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Growing Together2016 Annual Report

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Each year, it is both an honor

and a challenge to write a letter encapsulating everything BrickStreet accomplished over

the preceding 12 months. This year is no exception; in fact, this might be the hardest time I’ve ever had trying to squeeze our accomplishments into a single page for the annual report.

I could not be more proud of our team. 2016 was a breakthrough year for BrickStreet; we capitalized on the foundations we’ve built in the last decade and expanded possibilities for future growth.

Our acquisition of HM Insurance Group’s workers’ compensation book of business, along with the purchase of HM Casualty, and the joint venture announcement with Motorists Mutual were some of the major highlights. Conversations on each of these projects began long before 2016, but having

them both come to fruition in the same year was an extraordinary achievement for everyone involved in the discussions and planning.

The HM Insurance Group acquisition from its parent company, Highmark, was a win-win for both BrickStreet and Highmark; they wanted to focus on other core product offerings, and we were looking to continue to grow as a leading provider of workers’ compensation insurance in the region. We have been very successful incorporating our new Northeast Team into the BrickStreet family, and we have learned and integrated some of their work processes into our overall structure. We are growing together, planning the final conversion of archival data into our systems and building out our new office space at the One PPG Place building in Pittsburgh, Pa. Both the physical and data moves were completed in February 2017.

The joint venture announcement with Motorists Mutual in October was another remarkable highlight for the year. We chose the joint venture structure intentionally,

Continuing to GrowA letter from the CEO, Gregory A. Burton

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A letter from the CEO, Gregory A. Burton

partnering with Motorists financially and operationally, while protecting the BrickStreet brand and staying domiciled in West Virginia. We are enhancing their current workers’ compensation offering, while expanding our footprint and gaining the ability to offer our policyholders a multiline solution to insurance needs. Once again, a win-win for both companies! We have several working groups developing key pieces of our integration plan, which will continue in 2017. After necessary approvals, this affiliation is anticipated to be final by mid-year.

You can see why we chose “Growing Together” as the theme for our 2016 annual report. Not only are we strengthening our core through the HM transaction by adding a new subsidiary to our growing footprint and expanding our book of business—we are working toward finalizing our affiliation with Motorists, which reinforces our stability and long-term strategic vision to continue to be a dominant force in the

workers’ compensation marketplace. In both instances, we are growing together—with new product offerings, a new location, a new service team and more.

I’d like to close by thanking our board for its continued direction and support, our management team for its leadership and dedication, and all our staff for their teamwork and the service that they give to our agents and policyholders on a daily basis. Without everyone working together, we would never have had a successful 2016, with such an amazing 2017 on the horizon. I look forward to continuing our journey.

Gregory A. Burton

Chief Executive Officer

“2016 was a breakthrough year for BrickStreet; we capitalized on the foundations we’ve built in the last decade and expanded possibilities for future growth.”- Gregory A. Burton, BrickStreet CEO

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William J. McGee, Jr., Esq., Executive Vice President, General Counsel & Chief Risk and Compliance Officer

Gregory A. Burton, Chief Executive Officer

Jeff Benintendi, Executive Vice President & COO

T.J. Obrokta, Jr., President & Corporate Secretary

Tony Laska, Executive Vice President & CIO

J. Christopher Howat, Executive Vice President, CFO & Treasurer

Martin “Skip” Langlois, Director of Internal Audit

Senior Management

2016 Management Team

Board of DirectorsThomas V. Flaherty, Chairman

W. Marston Becker

Governor W. Gaston Caperton III

Kevin J. Craig

David Rader

Stephen Roberts

Steven F. White

Gregory A. Burton

T.J. Obrokta, Jr.

2016 Management Team

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Office LocationsCharleston (Headquarters) 400 Quarrier Street Charleston, West Virginia 25301 866.45BRICK (866.452.7425) or 304.941.1000

Charlotte 13860 Ballantyne Corporate Place, Suite 150 Charlotte, North Carolina 28277 866.45BRICK (866.452.7425) or 704.409.1099

Naperville 55 Shuman Boulevard, Suite 150 Naperville, Illinois 60563 866.45BRICK (866.452.7425) or 630.300.3330

Pittsburgh (opened February 2017) One PPG Place, Suite 2700 Pittsburgh, Pennsylvania 15222 866.45BRICK (866.452.7425) or 412.235.1111

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HM Insurance GroupTransaction Highlights

The lazy days of summer were anything but for BrickStreet, as we officially announced on July

11, 2016, the acquisition of the workers’ compensation business of Pittsburgh-based HM Insurance Group (HM) from its parent company, Highmark. BrickStreet acquired approximately $120 million in premium, as well as a stronger foothold in the Pennsylvania region.

We also welcomed more than 100 of Highmark’s workers’ compensation employees to the BrickStreet family on August 1. These employees comprise the new Northeast Team, which operates out of BrickStreet’s new office at One PPG Place in downtown Pittsburgh. As BrickStreet’s current Pennsylvania policies are transitioned to the Northeast Team, these new employees will be joined by veteran BrickStreet employees from other offices who already handle business in Pennsylvania. We believe this integration

will prove to be an unbeatable formula for success in the region.

The transaction included BrickStreet’s acquisition of HM Casualty Insurance Company. HM Casualty will now operate as a wholly owned subsidiary of BrickStreet, meaning it is similarly situated in our corporate structure to NorthStone Insurance, SummitPoint Insurance and PinnaclePoint Insurance. BrickStreet also assumed HM Insurance Group’s existing contracts with their agent base, and we have since secured updated contracts as applicable.

We will be continuing to finalize portions of this acquisition in early 2017, including conversion of archival and current data to our StreetConnect system.

When policy migration is complete, billings and commissions will be processed from the BrickStreet systems as well. This milestone,

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along with our Northeast Team’s moving and getting settled into its new office space, will complete the transition.

With Highmark’s excellent regional reputation, this acquisition allowed BrickStreet to grow strategically in the region without sacrificing any of the quality or service our clients have come to expect. We can now continue to build the BrickStreet book of business in Pennsylvania in a more personalized way—our Pittsburgh office will serve as a regional hub with a local feel, in order to ensure seamless service delivery for our agents and policyholders.

We are proud of our commitment to expanding BrickStreet’s footprint in Pennsylvania and beyond, and this acquisition is a shining example of the success that commitment can bring.

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The Westward ExpansionService Territory

During 2016, BrickStreet became fully licensed to write business in the state of Kansas, making the Sunflower State

the 14th entity in BrickStreet’s footprint. With the addition of Kansas as a new service territory, we now are actively writing business in Alabama, the District of Columbia, Illinois, Indiana, Kansas, Kentucky, Maryland, Missouri, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia.

BrickStreet has seen consistent expansion in recent years, while providing coverage and resources to a growing demographic. In 2016, BrickStreet grew its presence with a new acquisition, along with the approval of rates and writing business in new states.

With the addition of Kansas, our footprint has expanded further across the United States, increasing BrickStreet’s exposure nationwide. As our westernmost service territory, Kansas is at the geographic center of the country, and a perfect fit for the BrickStreet team. While BrickStreet has always stayed true to its Appalachian roots, we are excited to plant ourselves squarely in the Midwest.

We are constantly striving to find the best locations to showcase our special brand of 360° service, and we project we will begin writing business in Georgia and Iowa in 2017. Also, with

the anticipated closing of the joint venture with Motorists Insurance Group in 2017, we have the potential to see our footprint more than double in size in the coming year.

As BrickStreet continues to expand geographically, our strategy and approach are to remain dedicated to providing excellent service and solutions to our agents and policyholders.

1111

ACTIVELY WRITING

Alabama District of ColumbiaIllinois IndianaKentuckyKansasMaryland

MissouriNorth CarolinaPennsylvaniaSouth CarolinaTennesseeVirginiaWest Virginia

PROJECTED TO ACCEPT SUBMISSIONS IN 2017

GeorgiaIowa

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New Office Location

In 2016, BrickStreet’s continually expanding footprint grew to include a modern, open-concept office in the

heart of downtown Pittsburgh. Following the acquisition of the HM book of business, the Northeast Team now enjoys beautiful views from its new home at One PPG Place. The PPG building is a stunning 40-story office tower with a glass exterior, allowing BrickStreet’s newest office to impress with conference rooms that have floor-to-ceiling windows and amazing views of the city.

The office officially opened as BrickStreet’s Pittsburgh office on February 3, 2017, joining BrickStreet’s other office locations in Charlotte, N.C., Naperville, Ill., and its headquarters in Charleston, W.Va.

BrickStreet had already grown organically in Pennsylvania before the acquisition. With the creation of the Pittsburgh office, BrickStreet’s physical presence now matches its prestigious position as Pennsylvania’s third largest workers’ compensation carrier. The office is home to more than 100 employees, many of

them HM veterans who possess a deep knowledge of the market and a results-based philosophy that blend seamlessly with BrickStreet’s 360° model.

BrickStreet remains dedicated to maintaining the current local service delivery model agents and policyholders have come to expect. We will continue to use HM’s established agent distribution in Pennsylvania to deliver on the BrickStreet promise of superior solutions and service. Policyholders will continue to work with the same claims adjusters and underwriters.

The Pittsburgh office is a perfect fit, both regionally and culturally. BrickStreet has an existing presence on the East Coast, and HM has been emphasizing outcomes for years. Already a major risk management player in Pennsylvania, BrickStreet continues to diversify its book of business and grow as a regional carrier. We will look to expand progressively within Pennsylvania, and we are positioned nicely to flourish beyond.

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Admitted Assets, Liabilities and Surplus(Amounts in millions for all BrickStreet companies)

20152016

Total assets

Cash and invested assets

2014 2013 2012

Total liabilitiesand surplus

Total policyholders’surplus

Year

Other assets

Loss and LAE reservesUnearned premiumsOther liabilities

Total liabilities

Gross paid in and contributed surplus

Other surplus

$1,780.6$1,826.0 $1,673.7 $1,559.4

$1,955.4 $1,986.4 $1,859.0 $1,725.5

$658.9$705.8

$1,955.4$1,986.4

$603.7

$1,859.0

$552.6

$1,725.5

1,091.7133.255.7

$1,280.6

1,102.3139.654.6

$1,296.5

1,045.6 158.3 51.4

$1,255.3 $1,172.9

973.4140.758.8

693.5 646.6 591.4 540.3

12.3 12.3 12.3 12.3

160.4 174.8 185.3 166.1

$2,032.0

$2,255.0

$756.1

$2,255.0

$1,498.9

1,131.0173.3194.6

743.8

12.3

223.0

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101.5% 97.3% 96.6%101.0%

Statement of Operations(Amounts in millions for all BrickStreet companies)

$260.6 $308.8 $326.5 $295.0$359.5Net written premium

2015 2014 2013 20122016

95.8%Combined ratio

69.6%26.2%

The above information is a summary of the annual statements filed with the West Virginia Office of the Insurance Commissioner. A copy of the complete annual statements and/or audited statements for the past two years can be downloaded from the BrickStreet website: http://www.brickstreet.com/General/Pages/AboutUs.aspx.

Year

Earned premium

Loss and LAE expense Underwriting expense

Investment and other income

Net income before taxes Income taxes

Loss and LAE ratioUnderwriting ratio

69.2% 31.7%

76.1% 25.4%

75.1% 22.2%

64.8% 31.8%

52.8 60.0 64.3 58.5 60.0

56.012.7

59.99.0

64.212.0

63.015.6

60.223.6

222.894.3

185.982.7

249.178.5

231.972.5

173.293.8

320.3 268.5 327.5 308.9 267.2

Net income 52.250.9 47.4 36.643.3

Underwriting gain (loss) (0.1)(0.1) 4.5 0.23.2

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BrickStreet Forms Joint Venture with Motorists Mutual

Future Growth

In one of the most growth-focused moves in BrickStreet’s history, in October we entered into an affiliation agreement with

Motorists Mutual Insurance Company, located and headquartered in Columbus, Ohio. This joint venture with Motorists Mutual—a member of the larger Motorists Insurance Group—allows us to partner together financially and operationally, while maintaining our individual brands. Structuring the transaction as an affiliation was a deliberate and strategic move, as it allowed BrickStreet to continue to be owned by its policyholders, retain the brand and remain headquartered in West Virginia, while simultaneously enjoying enormous, company-wide benefits.

Motorists Insurance Group is a super-regional insurance group that is home to 11 different insurance companies, including property and casualty insurance, life insurance and insurance brokerage. Through this transaction, BrickStreet will be able to take advantage of this wider base of products and services by having access to other lines of commercial insurance outside of workers’ compensation. This increased access to other lines of commercial insurance will not change the fact that we are first and foremost a workers’ compensation company—in fact, our reputation as workers’ compensation experts

will only grow as we expand into the Motorists footprint.

Overall, this transaction will result in improved risk diversification by product line and geography, and involve more than 1,600 employees in 10 offices, writing in 29 states. We will see our premium grow to nearly $1.2 billion, with a surplus of nearly $1.55 billion and assets of $4.5 billion. Through this partnership, BrickStreet will become part of a super-regional carrier group and one of the top 20 mutual groups in the United States. While there are still regulatory approvals pending, BrickStreet expects the transaction will close in mid-2017.

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We further anticipate that the transaction will result in an A.M. Best rating of “A-” or better.

As we integrate our two companies, we also will be integrating our executive management teams to allow them to jointly manage the affiliation. The BrickStreet and Motorists Mutual Boards of Directors will each be comprised of an equal number of BrickStreet and Motorists Mutual representatives. Members of our executive management teams will have both new and expanded roles once the transaction closes, and there will be one operational structure in place to manage day-to-day operations and strategic planning. Operating jointly, the two

companies also have developed an internal structure to ensure the integration goes smoothly. We have set up five working groups to evaluate the best way to combine services and products, addressing issues relating to culture and human resources, operations, financial services and information technology. We are confident that these groups, along with our executive management teams, will successfully shepherd BrickStreet and Motorists Mutual through this time of transition. We are delighted with our forward momentum in 2016, proud of the BrickStreet family for adapting so quickly to these changes and—most of all—excited for what 2017 has in store.

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BrickStreet is rooted in community service. For us to succeed, our communities also must prosper. In an

effort to support and give back to our local communities, we established the BrickStreet Foundation, which is instrumental in reaching communities across our footprint.

Since its inception in 2012, the Foundation has supported many charitable causes and organizations in West Virginia, Pennsylvania, Tennessee, Virginia and beyond.

In 2016, one of the Foundation’s largest and most important efforts was providing flood relief in West Virginia. In June, severe flooding impacted several counties, destroying lives, homes, schools and businesses, and leaving families completely devastated. The BrickStreet Foundation and the BrickStreet family were immediate in their response to help.

The BrickStreet Foundation and individual BrickStreet employees all contributed in multiple ways to recovery efforts, which included monetary donations, various supply and clothing donations, volunteer assistance and coordinating with other supporting organizations. BrickStreet worked with the American Red Cross, the West Virginia Chamber of Commerce Foundation, the United Way of Greenbrier Valley and the United Way of Central West Virginia, as well as local governments and volunteer fire departments to help the affected communities.

Individual employees also offered their time at distribution centers and charitable organizations such as Mountain Mission and local churches throughout the region.

The BrickStreet Foundation continued its support by giving $7.5 million to various colleges and universities to fund scholarship endowments. A portion of these scholarships will be available to eligible students whose family members incurred permanent total disability or fatal work-related injuries. The remaining scholarships will be available based on financial need and academic achievement. We estimate these endowments should be able to fund up to 100 scholarships every year.

In addition to the Foundation’s support for non-profits and charities, BrickStreet conducts quarterly community service activities. This year, a few of these included: meal packaging at Feed My Starving Children in Naperville, Ill.; a Habitat for Humanity build in Charleston, W.Va.; holiday food drives in Charleston, W.Va.

BrickStreet firmly believes in serving our communities and fostering growth and development for future generations. As a company, we know it is important for us not only to contribute monetarily through the Foundation, but also to volunteer our time and assistance to help those in need. We are continually rewarded by being able to see the company and our employees out doing good work to better the communities we serve.

BrickStreet FoundationFocus on Friends in Need

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Your Business. Your People. You’re Covered.®400 Quarrier Street, Charleston, West Virginia 25301 1.866.452.7425 | 304.941.1000 | www.brickstreet.com