Growing Annual Report for the ® FUTURE 8.21.17 SOLAR ECLIPSE

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SHELTER INSURANCE COMPANIES 1817 WEST BROADWAY • COLUMBIA, MISSOURI 65218 1-800-SHELTER (1-800-743-5837) SHELTERINSURANCE.COM Facebook: ShelterInsurance Twitter: Shelter_ins YouTube: ShelterInsurance Instagram: ShelterInstagram LinkedIn: Shelter-Insurance-Companies 2017 Growing Annual Report for the ® FUTURE 8.21.17 SOLAR ECLIPSE

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.

REFLECTIONS A MESSAGE FROM SHELTER’S BOARD CHAIR AND PRESIDENT & CEO

After 15 years of service on the Board of Directors, I will be retiring in 2018. During my 45 year career and adding my tenure on the Board, I have witnessed Shelter grow and change tremendously. At the beginning of my career, annual premiums were $126 million and are $1.6 billion today. Policyholder surplus was $43 million and now stands in excess of $1.9 billion, 45 times the initial amount. I credit Shelter’s management, employees and agents for this growth along with sound, conservative fiscal management.

I will be retiring from a group of companies which continues to build on our passion for pleasing our customers. This annual report features information about our innovative efforts towards this passion and progress made during 2017, as well as our positive financial results. Shelter has been strategically focused on diversifying our operations across distribution channels and new states. We have also been focused on providing excellent customer service when catastrophes occur and our customers need us. During retirement, it will be exciting to watch the success of these initiatives and the continued growth of our core success formula. It has truly been an honor and pleasure to work alongside so many great employees and agents over the past 51 years! DON McCUBBIN Chair of Board of Directors On behalf of the Board of Directors, I would like to thank the entire Shelter team for its dedication and hard work, which enabled us to achieve our 2017 goals. As my successor, Rick Means, assumes the responsibility of Chair of the Board, I am confident that his experience and vision will guide the Companies to even greater success in the future.

Overall, 2017 was a very good year for the Shelter Insurance Companies as proven by the financial results displayed throughout this report. Production during 2017 lead to positive results including continued elevated average premium per policy, stable policy retention, and remarkable policy count growth. Combined policy counts for Shelter Mutual and General increased 3% and net direct written premiums increased nearly 6% compared to 2016. All of our production metrics exceeded their 2017 targets. Shelter Life Insurance Company’s operations and net investment income were very strong and stable and resulted in $22 million of income before tax.

The excellent financial results were achieved in spite of various challenges which were presented during the year. Shelter Mutual & General reported over $306 million of weather related losses. Shelter is in business to ‘weather’ these storm losses and help our insureds get back on their feet after a loss, but this level of weather losses was higher than average. Still the amount of weather losses as a percent of premium remained the same year over year. With regards to auto liability, Shelter is experiencing higher loss ratios, but they are showing some improvement over 2016. Shelter Reinsurance was impacted by hurricanes in the Caribbean and fires in California and suffered large catastrophe losses. RICK MEANS President & CEO After considering the effects of these items, the operating companies reported nearly $106 million of combined income before tax. Over the past 6 years, the operating companies have averaged $136 million of combined income before tax. The financial results experienced by our Companies are a testament to the hard work of our agents and employees and our commitment to sound financial management practices.

The passage of the Tax Cuts and Jobs Act during 2017 required us to revalue our deferred taxes. Simply put, a future tax benefit valued at a 35% tax rate had to be written down to a 21% tax rate. This means there was roughly a 14% decrease in net tax assets which resulted in a surplus reduction of $51 million.

As we look toward the future, it has been rewarding to see Shelter’s newest ventures taking life during 2017. AmShield, a new company selling property and casualty insurance through independent agents in the western U.S., sold its first policies in 2017. Say Insurance, Shelter’s online brand sold by Shelter General Insurance is now live in 4 states and experienced significant growth in policies. Ohio, our newest state in 2017 for our captive agents, now offers auto, home and life insurance. Results such as those we experienced in 2017 do not happen by accident. They are the result of hard work, innovative new ideas and a commitment to excellence. I am grateful to lead this exceptional team and look forward to being part of our continued growth and success. REFLECTIONS A MESSAGE FROM SHELTER’S BOARD CHAIR AND PRESIDENT & CEO On behalf of the Board of Directors, I would like to thank the entire Shelter team for its dedication and hard work, which enabled us to achieve our 2017 goals. – Don McCubbin, Chair

2017 BOARD OF DIRECTORS COMMITMENT TO MANAGEMENT EXCELLENCE Shelter Insurance Companies are governed by a nine-member Board of Directors empowered to provide policy decisions and general oversight of the Companies’ operations. Key responsibilities include reviewing corporate strategy and business plans and appointing officers. Three directors are elected annually by policyholders at the annual policyholders’ meeting. Each director is elected for a three- year term. In addition, the Board appoints four committees to directly assist the Board in fulfilling its responsibilities: the Investment Committee, the Executive and Compensation Committee, the Corporate Governance Committee and the Audit Committee.

While all four committees are important, the Audit Committee in particular is charged with performing three functions: serving as an objective party to monitor Shelter’s financial reporting process and internal control system; appointing, reviewing, and assessing the independent audit firm; and providing an avenue of open communication among the independent auditors, internal auditors, senior management and the Board.

Other senior management committees are established according to critical management issues. These committees are overseen by executive management. The goal of the Board and other committees is to ensure a management structure that provides effective oversight and is responsive to key issues on behalf of the employees, agents and customers of the Shelter Insurance Companies. 2017 BOARD OF DIRECTORS

DON A. McCUBBIN RICK L. MEANS ANDRÉS JIMÉNEZ Chair and Director Vice Chair and Director Director

J. DAVID MOORE DEBORAH L. DOUGLAS DAVID R. MONDAY Director Director Director

STEPHEN E. ERDEL H. BAKER KURRUS MADISON “MATT” MOORE Director Director Director SHELTER SHELTER GENERAL MUTUAL INSURANCE SHELTER INSURANCE COMPANY LIFE COMPANY INSURANCE COMPANY

AMSHIELD SHELTER INSURANCE ENTERPRISES, COMPANY LLC SHELTER INSURANCE® SHELTER SHELTER INVESTMENTS, GROUP OF REINSURANCE LLC OPERATING COMPANY COMPANIES In Gold - All rated “A” Excellent as determined by A.M. Best DANIEL As of December 31, 2017 HAULERS BOONE INSURANCE AGENCY, COMPANY LLC INC.

SHELTER SHELTER FINANCIAL BENEFITS SERVICES, MANAGEMENT INC. INC. SHELTER INSURANCE® FINANCIAL STATEMENT For more than 70 years, Shelter has provided a variety of insurance products and services to our customers. Shelter has grown to be one of the nation’s most successful and financially sound regional insurance groups.

2,163,844 $1.7 Billion $5.4 Billion P&C POLICY COUNT P&C POLICY EARNED PREMIUM ASSETS UNDER MANAGEMENT Up 224,539 over the past 5 years 5 year Annual growth of 4.74% Up $1 Billion in last 5 years

COMBINED INCOME BEFORE TAX

2013 $136 Million $1.92 Billion SHELTER MUTUAL SURPLUS 2014 $138 Million 5 year Annual growth of 6.56%

2015 $181 Million

2016 $138 Million

4,000 20 2017 $106 Million EMPLOYEES & AGENTS OPERATING STATES Added 3 in past 5 years MUTUAL AND GENERAL OPERATIONS Net direct written premiums before voluntary assumptions These entities have a permitted practice to build voluntary increased 5.7% compared to 2016 and were $1.59 billion. catastrophe reserves for both a major weather event and a Premiums continue to rise as a result of rate increases significant earthquake. During 2017, more than $17 million implemented over the past few years combined with a 3.1% was added to the voluntary pre-event reserves, which added average premium per policy increase and stable retention during 1.1% to the combined ratio. In total, there is $116 million in 2017. In the past 5 years, these two companies have issued almost the earthquake reserve and $111 million in the weather reserve 1.8 million new policies. available for future use. Six years of consecutive additions to the weather reserve has allowed it to build up quite substantially. Incurred weather losses were more significant this year. For the 2017 loss year, such losses and adjustment expenses were $306 The total underwriting loss was $50.9 million, representing a million, representing 19% of earned premiums. Non-weather 102.4% combined ratio. Strong investment gains contributed losses were around $717 million, up $19 million from 2016. In greatly to these operations during 2017. Net Income before tax the past 5 years, Mutual and General incurred $4.7 billion of ended at $71 million. Going forward, Shelter will continue its losses incurred representing 941,912 claims reported and an expansion into the state of Ohio with auto and homeowners. The average $4,972 per claim, testament to servicing our customers in Say Insurance brand will look to add new states during 2018 to their time of need. expand on the direct to consumer model.

MUTUAL & GENERAL MUTUAL & GENERAL WRITTEN PREMIUM BY STATE WRITTEN PREMIUM BY LINE OF BUSINESS 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 Liability Commercial Inland Marine Recreational Vehicle Dwelling Fire Cargo Farm Fire Apartment Owners Personal Inland Marine Boatowners

$227 Million $71 Million 396,877 PRE-EVENT RESERVES NET INCOME BEFORE TAX POLICIES ISSUED Funds set aside for future event, added layer of conservatism

5 YEAR CLAIMS BY THE NUMBERS

$4.7 Billion 941,912 $4,972 5 YEAR LOSS PAYMENTS 5 YEAR CLAIMS REPORTED AVERAGE $ PAID PER CLAIM Funds reinvested in our communities Number of claims reported Average paid amount over to serve our customers during the past 5 years the past 5 years SHELTER MUTUAL INSURANCE COMPANY Statements of Admitted Assets, Liabilities, and Surplus (Statutory Basis) YEAR ENDED DECEMBER 31

(IN THOUSANDS) 2017 2016 ADMITTED ASSETS BONDS $ 1,797,376 $ 1,754,717 INVESTMENTS IN AFFILIATES 702,533 735,025 COMMON STOCKS, UNAFFILIATED 325,492 306,115 OTHER INVESTED ASSETS 308,279 296,900 REAL ESTATE 36,318 33,350 CASH AND SHORT-TERM INVESTMENTS (32,942) (53,010) TOTAL CASH AND INVESTED ASSETS 3,137,056 3,073,097

PREMIUMS RECEIVABLE 156,609 140,351 DEFERRED INCOME TAX ASSET 35,566 52,638 OTHER ASSETS 30,314 22,479 ACCRUED INVESTMENT INCOME 14,741 16,255 INCOME TAX RECOVERABLE 6,850 693 TOTAL ADMITTED ASSETS $ 3,381,136 $ 3,305,513

LIABILITIES AND SURPLUS UNEARNED AND ADVANCE PREMIUMS $ 580,200 $ 553,768 UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES 523,140 521,562 CATASTROPHE RESERVES 224,366 206,878 ACCRUED EXPENSES 70,710 71,405 OTHER LIABILITIES 56,632 51,615 BORROWED FUNDS 5,401 23,144 TOTAL LIABILITIES 1,460,449 1,428,372

TOTAL POLICYHOLDERS’ SURPLUS 1,920,687 1,877,141

TOTAL LIABILITIES AND SURPLUS $ $3,381,136 $ $3,305,513 SHELTER GENERAL INSURANCE COMPANY* Statements of Admitted Assets, Liabilities, and Net Worth (Statutory Basis) YEAR ENDED DECEMBER 31

(IN THOUSANDS) 2017 2016 ADMITTED ASSETS BONDS $ 102,583 $ 106,691 INVESTMENTS IN AFFILIATES 9,225 13,843 OTHER INVESTED ASSETS 3,751 3,477 CASH AND SHORT-TERM INVESTMENTS 920 691 TOTAL CASH AND INVESTED ASSETS 116,479 124,702

PREMIUMS RECEIVABLE 7,223 5,053 OTHER ASSETS 1,997 2,225 INCOME TAX RECOVERABLE 1,805 950 TOTAL ADMITTED ASSETS $ 127,504 $ 132,930

LIABILITIES AND NET WORTH UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES $ 46,554 $ 45,101 UNEARNED AND ADVANCED PREMIUMS 16,794 13,832 OTHER LIABILITIES 2,105 3,815 CATASTROPHE RESERVES 2,203 2,024 ACCRUED EXPENSES 1,087 1,268 TOTAL LIABILITIES 68,743 66,040

NET WORTH 58,761 66,890

TOTAL LIABILITIES AND NET WORTH $ 127,504 $ 132,930 * INCLUDING SAY INSURANCE HAULERS INSURANCE COMPANY, INC. (HICI) Written premiums were over $40 million, an increase of 2017. The overall underwriting gain for the year was $866,000 2.6% driven mainly by additional policy count in Alabama, and net income before tax was $4.8 million. Over the past Georgia and Missouri. HICI recently expanded operations five years HICI has consistently grown its written premium, into both Alabama and Georgia. The Company also now surplus and asset levels. offers motorcycle and renters insurance in several of its operating states. HICI received a financial strength rating of A (Excellent) by AM Best. The Company’s premium to surplus ratio was a Incurred losses of $27 million were up slightly from respectable 90%, a strong position for a predominately auto the previous year, and great enough to be covered by an insurance writer. aggregate stop loss reinsurance agreement with its parent, Shelter Mutual. The agreement pays out if Haulers’ loss ratio exceeds 57.5%. The net benefit to HICI was $3 million for

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HICI WRITTEN PREMIUM HICI OPERATING BY STATE TERRITORY HAULERS INSURANCE COMPANY, INC. Statements of Admitted Assets, Liabilities, and Net Worth (Statutory Basis) YEAR ENDED DECEMBER 31

(IN THOUSANDS) 2017 2016 ADMITTED ASSETS BONDS $ 61,548 $ 61,640 CASH AND SHORT-TERM INVESTMENTS 1,017 2,229 REAL ESTATE 853 876 TOTAL CASH AND INVESTED ASSETS 63,418 64,745

PREMIUMS RECEIVABLE 8,149 8,437 ACCRUED INVESTMENT INCOME 518 540 OTHER ASSETS 5721 503 TOTAL ADMITTED ASSETS $ 77,806 $ 74,225

LIABILITIES AND NET WORTH UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES $ 20,694 $ 21,410 UNEARNED AND ADVANCED PREMIUMS 12,587 12,856 OTHER LIABILITIES 1,713 889 TOTAL LIABILITIES 34,994 35,155

NET WORTH 42,872 39,070

TOTAL LIABILITIES AND NET WORTH $ 77,806 $ 74,225

5.89% 5.59% 3.96% TOTAL ASSETS EARNED PREMIUM SURPLUS 5 YEAR ANNUAL GROWTH SHELTER LIFE INSURANCE COMPANY Premium and annuity considerations for Shelter Life increased Shelter Life continues to hold a financial strength rating of A (Excellent) by 3.2% over the previous year to almost $131 million. The A.M. Best. This rating provides further evidence of the strength and stability Company has added $4.8 billion to life insurance in force in the of Shelter Life Insurance Company. past 5 years, with ending in force of $26.7 billion. Even though asset balances have grown $192 million during the LIFE PRODUCTS OFFERED past 5 years due to good cash flows, the continued low interest rate environment has negatively impacted overall yields to the 20-Pay Whole Life Secure Whole Life investment portfolio and hence net investment income was similar EZ Term® Shelter Express Term® to last year and was reported at $43 million. The continued low Junior Special Whole Life interest rate environment also drove the previous need for the Level Term to Age 100 (10, 20, 30 years) Yearly Renewable Term Company to establish additional asset adequacy reserves in 2017 ® by $6 million, for a total of $27.5 million. Even with this increase Platinum Shield IV Universal Life in reserves, net income before tax was $21.7 million.

$1.237 Billion $26.7 Billion $207 Million TOTAL ASSETS INSURANCE IN FORCE SURPLUS Increase of $192 Million during the past 5 years Total value of active insurance policies Increase of $41 Million over the past 5 years Increase of $4.8 Billion over the past 5 years

95.60% $22 Million $131 Million LIFE RETENTION NET INCOME BEFORE TAX PREMIUM CONSIDERATIONS Percentage of policies renewing in current year Recorded more than $78 Million $606 Million during the past 5 years over the past 5 years SHELTER LIFE INSURANCE COMPANY Statements of Admitted Assets, Liabilities, and Net Worth (Statutory Basis) YEAR ENDED DECEMBER 31

(IN THOUSANDS) 2017 2016 ADMITTED ASSETS BONDS $ 1,080,787 $ 1,038,583 OTHER INVESTED ASSETS 44,779 49,115 Secure Whole Life Shelter Express Term® POLICY LOANS 23,236 23,260 Whole Life INVESTMENTS IN AFFILIATES 8,387 12,584 Yearly Renewable Term MORTGAGE LOANS ON REAL ESTATE, AFFILIATED 7,866 8,854 CASH AND SHORT-TERM INVESTMENTS 5,754 2,009 TOTAL CASH AND INVESTED ASSETS 1,170,809 1,134,405

DEFERRED AND UNCOLLECTED PREMIUMS 40,083 38,052 DEFERRED TAX ASSETS 9,829 10,497 ACCRUED INVESTMENT INCOME 9,280 10,049 OTHER ASSETS 6,584 5,929 TOTAL ADMITTED ASSETS $ 1,236,585 $ 1,198,932

LIABILITIES AND NET WORTH AGGREGATE RESERVES $ 935,005 $ 909,886 LIABILITY FOR DEPOSIT TYPE CONTRACTS 57,243 58,508 ASSET VALUATION RESERVE 8,980 10,782 POLICY AND CONTRACT CLAIMS 7,533 6,842 DUE TO AFFILIATED COMPANIES 3,904 2,967 OTHER LIABILITIES 17,418 13,943 TOTAL LIABILITIES 1,030,083 1,002,928

NET WORTH 206,502 196,004

TOTAL LIABILITIES AND NET WORTH $ 1,236,585 $ 1,198,932 SHELTER REINSURANCE COMPANY Shelter Reinsurance continues to provide the Shelter Insurance group returns in the areas of growth and diversification. Gross written premiums Canada were $120 million, similar to last year due to a soft market. During 5.41% Europe 2017, ShelterRe experienced an estimated $72 million in net incurred 29.14% losses as a result of several hurricanes and wild fires. Reinsurance also experienced a negative impact to profit and net worth due to changes in foreign exchange rates. Overall, the Company experienced a $30.5 million underwriting loss and a $15.2 million net loss before tax. Prior to 2017, Reinsurance had recorded 5 straight years of favorable underwriting results. The 5 year average underwriting gain is $17.2 million even after U.K. accounting for the losses from 2017. 7.91% The company’s continued reputation for prompt claims payment, exceptional customer service, professional staff and solid financial strength enables it to continue to diversify and support Shelter Insurance.

Bermuda 3.25% Asia United States 5.93% 25.31% Caribbean 11.01%

Israel $120 Million $30.5 Million Latin America 6.35% WRITTEN PREMIUM 2017 UNDERWRITING LOSS 1.39% Amount consistent with 2016

Oceania 3.94% South Africa .36% $86.6 Million $473 Million $321 Million 5 YEAR UNDERWRITING GAIN TOTAL ASSETS ENDING SURPLUS Average of $17.3 Million per year Increase of $151 Million in past 5 years Increase of $156 Million in past 5 years Canada 5.41% Europe 29.14%

U.K. 7.91%

Bermuda 3.25% Asia United States 5.93% 25.31% Caribbean 11.01%

Israel Latin America 6.35% 1.39%

Oceania 3.94% South Africa .36% SHELTER REINSURANCE COMPANY Statements of Admitted Assets, Liabilities, and Net Worth (Statutory Basis) YEAR ENDED DECEMBER 31

(IN THOUSANDS) 2017 2016 ADMITTED ASSETS BONDS $ 398,248 $ 398,510 COMMON STOCKS 31,266 12,750 CASH AND SHORT-TERM INVESTMENTS 16,980 8,636 OTHER EQUITY INVESTMENTS, AFFILIATED 742 699 TOTAL CASH AND INVESTED ASSETS $ 447,236 $ 420,595

FUNDS HELD ON REINSURANCE 14,407 17,921 ACCRUED INVESTMENT INCOME 3,349 3,487 DEFERRED TAX ASSET 1,409 2,620 PREMIUMS RECEIVABLE 6,209 2,547 OTHER ASSETS 261 132 TOTAL ADMITTED ASSETS $ 472,871 $ 447,302

LIABILITIES AND NET WORTH UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES $ 123,296 $ 94,482 UNEARNED PREMIUM 23,187 21,452 OTHER LIABILITIES 4,892 4,582 TOTAL LIABILITIES 151,375 120,516

NET WORTH 321,496 326,786

TOTAL LIABILITIES AND NET WORTH $ 472,871 $ 447,302 2017 OFFICERS

RICK L. MEANS S. DANIEL CLAPP TERESA K. MAGRUDER MADISON “MATT” President Executive Vice President Executive Vice President MOORE Chief Executive Officer Treasurer Executive Vice President

RANDA C. RAWLINS ROCKNE P. CORBIN TINA M. WORKMAN JOHN T. ROONEY Senior Vice President, Senior Vice President Vice President - Accounting Vice President General Counsel & Secretary & Managing Director & Assistant Treasurer Information Services Shelter Reinsurance Company

TERRY L. DYKES DAVID N. ABBOTT FRANK THOMPSON IV PAUL J. LaROSE Vice President Vice President Vice President Vice President Claims Investments Marketing Shelter Benefits Management Inc.

TODD J. WEYLER H. LLOYD MARSHA L. CARTER BRIAN D. WALLER Vice President MONTGOMERY, JR. Vice President & General Manager Vice President of Underwriting Vice President Shelter Life Insurance Company Government Relations Alternate Channels Board of Directors Approves Management Reorganization In November 2017, the Shelter Mutual Insurance Board of Directors approved the following leadership changes: Rick Means was elected to become the Chairman of the Board in July 2018, replacing Don McCubbin, who will retire at that time. Mr. Means will remain as Chief Executive Officer. Matt Moore, Executive Vice President, was elected President and Chief Operating Officer effective January 1, 2018. Randa Rawlins, Senior Vice President and General Counsel, was promoted to Executive Vice President effective January 1, 2018. In addition, Ms. Rawlins was elected to the Board of Directors, effective July 1, 2018. She will replace Don McCubbin on the Board and complete his unexpired term. At the December 2017 Board of Directors meeting, it was announced that David VanDyke was elected to replace Ms. Rawlins as General Counsel effective January 1, 2018.

RICK MEANS MATT MOORE RANDA RAWLINS

Shelter Unveils Employee Value Proposition Companies use employee value propositions (EVPs) to help market their organizations and attract potential employees. EVPs demonstrate how employees perceive the value they gain by working for a company. During 2017 a joint effort with SBMI, Training and the Advertising team worked to analyze, further develop and re-package Shelter’s employment brand and identify new or different delivery formats. The team conducted focus groups for employees to share what attracted them to Shelter, why they stay, what is important to them and suggestions for improvements. Stacye Smith, Shelter’s Director of Human Resources said, “We were very intentional to include a diverse group of employees from different departments, age groups, genders and company tenure.” The information gathered was used to develop an employee value proposition for Shelter, with participants assisting in writing the final statement. The statement is designed to give prospective and current employees a description of who we are:

SHELTER’S EMPLOYEE VALUE PROPOSITION “At Shelter Insurance® you feel like part of a family. Our leaders know employees personally and support a work/life balance. We’re a financially stable company with the desire to innovate and we enjoy a unique benefits plan you won’t find many places these days. We believe in doing the right thing and having a little fun along the way, supporting the communities where we live and work.” Shelter Recognized Shelter Helped Create in Business Insurance Industry Changes in 2017 Shelter’s leadership continued their focus on creating positive change in Magazine’s Annual the insurance industry through legislative efforts in 2017. Rick Means, Matt Moore and Brian Waller were instrumental in the passage of two bills, Best Places to Work including: • Arkansas Senate Bill 133, which allows insurance policies to in Insurance Program® depreciate all property costs, including labor costs. This change will lead to more consumer choice and better consumer protections in the property insurance marketplace. • Missouri House Bill 339, a tort reform bill that curbs some of the past abuses of time limited demands and of §537.065 agreements in Missouri. In addition, Rick Means testified in a hearing before the House Subcommittee on Housing and Insurance about the federal government’s role in the insurance industry. He expressed the industry’s strong support for two bipartisan bills. H.R. 3861would refocus the Federal Insurance Office (FIO) on international Shelter Insurance® was named in the annual Best Places to matters and require the FIO to coordinate more closely with the states. Work in Insurance program, which recognizes employers H.R. 3762 would help ensure federal negotiators in international insurance discussions represent the interests of the United States marketplace and its for their outstanding performance in establishing workplaces regulators, the state insurance commissioners. In his remarks, he encouraged where employees can thrive, enjoy their work and help their the FIO and the states to work together. companies grow. The annual program surveys employees at insurance organizations in several categories with a focus on overall satisfaction.

“It is an absolute honor to be recognized for this award and is a testament to the hard work and dedication of our employees,” said Vice President of Shelter Benefits Management Inc. Paul LaRose. “We will continue to challenge ourselves to strive to be the best company we can.”

“Being named to Business Insurance’s list of the Best Places to Work in Insurance for 2017 demonstrates that Shelter Insurance® has built a culture in which employees are supported and engaged, which benefits their customers and the employers’ financial performance,” says Business Insurance Publisher Peter Oxner.

ABOVE, FROM LEFT: MATT MOORE, BRIAN WALLER, RANDA RAWLINS, RICK MEANS, JIM ROTHWELL. SEATED IS ARKANSAS GOVERNOR ASA HUTCHINSON, SIGNING SENATE BILL 133. Ground Breaking Ceremony Held for New Mississippi State Office A ground breaking ceremony was held at the location for the new Mississippi State Office in Ridgeland on June 26, 2017. The building is scheduled for completion mid year 2018. Members of the Ridgeland community, branch employees and special guests from the state of Mississippi were invited to attend the ceremony, as well as several executives from the home office. Mike Chaney, Commissioner of Insurance for the State of Mississippi, spoke of the importance of Shelter’s visible presence in Mississippi and thanked Shelter for renewing its commitment by reinvesting in the state with the new State Office.

Shelter Expands Into Ohio AmShield Insurance® launches in Arizona During 2016, Shelter developed plans to expand to Ohio AmShield Insurance®, Shelter’s newest subsidiary, sold its first allowing Shelter Ohio-licensed agents, primarily in Indiana policies in Arizona in late 2017. The company was established to and Kentucky, to expand policy growth into the state. In further diversify risk by selling property and casualty insurance November 2016, agents started writing auto insurance through independent agents in western states. The first five in Ohio. independent agency groups to contract with AmShield are in the Phoenix area and include approximately 30 producers. By the end of 2017, product offerings expanded to include homeowners and life insurance to serve the needs of Ohio residents. An Ohio Sales Leadership Team is in place to Product offerings include auto, homeowners, renters, and condo, plan for further expansion and the first Ohio agents have with additional products coming in future months. AM Best rated been hired. The leadership team consists of a regional sales AmShield Insurance® A for Excellent so the company is well manager and three district sales managers focusing on the positioned to grow in the coming years. Dayton, Cincinnati and Columbus areas. “Randy, Scott, David, and Brad are responsible for recruiting and hiring new agents and executing successful marketing plans in Shelter’s newest captive territory. We look forward to a bright future in Ohio behind the efforts of the Ohio Leadership Team,” said Chris Ricks, Director of Marketing. Say Insurance Continues Expansion Efforts Say Insurance is a new brand of subsidiary Shelter General Insurance Company, which launched its direct-to-consumer channel for auto insurance in 2016 in the state of Illinois. Since then, Say has expanded to Missouri, Colorado and Tennessee as well as the addition of a comparative rater, compare. com. During 2017, Say focused on digital marketing efforts and the customer experience to build brand awareness and, in turn, increase policy sales.

Much of Say’s current success stems from staying true to its brand mission: to provide an insurance experience that is transparent, clear, respectful and useful. One way this is done is by providing consumers with their insurance score, including easy-to- understand explanations of how the score impacts his or her premium rate. This also means focusing Say’s efforts on simplifying purchasing and servicing auto insurance in a digital environment.

To that end, the Say Team made significant advances during 2017 in the following areas: • Creating a mobile-friendly website for quoting, purchasing and changing auto insurance. • Adding claim functionality to the website including filing a claim and the ability to check the status. • Creating well-rounded Blog and Insurance 101 sections to educate and entertain future and current Say drivers. • Equipping the Say Service Squad to provide customer service via phone, online chat and email. • Collecting voice-of-customer feedback from the Say Service Squad and website interactions. • Building Say’s social media presence, fan base and conversions through social advertising.

HERE ARE WHAT A FEW CUSTOMERS HAD TO SAY ABOUT THE COMPANY: “They were very polite and they sent me a gift that makes me smile from ear to ear, and made my day.” — Customer in St. Louis, MO

“The representative that assisted me covered every aspect involved in setting up my policy. She explained everything in simple to understand terms.” — Customer in Englewood, CO

Home Office Expansion Begins Construction began this year on the planned home office expansion. Plans include replacing the Columbia MO Claims Office with a new two-story building that will be north of the Home Office. The new building will house the Columbia Claims Office and our Print/Mail Distribution Center. Construction will take place in phases: • Phase I will add approximately 200 parking spaces to the west/southwest side of the building. • Phase II will include construction of the new two-story building north of the Home Office between the Training Center and the Gardens facing Ash Street. Construction is slated to begin in 2018 and be completed as soon as possible. • During Phase III includes tearing down the current warehouse and replacing it with more parking and a larger area for our company cars. This phase will likely take place in 2019. MARKETING CONFERENCE AWARDS TO THE RIGHT: COMPANY AGENT OF THE YEAR, JAY SNIDER

Each year, Shelter Insurance® holds its Conference of Champions The President’s Plaque is presented to the Conference of to recognize the top-performing agents for overall excellence Champions qualifying agent who issued at least 40 life policies in agency management. The 2017 Conference of Champions and the most net first-year traditional and universal life was held in Maui and the Champions were recognized for their premiums as counted for conference qualification. The Life Star achievements during the Awards Gala. The evening ended with Awards have the same criteria but are presented to the top 10 the announcement of the Company Agent of the Year, Jay Snider qualifying agents. In 2017, Richard and Bob Cargile of Searcy, and Affiliate Agent Bobby Blackwell of North Little Rock, Arkansas received the President’s Plaque and a Life Star award. Arkansas. In addition to honoring the overall Company Agent of the Year, Shelter’s leaders recognized individual State Agents of Kyle Nichols in Senatobia, Mississippi received the Rookie of the the year, District Sales Manager of the Year, Rookie of the Year, Year award. Matt Steele of Bryant, Arkansas was the runner up. President’s Plaque and Life Star. The District Sales Manager of the Year was Trey Branch of Hot Springs, Arkansas.

PRESIDENT’S PLAQUE ROOKIE OF THE YEAR AWARD DISTRICT SALES MANAGER OF THE YEAR RICHARD AND BOB CARGILE KYLE NICHOLS TREY BRANCH State Agent of the Year Award SPRINGFIELD (IL), TOPEKA, Jay Snider Arkansas AND LITTLE ROCK RECEIVE Joe Yamen Iowa Darin Potts Colorado BRANCH OF EXCELLENCE AWARDS Gabe Ritchart Illinois Each year, the Claims Department honors its three top branch offices with Doug Hazen Indiana Branch of Excellence Awards. The awards are based on goals created from Shelter’s Four-Legged Stool: Jean Curry Kansas Barbara Wright Kentucky SELL INSURANCE. Ray Schrock Louisiana HELP OUR COMMUNITIES. Chuck May Mississippi SERVE OUR CUSTOMERS. Matt Thurmon East Missouri Chris Hammen West Missouri DO THE RIGHT THING. Megan Fales Nebraska Shelter’sWE Claims Department leadership recognized three Branches of Excellence in Aaron Ruiz Agency Oklahoma 2017. While the entire department exemplified excellent claims service, these three branches excelled: Little Rock, Arkansas in the Southern Region; Topeka, Kansas in Lauren Hahs-Gilchrist Tennessee the Western Region; and Springfield, Illinois in the Central Region. These branches showed excellent statistical success; but even more important, they Life Star Award exemplified outstanding customer service and teamwork. The Branch Managers were awarded a plaque commemorating this significant accomplishment and each Richard Cargile Arkansas employee received a small token of appreciation during a branch celebration. Joe Yamen Iowa Jay Snider Arkansas Ryan Webb Arkansas Robert Murry Arkansas Aaron Ruiz Oklahoma Blake Rogers Arkansas Bobby Lawrence Louisiana Dave Thomas Missouri Timothy Brewer Arkansas

ABOVE, FROM LEFT: RANDA RAWLINS PRESENTING REGIONAL BRANCH OF EXCELLENCE AWARDS, TERRY MARTIN OF LITTLE ROCK CLAIMS, KEN GOETZ OF SPRINGFIELD, IL, CLAIMS, AND AARON MEEK OF TOPEKA CLAIMS. SHELTER EXPANDS Be the Bridge In May, a group called “Be the Bridge” launched DIVERSITY EFFORTS; monthly meetings for employees to discuss racial accord. The group held 9 sessions during 2017 to SEES PROGRAMS GROW discuss opportunities for new perspectives in their Shelter’s commitment to diversity and inclusion continued in personal lives. 2017, and our investments in community partnerships, diversity recruiting and overall communication about the importance of these things has not gone unnoticed. The Columbia National Success Grants Association for the Advancement of Colored People (NAACP) The City of Columbia teamed with Shelter to provide presented its Community Service Award to Shelter Insurance three Success Grants annually to graduating high school Companies in recognition of continuing organizational support seniors in qualifying neighborhoods.* for the group and its work. In 2017, Shelter chose its first Success Grant recipient, Charles Allen, Shelter Home Office retiree and active member Mekhia Thompson. With the help of Shelter Insurance® of the local chapter of NAACP, presented the award to Rick and local city members, Mekhia hosted a block party Means, President and CEO. Shelter received the award in in the East Neighborhood. Roughly 50 members of conjunction with the organization’s annual Freedom Fund the neighborhood joined Mekhia for dancing, games Black Tie Banquet, held in Columbia. and food. Mekhia said, “My proposal to get the community in my neighborhood more involved with one another is to have a block party. I know there’s a variety of kids in the Rice Road area and I want to do something that would involve their interests. If we had law enforcement or city officials out being involved then I believe that would break down assumptions and stereotypes of authority figures in our society.” * The $1,000 award can be renewed for up to four years for a total $4,000 toward college expenses.

BELOW: MEKHIA THOMPSON, RECIPIENT OF SHELTER’S FIRST SUCCESS GRANT

ABOVE: CHARLES ALLEN PRESENTING AWARD TO RICK MEANS Reverse Mentoring Reverse Mentoring is an initiative the Diversity Committee started in 2014. It is intended to pair junior employees with executives for the purpose of sharing knowledge. The pairs meet for nine weeks with a time commitment of approximately 1-2 hours per week. Since its inception, the program has had a total of five sessions with 30 mentors and 24 mentees (Directors, VPs, and Executive VPs) participating.

Shelter Women’s Advocacy Group The Shelter Women’s Advocacy Group (SWAG) offers programming for women in professional development, personal enrichment and networking. In 2017 the group grew to 168 members. ABOVE: 2017 EPN MENTORING GROUP

Some of SWAG’s activities include holding educational activities such as Lunch & Learns, community and social activities, book groups and mentoring. These things give members an opportunity to sharpen their professional skills and get to know their co-workers.

LEFT: BRIAN JONES, SHELTER’S MANAGER OF DIVERSITY & INCLUSION SPEAKING AT DAP AWARDS CEREMONY

In addition to these efforts, these diversity and inclusion programs continued in 2017:

• The Diversity Internship Program • Our partnership with Columbia Public School District’s Partners in Education program • The Multicultural Achievement Committee (MAC) Scholars program • The Supplier Diversity program Shelter also sponsored the Columbia Values Diversity Breakfast, held a community-wide diversity networking event and had representatives attend the Diversity Awareness Partnership’s (DAP) 3rd Annual Diversity Dinner. In addition, Shelter sponsored the Contractors Expo to build inclusive partnerships.We look forward to a bright future for our diversity and inclusion efforts. 2017 - $1,003,000 2016 - $913,500 SCHOLARSHIPS AWARDED SHELTER FOUNDATION SCHOLARSHIPS CONTINUED IN 2017 Each year, the Shelter Insurance Foundation awards a wide variety of scholarships to students throughout our operating region. The largest of these 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 2017, 439 students received a $2,000 scholarship through this program, for a total of $878,000. This is a 9% increase over last year’s total of $802,000. Total scholarships have grown each year, largely because of increased agent participation.

Scholarship Program for Children Other Scholarships of Shelter Employees and Agents • B.M. SEAMAN SCHOLARSHIPS Two graduates of La Plata, MO High School are each The Shelter Foundation also sponsors a scholarship program for awarded a $2,000 scholarship. children of Shelter employees and agents. This year, 43 scholarships were awarded through this program valued at $3,000 each, for a • MULTICULTURAL ACHIEVEMENT COMMITTEE total of $129,000. (MAC) SCHOLARS A $2,000 scholarship is awarded to one Columbia Public Schools High School graduate who is an active member of the MAC Scholars program. SHELTER IS PROUD TO • LANG AWARD HELP FURTHER THE A $500 scholarship is awarded to an outstanding vocational education graduate of Missouri School for EDUCATION OF THESE the Deaf in Fulton, Missouri. HARD-WORKING, • SUCCESS GRANTS Up to three renewable scholarships are awarded to DESERVING STUDENTS selected high school seniors, payable at $1,000 per year for four years as long as the students maintain EACH YEAR. academic requirements. Shelter Employees Employee Contribution “PAVED THE WAY” for United Way $172,386 As planning and construction began at the home office to pave the way for more parking in 2017, Shelter employees “Paved the Way” for the Heart of Missouri United Way and the local charities they serve. The co-chairs of the 2017 campaign were Brad McCarty of Claims, Angie Pezold of Information Services and Clint Martin of Marketing. In addition, Carrie Bryant of Investments was the loaned executive and Lauren Andrews of Accounting served as treasurer for the campaign. The co-chairs added several new fundraising ideas to the traditional methods used such as casual day passes, parking spot raffle and the online auction. New in 2017, employees, agents and retirees could order personalized bricks that will be laid on a pathway outside both south entrances to Shelter Gardens. The sale of the bricks accounted for $10,303 of the total amount of funds raised.

TOTAL CAMPAIGN: $280,476 THE 2017 CAMPAIGN RESULTED IN A 14% INCREASE OVER THE PREVIOUS YEAR.

Corporate Contribution $38,000

Special Events $58,315

Retirees $5,775 2017 CONTRIBUTION TOTALS Foundation Match $6,000 In 2017, Shelter Cares coordinated approximately SHELTER 2,024 volunteer hours for the following activities: CARES! • The Food Bank for Central and Northeast Missouri • United Way Day of Caring Project • Cleanup Columbia • Salvation Army Red Kettle/Bucket Blitz Campaign Bell Ringing 126 • Lunch in the Park hours contributed • Shelter’s Fountain Celebration Games from the field • Shelter’s Goblins in the Garden Event • Partnership Against Hunger Food Drive over • EPN Volunteer Efforts • Rainbow House Mulch Delivery 1,210 • Taste of Tiger Event Setup Shelter Cares 2,024 volunteer 80 total hours hours volunteers from donated the field 164 monthly volunteer 841 hours $ total volunteers

Shelter has long been active with The Food Bank for Central and Northeast Missouri, and in 2017, Shelter retirees were invited to participate. The first session with retirees and Shelter Cares at the Food Bank was held in June. It was so well received that a second one was held in October.

Also in 2017, Shelter field offices, departments and other professional organizations contributed more than 80 volunteers who served more than 126 hours in various community service projects throughout our operating territories. Shelter Cares also provided support and volunteer opportunities for other community efforts including: • Voluntary Action Center • Loaves & Fishes • Room at the Inn • West Middle School • Coyote Hill Farming Day • Show-Me State Games • Relay for Life • Cub Scout Day Camp • City of Columbia 4th of July Celebration • Meals on Wheels • Columbia Center for Urban Agriculture • Central Missouri Humane Society • Boys and Girls Club • Habitat for Humanity • A variety of local charities/organizations benefited from the Diversity Open Houses held at various branch offices Shelter Insurance Companies’ commitment to supporting the communities we live in and dedication to being a good corporate citizen are evident in the total hours employees spent volunteering in 2017.

Shelter Volunteer Summary The chart below is a summary of volunteer hours contributed to the communities Shelter serves for the past five years.

VOLUNTEER HOURS 2024

1201 1210 917 559

2013 2014 2015 2016 2017 Fred V. Heinkel Awards Presented to Larry McDaniel and John Warner Larry McDaniel of Harrisburg, Missouri, and John Warner of Columbia, Missouri, each received the Shelter Foundation’s annual Fred V. Heinkel Award for Excellence, along with a check for $2,000, in a ceremony held in the Training Center at the Home Office in September 2017. McDaniel is executive director of Coyote Hill Christian Children’s Home. He organized Coyote Hill in 1997 and has managed its steady growth since then by providing five children’s homes, with a sixth home in the planning stages. Larry was nominated for the Heinkel Award for his dedicated, professional leadership of Coyote Hill, a safe and healthy home environment for neglected children in the foster care system. John Warner’s 36-year career in law enforcement includes working as a police officer in Warrensburg and Columbia, Missouri, where he was a member of CPD’s S.W.A.T. Team, a D.A.R.E. instructor and School Resource Officer for Columbia Public Schools. John has received several awards throughout his career for his leadership and contributions to schools and the Columbia community. He most recently received a Certificate of Appreciation in 2013 by the City of Columbia for being a model of the city’s core values.

ABOVE: RICK MEANS CONGRATULATING AWARD WINNERS LARRY MCDANIEL AND JOHN WARNER

Shelter Thanks 71-Year Policyholder Chris Hammen, Shelter agent in Crane, Missouri, with a basket of flowers in hand, paid a visit to a loyal policyholder whom he was about to lose as a customer. Anna Lee, a rural resident of Crane, notified Hammen that she was selling her 2009 Chevy Impala and would no longer be driving. Mrs. Lee’s auto policy was the last associated with her Shelter family number, and it represented the last of a long, unbroken string of auto insurance policies purchased by Mrs. Lee and her late husband, John. The Lees were among the first customers of Marvin Lester Wilson, who established the charter MFA Mutual Insurance Agency at nearby Hurley, Missouri. The Lees became one of the first customers and their auto policy was one of 17,000 written in 1946 by 77 charter MFA Mutual agents. “Anna was very appreciative of the flowers and glad for the visit,” Chris said. “It was a great afternoon. It really made her day.” SHELTER TRADITIONS CONTINUE Each year, Shelter holds events that are open to the community as well as some just for employees and their families. Events include the Annual Fountain Celebration in the spring, Shelter Gardens Concert Series during the summer, Goblins in the Garden in the fall, Shelter Christmas Tree lighting in early December and the Symphony of Toys at the end of the year. Emerging Professionals Network Who says work can’t be professional, educational and fun? Established in 2013, the Emerging Professionals Network (EPN) proves all three can be true. EPN continued to grow in 2017, offering employees the opportunity to better understand our industry, connect with other employees and further their professional development by serving on and sometimes leading committees, attending networking events and volunteering in our communities.

Since its establishment, EPN has grown to 700 members and has formed seven committees: Membership, Development, Community Involvement, Social, Education, Field and Fundraising. Members have a variety of ways to get involved and increase employee engagement. 8.21.17 SOLAR ECLIPSE