the one true reason we exist

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BUILDERS TRUSTO F N E W M E X I C O ®

Workers’ Compensation Excellence Since 1987

Workers’ Compensation Excellence Since 1987

Affiliated with New Mexico Home Builders AssociationBUILDERS TRUSTO F N E W M E X I C O ®

Workers’ Compensation Excellence Since 1987

Workers’ Compensation Excellence Since 1987

our missionBuilders Trust of New Mexico, as an affi liate of New Mexico Home Builders Association, has the mission of providing a long term stable solution to workers’ compensation obligations and liabilities for members of the New Mexico Home Builders Association who qualify as Participants in the Builders Trust group self insurance fund. Our philosophy is to maximize value and to promote safety to our Participants and their employees. We strive to maintain a favorable workers’ compensation business climate through active governmental affairs participation.

2 0 0 9 B O A R D O F T R U S T E E S

Bob DolgenerSecretary Treasurer | Ruidoso

John Jourdan Chairman | Hobbs

Lee RawsonTrustee | Las Cruces

Mike DrunzerTrustee | Alamogordo

Wayne RutherfordTrustee | Taos

Mark CarpenterTrustee | Clovis

Rick DavisTrustee | Albuquerque

Rick MurphyTrustee | Gallup

Kevin McGinleyTrustee | Mesilla

Scott BealhenNon-voting Member

Representing New Mexico Home Builders Association

Albuquerque

Jack C. Milarch Jr.CEO & Non-voting Member Representing New Mexico Home Builders Association

B A L A N C E S H E E T S 2 0 0 9 2 0 0 8AssetsInvestments ___________________________________________________________________________________________________________________ 62,006,660 53,060,735 Cash and Cash Equivalents ____________________________________________________________________________________ 1,665,167 3,652,787 Certifi cates of Deposit _______________________________________________________________________________________________ — 2,450,000 Premium Receivable __________________________________________________________________________________________________ 1,406,707 1,853,650 Insurance Receivable on Paid Losses ________________________________________________________________ 305,340 258,800 Insurance Recoverable on Unpaid Losses ______________________________________________________ 3,722,007 4,642,102 Prepaid Expenses and Other _________________________________________________________________________________ 1,289,458 896,664 Property and Equipment _________________________________________________________________________________________ 1,695,961 1,731,302 Other Receivables________________________________________________________________________________________________________ 481,877 564,773 Deferred Income Taxes _____________________________________________________________________________________________ 742,551 2,119,400 Totals Assets 73,315,728 71,230,213

Liabilities and SurplusReserves for Losses and ALAE ______________________________________________________________________________ 34,518,531 34,995,635 Participant Deposits ___________________________________________________________________________________________________ 4,415,736 5,432,567 Premium Refund Payable ________________________________________________________________________________________ 423,709 1,237,160 Other Payables ______________________________________________________________________________________________________________ 781,117 905,957 Total Liabilities _____________________________________________________________________________________________________________ 40,139,093 42,571,319 Surplus ______________________________________________________________________________________________________________________________ 33,176,635 28,658,894 Total Liabilities and Surplus 73,315,728 71,230,213

S T A T E M E N T O F E A R N I N G SIncomePremium Income, Net _______________________________________________________________________________________________ 14,111,155 18,891,750 Investment Income, Net __________________________________________________________________________________________ 1,653,090 2,517,299 Other __________________________________________________________________________________________________________________________________ 458,524 525,030 Total Income 16,222,769 21,934,079

ExpensesLosses and Loss Adjustment Expenses _____________________________________________________________ 9,126,595 8,805,895 Administrative Expenses _________________________________________________________________________________________ 3,212,612 3,182,387 Agents Commissions __________________________________________________________________________________________________ 1,499,592 1,942,669 Claims Management Expenses _____________________________________________________________________________ 678,674 716,866 Royalty Fees ____________________________________________________________________________________________________________________ 181,506 245,446 Total Expenses 14,698,979 14,893,263

Earnings Before Premium Refund 1,523,790 7,040,816 Premium Refund __________________________________________________________________________________________________________ 807,605 805,747Earnings Before Income Taxes _____________________________________________________________________________ 716,185 6,235,069 Provision for Income Taxes ____________________________________________________________________________________ (60,376) 2,067,638Net Earnings __________________________________________________________________________________________________________________ 776,561 4,167,431 Net Unrealized Gain (Loss) on Securities ______________________________________________________ 3,741,180 (4,447,288) Total Comprehensive Income 4,517,741 (279,857)

A U D I T E D F I N A N C I A L S T A T E M E N T SDecember 31, 2009 and December 31, 2008

CONTRACTORS BELONG HERE.

Strength of SafetyBuilders Trust is well known throughout New Mexico for our excellent loss prevention consulting through our Field Safety Services. In 2009 our Field Safety Services Specialists made 1,138 Participant contacts. The results speak for themselves. By two measures of loss standards, number of claims fi led per dollar of covered payroll and total claim liability per dollar of covered payroll – our record continued its positive trend. These indicators show that the drop in both frequency and severity of claims is not just driven by a down turn in business. Our trend is driven by our Participants who continue to promote and practice workplace safety. During the year we encouraged our Participants to take advantage of the business slowdown to create a more productive and safer work force. We encouraged our Participants to tighten their hiring practices, institute better equipment maintenance habits, and implement programs such as new employee mentoring and mandatory drug testing. Contractors belong here because our Field Safety people know our Participants and their operations and they draw on that industry specifi c experience to provide suggestions, advice and guidance that simply makes sense and keeps employees safer.

Strength of Premium RefundIn 2009 Builders Trust, for the fi rst time in our history, returned unneeded premium to our Participants twice in the same year. We took this unprecedented action because we recognized the urgency of putting cash back into the hands of our Participants. Contractors belong here because they know when times are tough they can count on the Board of Trustees understanding their needs. In May of 2009 we paid out $805,747 in premium refunds that were declared in 2008. Later in 2009 your Board of Trustees, for the fi rst time in the history of our fund, declared an additional $807,605 in premium

It’s a slogan we’ve promoted for many years but at Builders Trust it is much more than a slogan, it ultimately is the one true reason we exist. In 2009 we showed our true strength by demonstrating time and again the many reasons why Contractors belong here. While outside forces continued their constant pressure on our industry, Builders Trust remained steadfast, standing beside our Participants. But certainly not just standing by.

Strength FinanciallyFortunately for us all, Builders Trust came into this recession from a position of fi nancial strength. For over two decades now we have managed our fund and invested our money with a conservative, long-term view that has served us all very well. We have suffi cient money in reserve to easily cover all of our claim obligations – which totaled $34,518,531 in accumulated known obligations at the end of 2009. In addition, over time we have built a substantial surplus that will allow us to continue this strength into the future. Our surplus allows our fund comfort and fl exibility in a number of ways. For instance, having redundant reserves allows our Participants to forego the usual group self insurance requirement of annual submission of fi nancial statements. Contractors belong here because Participants can rest assured that Builders Trust will be here to take care of our obligations, today and into the future.

Randy Akin Builders Trust of New Mexico

Chief Operating Officer

Ronnie LetcherBuilders Trust of New Mexico

Marketing General Agent | Artesia

5931 Office Blvd. NE, Suite 3Albuquerque, New Mexico 87109

505-345-3477 | 1-800-640-3369

www.builderstrust.com

BUILDERS TRUSTO F N E W M E X I C O ®

Workers’ Compensation Excellence Since 1987

Workers’ Compensation Excellence Since 1987

Affiliated with New Mexico Home Builders Association

BUILDERS TRUSTO F N E W M E X I C O ®

Workers’ Compensation Excellence Since 1987

Workers’ Compensation Excellence Since 1987

refunds and that money was paid out in December of 2009. Thus, 2009 saw Builders Trust pay out a total of $1,613,352 to our past and current Participants as a Return of Premium! Those dollars covered payroll, made a truck payment, purchased materials, rented equipment and paid off a loan. The word “Trust” is in our name and we take that seriously. Contractors belong here because as a Group Self Insurance Fund we return excess premium back to our Participants.

Strength of TechnologyPremium income slowed appreciably in 2009 but positive change was nevertheless fast paced here at Builders Trust. To increase internal effi ciencies and achieve long-term savings we invested in technology to take our operations into a paperless environment. To go paperless, we purchased ImageRight® content management and workfl ow solution software to streamline operations, increase productivity and enhance our world-class customer service. For example, when a coverage application is received from a prospective new Participant all departments involved in the evaluation – Underwriting, Premium Audit, Field Safety Services and Accounting – can simultaneously review all application documents for swifter binding of coverage. Our Claims Department can now send hundreds of pages of medical records to a health care provider by moving the scanned documents to a disk with a few clicks of a mouse. The process is immensely faster than locating and pulling a paper fi le, removing pages, placing them on a copier and then re-inserting those documents back into the paper fi le – and one small CD can be mailed much less expensively than a box of paper.

Third party audits can now be done remotely, saving travel expenses. We have redeployed tasks and leveraged the investment in technology to do our jobs faster and more effi ciently with fewer employees and along the way we are lowering our operating costs in several ways, including less use of paper and copier toner and a decrease in postage. To better serve you, our staff now has much faster access to over 750,000 documents we manage here at Builders Trust. Contractors belong here because at Builders Trust we continue to invest in technology now to achieve substantial savings in the long run.

Strength of ServiceOur world-class and highly special-ized service continues to set us apart from the rest of the industry. Builders Trust, like many of our Participants, has downsized. Even so, we truly believe that we are now able to do a better job of servicing the needs of our Par-ticipants than ever before. Each of our staff members is a talented specialist. In 2009 we continued to enhance and expand our popular BT PAL, which is our internet Participant and Agent Link to Builders Trust. Working together we cover all facets of workers’ compensa-tion for you. We are ready to guide, evaluate, respond and answer. Contrac-tors belong here because we provide one line of insurance for one industry, only in New Mexico. You need only experience our personalized and spe-cialized professional service one time to know that no one does it better than Builders Trust.

Jack C. Milarch Jr.Chief Executive Officer

L O S S R A T I O B Y Y E A RIncurred Loss Ratios as of 12/31/2009 (Exclusive of Excess Insurance)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

120%

100%

80%

60%

40%.87 .77 .64 .55 .77 .49 .59 .49 .46 .47

2004 2005 2006 2007 2008 2009

1.5 M

1.2 M

.9 M

.6 M

.3 M 1.2 .75 .5 .89 .81 .81

P R E M I U M R E F U N D D E C L A R E D B Y F U N D Y E A R (In Millions)

2004 2005 2006 2007 2008 2009

1400

1200

1000

800

600

4001382 1359 1367 1090 867 636

C L A I M S P E R Y E A R

2 0 0 9 C L A I M S I N J U R Y B R E A K D O W NB R E A K D O W N

Type of Injury # of Claims % of All Claims

Laceration 136 22%

Sprain 78 12%

All Other 96 15%

Contusion/Bruise 64 10%

Fracture 49 8%

Foreign Body 39 6%

Puncture 27 4%

Strain 147 23%

Total 636 100%