The Superior Court appointed John Garamendi, Insurance Commissioner of the State of California, as Liquidator of Fremont Indemnity Insurance Company (the "Company in Liquidation") on July 2, 2003.

The following information will help answer most of your questions about potential claims and the liquidation procedure.

The California Insurance Commissioner's Conservation & Liquidation Office has been assigned the responsibility of managing the liquidation of the Company in Liquidation on behalf of the Commissioner.

After reading this booklet and the enclosed Proof of Claim form, you may direct all additional questions concerning the Company in Liquidation to:

Claims Department- Fremont Indemnity Insurance Company in Liquidation
Conservation & Liquidation Office
P. O. Box 26899
San Francisco, CA 94126
(866) 740-6122

Please state that you have a Fremont Indemnity Insurance Company Proof of Claim question when you call.

Questions and Answers about the Liquidation of
Fremont Indemnity Insurance Company

Q: What happens when an insurance company becomes insolvent and is liquidated?

Insurance companies organized in the State of California are regulated by the Insurance Commissioner of the State of California (the "Commissioner"), and when they become insolvent, the Commissioner is sometimes directed by courts to liquidate them. When ordered to liquidate a company, the Commissioner, through the Conservation & Liquidation Office (CLO), gathers the company's assets and determines its liabilities. Liabilities include such things as operational expenses, unearned premiums, and claims against insurance policies issued by the company being liquidated. The liquidation proceeding is conducted under court supervision and according to procedures mandated by the California Insurance Code and related laws. The liquidation process often takes several years to complete.

Each state has Insurance Guaranty Associations ("IGAs") that may provide coverage for claims against insurance policies of liquidated insurance companies. The California Insurance Guarantee Association ("CIGA") provides statutory protection under the Company's covered insurance policies issued to California residents or issued on property permanently located in the State of California. For workers' compensation coverage, some states have designated other entities to administer the coverage. In some states, claims are handled through third party administrators retained by the IGAs. For simplicity, we refer to all of these entities as IGAs. The IGAs are authorized to submit their own claims against the Company in Liquidation to reimburse certain payments they make on policyholder claims.

Fremont Indemnity was admitted in California and most of the other states. As a result, anyone that resides in a state in which Fremont was licensed might be covered by one of these IGAs. Please check the Fremont Indemnity section of our website (www.caclo.org) and the "Guaranty Fund Managers' section of the NCIGF website (www.ncigf.org) for contact information on the IGA in your state.

However, you may reside in a state that does not cover your claim. If so, your claim will be handled by the CLO via the Proof of Claim process.

Q: What is a Proof of Claim?

With two exceptions noted below, the Insurance Code requires all persons interested in the assets of the Company in Liquidation to file a form prescribed by the Commissioner that provides basic information about the claim and any supporting data or documents that may be requested. This package should contain a proof of claim form that specifies the other information you must file to have your claim considered. The completed form together with all the supporting data and documents is referred to in this booklet as a "Proof of Claim".

Q: What happens after I file the Proof of Claim?

The Commissioner is in the process of collecting assets and calculating the liabilities of the insurer. This process includes the review of the Proofs of Claim. Those claims that are determined to be covered by an IGA in your state will be forwarded to them for processing. Those that are not covered by an IGA will be reviewed by the CLO. If more information is needed with respect to your claim, it will be requested from you. By filing your claim you agree that you will provide such information necessary to process your claim. The records of the Company in Liquidation may be incomplete or inaccurate and you may need to provide this information. Be advised that the Commissioner is empowered to compel testimony and documents via issuance of a subpoena under Insurance Code Section 1042.

Q: Do I have to file a Proof of Claim if I reported a loss event to the Company in Liquidation before it was ordered into liquidation?

No. The liquidation order directs the Commissioner to "deem filed" any policyholder claims already pending that were filed with the Fremont Indemnity Insurance Company prior to. IF YOU ARE UNSURE WHETHER THE COMPANY HAS A RECORD OF YOUR PENDING CLAIM, YOU SHOULD FILE A PROOF OF CLAIM. Additionally, because the records of financially troubled insurers are not always in perfect order, you may wish to file a Proof of Claim to ensure that the Commissioner is aware of your claim against the Company in Liquidation.

Q: Since Fremont Indemnity Insurance Company has been ordered into liquidation, will my claims be paid? Will they be paid in full?

All valid claims incurred prior to the expiration date of your insurance policy will be paid subject to your policy conditions, your policy limits, the statutory limitations of the IGAs referenced earlier and subject to available estate assets.

Other than for a return of premium or deemed filed claims, you must return a Proof of Claim to Fremont Indemnity Insurance Company, c/o the Conservation & Liquidation Office, P.O. Box 26899, San Francisco, CA, 94126 no later than June 30, 2004. Your claim must be received by the CLO prior to the close of business on June 30, 2004. If mailed using the U.S. Postal Service, the Proof of Claim (including the form and supporting documents, if any) must be postmarked on or before June 30, 2004.

FAILURE TO TIMELY FILE YOUR CLAIM WILL LIKELY RESULT IN DENIAL OF YOUR CLAIM.

The CLO will document receipt of your claim and forward your claim to the IGA based on the state in which you reside. If that IGA rejects your claim because of statutory limitations or if the Company in Liquidation was not authorized to transact business in the state, you may then contact the CLO for further information. If your claim is not covered by your IGA, it will be reviewed ("adjusted") by the CLO. If approved in whole or in part it will be paid from the assets of the Company in Liquidation. If the Company in Liquidation does not have enough assets to pay claims in full, they will be paid proportionally in the priority discussed below.

Q: How long will it take for my claims to be paid by the IGA?

When a company is placed into liquidation, the IGA is typically activated to pay claims as soon as the court orders the liquidation. Claim payments have already begun in all of the respective states.

Q: If I have a Retrospectively Rated policy, will the guaranty association pay the retro returns?

Generally retrospectively rated premium returns are not obligations of IGAs although statutes differ among the various states. These are obligations of the Company in Liquidation. You will need to file a Proof of Claim. You may state that the claim is for all future calculations of the indicated policy number.

Q: I have questions about what is and what is not covered by the IGA. Who can answer these questions for me?

You should address your questions about IGA responsibilities to the IGA in the state where you reside.

Q: I believe I have a claim against a policyholder of the Company in Liquidation but I am not a policyholder. How do I make a claim?

Third-party liability claims against the policyholders of the Company in Liquidation are made in the same manner as policyholder claims. To file a claim for monies you believe the Company in Liquidation may owe you, or its policyholder, you must file a Proof of Claim with Fremont Indemnity Insurance Company, c/o the Conservation & Liquidation Office, P.O. Box 26899 San Francisco, CA 94126 no later than June 30, 2004. Your claim must be received by the CLO prior to the close of business on June 30, 2004. If mailed using the U.S. Postal Service, the Proof of Claim (including the form and supporting documents, if any) must be postmarked on or before June 30, 2004.

YOU SHOULD FILE A PROOF OF CLAIM EVEN IF YOU ARE UNSURE WHETHER OR NOT YOU HAVE A CLAIM. If you fail to file a Proof of Claim by this date, your claim may be considered late. BY LAW THE COMMISSIONER MAY NOT ACCEPT CLAIMS FILED AFTER THE BAR DATE.

The CLO will send you a letter acknowledging receipt of your Proof of Claim. If your claim is or may be covered by an IGA, the CLO will forward your information to the IGA for the state in which you reside. If the IGA rejects your claim because of statutory limitations or if the Company in Liquidation was not authorized to transact business in the state, you may then contact the CLO for further information.

Q: If my claim is directly against the Company in Liquidation, and I am neither a policyholder nor a third-party liability claimant, how do I make a claim?

The Commissioner handles claims filed against the Company in Liquidation by general creditors, trade creditors, governmental agencies, reinsurers, agents, employees and any other persons who may have some claim against or other interest in the assets of the Company in Liquidation. To file a claim you must submit a Proof of Claim with Fremont Indemnity Insurance Company, c/o the Conservation & Liquidation Office, P.O. Box 26899 San Francisco, CA 94126 no later than June 30, 2004. Your claim must be received by the CLO prior to the close of business on June 30, 2004. If mailed using the U.S. Postal Service, the Proof of Claim (including the form and supporting documents, if any) must be postmarked on or before June 30, 2004.

YOU SHOULD FILE A PROOF OF CLAIM EVEN IF YOU ARE UNSURE WHETHER OR NOT YOU HAVE A CLAIM. If you fail to file a Proof of Claim by this date, your claim may be considered late. BY LAW THE COMMISSIONER MAY NOT ACCEPT CLAIMS FILED AFTER THE BAR DATE.

Q: What are the priority levels for the consideration and payment of claims?

The payment priority of claims against the Company in Liquidation is found in California Insurance Code Section 1033(a), which can be found in county law libraries and is available on the Internet (http://www.leginfo.ca.gov/calaw.html); check "Insurance Code" and click "Search"; then select sections 1010-1062 and scroll down to Section 1033). The most common provisions are summarized below; this summary is only intended as a brief overview of the laws concerning claims priority for your information only and not a complete statement of the statutory provisions in Section 1033(a) of the California Insurance Code. IT IS NOT NECESSARY FOR YOU TO ATTEMPT TO DETERMINE THE PRIORITY OF YOUR CLAIM.

First priority ("Class One") - administrative expenses of the Company in Liquidation. This will include legal fees and other claim related loss adjustment expenses incurred during conservation and not covered by the IGAs. This category also includes expenses of administration incurred during conservation and liquidation. Generally, no proof of claim need be submitted for Class One claims. However, if you believe your claim falls in this category you may wish to file a claim.

Second priority ("Class Two") -- claims for insurance coverage to the extent of the policy limits. This includes both the claims of the IGAs for reimbursement of claims paid by them and insurance coverage claims not covered by any IGA. Please consult the Insurance Code for specifics. However, "bad faith," punitive damage claims, claims in California for retrospectively rated premiums, and claims of reinsurers based upon reinsurance contracts are not included in Class Two. Such claims are included in Class Seven (see below).

Third through Sixth priority ("Classes Three through Six ") -- certain claims for taxes and other preferred matters under state and federal law.

Seventh priority ("Class Seven" or "General Creditor Claims") -- includes any claim not included above except for certain claims based on rights of the shareholders and owners of the insolvent insurance companies which are of Eighth and Ninth priority.

The CLO is ready to respond to your concerns. If you require assistance, forms, or information, please contact us at 866-740-6122. Please state that you have a Fremont Indemnity Insurance Company Proof of Claim question when you call.

Q: What is a Contingent and Undetermined claim?

Under California law, a Contingent and Undetermined claim (sometimes referred to as a "C&U Claim" or "policyholder protection claim") is defined as any claim or demand upon which a right of action has accrued at the date of the order of liquidation and upon which the liability has not been determined or quantified.

IF YOU DO NOT HAVE A SPECIFIC CLAIM AT THE PRESENT TIME BUT WISH TO PROTECT YOURSELF FROM AS-YET UNKNOWN CLAIMS OR CLAIMS WITH UNKNOWN AMOUNTS YOU MAY FILE A C&U CLAIM. You should file a C&U Claim with respect to any incident or event that you believe could lead to or give rise to a claim in the future.

If you file a Contingent and Undetermined Claim, you must provide any and all available additional information that you know at the time you file your claim. If you do not yet know the following information, you may still file a Contingent and Undetermined Claim and then provide the information when it becomes known to you:

1. The date(s) of event(s) or occurrences;
2. The name(s) of all known claimant(s);
3. A detailed description of the incident(s) or event(s);
4. A detailed description of the outcome(s);
5. The event(s) that resulted from the original incident(s) or event(s); and
6. Your estimate of the dollar amount of the future claim, if possible at the time of filing.

Any person with an interest or potential interest in the assets of the Company in Liquidation may file Contingent and Undetermined Claims.

NOTICE IS HEREBY GIVEN that on July 2, 2003 the Superior Court for the State of California, in and for the County of Los Angeles entered an Order Appointing Insurance Commissioner as Liquidator and Restraining Orders in the case entitled Insurance Commissioner of the State of California v. Fremont Indemnity Company, Case No. BS083582, which order appointed the Insurance Commissioner of the State of California as Liquidator of Fremont Indemnity Company ("Fremont") (in such capacity, "Liquidator") and directed the Liquidator to marshal assets and wind up the business and affairs of Fremont as provided for in California Insurance Code Section 1016.

NOTICE IS FURTHER GIVEN that any and all policyholders, insureds, creditors, shareholders, reinsurers, or other persons having any claim or demand of any kind against Fremont must file their claim together with proper proof thereof with the Liquidator, c/o The Conservation & Liquidation Office, P.O. Box 26899, San Francisco, CA 94126 on or before June 30, 2004 (the "Claims Bar Date"). Any claims not filed on or before the Claims Bar Date shall be deemed waived. Failure to file a proof of claim by the Claims Bar Date will forever bar you from making a claim in the liquidation of Fremont.

A claim must be set forth in writing and under oath, on a form prescribed by the Liquidator. The prescribed form requires the following information:

1. The particulars of the claim and the consideration therefore,
2. Whether the claim is secured or unsecured and, if secured, the nature and amount of such security,
3. The payments, if any, made thereon,
4. A statement that the sum claimed is justly owed from such person to the claimant,
5. A statement that there is no offset to the claim,
6. Such other data or supporting documents as the Liquidator requires, including a full copy of your policy and a statement whether the claim is Contingent and Undetermined (as described below).

Even if you do not have a specific claim at the present time, but wish to protect yourself from a claim that may arise in the future or unknown claims or claims with unknown amounts, you should file a Contingent and Undetermined Claim. A Contingent and Undetermined Claim is an incident or event that you believe could lead to or give rise to a claim in the future.

1. The date(s) of event(s) or occurrences,
2. The name(s) of all known claimant(s),
3. A detailed description of the incident(s) or event(s),
4. A detailed description of the outcome(s),
5. The event(s) that resulted from the original incident(s) or event(s),
6. Your estimate of the dollar amount of the future claim.

Forms will be mailed to all policyholders, creditors, and other interested parties. A copy of this form may also be obtained by writing to: Fremont Indemnity Company, c/o the Conservation & Liquidation Office, P.O. Box 26899, San Francisco, CA 94126.

NOTICE IS FURTHER GIVEN that the rights of policyholders, insureds, claimants, creditors, shareholders, reinsurers and all other persons interested in the assets of the Company in Liquidation are fixed as of July 2, 2003.

NOTICE OF APPLICABILITY OF THE CALIFORNIA INSURANCE GUARANTEE ASSOCIATION

NOTICE IS FURTHER GIVEN that Fremont was admitted to transact insurance business in the State of California and therefore participated in the California Insurance Guarantee Association ("CIGA"). CIGA provides payment for certain types of California claims made against certain types of California-issued insurance policies. The types of claims and policies for which payment may be made, the extent of the payment, and the persons to whom payment may be made, are specified in Sections 1063, et seq., of the California Insurance Code.

If you have a claim that you believe is covered by CIGA, you should contact CIGA via the following mailing address:

Claims involving non-California policies or losses occurring outside of California may be covered by an insurance guaranty association in another state, depending on the state in which the insured or claimant resides, the nature of the claim, the type of policy, and other factors. Claims covered by such guarantee associations should be submitted directly to such other association. Address information for guaranty associations in other states may be found by checking the Fremont section on the CLO website at www.caclo.org.

This notice is given and published pursuant to the provisions of Sections 1021, 1022, 1023, and 1063.7 of the California Insurance Code for the purpose of liquidating and winding up the business of the Company in Liquidation and ALL PERSONS ARE HEREBY WARNED THAT UNLESS THEIR CLAIM IS FILED IN THE MANNER AND WITHIN THE TIME PERIOD HEREIN SPECIFIED, THEIR CLAIM MAY NOT BE ACCEPTED FOR FILING OR ALLOWANCE AND SHALL BE DEEMED WAIVED.