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NOTES TO THE FINANCIAL STATEMENTS

Note 1

Losses and loss adjustment expenses

$5,484,008

The NJDOBI completed a comprehensive review of the Company’s loss and loss adjustment expense reserves and determined that the Company’s gross reserves were redundant by $932,000 but were within the reasonable range of estimates. The Company reported net reserves were found to be $932,000 redundant and were also within the range of estimates.

The materiality established for this examination was $1.5 million. The business produced by the Company produces a much wider range of reasonable estimates, and through discussion with the actuaries it was agreed both the gross and net reserves booked by the Company would be acceptable for examination purposes, therefore no examination adjustment was reflected in this examination report.

As part of the review of the above mentioned reserves, the examination verified the data concerning case reserves and losses paid to Company actuarial reports and to Schedule P by line of business and by accident year. A haphazard sample of claims were selected and traced/agreed to actual claim files to verify underlying claim attributes. The test work performed yielded no material exceptions or problems.

Note 2

Taxes, Licenses and Fees

$ -0-

It was noted that the Company did not accrue for statutory examination fees at December 31, 2008. It is recommended that in the future the Company should make a reasonable provision for future statutory

examinations.

Note 3

Payable to Parent, Subsidiaries and Affiliates

$42,712

It was noted during the examination that these expenses are related mostly to salary reimbursements for two employees and other office expenses at the Arizona office. There is no agreement in writing relating to these reimbursements to Mapfre USA of Florida. It is recommended that the Company draw up an agreeement to detail the stipulations of these reimbursements.

SUBSEQUENT EVENTS

It was noted that subsequent to the examination the parent, Mapfre USA, was in the process of being sold to Commerce Insurance Company of Webster, Massachusetts.

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