Litigation Analysis

1. Litigation Analysis 1

2. Introduction The following presentation provides a high level overview of Citizens’ claims and litigation trends, as well as the drivers of claims disputes and litigation. This information is intended to provide a macro view of claim and litigation activity in the aggregate. This macro view does not provide any insight into the merits of any individual claim. The presentation outlines the past five years, 2009 through 2013, to demonstrate the relationship between the number of policies in force, the number of claims reported and the number of litigated claims. 2

3. Overview of Total Claims Payments 3

4. How many dollars in claims payments were paid by Citizens in each of the last five years? • Policies In Force: The number of policies in place for the given year. Projections for 2013 based on expected depopulation by year end. • Total Claims Payments: Total dollars paid by calendar year. These figures represent indemnity benefits (including legal fees paid to policyholder) paid under the policy of insurance and all Citizens’ expenses associated with the adjustment of the claim. • 2013 YTD: Year-to-Date through August 31, 2013. 4

5. Overview of Reported Claims vs. Litigated Claims 5

6. What is the relationship between the number of claims reported and litigated claims over the last five years? The information below shows the number of reported claims for each of the last five years based on the year the loss occurred (accident year). The number of lawsuits is also shown based on the year the loss occurred, not by the year the lawsuit was received. The comparison of reported claims to litigated claims by accident year demonstrates the percentage of claims that resultin litigation. The information below shows a disproportionate increase in the percentage of claims that resulted in litigation as compared to the percentage of policies in force with reported claims. As the remainder of this presentation will reveal, there is a direct correlation between the rise in Water Loss claims, reported and litigated, and the increasing trend in overall litigation. • Reported Claims (Accident Year): Number of claims reported by year loss occurred. • Litigated Claims (Accident Year): Number of lawsuits by year loss occurred. The number of new lawsuits is expected to develop over time, which would result in an increased percentage of reported claims that are litigated. • 2013 YTD figures are through 8/31/2013. • *Developed Going Forward Over Time: Projection of ultimate count by accident year of claims reported and litigated based on past patterns. 6

7. What is the relationship between the number of non-Sinkhole claims reported and litigated claims over the last five years? For non-Sinkhole causes of loss (all causes of loss excluding Sinkhole): The comparison of non-Sinkhole claims again shows a disproportionate rise in the percentage of claims that resulted in litigation as compared to the percentage of policies in force with reported claims. • Reported Non-Sinkhole Claims (Accident Year): Number of claims reported by year loss occurred. • Litigated Claims (Accident Year): Number of lawsuits by year loss occurred. The number of new lawsuits is expected to develop over time, which would result in an increased percentage of reported claims that are litigated. • 2013 YTD figures are through 8/31/2013. • *Developed Going Forward Over Time: Projection of ultimate count by accident year of claims reported and litigated based on past patterns. 7

8. What is the relationship between the number of Sinkhole claims reported and litigated claims over the last five years? For Sinkhole causes of loss: Unlike non-Sinkhole claims, the information indicates a sharp decrease in the percentage of claims that result in litigation as compared to a fairly stable percentage of policies in force with reported claims over time. • Reported Sinkhole Claims (Accident Year): Number of claims reported by year loss occurred. • Litigated Claims (Accident Year): Number of lawsuits by year loss occurred. The number of new lawsuits may develop over time, which would result in an increased percentage of reported claims that are litigated. • 2013 YTD figures are through 8/31/2013. • *Developed Going Forward Over Time: Projection of ultimate count by accident year of claims reported and litigated based on past patterns. • This projection is based on early development of claims. Due to 2011 statutory changes (SB408), future development is uncertain. 8

9. Overview of Litigation Drivers 9

10. What is the trend by cause of loss for all reported claims? • Reported Claims are based on the year the loss occurred. • 2013 YTD figures are through 8/31/2013. • Other includes: Aircraft/Vehicle, Burglary, Theft, Catastrophic Ground Collapse, Earth Movement, Explosions, Third Party Liability, Smoke & Vandalism. 10

11. What is the trend by cause of loss for litigated claims? • Litigated Claims are based on the year the loss occurred. • 2013 YTD figures are through 8/31/2013 • Other includes: Aircraft/Vehicle, Burglary, Theft, Catastrophic Ground Collapse, Earth Movement, Explosions, Third Party Liability, Smoke & Vandalism. 11

12. What is the statewide comparison of non-Sinkhole claims over the last five years? The comparison of non-Sinkhole claims reported and litigated shows a correlation with the number of claims that result in litigation in all counties except Miami-Dade. Miami-Dade is the only county where the percentage of litigated claims out paces the percentage of claims reported. While Miami-Dade represents 19% of all Citizens policies in force, it accounts for 35% of all reported non-Sinkhole claims and 67% of all litigated non-Sinkhole claims (nearly twice the percentage of claims reported for this county). Accident Years (Year loss occurred) 1/1/2009-8/31/2013 • Non-Sinkhole claims include all causes of loss except Sinkhole. • Data reported is based on combined total non-sinkhole claims reported over five years – 1/1/2009 through 8/131/2013. 12

13. What are the reasons Citizens disputes a non-Sinkhole claim? The chart below represents the reasons why Citizens disputes a claim that may result in litigation. The policy exclusion of “Long Term Leakage” applicable to water loss claims is the leading driver for litigated claims, representing almost one quarter of all lawsuits in August 2013. • This information is a snapshot in time as of August 31, 2013 and not intended to capture trends over time. • *Dispute Reasons Definitions: Basis for issue in question that arose out of adjustment of claim. • Improper Assignment of Benefits: Faulty attempt to give rights to claims benefits to another party. • No Ensuring Damage: No covered damages as a result of covered loss. • Late Notice: Failure to promptly report claim causes prejudice to insurer in the investigation of a claim. • Causation: Dispute as to whether a covered loss caused damage. • All Other: Includes partial denial of coverage, vacancy, scope of damages and no wind-created opening that led to damage. 13

14. What is the statewide comparison of Sinkhole claims over the last five years? The comparison of Sinkhole claims reveals a close correlation across all counties of reported claims to litigated claims. This is unlike the non-Sinkhole geographic distribution where Miami-Dade County outpaces all other counties, especially in litigated claims. Accident Years (Year loss occurred) 1/1/2009-8/31/2013 14 • Data reported is based on combined total sinkhole claims reported over five years – 1/1/2009 through 8/131/2013.

15. What are the reasons Citizens disputes a Sinkhole claim? The chart below is a representation of the reasons why Citizens disputes a Sinkhole claim that may lead to litigation. Over one-half (56%) of all Sinkhole disputes in litigation arise out of Citizens’ efforts to repair the damaged property. • Depicts sampling of litigated Sinkhole claims (204) as of August 31, 2013. This information is a snapshot in time as of 8/31/13 and not intended to capture trends over time. • All Other includes dispute over method of repair, premature suit (pending coverage/payment), pre-existing damage, failure to promptly report & causation. 15

16. Water Losses Leading Cause of Loss for Claims Reported and Litigated 16

17. What is the relationship between Water Loss claims reported and litigated Water Loss claims over the last five years? The chart below shows the number of Water Loss claims reported and litigated for each of the last five years based on the year the loss occurred (accident year). The comparison of the litigated Water Loss claims to the number of Water Loss claims reported and total claims reported for each of the last five years indicates a rising trend for Water Loss in both claims reported and litigated. • Reported Claims (Accident Year): Number of reported claims by year loss occurred. • Litigated Claims (Accident Year): Number of lawsuits by year loss occurred. The number of new lawsuits is expected to develop over time, which would result in an increased percentage of reported claims that are litigated. • 2013 YTD through 8/31/2013. • Years 2009 through 2013 YTD based on actual claim counts and not on “Developed Going Forward Over Time” figures. 17

18. Why are Water Loss claims disputed by Citizens? Long Term Leakage (excluded under policy) is the main driver for disputed claims representing 29% of all Water Loss claims in litigation. • *Improper Assignment of Benefits: Faulty attempt to give rights to claim benefits to another party. • *Loss Not Covered: Source of water leak excluded under policy. 18

19. What types of Water Loss claims are in litigation? The information below shows the underlying type of loss for Water Loss claims in litigation. More than one-half (58%) of the Water Loss claims in litigation arise out of plumbing leakage/break. 19

20. Where are most of the Water Loss claims in the state? Miami-Dade County leads all other counties in both claims reported and claims litigated by a wide margin • 40% (61,838) of ALL reported Water Loss claims • 68% (10,977) of ALL litigated Water Loss claims Number of Water Loss Claims Reported & Litigated Accident years 1/1/2009-8/31/2013 • Data reported is based on combined total water loss claims reported by accident year over last five years – 1/1/2009 through 8/31/13. • Accident Year: Year loss occurred . 20

21. What is the relationship between Age of Home and Water Loss claims over the past five years? Overview of Age of Home as compared to the number of Policies in Force Statewide: The information shows that 57% of all homes insured by Citizens over the last five years are over 29 years old. Overview of Age of Home Statewide Policies in Force Over Past Five Years 1/1/2009-8/31/2013 21 • Data reported is based on total number of policies in force over last five years – 1/1/2009 through 8/31/2013.

22. What is the relationship between Age of Home and Water Loss claims over the past five years? Overview of Age of Home as compared to the number of Policies in Force by County: Miami-Dade, Broward and Pinellas counties combined make up 50% of the homes 29 years and older. Miami-Dade, with 20% of homes 29 years and older, accounts for 40% of all reported Water Loss claims and 68% of all litigated Water Loss claims. As compared to Broward County with 16% of homes 29 years or older, Miami-Dade has nearly twice the percentage of reported claims and over three times as many litigated claims. Overview of Age of Home Statewide Policies in Force Years 2009-2013 • Data provided is based on total number of policies in force for each county over past five years - 2009 through 8/31/2013. 22

23. Overview of Defense Counsel Expenses in Litigation 23

24. How much has Citizens paid each year for Defense Counsel Expenses for litigated Property Loss claims? While the rise in total dollars paid for Defense Counsel Expenses over the past five years is in direct correlation to the increase in the number of litigated claims over time, the average dollars paid per litigated claim has remained fairly stable. • *Indicates total number of litigated claims for which a payment was made in given year - does not represent number of pending litigated claims. • Defense Counsel Expenses include legal fees and expenses paid for litigated property loss claims to Defense Counsel by calendar year. • Total Claims Payments: Total dollars paid by calendar year. These figures represent indemnity benefits (including legal fees paid to policyholder) paid under the policy of insurance and all Citizens’ expenses associated with the adjustment of the claim . • 2013 YTD through 8/31/2013. • Earned premium includes surcharges. 24

25. How much has Citizens paid over last five years for Defense Counsel Expenses by county over the past five years? 53% of Defense Counsel Expenses over the last five years have been paid for litigated claims in Miami-Dade County. This is more than four times the amount spent in the next leading county – Broward with 13%. Defense Counsel Expenses by County Over Last Five Years Cumulative Payments over years 2009-8/31/2013 Defense Counsel Expenses By County * Cumulative total payments for past five years • Defense Counsel Expenses include legal fees and expenses paid for litigated property loss claims to Defense Counsel over the past five years (cumulative total). 25

26. How much has Citizens paid each year for Defense Counsel Expenses for litigated non-Sinkhole Property Loss claims? An examination of the non-Sinkhole litigated claims also shows that while the total dollars paid for Defense Counsel Expenses per year has increased, the average dollars paid per litigated non-Sinkhole claim is stable. • *Indicates total number of litigated claims for which a payment was made in given year - does not represent number of pending litigated claims. • Defense Counsel Expenses include legal fees and expenses paid for litigated non-Sinkhole property loss claims to Defense Counsel by calendar year. • Earned premium includes surcharges. • Total Claims Payments: Total dollars paid by calendar year. These figures represent indemnity benefits (including legal fees paid to policyholder) paid under the policy of insurance and all Citizens’ expenses associated with the adjustment of the claim. • 2013 YTD through 8/31/2013. 26

27. How much has Citizens paid each year for Defense Counsel Expenses for litigated Sinkhole claims? Focusing only on Defense Counsel Expenses for litigated Sinkhole claims, the rise in average dollars paid per litigated Sinkhole claim in 2012 is in direct correlation with defense efforts arising out of the 2011 statutory changes regarding Sinkhole claims. • *Indicates total number of litigated claims for which a payment was made in given year - does not represent number of pending litigated claims. • Defense Counsel Expenses include legal fees and expenses paid for litigated Sinkhole claimsto Defense Counsel by calendar year. • Earned premium includes surcharges. • Total Claims Payments: Total dollars paid by calendar year. These figures represent indemnity benefits (including legal fees paid to policyholder) paid under the policy of insurance and all Citizens’ expenses associated with the adjustment of the claim. • 2013 YTD through 8/31/2013. 27

28. Trial Outcomes for Property Loss Claims in Litigation Of the total 42 cases since 2010 that have proceeded to trial, 69% have resulted in an overall positive outcome - 59% with a jury verdict for Citizens and 10% with a Favorable outcome. 31% of all trials resulted in an unfavorable result for Citizens. Of the 42 cases that proceeded to trial since 2010, 43% arose out of Miami-Dade County (18 trials). The outcome for Miami-Dade trials reveal 83% resulted in a positive outcome for Citizens (61% Defense Verdicts for Citizens and 22% Favorable). 17% of the Miami-Dade trials resulted in an Unfavorable outcome for Citizens. • Defense Verdict: Jury verdict in favor of Citizens (no recovery by policyholder). • Favorable includes 1 dismissal of case during trial and 3 cases where the total dollar amount of verdict and fee award was less than policyholder’s last pre-trial demand to resolve matter. • Unfavorable: Jury verdict for policyholder where the total dollar amount of verdict and fee award was greater than policyholder’s last pre-trial demand to resolve matter. 28

29. Fees for Policyholder’s Attorney - FAQS How does a policyholder’s attorney earn a fee in a First Party Property Homeowner’s insurance dispute? ANSWER: The attorney typically enters into a contracted fee agreement with a policyholder. This is a private arrangement between the policyholder and attorney, the terms of which are not known to Citizens. 627.428, Florida Statutes, also allows for entitlement to fees when a policyholder obtains a judgment or decree rendered by a court of law against an insurer and in favor of the policyholder. What is section 627.428, Florida Statutes (commonly referred to as the “attorney fee statute”)? ANSWER: This statute speaks to entitlement of a policyholder to recover reasonable attorney’s fees from an insurer in the event that a judgment or decree is rendered by a court of law against an insurer and in favor of the policyholder. Does section 627.428, Florida Statutes, specify that an insurer must make direct payment to a policyholder’s attorney? ANSWER: No. The statute does not speak to how the fees to a policyholder’s attorney must be paid, it only speaks to entitlement for recovery of reasonable fees for a policyholder’s attorney. However, a court of law may specify how payment of fees is to be made for the fee amount of the policyholder’s attorney. Does section 627.428, Florida Statutes, apply to claims settled without a judgment or decree rendered by a court of law? ANSWER: No. Under the terms of the statute it applies when a judgment or decree is rendered by a court of law against an insurer and in favor of the policyholder. However, parties can stipulate to entitlement for fees, and the fee amount, when a litigated claim is settled. 29

30. Fees for Policyholder’s Attorney – FAQs (continued…) When a claim is resolved by a trial… How does Citizens determine the fee amount due for services of the policyholder’s attorney? ANSWER: If a policyholder prevails through trial and is entitled to an award of attorney’s fees under 627.428, Florida Statutes, the fee amount can either be negotiated between Citizens and the policyholder / policyholder’s attorney, or determined by a court of law. How does Citizens issue the payment for fees for the policyholder’s attorney under the above circumstances? ANSWER: In either circumstance mentioned above, Citizens would issue payment to the policyholder and attorney as is its contractual and statutory duty in order to protect the claims and interests of both, unless otherwise ordered by a court of law. When a claim is resolved by an agreed settlement with policyholder… How does Citizens determine the fee amount for the policyholder’s attorney? ANSWER: The fee amount can be negotiated with Citizens separately from all other indemnity benefits and rights stemming from the policy of insurance. *Note – Global settlements may be more commonly used by both policyholders and Citizens to resolve claims. How does Citizens issue the payment for fees for the policyholder’s attorney under the above circumstances? ANSWER: In a circumstance such as this where the fee amount is separately negotiated with Citizens, Citizens would issue payment to the policyholder and attorney as is its contractual and statutory duty in order to protect the claims and interests of both, unless otherwise ordered by a court of law. . 30

31. Fees for Policyholder’s Attorney – FAQs (continued…) What is a Global Settlement? ANSWER: A “Global” settlement is a lump sum settlement agreement of all benefits and entitlements without delineation or apportionment. When a claim is settled through a Global settlement… What is Citizens’ role in determining the fee amount due for services of the policyholder’s attorney? ANSWER: None. The fee amount is a private arrangement between the attorney and the policyholder, and is not known to Citizens. How does Citizens issue payment of the settlement funds in a Global settlement? ANSWER: In a circumstance such as this where the fee amount is not separately negotiated with Citizens, Citizens cannot prejudice the interests of other parties by arbitrarily apportioning a separate amount for the policyholder’s attorney fees. Thus, all interested parties are included in the global settlement payment. If a claim is settled, what are Citizens’ obligations to parties with an interest in the settlement proceeds? ANSWER: Citizens’ top priority is to ensure all interests are protected. The right of the policyholder’s attorney is protected and equal to all other known legal interests in the settlement proceeds. Therefore, payment is issued to all interested parties known to Citizens to hold a legal right to the proceeds. The only exception in the settlement context is when indemnity benefits or rights stemming from the policy of insurance are negotiated separately and independently from any attorney fee which the policyholder may be entitled to recover, or when otherwise ordered by a court of law. 31

32. Overview of Alternative Dispute Resolution Methods 32

33. How has the volume of Policyholder Requests for Appraisal changed after the 2010 Policy Form Revisions? The information on the following slides reflects that changes in the insurance policy provision for Appraisal have not deterred policyholders from continuing to seek Appraisal as an alternative dispute resolution method. While the number of Appraisal requests have not increased in direct proportion to the level of increase in newly reported claims each year, policyholders continue to invoke the Appraisal option. In fact, Citizens currently averages over 780 Appraisal requests per month. A comparison of the Appraisal requests by calendar year (Slide #34) to the Appraisal requests by accident year (Slide #35), clearly shows that the change in the insurance policy provision for Appraisal that rolled out in 2010 did not create an obstacle to policyholders requesting Appraisal. It should be noted that Citizens has a special team of adjusters focused on Appraisal requests by policyholders. In many instances when Appraisal is requested, the claim is settled without the need for the full Appraisal process due to the focus that an Appraisal request brings to the issues in dispute. The most recent data for 2013 reflects that 98% of all claims for which Appraisal is requested are resolved by an agreed settlement with the policyholder or through the Appraisal process. Only 2% of all claims for which Appraisal is requested are determined to be ineligible for the Appraisal process. The information also shows that Miami-Dade County alone accounts for 70% of all requests for Appraisal. The leading cause of loss for all Appraisal requests is Water Loss at 85%. 33

34. How has the volume of Policyholder Requests for Appraisal changed after the 2010 Policy Form Revisions? Number of claims in litigation, DFS Mediation & Appraisal over the last five years: Appraisal Requests by Calendar Year Over Past Five Years 1/1/2009-8/31/2013 • Appraisal Requests: Number of claims for which policyholder requested Appraisal in the given year. • 2013 YTD: 1/1/2009 through 8/31/2013. 34

35. How has the volume of Policyholder Requests for Appraisal changed after the 2010 Policy Form Revisions? Appraisal Requests by Accident Year Over Past Five Years 1/1/2009-8/31/2013 • Appraisal Requests by Accident Year: Number of claims for which policyholder requested Appraisal by year loss occurred. • 2013 YTD: 1/1/2009 through 8/31/2013. 35

36. What is the Cause of Loss for Appraisal Requests? Across Appraisal claims, Water loss is the leading cause of loss by an overwhelming 85% of all claims, with 50% arising out of Plumbing Leakage/Break. • This information is a snapshot in time as of August 31, 2013 and not intended to capture trends over time. • Water – Other: Includes Flood, Sprinkler Leakage. • All Other: Includes Lightning, Collapse, Aircraft/Vehicle & Vandalism. 36

37. Overview of Claims where Policyholder has Attorney Representation 37

38. How many claims have been reported where policyholder has attorney representation over the past five years? The percentage of claims reported where policyholder has attorney representation has increased from 8% in 2009, 11% in 2010, 16% in 2011, 18% in 2012 and reflects 14% in 2013 year to date. Overview of Reported Claims where Policyholder has Attorney Representation (Claims Reported between 1/1/2009 - 8/31/2013) • 2013 YTD through 8/31/2013. 38

39. What are the Top 10 Firms representing policyholders for claims reported over past five years? 43% of the claims reported where policyholder has attorney representation over the past five years arise out of the ten law firms listed in the chart below. Distribution of Claims Reported Where Policyholder has Attorney Representation Claims Reported over Five Years 1/1/2009 - 8/31/2013 • *Includes claims reported with more than one firm representing the policyholder. 39

40. What are the Top 10 Firms representing policyholders for litigated claims over the past five years? 50% of the claims litigated over the past five years are filed by the ten law firms listed in the chart below. Distribution of Litigated Claims by Law Firm Over Past Five Years 1/1/2009 - 8/31/2013 • *Denotes law firms also included in top 10 firms for claims reported where policyholder has attorney representation over last five years. 40

41. Where are most of the litigated claims in the state? 84% of all litigated claims arise from the tri-county area (Miami-Dade, Broward and Palm Beach), with Miami-Dade representing 60% of the statewide total over the past five years. Distribution of Litigated Claims by County By Accident Years 1/1/2009-8/31/2013 • * ALL Litigated claims includes non-Sinkhole litigated claims and Sinkhole litigated claims combined. 41

42. Summary The claim and litigation trends over the past five years reflect that water losses are the leading cause of loss for both reported and litigated claims. The increase in the number of litigated water loss claims alone is driving a disproportionate increase in the percentage of litigated claims as compared to the overall percentage of policies in force with reported claims. Water losses currently account for 50% of all reported claims, and 75% of all litigated claims. The tri-county area of Miami-Dade, Broward and Palm Beach account for 84% of all litigated claims. Examination of Miami-Dade County reveals that it leads all other counties in the state of Florida in the percentage of claims both reported and litigated overall. Miami-Dade is the only county where the percentage of litigated claims out paces the percentage of claims reported. While Miami-Dade represents 19% of all Citizens policies in force, it accounts for 33% of all reported claims and 60% of all litigated claims statewide. This constitutes reported clams for Miami-Dade that are nearly twice the percentage of the policies in force for this county, and litigated claims over three times the percentage of the policies in force. In terms of water losses, Miami-Dade County again leads all other counties in both claims reported and claims litigated by a wide margin, with 40% of all reported water loss claims and 68% of all litigated water loss claims over the past five years. Moreover, age of home is shown not to be a driving factor as Miami-Dade, with 20% of homes 29 years and older, has nearly twice the percentage of reported claims and over three times as many litigated water loss claims as compared to Broward County, with 16% of homes 29 years or older. With regard to the level of Appraisal requests made by policyholders, the numbers for each year clearly indicate that the 2010 change in the insurance policy provision for Appraisal has neither deterred policyholders from continuing to seek Appraisal as an alternative dispute resolution method, nor become an obstacle to resolving claims. In fact, the most recent data for 2013 reflects that 98% of all claims for which Appraisal is requested are resolved by an agreed settlement with the policyholder or through the Appraisal process, with only 2% of all Appraisal requests determined to be ineligible for the Appraisal process. The leading cause of loss for all Appraisal requests is water loss at 85%. Again, Miami-Dade leads all other counties by a wide margin as this county alone accounts for 70% of all Appraisal requests over the last five years. (Continued on next slide…) 42

43. Summary (continued…) The trial outcomes since 2010 seem to support the appropriateness of Citizens’ positions on property loss matters in light of the 69% success rate for Citizens – 59% with full defense verdicts for Citizens. In Miami-Dade County, which accounts for 43% of all trials with a property loss dispute, Citizens has realized an 83% success rate in positive outcomes (61% resulting in a full defense verdict for Citizens). Moreover, looking at the number of Appraisal and DFS mediation requests, as well as the small number of litigated claims that go to trial (where Citizens’ has a high rate of success) - it is clear that the parties reach a mutually agreeable resolution in the overwhelming majority of litigated cases without going to trial. The rise in total dollars paid for Defense Counsel Expenses over the past five years is a direct result of the increase in the number of litigated claims over time. The increase in the number of litigated claims, in turn, is in direct correlation to the disproportionate percentage of claims arising out of Miami-Dade County, especially water losses. Despite this increase in litigation, the average dollars paid per litigated claim has remained fairly stable. 53% of Defense Counsel Expenses over the last five years have been paid for litigated claims in Miami-Dade County. This is more than four times the amount spent in the next leading county – Broward with 13%. Of all litigated claims, 50% are brought against Citizens by ten law firms. These ten law firms constitute 1% of the overall number of law firms that bring suit against Citizens. The majority of these lawsuits,60%, arise out of Miami-Dade County. The payment of attorney’s fees to policyholders’ attorneys is a multifaceted issue involving Citizens’ duty to protect the interests of all parties. The fee amount due to the policyholder’s attorney is generally established in a private contract between the policyholder and his/her attorney. Only in the very limited circumstances where a court of law determines the amount of the fee, or when the fee is separately negotiated with Citizens, is the fee amount known to Citizens. In the vast majority of circumstances, the fee amount due to a policyholder’s attorney is a private arrangement between the attorney and the policyholder. (Continued on next slide…) 43

44. Summary (continued…) Looking at all the information which has been compiled, a reasonable conclusion would be that the entire litigation story cannot be understood by simply looking at the aggregate numbers. Understanding the details is critical. The volume of litigation cannot be fully understood or addressed without acknowledging the disproportionate impact of water loss claims and litigation arising out of Miami-Dade County. It is both in Citizens’ and its policyholders’ interests to decrease litigation. Citizens is dedicated to exploring solutions to decrease the overall litigation volume. It is obvious that the solutions have to be focused on the underlying drivers of litigation volume. In order to succeed in reducing litigation, the disproportionate volume of water loss claims and the disproportionate concentration of litigation arising out of Miami-Dade must be addressed. 44