansas City, on for Excellent so the Company is well marketing and innovation ideas for the new product. The Barkley team provided the positioned to grow in the coming years. Say Insurance™ logo, branding and style guidelines, as well as several key research pieces related to the consumer’s journey through sales and service. True Media, based in Columbia, is a current vendor for a portion of Shelter’s current external media buys and was chosen as the media buying agency for Say Insurance.™ The new product launch is targeted for Fall 2016 in Illinois.

` 2015: A Year of Change for Customer Services New technology, new surroundings, new numbers and new ideas were the story for Customer Services in 2015. In February, Interactive Voice Response (IVR) was implemented, which resulted in reduced call handling time. In April, the department moved to the lower level of the home office. The new space is state-of-the-art and will allow for business continuity if there are tornado warnings in the area. Other interesting facts for 2015: In addition to IVR, technology was used for a variety • We had 17,675 self-service calls - of other things, such as: mostly customers making payments. • Analytics to help with call volume forecasting and • Service levels were 90.51%, meaning 90.51% of calls advanced scheduling. were answered within 40 seconds. This is the best it’s • Enhanced scheduling options for CSRs - The CSR ever been. with the best call handling statistics gets to choose • The abandon rate was reduced to 3% from their shifts for the upcoming week. 6%, meaning 16,000 fewer calls were abandoned. • Advanced call recording, MP4 audits and screen • Customer Services Representatives (CSRs) capture help with quality assurance. handled a total of 548,763 calls, 91,000 of which • Speech Analytics – This technology reviews every were policy changes. call to identify key words and phrases. This • Customer Account Representatives wrote $20 enables identification of “champagne moments” million in annual premiums. and alert notifications for case management.

4 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT Shelter Insurance® Donates $450,000 for Veterans’ Housing Development

In April 2015, Rick Means presented a facility is aging and they are turning in 1946 when we started offering car $450,000 donation to Welcome Home, away veterans. The new facility will insurance,” Means said. “The veterans Inc., a veteran’s assistance organization enable them to accommodate more who have joined the Shelter team located in Columbia, Missouri. The veterans and will be a modern, ADA- throughout the years have contributed donation is the largest amount Shelter compliant facility. Means said Patriot significantly to our success, and has given at one time to any group. It is Place, the first phase of the Community we dedicate our donation to those being used to help fund Patriot Place — for Veterans project, was about individuals.” Four Shelter employees 25 one-bedroom veterans apartments $450,000 short and Shelter stepped in to and one retiree who are all veterans set to be built in the next few years. cover the cost. attended the presentation. They include Tracy Rowe, Rockne Corbin, Janice Welcome Home, Inc. provides shelter “Shelter has a long history of hiring Munford, Norm Cox, and Keith Curd. for many homeless veterans, but their veterans—all the way back to our roots An Agile Approach to Project Management The Information Systems (IS) department has used the Waterfall method of project management to complete projects for years, but that made communication between team members difficult, which delayed projects. To address the need for a change, they took a bold step in 2015 and started the transition from the Waterfall model to Agile project management.

While researching project management options in 2014, Douglas Jones, IS Senior Analyst for Shelter, attended an Agile conference and was immediately impressed by its comprehensive approach. Soon after that conference, Shelter contracted with a coaching Over the summer, more than 60 Shelter product owners and company for a three-day Agile training session, which resulted developers learned the Agile basics. The training focused on a in the formation of two pilot teams. “It’s not just about changing series of “sprints,” which are designed to deliver an incremental work habits,” says Jones. “It’s really a cultural change. Instead of amount of value every two weeks. asking people to go into their cubicles every day and work heads- down, they go into a co-located team area where they can work With the Agile transition ongoing, there are still challenges to together much more collaboratively. You also communicate with address and decisions to be made, such as finding available space each other much more about what you are working on.” for more collaborative workspaces. While some teams currently co-locate, others must wait for space to open up. Thanks to the Recognizing the need to apply Agile practices to complete larger improved communication, shared responsibilities and reduced initiatives, Shelter contracted with a company called Agile42 to stress due to the shared workload, many IS team members successfully make the shift to Agile. consider the transition to Agile an innovative and exciting option for the future.

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 5 Employee Survey In an effort to become and remain an employer of choice, Shelter contracted with Lockton Companies in the fall to help conduct a confidential and anonymous employee Climate Survey. Participation was outstanding—1,562 employees completed the survey, representing an 84% response rate–one of the best Lockton has seen. In addition, the survey averaged 76% positive feedback, which, according to Lockton, places Shelter in the top quartile of opinion surveys they have conducted.

Survey questions pertained to six key areas most relevant to employees’ work experience—benefits, compensation, communication, culture, relationship with management and career development. Here is what the results showed: Relationship with Management Communication Benefits and Compensation This section scored well overall with a This section had a positive feedback Almost all employees (88.7%) indicated 75.7% positive feedback rating. Employees rating of 77%. Employees felt that Shelter offers benefits that are important felt managers are easy to approach and Shelter’s vision and mission have been to them, including the 401(k) profit their roles and responsibilities have clearly communicated to them and they sharing plan and retirement plan. Nearly been clearly defined and communicated. understand the goals and mission of their 78% of employees think Shelter offers a Employees also felt the right officers are in department. However, employees did competitive total compensation package. place to lead Shelter and they demonstrate indicate a lack of adequate communication SBMI and Shelter management will commitment to Shelter’s core values. channels for sharing concerns. A new continue to analyze and benchmark our portal was added to Spotlight, our Benefits and Compensation areas to Career Development Company’s intranet page, where employees provide competitive programs. can submit concerns confidentially. This area was the lowest scoring driver of the survey with a 60.8% positive feedback rating. Although the results showed more Culture than 80% of employees are currently This section received an overall positive happy with what they do on a daily basis, a feedback rating of 76.3%. A majority of desire for more training and development employees indicated if they had a friend opportunities for personal and professional looking for a job, they would recommend Shelter as a place to work. growth was expressed. Plans are underway to offer more of these opportunities in the future as a result of the survey response.

Shelter Adds New Coverage Shelter Insurance® added new car replacement coverage to private • The car is a total loss passenger auto policies in 2015. Shelter customers received this • It has less than 15,000 miles additional protection at no extra charge. If a customer buys a brand • The customer bought it new and has owned new car and has an accident, Shelter will pay them an additional amount—above the comparable value—for the same year, make and it for less than 12 months model, provided the following conditions apply:

6 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT On April 30, 2015, Shelter unveiled its newly renovated fountain at the 50th Annual Fountain Celebration. The weather was on our side as more than 1,000 people gathered to see the foun- tain officially started for the first time. These people were among the first to see the fountain’s new features, such as arching jets of water that shoot from the two side basins into a larger center basin and waterfalls between the center and side basins. Those who have visited at night have seen the LED lighting features as well.

Although the fountain’s renovations and new features were the highlight of the event, there were also games, live Calypso-style music by the Banana Oil Pan Band, a children’s train, photo booth and more.

Newly Renovated Fountain Unveiled

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 7 Marketing Conference Awards Each year, Shelter Insurance® holds its Conference of Champions to recognize top performing agents in various areas during a qualifying period. Those who qualify are eligible to win a variety of awards. The awards are broken down into Company and State Agent of the year, District Sales Manager of the Year, Rookie of the Year, President's Plaque and Life Star. In 2015, Bob Cargile, Richard Cargile, Dei Bryant (affiliate) and Andy Sills (affiliate) received the Company Agent of the Year award. State Agent of the Year awards went to the following agents: • Richard and Bob Cargile – Arkansas • Trevor Harris – Kansas • Derek Thomason – West Missouri • Jeff Mosier – Colorado • Sean Slusher – Kentucky • Jeb Brant – Nebraska • Gabe Ritchart – Illinois • Martin Byrley – Louisiana • Aaron Ruiz – Oklahoma • Brad Hancock – Indiana • Jason Rustin – Mississippi • Jay Norman – Tennessee • Joe Yamen – Iowa • Richard Horner – East Missouri

In 2015, Bob Cargile, Richard Cargile, Dei Bryant (affiliate) and Andy Sills (affiliate) received the Company Agent of the Year award.

Simon Mack, Rookie of the Year Randi Pender, Rookie of the Year Wayne Lawson, DSM of the Year Runner Up

Richard and Bob Cargile also received the President’s Plaque and Life Star awards. Other Life Star award winners were: • Derek Thomason – West Missouri • Brian McPherson - Oklahoma • Jay Norman – Tennessee • Brad Hancock – Indiana • Jeff Mosier – Colorado • Deanna Polly-Faulkner - Kansas • Bobby Lawrence - Louisiana • Sandra Hahs Agency (Sandra Hahs and • Joe Yamen – Iowa Lauren Hahs-Gilchrist) - Tennessee

8 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT Branch of Excellence Awards Each year, the Claims Department honors its top branch offices as Branches of Excellence. Each branch had goals based on its contribution to the Four Legged Stool:

• We sell insurance. Above: The Topeka branch has won its region’s award • We serve our customers. 5 of the last 11 years, which shows its consistent • We help our communities. performance. The branch led the Western Region with • We do the right thing. a 91% rating on auto customer service surveys and also achieved over 17.7% collision subrogation, having 5 of Although the entire Department the department’s top 10 subrogation producers. exemplified excellent claims service, three branches stood out. The 2015 Branches Right: Terry Dykes, Aaron Meeks and Dan Widhalm. of Excellence Awards were presented to Nashville, Tennessee in the Southern Region; Topeka, Kansas in the Western Region; and Springfield, Missouri in the Central Region.

These branches showed statistical success; but more importantly, they exemplified outstanding customer service and teamwork. Each branch was awarded a plaque commemorating this significant accomplishment and each employee received a small token of appreciation.

Also recognized were supporting staff members at the winning branches. Those Above: Springfield (Missouri) exemplified outstanding recognized included: community service while participating in many different community activities, including helping United Way and Nashville: the Child Advocacy Center. At the top of the Central PD Specialist – Ryan Dedrick Region, Springfield helped our insureds with collision Property Specialists – Greg Stippec and subrogation over 16.3%. The branch showed excellent Kent Peterson customer service with more than 88% of its customers Litigation Attorney – Aaron Mutnick saying they would recommend Shelter to a friend.

Springfield (MO): Right: Terry Dykes, Todd Gardner and Shawn Knauts. Property Specialist – Adam Smith PD Specialist – Sterling Stirewalt Litigation Attorney – Aaron Mutnick Topeka: Property Specialist – Vaughn Wolfe PD Specialist – Lance Kaufman Litigation Attorney – Shari Weinman

Overall, customers were very happy with the service they received from Shelter’s Claims Department. On customer surveys, more than 90% of customers and claimants indicated they would recommend Shelter to Above: Nashville’s 88% was first in the Southern Region a friend. in percent of their customers surveyed who said they would recommend Shelter to a friend. Impressively, this is an 11% jump in only two years. The branch also had six employees awarded Cause for Applause. The employees also contacted our property insureds within a half day from first assignment, well below the one-day goal.

Right: Matt Murray and Matt Moore. 2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 9 Diversity Matters to Shelter Diversity Awareness In 2015, we continued existing initiatives and started new ones to support our mission of bringing together the diverse perspectives of all agents, employees and community Partnership (DAP) partners to create an inclusive, collaborative environment. Supplier Diversity Diverse Recruiting Methods Our new Supplier Diversity Program Members of SBMI and field representatives Policy helps ensure inclusion of minority-, attended various career fairs and networking woman- and veteran-owned businesses events throughout the year to expand our in the competitive bidding process at diversity recruiting efforts. Most notably, Shelter. To be considered for the program, they attended the Community Job Fair at a business must be certified as a minority- Douglass High School and the University owned entity. It must provide the of Arkansas – Fayetteville Career Fair and appropriate certification showing it qualifies Diversity Networking Event. In addition, in one of the approved catagories. members of SBMI attended the career fair after The Bottom Line for Diversity Reverse Mentoring Conference at Mizzou. Reverse Mentoring had another strong year featuring several enhancements to the program, including plans to allow management at the director level to In March, the St. Louis-based Diversity participate in the program in 2016. Awareness Partnership (DAP) started a new branch in Columbia. DAP’s mission is to increase awareness, facilitate engagement and provide education about diversity and Diversity Webpage Update inclusion, so when the opportunity arose After some analysis of Shelter’s diversity page for a partnership, it made perfect sense. on our public website, additional content DAP achieves its mission through youth was added that will be updated each year. programs, diversity training, community The Community Involvement section was forums and diversity publications that are previously a sub-section of the diversity page, easy for other communities to duplicate in but as part of the updates it was broken out order to advance their own diversity and into its own section, complete with a sub- inclusion efforts. section for Shelter Cares. New metrics were also put into place allowing us to track the use The Columbia DAP branch is led by Regional Manager Nikki McGruder. SBMI of the content. Director Stacye Smith serves on the Advisory Board. In July, Ms. McGruder and Ms. Smith organized the first DAP Networking Breakfast, which was held at Shelter. Individuals from the community, other corporate sponsors, local business owners and business professionals attended and Ms. Other Diversity Initiatives in 2015 McGruder gave a presentation about DAP’s Pillars of Impact. In addition to the Supplier Diversity Program Policy and the partnership with Shelter also hosted two of DAP’s local DAP, Shelter sponsored, supported or participated in several other diversity community forums entitled “Listen, Talk, events in 2015: Learn: Dialogue Across Differences.” These forums teach attendees the difference • Columbia Values Diversity Breakfast between debate and dialogue, facilitation • 2015 MU Celebrates MLK – Celebration and Lecture tips and strategies, and offered a strategy for • Statewide Collaborative Diversity Conference answering difficult questions about racism and bias. Several employees attended DAP • Columbia African American Association – Sunday Best Banquet training sessions on the following topics: • Fun City Youth Academy Community Champions Dinner • Sharp End Historic Marker Supporter • The Difference Between Diversity • The Bottom Line for Diversity Conference at Mizzou and Inclusion • Trulaske Business Academy Etiquette Dinner • Unconscious Bias in the Workplace • Statewide Collaborative Diversity Conference • Evaluating Organizational Diversity and Inclusion Efforts Shelter continued its partnership with MAC Scholars as a part of the Columbia • Leveraging Generational Public Schools Partners in Education Program as well. Differences for Business Success Shelter also sponsored the inaugural Diversity Dinner.

10 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT Lunch & Learns EPN held monthly Lunch & Learn 2015: A Year of Firsts for the Emerging sessions to educate employees about different departments at Shelter. Professionals Network (EPN) Speakers talked about topics such as life as an agent, Shelter’s Special Investigation Unit, Shelter’s travel Shelter’s Emerging Professionals Network (EPN) was created as a diversity initiative in department, a Company status 2014 to help employees create and build connections across departments and create update from the CEO and more. In opportunities for personal and professional development, leadership, education and addition to Lunch & Learn sessions, community involvement. they also invited their first outside speaker for a presentation. In its second year, EPN continued to grow and flourish. As of November 30, 2015, Field Kick-Offs EPN had 285 Home Office members and 337 Field members. Throughout the Various EPN leadership members year, EPN members attended monthly Lunch & Learn sessions, participated in a hosted field kick-off events in Topeka, new mentoring program, volunteered for various charities and hosted a number of Baton Rouge, Denver, St. Louis networking and social events. and Lexington. Their presentation topics included team building, time management, preparing for promotion, planning and interview skills.

EPN Mentoring Program In the spring, 24 EPN members participated in EPN’s first mentoring program. The program paired mentors and mentees, and gave them materials to help them start discussions throughout the course of the four month program.

In addition to their work on the program, participants were invited to hear Rick Means and Brian Waller give a presentation called “Politics and Insurance,” which focused on Shelter’s involvement in the political process.

Networking Networking is an important part of professional development, and EPN offered many opportunities for members to do just that at fun events and activities during the year, including the popular Color Run, a roller skating event, a trip to St. Louis for a Cardinals game, a trip to Oktoberfest in Hermann, Missouri and more. In addition, members could attend monthly Mix-n- Meet Luncheons that brought small groups together from various departments to get to know one another better.

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 11 Shelter Employees Moved the Needle for United Way

This year’s theme for the annual United Way campaign was “Moving the Needle,” and Shelter employees did just that—in fact, they surpassed last year’s Type of Contribution Amount Raised amount raised by $12,291.44. The total amount raised this year was $217,000. Employee & Retiree Contributions...... $153,749.10 This year, employees were encouraged to contribute “Just One More” to the United Way than they did last year, whether that’s just one more dollar than Special Events...... $23,850.90 before, 1% more of a payroll deduction donation, or even volunteering just one more day at the Food Bank. Shelter Insurance® Corporate Donation...... $34,000.00 Sara Hall of Home Office Claims and Paul Larimore of Training were the co- chairs of the 2015 Home Office United Way campaign. Lacy Rice of Internal Shelter Foundation Match of Leadership Donations...... $5,400.00 Auditing served as the Companies’ loaned executive to the Heart of Missouri United Way, and Christine Brown of Accounting served as the 2015 United Way Campaign Total...... $217,000.00 campaign’s accounting representative.

Each year, Shelter holds activities such as the sale of casual day tickets, a chance to win use of a United Way preferred parking spot, an ice cream social and an online auction. This year’s campaign also featured fun and exciting ® new ways for employees to give “Just One More” including:

• Fair Day • 5K and 1-Mile Walk • Fountain Speed Boat Race MOVING • Dessert Celebration the • Cardboard Box Car Race NEEDLE

12 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT Shelter Cares… for Our Communities Central Missouri Food Bank Many Shelter employees look for ways to help those in need, but it’s hard to know where the need exists. The Shelter Cares committee is made up of individuals from different departments at Shelter. It was formed to share volunteer opportunities from external groups with all employees and organize participation. They also review requests for volunteers submitted by employees for various charitable events, and if a request is appropriate, committee members will share them with their teams. 293 586 In 2015 Shelter Cares coordinated approximately 1,201 volunteer hours for the following activities: VOLUNTEERS HOURS Shelter’s Fountain Live United Action Goblins in the Garden Celebration Games Team Project Event

VOLUNTEERS57 114HOURS VOLUNTEERS19 152HOURS VOLUNTEERS66 147HOURS

Salvation Army Red Kettle Clean-Up Columbia Lunch in the Park Mass Casualty Campaign Bell Ringing 35 70 19 38 30 60 VOLUNTEERS HOURS VOLUNTEERS HOURS VOLUNTEERS HOURS VOLUNTEERS34 34HOURS

Shelter Cares also provided support and volunteer opportunities for other community efforts in 2015, such as: • Monthly Volunteer Night at the Food Bank for Central & • Wheeling for Healing event to benefit the Wounded Northeast Missouri Warrior Project • Roots N Blues N BBQ Festival • Apple Picking at Hufstutter Orchard to benefit the • Show-Me STATE GAMES Central Missouri Food Bank • City of Columbia First Eve • Women’s Network of Columbia, MO • Shelter’s 2015 Poker Walk • Boys and Girls Club • Ronald McDonald House Meal Preparation • National Salvation Army Week • Room at the Inn Winter Shelter • Shelter Gardens Concert Series • Meals on Wheels “Big Wheels” event

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 13 Shelter’s Community Involvement 1 2 One of the four legs of Shelter’s vision is to be a good corporate citizen and give back to our communities. It’s part of our culture, so it’s not surprising to find Shelter employees in the Home Office and in our Field Offices helping out at a local food bank, making a meal for guests at the Ronald McDonald 6 7 House, helping our veterans, supporting those with special needs, collecting items for the homeless, collecting donations for children’s charities and more. Here’s a list of some organizations that Shelter employees and agents helped or donated to in 2015:

• Central Missouri Humane Society • Stewpot Community Center, (Jackson, MS) • Relay for Life • Animal Services, (Springdale, AR) • Phoenix Family, (Kansas City, MO) • Ronald McDonald House • Children’s House, (Springdale, AR) • Operation Warmth, (Lexington, KY) • Gleaners Food Bank of Indiana • Coyote Hill • Toys for Tots • The Food Bank for Central and • Great Circle • Meals on Wheels Northeast Missouri • Rainbow House • Brad Edwards Warmth 4 Winter Program • Arkansas Foodbank • The Denver Human Services GIVE Program (Oklahoma City, OK) • Ozarks Food Harvest • Salvation Army • Humane Society, (Oklahoma City, OK) • Homeward Bound (Grand Junction, CO) • Baptist Children’s Fund, • Hope Center, (Edmond, OK) • Our House (Little Rock, AR) (Oklahoma City, OK) • Community Blood Center of the Ozarks • 7 Hills Homeless Center (Springdale, AR) • Junior Achievement • The Waterman Shoe Drive (Ozarks) • Possibility Place (Murfreesboro, TN) • Riley Hospital for Children at IU Health, • Central Illinois Community Blood Center, • Welcome Home, Inc. (Columbia, MO) (Indianapolis, IN) (Springfield, IL) • Disabled American Veterans (DAV) of • Christians 4 Kids, (Jonesboro, AR) • Fairlawn Heights Assisted Living, Rogers County, (Claremore, OK) • The Stable Alternative School, (Topeka, KS) • Thompson Hood Veterans Center (Lexington, KY) • Topeka Common Ground, (Topeka, KS) (Wilmare, KY) • Manuel J. Cortez Elementary School, • Baptist Children’s Home, (Owasso, OK) • Central Missouri Honor Flight (Las Vegas, NV) • Warm Up Columbia • Wounded Warrior Project • Peggy’s Attic, (Las Vegas, NV) • The Leukemia and Lymphoma Society • Job Point • Economic Opportunity Agency (EOA) • Cystic Fibrosis Foundation • Habitat for Humanity Children’s House, (Springdale, AR) • The Muscular Dystrophy Association • Show Me STATE GAMES • Child Advocacy Center, (Springfield, MO) • Juvenile Diabetes Research Foundation (JDRF) • Heart of Missouri United Way • Voluntary Action Center • American Cancer Society • Inner City Summer Camp for • St. Baldrick’s Foundation Underprivileged Children (supported by the • Susan G. Komen Race for the Cure Baptist Association of Greater Baton Rouge) • Gateway Area Chapter National MS Society

14 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT 3 4 5

8 9 10

Shelter’s Home and Field Office employees & agents worked hard in 2015 to help others. Here are just a few pictures that illustrate a much larger effort by everyone.

1) Cooking for a Cause: Home Office 4) Through the Miracle League of 8) Cooking for a Cause: Home employees from various departments Edmond, OK, volunteers from the Office employees from various prepared meals for the Ronald Oklahoma City claims office were departments prepared meals for the McDonald House. paired with special needs children Ronald McDonald House. and adults to play baseball. 2) Tulsa Claims at the Community Food 9) Shelter volunteers partnered with Bank of Eastern Oklahoma. 5) Alternate Channels donated items Woodhaven on October 16th to to the Insurance Professionals of LIVE UNITED! 3) Shelter’s team in Relay for Life 2015 Mid-Missouri supply drive benefiting raised $8,962.15 to help beat cancer. Welcome Home Inc. 10) Columbia Claims raised more than This would not have been possible $200 in cash and had several fans without the help from the Shelter 6) Little Rock employees donated more donated as part of their Fan Drive Foundation, Shelter employees, and than 30 new and gently used coats for for the Voluntary Action Center. the Shelter Relay Team and their children and adults. family members. 7) Marketing, Investments and Alternate Channels volunteering at the Food Bank for Central and Northeast Missouri.

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 15 Shelter Foundation Sets New Record for Scholarships

Each year, the Shelter Insurance Foundation awards a wide variety of scholarships to students throughout our operating region. In 2015, a total of $860,500 in scholarship money was awarded to 413 deserving students. This is the most scholarship money the Shelter Foundation has awarded in its 31 year history.

Shelter’s largest program is the Scholarship Program for agents, which is funded by agents and the Shelter Foundation and offered to graduating high school seniors in the agent’s local community. In 2015, 371 students each received a $2,000 scholarship through this program, for a total of $742,000. This is a 13% increase over last year’s total of $654,000.

The Shelter Foundation also sponsors a scholarship program for children of Shelter employees and agents. This year, 36 scholarships were awarded through this program valued at $3,000 each, for a total of $108,000.

Other scholarships issued through the Foundation in 2015 include:

• B.M. Seaman Scholarships – Two graduates of La Plata MO High School were each awarded a $2,000 scholarship. • Lang Award - A $500 scholarship was awarded to an outstanding vocational education graduate of Missouri School for the Deaf in Fulton, Missouri. • West Middle School – Two 8th grade students at West Middle School each received $2,000 scholarships. West Middle School is Shelter’s Partner in Education. • MAC Scholars – This was the second year for the Shelter Insurance Foundation to award a $2,000 scholarship to a Columbia Public School high school graduate and active member of the Multicultural Achievement Committee (MAC) Scholars Program. MAC Scholars is Shelter's Partner in Education

Shelter is proud to help further the education of these hard-working, deserving students each year.

Holiday Concert Returns for Special Performance The Missouri Symphony Orchestra kept Shelter and Columbia entertained once again this year, with a Shelter Gardens performance in June and the annual Symphony of Toys concert in December. In addition to a public performance of the Symphony of Toys, they held a private performance for Shelter employees, agents, retirees and their families at the Missouri Theater in downtown Columbia.

16 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT A Torch and Two (New) Cities

What was new with the Shelter Insurance® Show-Me STATE GAMES Torch Run in 2015? The addition of two new cities to the journey—St. Joseph and Cape Girardeau. Participants ran the Torch through Joplin, then Springfield, Kansas City, St. Joseph, Hannibal, Cape Girardeau, St. Louis, St. Charles, Jefferson City and Columbia.

Shelter hosts the Torch Run each year in the spring to generate exposure and enthusiasm for the Show-Me STATE GAMES throughout Missouri. The games take place in June and July and are set up similar to an Olympic-style sports festival, offering more than 40 events for all ages and levels, from novice to competitive athletes.

This year, Sr. Vice President, Secretary and General Counsel Randa Rawlins and Marketing Director Jim Rothwell ran the torch into Busch Stadium, and Ms. Rawlins threw out the ceremonial first pitch in the Cardinals game. Marketing Vice President Frank Thompson was the final bearer as he used the torch to light the official flame of the Show-Me STATE GAMES at the Opening Ceremonies festivities. Shelter Receives Award for Climate Protection In April 2015, Shelter was recognized by the City of Columbia, Missouri, as a leading business in the area of sustainable operating practices at the Mayor’s Climate Protection Agreement (MCPA) awards.

Shelter was one of eight Columbia businesses and organizations recognized for going above and beyond in the world of sustainability by adopting innovative ways to conserve resources and becoming environmental stewards to make Columbia a better place to live and do business.

“We established the MCPA award program to recognize excellence in sustainable practices demonstrated by local businesses and organizations and promote a culture of environmental responsibility,” said Columbia Mayor Bob McDavid.

Shelter received the inaugural MCPA award in the Pollution Prevention category for its installation in November, 2014 of a solar electric (PV) system for generating power. The 89.1 kW system on the roof of the Grounds building was designed to generate more than 100,000 kWh of electricity annually, representing 95% of the Grounds facility normal usage. The combination of federal and local incentives for clean energy initiatives is expected to provide a return on investment of 10 years or less, with a system life of 25+ years. At the conclusion of 2015, a performance analysis of the PV system was completed. During the initial twelve month period, Shelter’s system generated 115,128 kWh of electricity, reducing the annual energy required from Columbia Power & Light to 6,029 kWh. It was a perfect match to our objective of producing 95% of total electrical usage. Electric bills for 2015 totaled just $606.

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 17 Arkansas Consumers Benefit from New Anti-Fraud Law Drafted by Shelter Insurance® A significant loophole in Arkansas the policy limits of $1,000,000 were paid of Insurance before filing the bill. Next, insurance law was closed when Governor to a customer who suffered a total fire loss Shelter’s grassroots organization of Shelter Asa Hutchinson signed a new insurance to his home. He discovered the customer agents and employees throughout the bill into law in 2015. Closing this loophole had also purchased another homeowners state contacted their local legislators to helps protect against potential fraud. It policy from a different Company a few encourage them to pass this bill into law, also takes away an incentive to purchase days before the fire. That carrier also paid which they did. multiple policies for the same risk, and the limits of coverage, resulting in the thus receive payments many times the insured receiving a double recovery. A group of Shelter agents and employees value of the risk, which is like playing the attended the ceremonial bill signing in the lottery or placing a wager. Both of these Fixing this problem required updating a Governor’s office on June 30, 2015. The bill things can cause everyday consumers to portion of Arkansas’ insurance law. This became law in Arkansas on July 22, 2015. pay more for their insurance coverage. anti-fraud measure was drafted by Shelter’s Law Department. Shelter’s Government The problem came to light when a Shelter Relations Department then secured the Insurance® agent advised Shelter’s leaders support of both the Arkansas insurance of a claim that arose in his agency where industry and the Arkansas Department

18 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT Annual Meeting of Policyholders BOARD OF DIRECTORS Executive & Investment Compensation Audit EXTERNAL EXECUTIVE AUDIT FIRM MANAGEMENT INTERNAL AUDIT HOME OFFICE OPERATIONS AND BRANCH OFFICES Investments Accounting

Commitment to Management Excellence

Shelter Insurance Companies are governed by a nine-member as an objective party to monitor Shelter’s financial reporting Board of Directors empowered to provide policy decisions process and internal control system; appointing, reviewing, and and general oversight of the Companies’ operations. Key assessing the independent audit firm; and providing an avenue of responsibilities include reviewing corporate strategy and business open communication among the independent auditors, internal plans and appointing officers. Three directors are elected annually auditors, senior management and the Board. by policyholders at the annual policyholders’ meeting. Each director is elected for a three-year term. In addition, the Board Other senior management committees are established according appoints three committees to directly assist the Board in fulfilling to critical management issues. These committees are overseen its responsibilities: the Investment Committee, the Executive and by executive management. The goal of the Board and other Compensation Committee and the Audit Committee. committees is to ensure a management structure that provides effective oversight and is responsive to key issues on behalf of While all three committees are important, the Audit Committee the employees, agents and customers of the Shelter Insurance in particular is charged with performing three functions: serving Companies.

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 19 Shelter Insurance® first opened its doors in 1946, providing affordable auto insurance to Missourians.

With a policy of integrity and customer service for the benefit of our customers, employees, agents and communities, Shelter has grown to be an industry leader in insurance, financial products, and services. In fact, we are now one of the nation’s most successful and financially sound regional insurance groups, with an international reinsurance operation.

($ IN THOUSANDS) 2015 2014 2013 2012 2011

Consolidated Assets $4,451,498 $4,340,202 $4,066,984 $3,909,298 $3,705,787

Equity $1,787,842 $1,682,712 $1,566,904 $1,397,888 $1,281,420

P&C Net Earned Premium $1,529,383 $1,463,936 $1,406,110 $1,346,540 $1,297,360

P&C Policy Count 2,049,378 2,002,413 1,965,949 1,939,305 1,926,645

Life Earned Premium $119,900 $115,289 $114,071 $129,227 $146,959

Life Insurance in Force $24.8 billion $23.7 billion $22.6 billion $21.8 billion $20.9 billion

Employees and Agents 3,914 3,881 3,807 3,752 3,747

20 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT The Shelter Insurance® group is made up of the Our financial strength ratings as following operating Companies*: determined by A. M. Best: Shelter Mutual Insurance Company A (Excellent) Shelter General Insurance Company A (Excellent) Shelter Mutual Insurance Company Haulers Insurance Company, Inc. A (Excellent) Shelter General Insurance Company Shelter Life Insurance Company A (Excellent) Shelter Life Insurance Company Shelter Reinsurance Company A (Excellent) AmShield Insurance Company A (Excellent) Shelter Reinsurance Company Haulers Insurance Company, Inc. Claims Office Locations: Shelter Investments, LLC Jonesboro, AR Columbia, MO Shelter Financial Corporation Little Rock, AR Kansas City, MO Shelter Financial Services, Inc. Springdale, AR Springfield, MO Denver, CO St. Louis, MO Shelter Benefits Management Inc. Springfield, IL Oklahoma City, OK Shelter Enterprises, LLC Indianapolis, IN Tulsa, OK Topeka, KS Lincoln, NE Daniel Boone Agency, LLC Lexington, KY Las Vegas, NV AmShield Insurance Company Baton Rouge, LA Columbia, TN Jackson, MS Nashville, TN *As of December 31, 2015

Operating territory for Shelter Mutual, Shelter General and Shelter Life:

Home Office Branch Office

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 21 Pre-Event Castastrophe Reserves Pre-Event Catastrophe Reserves Mutual and General Operations (in Millions) $181

$157 Gross direct written premiums before voluntary assumptions

increased 4.1% compared to 2014 and were $1.431 billion. $132 Premiums have continued to rise as a result of rate increases

during the past years with the 2015 rate of change on average $108 premium per policy increasing by 1.8%. During the year, there were 358,497 newly issued policies and ending policy count $85 was up 46,310 policies for the year. Last year’s ending policy count was up 36,000 and 2013 was up 25,000 for comparison. Retention improved 38 points and ended at 86.58%. 2011 2012 2013 2014 2015

Incurred weather losses were also very favorable. For 2015, such losses were $207 million (similar to the previous year) and represented 15% of earned premiums. These entities SurplusShelter As Regards Mutual Policyholders added $26 million to the voluntary pre-event reserves, which Surplus as Regards Policyholders (in(in Millions) adds 1.9% to the combined ratio. Without such reserves, the $1,788

combined ratio was 96.6%. In total, there was $107 million in $1,683

the earthquake reserve and almost $76 million in the weather $1,567 reserve available for future use. Four years of consecutive additions to the weather reserve has allowed it to build up $1,398 quite substantially. $1,281

The year-end IBNR (Incurred but not Reported) evaluation resulted in a small $1.7 million increase. General continues to 2011 2012 2013 2014 2015 experience deficiencies on the Commercial Auto Liability line due to continued loss development and frequency of claims.

Loss adjustment expenses represented 7.4% of earned premiums. The year-end analysis on the reserves for adjusting ShelterNet Mutual Income Insurance After Taxes Company expenses resulted in an increase of $2.8 million, primarily Shelter General Insurance Company on the auto and other liability lines. Underwriting expenses Net Income(in Millions) After Taxes of 26.9% of written premiums were reasonable for the year. (in Millions) The total underwriting gain was $5.5 million, representing a $83.6

$70.8 $69.8 98.79% combined ratio and without pre-event reserves would $64.1 have been an underwriting gain of $31.3 million.

The strength of an insurance company can be measured by both its surplus strength and premium writings to surplus. Shelter Mutual’s Surplus as Regards Policyholders has grown 2011 2012 2013 2014 2015 $500 million since 2009 and now stands at a very strong $1.788 billion. Net premiums written to surplus are a low $(24.9) 80%. Such a low premium to surplus ratio is considered a sign of financial strength, which can be measured against other insurers who may be as high as 300%.

22 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT SHELTER MUTUAL INSURANCE COMPANY Statements of Admitted Assets, Liabilities, and Surplus (Statutory Basis) YEAR ENDED DECEMBER 31 (IN THOUSANDS) 2015 2014 ADMITTED ASSETS BONDS $ 1,572,115 $ 1,401,044 INVESTMENTS IN AFFILIATES 697,118 648,111 COMMON STOCKS, UNAFFILIATED 318,708 375,081 OTHER INVESTED ASSETS 274,445 280,753 SHORT-TERM INVESTMENTS AND CASH (20,301) 7,076 REAL ESTATE 33,844 33,407 TOTAL CASH AND INVESTED ASSETS 2,875,929 2,745,472

PREMIUMS RECEIVABLE 129,809 116,417 DEFERRED INCOME TAX ASSET 50,822 46,903 ACCRUED INVESTMENT INCOME 15,427 14,966 INCOME TAX RECOVERABLE 17,049 22,781 OTHER ASSETS 25,760 27,238

TOTAL ADMITTED ASSETS $ 3,114,796 $ 2,973,777

LIABILITIES AND SURPLUS UNEARNED AND ADVANCE PREMIUMS $ 531,389 $ 514,528 LOSS AND ADJUSTMENT RESERVES 491,269 434,384 CATASTROPHE RESERVES 181,162 155,449 ACCRUED EXPENSES 71,874 68,528 BORROWED FUNDS 17,327 30,960 DRAFTS PAYABLE 0 39,866 OTHER LIABILITIES 33,933 47,350 TOTAL LIABILITIES 1,326,954 1,291,065

TOTAL POLICYHOLDERS’ SURPLUS 1,787,842 1,682,712

TOTAL LIABILITIES AND SURPLUS $ 3,114,796 $ 2,973,777

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 23 Property and Casualty Net Earned Premium and Policy Count Mutual and General ($ IN THOUSANDS) 2015 2014 2013 2012 2011 Net Earned Premium $1,395,653 $1,327,683 $1,275,422 $1,216,150 $1,169,923 Percent Change 5.12% 4.10% 4.87% 3.95% 6.95%

Policy Count 2,013.3 1,967.0 1,931.1 1,905.9 1,896.0 Percent Change 2.35% 1.86% 1.32% 0.52% 1.77%

AssetsAssets Under Under Management Management Property and Casualty Amount (in (inBillions) Billions) Net Written Premium Amount

$5.0 $4.9

27% Auto $4.6 27% Auto Homeowners Homeowners $4.4 Other PropertyOther Property $4.1 54%54% Farmowners Farmowners Commercial MultiCommercial Peril Multi Peril 2011 2012 2013 2014 2015 12% Other 12% Other *Includes Shelter Retirement Plan and Shelter Foundation 3% 2% 2% 3% 2% 2%

Shelter Mutual and Shelter General Property and Casualty Products Shelter’s exclusive agents offer the following property and casualty products:

Auto Property Liability Business Private Passenger Auto Homeowners Personal Umbrella Business Owners Commercial Auto Mobile Homeowners General Liability Commercial Fire Motorcycle Farmowners Comprehensive Farm Commercial Inland Recreational Vehicle Dwelling Fire Liability Marine Farm Fire Cargo Apartment Owners Personal Inland Marine Boatowners

24 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT SHELTER GENERAL INSURANCE COMPANY Statements of Admitted Assets, Liabilities, and Net Worth (Statutory Basis) YEAR ENDED DECEMBER 31 (IN THOUSANDS) 2015 2014 ADMITTED ASSETS BONDS $ 111,875 $ 108,703 INVESTMENTS IN AFFILIATES 13,301 10,782 OTHER INVESTED ASSETS 3,343 3,173 CASH AND SHORT-TERM INVESTMENTS (773) 1,979 TOTAL CASH AND INVESTED ASSETS 127,746 124,637

PREMIUMS RECEIVABLE 4,506 4,251 INCOME TAX RECOVERABLE 1,125 4,641 OTHER ASSETS 1,993 10,692

TOTAL ADMITTED ASSETS $ 135,370 $ 144,221

LIABILITIES AND NET WORTH UNPAID LOSSES AND LOSS EXPENSES $ 47,530 $ 52,355 UNEARNED PREMIUM 12,944 12,202 ACCRUED EXPENSES 1,307 1,767 OTHER LIABILITIES 5,619 11,267 TOTAL LIABILITIES 67,400 77,591

NET WORTH 67,970 66,630

TOTAL LIABILITIES AND NET WORTH $ 135,370 $ 144,221

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 25 Earned Premium & Net Income Before Taxes

Haulers Insurance(in Millions) Company Haulers Insurance Company, (in Millions) $36.0 $34.6 $35 $32.0 $29.2 Inc. (HICI) $30 $27.8 $25

$20

HICI recorded $36.9 million of direct written premium, an $15

increase of 1.67% from the previous year, with net earned $10 $6.6 $5 $2.2 premium increasing 3.7% to a record $37 million as a result $0.4 $(0) of continued geographic and product expansion. Two $(0.3) $(0.0) 2011 2012 2013 2014 2015 expansion states, Georgia and Alabama, continue to grow Earned Premiums Net Income Before Taxes in policy count. HICI also began writing policies in South Carolina in June 2014 and have accumulated 346 policies Haulers WrittenHaulersHICI Premium Written Premium Premium by State by State by State through December 2015. In terms of product, during 2015 SC SC 0.48% 0.48% the Company began writing renters policies in Tennessee MO MO 19.38% 19.38% and Virginia. Policies in force overall grew 1.9% to 36,109.

Alabama Alabama IN IN Georgia Georgia Loss payments increased to $23.6 million this year IL 7.55% IL 7.55% 0.13% 0.13% Illinois Illinois TN TN compared to $19.3 million last year due to increases in both 37.83% 37.83% Indiana Indiana auto severity and frequency. This uptick resulted in an Missouri Missouri GA GA South Carolina South Carolina 16.55% 16.55% underwriting loss of $3.9 million for the year. The Company Tennessee Tennessee Virginia Virginia ended the year with net income of $335 thousand and AL AL 4.96% 4.96% surplus of $37.9 million. VA VA 13.12% 13.12%

HICI received a strength rating of A (Excellent) by A.M. Best. The premium to surplus ratio was 100%, which is considered very strong for a predominately auto insurer.

IL IN

MO VA

TN SC

AL GA

HICI Operating Territory

26 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT HAULERS INSURANCE COMPANY, INC. Statements of Admitted Assets, Liabilities, and Net Worth (Statutory Basis) YEAR ENDED DECEMBER 31 (IN THOUSANDS) 2015 2014 ADMITTED ASSETS BONDS $ 62,285 $ 60,081 REAL ESTATE 893 916 CASH AND SHORT-TERM INVESTMENTS 2,082 1,657 TOTAL CASH AND INVESTED ASSETS 65,260 62,654

ACCRUED INVESTMENT INCOME 564 563 PREMIUMS RECEIVABLE 7,532 7,661 OTHER ASSETS 634 356

TOTAL ADMITTED ASSETS $ 73,990 $ 71,234

LIABILITIES AND NET WORTH UNPAID LOSSES AND LOSS EXPENSES $ 23,521 $ 20,835 UNEARNED PREMIUM 11,858 11,988 OTHER LIABILITIES 669 842 TOTAL LIABILITIES 36,048 33,665

NET WORTH 37,942 37,569

TOTAL LIABILITIES AND NET WORTH $ 73,990 $ 71,234

Haulers InsuranceTotal Assets Company Net Worth Haulers Insurance Company Total(in Millions)Assets (in Millions) (in Millions) Net Worth (in Millions) $74 $71 $37.6 $37.9 $66 $36.8 $35.3 $35.8

$58 $57

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 27 Net IncomeNet Income Before Before Taxes Taxes (in Millions) Shelter Life Insurance Company Millions (in Millions) $22.2 $19.8 $16.7 In terms of income, total collected premiums were up 3.7% $12.2 and ended at $133.2 million. Policy count increased by 11,300, ending the year with almost 296,000 life policies $0.4 in force. Net investment income was $44.3 million, very 2011 2012 2013 2014 2015 similar to the previous year. Even though assets are higher, Life Insurance in Force (in Billions) the continued low interest rate environment has impacted Life Insurance in Force overall yields to the investment portfolio. (in Billions) $24.8 $23.7 $22.6 $21.8 Life and annuity benefits paid increased $1.9 million $20.9 primarily due to growth in total ordinary life policies. Loss reserves are also up $33.7 million over the prior year, contributed to by an aging business and the addition of a $7 million asset adequacy reserve.

2011 2012 2013 2014 2015 Shelter Life ended the year with $12.2 million of net income before tax and net worth of $184 million. The Company added $1.1 billion to life insurance in force for a total of Premium and Annuity Considerations $24.8 billion. Premium and Annuity Considerations (in(in Millions) Millions)

Shelter Life received a strength rating of A (Excellent) by $99.7 $104.2 $94.9 $98.5 $90.6 A.M. Best. This rating provides further evidence of the strength and stability of Shelter Life Insurance Company. $47.3

$24.2 $22.4 $20.4 $21.4

2011 2012 2013 2014 2015

Products Offered - Life First Year Renewal 20-Pay Whole Life EZ Term® Total Assets Junior Special Shelter Life Insurance Company Total (in Millions)Assets Level Term to Age 100 (10, 20, 30 years) (in Millions)

$1,157 Platinum Shield® IV Universal Life $1,078 $1,118 $1,013 $1,045 Secure Whole Life Shelter Express Term® Whole Life Yearly Renewable Term 2011 2012 2013 2014 2015

28 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT SHELTER LIFE INSURANCE COMPANY Statements of Admitted Assets, Liabilities, and Net Worth (Statutory Basis) YEAR ENDED DECEMBER 31 (IN THOUSANDS) 2015 2014 ADMITTED ASSETS BONDS $ 992,314 $ 955,674 OTHER INVESTED ASSETS 47,185 44,778 POLICY LOANS 24,505 24,666 MORTGAGE LOANS ON REAL ESTATE, AFFILIATED 12,092 10,691 INVESTMENTS IN AFFILIATES 9,792 9,802 CASH AND SHORT-TERM INVESTMENTS 5,775 5,672 TOTAL CASH AND INVESTED ASSETS 1,091,663 1,051,283

DEFERRED AND UNCOLLECTED PREMIUMS 35,929 33,813 DEFERRED TAX ASSETS 13,953 15,010 ACCRUED INVESTMENT INCOME 10,635 10,809 OTHER ASSETS 5,219 7,307

TOTAL ADMITTED ASSETS $ 1,157,399 $ 1,118,222

LIABILITIES AND NET WORTH AGGREGATE RESERVES $ 885,674 $ 854,253 LIABILITY FOR DEPOSIT TYPE CONTRACTS 56,154 54,961 POLICY AND CONTRACT CLAIMS 6,441 5,413 DUE TO AFFILIATED COMPANIES 3,453 5,148 ASSET VALUATION RESERVE 9,237 7,035 OTHER LIABILITIES 12,309 13,414 TOTAL LIABILITIES 973,268 940,224

NET WORTH 184,131 177,998

TOTAL LIABILITIES AND NET WORTH $ 1,157,399 $ 1,118,222

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 29 Premium and Annuity Considerations (in Millions)

Underwriting Gain & Net Income Shelter Reinsurance Company Shelter Reinsurance Company (in (inMillions) Millions)

$43 $38 $39 $31 $32 $26 $26 Shelter Reinsurance was incorporated in 1986 with the goal $20 of diversifying Shelter Mutual’s property portfolio outside of its operating territory. This goal has evolved into Shelter 2011 2012 2013 2014 2015 Reinsurance becoming a global reinsurer, partnering with $(56) approximately 280 Companies from more than 60 countries. $(66) Geographic diversification via the reinsurance channel has Net Underwriting Gain (Loss) Net Income (Loss) Before Taxes been successful with $109 million of earned premium and $39.2 million of net income before tax in 2015. A.M. Best continued to rate Shelter Reinsurance as “A” (Excellent) with a stable outlook.

The year 2015 was not without catastrophic events across Net Worth the global marketplace. Shelter Re sustained losses in 2015 Shelter Reinsurance Company from winter storm events in the northeastern United States, (inNet Millions) Worth wildfires along the western coast of the United States and (in Millions) $296.7 Canada, hurricanes in the Caribbean and an earthquake in $271.0 Chile. None of these events caused any significant impact $245.4 to Shelter Re’s portfolio or the reinsurance marketplace as a whole.

The trend of low catastrophic experience, a strong US Dollar $165.2 and the influx of alternative capital continued in 2015, $143.2 creating a highly competitive reinsurance environment. Shelter Re continues to be successful despite the current market environment and demonstrated success in profitably 2011 2012 2013 2014 2015 expanding our geographic footprint. This will be the continued focus of Shelter Re in addition to delivering the same level of exceptional customer service that Shelter Insurance Companies are now known for around the world.

Shelter Reinsurance Company Net Written Premium TotalTotal Assets Assets (in Millions) (in(in Millions) Millions) Net Written Premium $422 (in Millions) $406 $102 $102 $103 $103 $383 $98

$322 $294

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 30 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT SHELTER REINSURANCE COMPANY Statements of Admitted Assets, Liabilities, and Net Worth (Statutory Basis) YEAR ENDED DECEMBER 31 (IN THOUSANDS) 2015 2014 ADMITTED ASSETS BONDS $ 391,976 $ 370,180 CASH AND SHORT-TERM INVESTMENTS 9,045 8,557 OTHER EQUITY INVESTMENTS, AFFILIATED 677 637 TOTAL CASH AND INVESTED ASSETS 401,698 379,374

ACCRUED INVESTMENT INCOME 3,520 3,649 DEFERRED TAX ASSET 2,517 3,217 PREMIUMS RECEIVABLE 1,930 3,227 INCOME TAX RECOVERABLE 1,414 1,407 OTHER ASSETS 11,186 14,810 TOTAL ADMITTED ASSETS $ 422,265 $ 405,684

LIABILITIES AND NET WORTH UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSE $ 100,586 $ 107,309 UNEARNED PREMIUM 22,310 23,101 OTHER LIABILITIES 2,690 4,273 TOTAL LIABILITIES 125,586 134,683

NET WORTH 296,679 271,001

TOTAL LIABILITIES AND NET WORTH $ 422,265 $ 405,684

Shelter Reinsurance Company Distribution of Signed Premium U.K. Europe 6.1% 27.9% Asia Canada 5.6% 4.9%

Oceania United States 24.6% 2.6% Bermuda 3.5% Israel 12.1% Central America 1.2% Caribbean South Africa 10.8% 0.7%

2015 ANNUAL REPORT SHELTER INSURANCE COMPANIES 31 BOARD OF DIRECTORS - 2016

Don A. McCubbin Chair and Director

Rick L. Means Andrés Jiménez J. David Moore Deborah L. Douglas Vice Chair and Director Director Director Director

David R. Monday Stephen E. Erdel H. Baker Kurrus Madison M. (Matt) Moore Director Director Director Director

David Monday, not pictured

32 SHELTER INSURANCE COMPANIES 2015 ANNUAL REPORT OFFICERS - 2016

Rick L. Means President and Chief Executive Ocer

S. Daniel Clapp Executive Vice President

Teresa K. Magruder Executive Vice President and Treasurer

Madison M. (Matt) Moore Executive Vice President

Randa Rawlins Sr. Vice President, Secretary and General Counsel

Rockne P. Corbin Senior Vice President and Managing Director Shelter Reinsurance Company

Tina M. Workman Vice President of Accounting and Assistant Treasurer

John T. Rooney Vice President of Information Services

Terry L. Dykes Vice President of Claims

David N. Abbott Vice President of Investments

Francis (Frank) L. Thompson IV Vice President of Marketing

Paul J. LaRose Vice President Shelter Bene ts Management Inc.

Todd J. Weyler Vice President of Underwriting

H. Lloyd Montgomery, Jr. Vice President of Alternate Channels

Marsha Carter Vice President and General Manager of Shelter Life Insurance Company SHELTER INSURANCE COMPANIES 1817 West Broadway • Columbia, MO 65218 1-800-SHELTER (1-800-743-5837) • ShelterInsurance.com

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