State of Minnesota In Re: The Matter of the Liquidation of ...mn.gov/commerce-stat/pdfs/liquidation-mstc-qtrly-rpt-dec2016.pdfREPORT ON PROGRESS OF LIQUIDATION PROCEEDINGS January

Filed in Second Judicial District Court12/22/2016 12:13:56 PM

Ramsey County, MN

62-CV-11-9400

State of Minnesota

County of Ramsey

In Re: The Matter of the Liquidation of Minnesota Surety and Trust Company

District Court

Second Judicial District

62-CV-11-9400

QUARTERLY REPORT MINN. STAT.§ 60B.25

REPORT ON PROGRESS OF LIQUIDATION PROCEEDINGS

January 1, 2017

NOW COMES Mike Rothman, Commissioner of Commerce of the State of Minnesota, in his capacity as the statutory and court-appointed liquidator of Minnesota Surety and Trust Company, ("MSTC") and for his summary of progress and cunent status of the MSTC liquidation proceedings, states as follows:

1. The court placed MSTC in liquidation on November 22, 2011. 2. The court appointed the Commissioner of the Minnesota Department of Commerce

(hereinafter "Commerce") as liquidator of MSTC. 3. MSTC, a Minnesota insurance company, was also licensed as a trust company and

actively administered a number of trusts.

REPORT I. Financial Statements

4. The Liquidator attaches hereto as Exhibit A the financial statement for MSTC as of September 30, 2016.

II. Notice and Claims

5. The Liquidator is reviewing information submitted by some of the former agents of MSTC for the release of the agent's build-up-fund accounts.


Ramsey County, MN

62-CV-11-9400

6. The Liquidator reviewed a claim submitted by the U.S. Immigration and Customs Enforcement agency (ICE) for breaches of immigration bonds and issued a letter of denial on November 29, 2016. As a matter of law, all insurance policies and similar contracts of coverage issued by MSTC terminated effective December 23, 2011. All bonds listed in the ICE claim were breached after September 16, 2014 and had no coverage at the time of the breach. The Liquidator has not received any response from ICE or counsel representing ICE.

III. Operations

7. On August 14, 2015 the Liquidator filed an application with the U.S. Depaiiment of Justice for a limited release of federal claims in the liquidation of Minnesota Surety and Trust Company. As of the date of this repmi the application was still pending.

Respectfully submitted,

MIKE ROTHMAN Commissioner Minnesota Depaiiment of Commerce

By his Special Deputy Liquidator

Date


Ramsey County, MN

62-CV-11-9400

Property and Casualty Companies

QUARTERLY STATEMENT AS OF SEPTMEMBER 30, 2016

OF THE CONDITION AND AFFAIRS OF THE

MINNESOTA SURETY AND TRUST COMPANY NAIC Co. Code 30996 Employer's ID Number 41 -0665921 NAIC Group Code

Organized under the Laws of Minnesota State of Domicile Minnesota

Country of domicile United States

Incorporated/Organized: August 28, 1945 Commenced Business: August 28, 1945

~ Statutory Home Office 85 7th Place East, Suite 500, St. Paul, MN 55101-2198

Main Administrative Office 85 7th Place East, Suite 500, St. Paul, MN 55101-2198

Mail Address P.O. Box 133, Farmington, CT 06034

Primary Location of Books and Records 85 7th Place East. Suite 500, St. Paul, MN 55101-2198

Internet Web Site Address http://mn.gov/commerce/topics/enforcement/Hquidations,isp

Statutory Statement Contact

State of Minnesota County of Ramsey

l<athleen Orth (651) 539-1763

OFFICERS None-Company in Liquidation

OTHER OFFICERS None - Company in Liquidation

DIRECTORS OR TRUSTEES None - Company in Liquidation

} ss Tho olllcors of U1ls ref)011Jng entity being duly Sv.,)lr1, each depose end say that they 8f8 the deserted oir~er of said reporting entity, and that on the reporting period stated above, all or lhe herein described assets v.ere the absolute property of lhe or tho said reporting entity, free and clear from any lions or claims thereon, oxcopt as heroin stated, and that this statement, together vAth related exhibits, schedules and oxplanatlons therein conlalned, annexed 0< referred to, Is a full and ~ue stalemenl of all lho assets and flablliUes and or the condition and affairs ol tho said reporting entily as or the reporting period stated above, and of ils income and deductions there from for the period ended, and have been completed in acc0<dance vAlh U10 NAIC Annual Statement Instructions and Accounting Practices and Procedures manual oxcopl to tho oxtont lhal:: (1) state law may differ, 0<, (2) lhat stale rules or regulations req11re difforences In reporting not related to accounting practices and procedures, acc01ding to the best or their information, kno1•Aedge and belief, respectively. Furthermore, the scope ol this atteslatlon by the described orricers also includes the related corresponding electronic filing with the NAIC, wilen required, that Is an exact copy (except !or f0<matting dilferences duo to electronic fiing) el lhe enclosed slatement. The clcclronlc filing may bo requested by various rogulalors In lieu of or In addillon lo the enclosed stalement.

\ 0 { 2S / z.olLP

Chief Examiner


Ramsey County, MN

62-CV-11-9400

STATEMENT AS OF SEPTEMBER 30, 2016 OF THE MINNESOTA SURETY & TRUST COMPANY

ASSETS Current Year

NetAdmllled Assets December 31

(Column 1 Prior Year Net Nonadmitted minus Admitted

Assels Assets Column 2) Assets 1 Bonds 581,323 581,323 . 704,789 2 Slacks:· · · ... .............. .................................................................... · ·· · ..................................................... ..

2.1 Preferred stocks· ... ......................................................... · · ..... ..... • · · .... · · 2.2 Common Stocks' · · .. .......... · · · .. ........................ · .......................... ..

3. Mort~age loans. on. real estate: ...................................................................................................................... ............................................................................................................................... .. 3.1 First Liens 3.2 Olher than first liens............ · ..... .......................... · · ...... ........................... ..

4 Real estate · · .. ..

. 4 .1. Properties. occupied .by the. companY ................................................................................................................................ ................................................................................................... .

. 4.2. Properties. held for the .eroducllon.ol_lncome .(tess.$.encumbrances) .............................................................. ................................................................................................. .

. 4.3.Propertles. held for sale (less.$ .. encumbrances) ........................................................................ ................................................................................................................................ . 5 .cash ($450,903, .Schedule. E ·Part .1 ) •. cash .equivalents. ($0, .Schedule E- Part 2J.. ........... .......... 450,903 ................................................... 450,903 .............. 346,276 6 Contract loans 7~~~ .. . 8 Other Invested assets .. .......... ....................................... ·· · · · ...... · .... .... ............. · · ...... · · ............ ..

9 Receivable for securities .. ............ · · .. .

~ ~ :!~~~~~t: 1:~~:-~~e;~;~:::t:l~a::~~~ assets JSchedule: DL) ::::::::::::::::::::::::::::::::::::::::::::::::::::: ·:::::::::::::::::::::::::::::: ::::::: ::::::::::::::::::::::::::::::: ::::::::::::: ::: ::: ::::: :::::::::::::::: :::::::::::::: 12. Subtotals, .cash. and .lnvested.assets.(Line. 1, through .Line1.1) ...................................................... ....... 1,032,226 ..................................... -......... 1.,032,226 ........... 1 ,051,065 13.Tille. plants less$ ... charged. ofl(for.Title. insurers. only) ..................................................................... ..................................................................... ........................................................... .. 14 Investment income due and accrued 3,540 3,540 . 7,392 15 Premiums and considerations: · "........................... · .. · ......

. 15.1 .. Uncollected,premiums and.a~ents' .balances. In. the. courSe.or collection ................................... 88, 133 ....................... 88, 133 ............................ -............................ 0 15.2 Deferred premiums, agents' balances and installments booked but deferred and

. not.yet .due.(lncludlng. $ ..... earned. but unbilled.premiums) .................................................................................................................................................................. ............................ .. 16 Reinsurance:

16.1 Amounts recoverable from reinsurerS· ................ · ... .......... ... 16.2 Funds held by or deposited with reinsured companies

.16.3 Accrued .retrospectivepremlums .. ....................................................................................................................... ................... _ .. , ....................................................................... .. 17 Amounts receivable relating to uninsured plans

18.1 . Current federal and .foreign .income tax. recoverable .and. interest. thereon.............................. .............................. ........ ............................ .. ..... .................. ............................. .. 18.2 Net deferred tax asset

19 Guaranty funds receivable or on deposit .. . .. .

20. Electronic data .processing equipment and .software .......................................................................... .................................................................................................... ............................. .. 21. Furniture and.equipment, .Including. health .care dalive,y. assets ($.J ...................................... ...................................................................................... . .. .. ............................. .. 22. Net .adjustment .In assets .and. liabilities ,due. toJorelgn exchange. rates ................................................................................................................................................................... .. 23 Receivables from parent, subsidiaries and armlates

24. Health. care.($ .J. and. other amounts. receivable ...................................................................................................................................................................... ......................................... . 25 .Aggregate.write-Ins .ror other.than invested .assets ................................................................................................. 100 ............................................................ 100 ........................ 100 26 Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell

.Accounts (Line. 12.to Line .25) .............................................................................................................................. 1., 123,999 ...................... 88, 1.33 ........ 1.,0351866 ............ 1,058,557 27. From Separate. Accounts, .segregated .Accounts .and. Protected. Cell Accounts .................................................. ...................... ................ ............................................................ . 28.Total.(Line.26.and.Llne27L......................................................................................................................... 1,123,999 88,133 1,035,866 1 058,557

DETAILS OF WRITE-INS .......... 1101................................... ... .................................................................................................................. ..... .. ... .... ... ............................... ....................................... .............................. . . ............... . .......... 1102 ................................................................................................................................................................................................ _ .. , ................................................................................................................ .. .......... 1103 ........................................................... ......................................................................................................................................................................................................................................................... .

.......... ~ ~~: ·~~~~{Jn~~,~~~~~~r~~rt~e;;~31~;u~~~ ~~);~~ ~v1e:b~~~age .................................................................................................. ............................................................................ ..

2501 Assets reserved for the account or others 100 100 100 ......... 2502 ............................................................ . ..................................................................................................................................................... , .................................................................. .............................. . ......... 2sof ...................................................................................................................................................................................... ........................................ .......................... ............................................................ .

:::::::::·~~~·~;~~~~ta:~~r;:~·nt~~·;~~82~j~'~~~~~~~~~;~~:0;5e;~o;!iage::::::::::::::::::::::::::::::::::::::::::::::::: .::::::::::::::::::::~:~ :: :::::::::::::::::··:::::· .. ·::·::::r::::::::::::::::::·~·~·~:: ::::::::::::::::::::::;~~

Q02


Ramsey County, MN

62-CV-11-9400


LIABILITIES, SURPLUS AND OTHER FUNDS 1

Current Statement Date

December 31, PrlorYear

1,lossos ........................................................................................................................................................................................................................ 5.ooo ............................. 5,000

2 _Rein SY ranee payable cn.peld losses ond, loss tld1uslmcnt °'P°"'"' ................ , ........ , ................................................................ ...... , ...... , .. , .... ,,, .... ,, .. ,, .. , ...... ,, ................. , ............... . 3 ,loss adjustment oxponios ................................................................................. , .................... , ............................ ,................ ,,..................................... ... . ................................... .

4 ,Commissions poyable, ccnUngcnt commlsslcns.•nd other elmllor ehetqo• ................................................................................................................ 1.630 ............................ 1,630

5 ,OUlo,oxpon .. s(excl.Jdlng,texes, l~onsos.ond.foos> .... , ...... , .................................................................................... ,, ........................................ 115,240 .......... , ......... ,, ... 124,268

6 ,Taxes, leensu and foos (mluding.fodoral and forelgn_lneemo.toxe,) .................................................................................... , ............................... 27,635 .. ....................... 27,635

7 • t Cu"Olll fodllf&I 1111d fo,olgn.lncome !axe, (Including$ .... cn.realzod eaplW golns\lossos} .................................................... ............................................................................. .. 7 .2 Net defo,rod lax llabllty

8 ,Booowed,monoy .. , ................. ,., ........................................................................... , .................... , .. , ... ,, .................................... , .............................. 310,660 ........................ 310,600

8 ,UnOllmod.premiuma ............. , ......... , ............................................................... , ...... , .. , ................................................................ ................................. 4,295, ................. , .......... 4,285

10 ,AdvMCod plOIMlm,, .. ,,,,,,,.,,,,,.,., .... , .. , ........ , ........ , .. ,, ................ , .. , ...... , ................................................................................... ,, ....... ,., ... , ......... ,.,.,,., ................................. , ........... , ..

11 ,DMdends,docwod, and unpaJd: ........................................................... , .... , .... ,., .. , .. ,,,, ...... , .. , ... , ................................................ , ,, .. , .. , ..... ,, .. , .. , .. ,,.,, .. , .. , ............................................ .

• 11.1 Slockhold011 ................................................................................................................................................................... ........................................... .................................... .

. 11.2 Polieyho!dera ....................................................................................................................................................................................................... , ......................................... .. 12 .Codod,rolnsuronct,p,tmium1 poyablo (not ol coding comml'81ons)_ .......................................................................... , .. , ....................................................................................... ..

13 .Funds hold_bycompany.underroln,urancolfoades .................................................................................................................. ............................................................................ ...

14 Amounts wlU1hold e< ratal'lod,by compMy lot account of othora ............................................................................................................................ 64.114 .......................... 95.034

15 ,Remllances. Rnd.ltoms not olk>ealad .......................................................................... , ....................................... , .................................................................................................. . 16 PrOYilion 10< ralnsoranee ......... , ................................. , .................................................................................................................................................................................................. "''"'"'"'''''""'''''"''"'"''

17 ,Nol adjuslmenl1.1n enols and l!lblltios duo to_forolgn oxchongo.mto, .............................................................. , ...................... ............ , ...... , .. , ........................ , .............................. ,.

18 .Drort, OiJlslandi"R .................................................................................................................................................. ................. ........................................... .................................... .

19 _Payable lo paronl.aubsldlarlos and. affilslos ................................... , ......................................................................................................................... , .............................................. .

20. Oorivatlvos ..... , ...................................................................................................................................................................................................... , .. ,.......... . .............. ................... .

21 .Payobio IC< s.euntio• ............................................................................................................................................................................................................................................. .

22 .Payable fo, aocultios. ~nd~g .............................. , ................................................................................. ............................ , .................................................................................... .

23 .Llobll~ fot 1mounts.hold_undo,_uninaured plan• ............................................................................................................. , .................................................................................... ..

24 Copilal nol••.i .... and ilte .... t Ulereon.s ......................................................................................................... , .............................................................................. , ................ , ....... .

25 Aggrogate.11111,in, .r°' isbliUos,............................................................................................................................................. ......... .......................... .... • ................................... . 28 ,Tocat,lobllitiH tW,1<1110 protoclod ceHlabiltiea (Uno .1. Ulrough. Uno .25) .................................................................................................................. 549.373 ........................ 568.522 27 Protected eoll labllties

28 .Total llabllit!Gs (Uno 26.ond.Uno 271. ............................................................... , ...... , .. , ...... , ......... , .......................................................................... $49,373 ......................... 568.522

29.AQgrtgolo_wrilean, fo, special aurplus funds ....................................... , ......... , ......... , ......... , .............................................................................. , ................................................... .

30 Common.eapltal atoct ............................................................................................................................................................................................ 500.000 ......................... 500.000

31 .Prefeffod capital stock ................................................................................................. , ......................................................... , ....... , ......... , ..... , ............. , ........................................ ..

32 Aggrogntowrittaln1 fo,_otho,_Uian apoelal wrptus fund• ............... , ........................................................ - ............................................................................................................. .. .

33 Surpl.Js note• ............................................................. , ................................................................................................. , .. , .................................... 1,212,000 ..................... 1,212.000

34 Gross.paid In andee<lrillutod surplua . ., ................................................................................................. ........................................................ .. _100.000 ......................... 100.000

35 _Unosslgnod funds (61.<J)I.Js) .......... , ................................................................................................................................................................... (1.325,507) .............. (1.321,985)

30 ,Less.lroasury sloek,,otecst ..................................................................................................................... , .. , ........................... , ...................................... ... ................................... ..

,36.1 ... Shruos common_!volua iicludod_ln_line 30 s ... l ............................................................................... , ......... , ................................................................................................. . 36.2 ... Shsrea p,eferrad (vaue Included.In Une,31 .S.J .............................................................................................................. 1-------,i-------1

37 Surpl.Js •• regards polcyholdors (lino 29 tc line 35, lus Lino 38) Pago 4. line 39 486,493 480.035

38 TotclS IPIIII• 2. lino 28. Column 3) 1.035.866 1.058.557 DETAILS OF WRITE-INS ....... , .... , .................................................................................. , .......................................................................................................... , .. ,.,.,,.,,,,,.,, .. ,, .......... , .. '"''''""""''''""'"'"''"'"'

2so1 ................................................................................................................................................................................................................................................................................ . 2S02

2503

2598 SummN'( of romolnJm wrlto•lns lot.Linc 25 lrom o,erlbw P"II• ................................................................................................... , ......................................................................... .. 259g Tol~ls (llnos 2501 throu{Jh 2503 plus 2598) (lino 25 above)

2901

2902 ..................................................... , .... , ........... ,,,; .. ,o1;,;;; • • , ..... . ...................... ................................................................ , •• , ............ ... , ............................................................. .. , ... ,, ...... .

2903

2998 ,Summery ol_romeinilg Wlile-lns le<Llne 29.lrom,ovotl~w paqo ................................................................................................................................................... , .. , ...... , ................ . 2999 Totals ( lints 2801 Uuough 2903 plus 2998) (Uno 29 ebove)

3201

3202 ........ ,.,,., .. , ... ,, ....... ,,,,, .. , .. ,,,,, .. ,,,, ........................................................................................... ., ................................................................................ , ................................. , .. ,, ........... .. 3203

3298 .Summary of remaining writoans lo,.Llne 32 from overflow pogo .............. , ................ , ............................................................................................................................................... . 3209 Tolola (line 3201 through 3203 plus 3298) (Uno 32 ~bovo)

Q03


Ramsey County, MN

62-CV-11-9400

1 Premiums earned:

SlATEMENT AS OF SEPTEMBER 30. 2016 OF TIIE l.tlNNESOTA SU!lETY & 1RUST COMPANY

STATEMENT OF INCOME

UNDERWRITING INCOME

Cment Yoir to Dato

Prior Year Prio, Year Ended to Dato December 3 t

1.1,Dlrect l_W(4tcn S ---···-·················· .. L. .................................................................. ,.,_,_,,, ........................ ..................... ·. _ ...................... · .................... ·. 1.2,Assumod JWritten S ......................... ..l ....... ,.. __ , ............................................. , ......... - .... - .................................................................................................. ..

_::~:~:~;;~t;•:S ::::::::::::::::::::Jc::::::::::::::::::::::::::::~~~~:::::::::::::::::::::::::.::=:::::::::::::::::::::::: :::::::::::::::· ::::::::::::::::: ~~:::: -.. ::::.: ::= DEDUCTIONS:

2 _Lossas Incurred (Cuirent accldenty!a,- S '"*""""'"""'"'"""'".); .,.,,_ ... , .. ___ ,,_,,, ___ ........................... ............ ...... ______ ................................... ,_,., ................ .

. 2.1,Direct ............................................................................... ........ ....................................................... __ ,_, ___ ,(100) ............ _ .. J700) ............. (900) 2.2As1umed ·2,3'ceded ................................................. ,_ ...................................................................... , •• _ ... , ................ ~ ....... ............................................................. ..

2.4 Not .......................................................................................................................................................................... J 100) ............. ..J700J · ........... (9001 3 Loss_adjus1men1 0~}'$0S lncUfled .............. ,_ ............... · .......................................................................... _., ...... ............. ........... ............................. .. ~ Other undc1wf!UnJl,Ol~ensas lncu1rod .................................... - •. -.................................................................. ......... 21,,250, ............... 60,696 ......... 7\398 .. 5 A~~rc,ato wrile•ln& r0< undilf\•nitln~ deductions ...................... ........... ... ..................... , ............................ ____ ................................................................. . 6 Total under\mtin~ deductionJ!Llnes 21hrou9h 5/, .. ,_ ...................... .................................................................... _ .. , ............ 21,150, ........... . 5~996 .......... 731498_ 7 .Net Income or J>rOWC~d cels ..................................................... _ .................................................. _., ..................... ,,1--..,.,.=+----,...,...,.=1---,,.,,; 8 Net underwrldng gain (loss) (Line 1 minus Lino 6 + Line 7) 121. 150 159,996 173 498

INVESTMENT INCOME 9 ,Net lnvostmontlncoo1a earned ............... , •• _ •• , ... ,,_,,, •• , .... ,._ ... , ........... ---··--...... __ ,_,, .. , ....................................... _, __ 17,608, ................ 18,654_ ••• ,., __ 26,013.

10 Net ,reolzcd c~pltal,palns J!oues) loss ca~aat pains tax of .. S ............................. - .................... _ ... , ••.• - ............. ____ ...... ,_ ......... , ............................................... . 11,Net lnvesonenl ,Qaln~)lLlnos_9,• 10J.. ................................................................................. __,,__ •.• _..,..,.., •• , ........... 17,608 ................. 18.654 ............. 25,013 .

OTHER INCOME 12 Ntlgaln Or(loss)rro,n egents'or premum,bolances ChDfQOd_o« .................................................................... _ ••• ,., __ ....................... - ............................ ..

13 Fl~=~~~:~:: c5hargos not Included °:;~e~~~sg-0d oUS ·::::::::::1::::::::::::::::::::::::: ::::::·::::::::::::== :::::::::::::::::: ::::::::::::::::~ ~=::::::::::::::: 14 A_RPro9a10 1'1Tlle-lns ror nvscellaneous Income ................................. _,_, ................................................................................ ...... ,. _______ 65 •.•.••• , •• _ .. , ••••• 15 Total otherlncome(llnes 12 throu11h.14L ............................................................................................ .... , ___ ,, ....... ........ _.,,, . .. _, ................... 65 ....... ___ ,, ....... . 16 Net Income beroro dMdonds to,po6cyl\olders, anor ~a_pital..Q_ains_tax end bef0<e ,11 other fodcral , ____ ,,, ................. ,_ .. , ...................... _, ............ - ......... _, ....................... ..

,_and rorot.an lnoome taxos (Llnos 8_p1us Line 11+ 15} ................. .. .......... - , ..... .. .......................................................... ........... ll,542) .............. J 41,27!) , ___ ,, {18,485) 17 ,Dividends to eolcrholders ................ ,., _____ ,,,,_,,,, ....................... , .............................................................................................................. ___ ,.-... , ............ . 18 .Net Jncomo,ener dMdends.to_polc)'holder~ anorcaphat gains tax and betore all other rederel end .......................... ......... . (3,542) __ ........... (41,277) ........ (48,465)

••• roml~n lncprno taxos(Llne. 16 minus Line 171._,_ .. , ............ ........ _, _________ , .. , ................. _ ............................................................................... , ....... - •• , ....... , 19 ,Federal and.for~iS_n,lncome.taxes Incurred -···-·-·····-................... _, __ , __ ,. ____ ,,.,, .. ,_ ................................................ --,,,..,.=1---..,.,..,=--=~ 20 Net lnoome.(Llne 18 minus Line 19) ~o.Llno,22L. ..................................................................... ____ ,, ___ , __ ,_.......... 13 542 141 277 146 4851

CAPITAL ANO SURPLUS ACCOUNT 21 ~UIJ)lus.as.regards.e,olcyl\olders,.December 31 JMfor~oar ..................................................................... ,_ ......... _,._, ....... 490,035, ............ 638,620 ......... 538,520.

~~:~::~::~:,;~oif~:-~~~lectad:Callaccounts_:::::::::::=::::~~::::::::~~~~=~~:::::::=::::::::::::::::::=::::::=::·:::::::::::::=== P,,~2) ::::::::::~~~

1•277

1,..:::.(48

•485

)

~: ~~:~~e:~ ~:: ~~:::::: ~J:1~~~:a~~~1~ 11:ncQ~~:99fns tax or S ~~:::::::::::::::::::::::::=:::::::~::::::::::::::::::: :~~=:::=:::::::: ::::::::::::::::::: ::::::::::::::::::: 26 Chanue.ln net dererred lncomo,la.. ............................... , ....................... ,_.,_,.,,, .. , ........... ,. __ ,,. ___ ,,,._, __ ,, ...... _ ....................................... - ............................ .. 27 Chan9-0 In nonadmitted assets .......................... _,_, __ ....................... ,., __ .......................................................... ·-·-···-·-··-.. ·-· ........................ ................... .

~~ ~~:~:; :~ ~;~~~~;elnsurance :::::::::::::::::::::~~:::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::::::::::: :::::::::::::::::::::: ::::::::::::::::: 30 Surp1us,jcontnbuled, t(!), ~~th drawn .rrom ,erotccted cells ......... _, ............. ,. ______ ,, .. ,,_, __ .... , ................................ , ........ .............. ........................... . ...................... . 31 C~mulativo etract or changes In accountin.11;rinc:lples ................................... _ ......................................................................................................................... - •. 32 Capital chanQes ... ,.,_, .............. _ .. ,_ ............................... - .................................................................................. , ........... ..,_, __ ,, .. _, __ , __ ,,, .. ..................... .

3Z.f Poldln 32.2 Transrcirod from su,p)us !Stoek Di~dend) ......................... , ... _________ ,,_,_, _ __ ,,_,_, __ , ___________ ................................................ - .... ... _ ..................... . 32.3 Transrarred to surplus ................ - ...... _., ..... _.................................................................................... • .............................. _, ____ ·-··-········"·

33 SUIJ)lus, adjuslmonls: ......... ........................... _., ....................................................................................... _., ........... __ ..,, _ __ ,, ___ ........... - .... , .... __ ,, ... , ............... . 33.1 Paid In

33. 2 Transrc11od to ca~ltal (Sloct<. divider1dJ.. .......... _., ......... , •• , ... ,. __ , _____ , ........................................ _ .. _____ .......... _, ...................... - ............................... . . 33.3 Tran_sro11ed f10<n c~al .............. ,.,_, •• , .......................................... - ................................................................................. , .... - ........... _ .............. , ..... .

34 .Net remlttnnces from or (toJHome,Office ....................................... ___ ,, _______ ................. - ............................. _. ·--··-·-·-····· .. ,.,_., ... _ ... ,.,., .,_,., .......... . 35 DMdends to stockholders 36 ,Chan~e,tn ~casury stock jPage 3, Line_38. 1 and.Lina. 38.2,,ColulM 2 minus Column1J.. •• , ..... __ ... , .. , ........................ ............ ......................... ........................ . 37Aggr~gate write.Ins for Mins and loS$0S In SVfP.!!/S , ... , ... , .. ,.,, ..................................... - ...... - ..................... ................................. . .......................................... . 38 Change In surplus as reaords,poljcyholders r0< the yearJLlne 22 throuah Lino 371.. .............................. _, ................ ,_,, ____ .[315421 ............. {41,277J ....... (~8,485) 39 Surplus asregards polcyholders, as or statement data (Lines 21 plus 38) 486 493 497 243 490 035

DETAILS OF WRITE-INS

501 ............................................................... ,_,_,., ........................... ,._,_, .......................................................................... ... , ............................................ .. 502 ................................................................................................. , ............ _,,,,. .............................................. _., ........ ____ .. __ , .............. _., ................................ .. 503 ........................... , ___ ,, _____ .. ,_ ................................................................. ,_,, .. __ ,_,.,. .................... - .... _ ... _,.,.,, __ ,,, .................................. - ................................ .. ~~: ~~:s1ic~' ~:1

8~1,o~~~~~:s;;~;:: i~;o~~sWL~!eal~oover·-····-·-··-.... -.... _ ...................................... ......................... : ..... ................... -· .................. ·

::~! -~~'.~~~~-~'..~-~~~:,'.:~:'.~ .. ~~°-~~-:::::::::::::::::::::::::::::::::::::::~:::::::::::::::::::::::::::::::::::::::::::::::::::::· ::::==::::: ::::::::::::_~s-::::::::::::::: 14028 ........ - ................ - ........................ _,,,,. ... , .......................................... _,,, ____ .. ,.,., ..... ,_ •• , ................................... , .................. _ .......... , ... _ ....... , ..................... , 14-03 1498 Si.mmaryor remalnln~ wrlte·lns,ror Line 14 rrom overflow paso ..... _ ............. _ ............................................................... ·······--.. ••·••· ........... ,.,_.,.,_., , __ ,, .. ___ ,., .... . 1499 Totels lllne 1401 thrOUQh Lino 1403 olus Line 14981 Cline 14 9bo1'9l • 65 •

3701 .................. ............... --- ............................ ___ ....................... ---·--··--..... , ............ - ................ _ .. . . ·-- -· _ -- ..... --· .. . ...... ........... ..................... . 3702 ....................... ,._ ........................................ _, __ , ________ , .. , ............................. , ...................................................................................... , ... _ .............................. .. 3703

;~~: ~~~:iz:~~~1·~:~i~~~~n;;~3 ~~:s ~:.~o;;;;~:~ ~;~bo~\ ·- - ------·-..... ....................... - ....... _.,.,,,_, .............. ·-_' ........... , .................................. •'

004


Ramsey County, MN

62-CV-11-9400


CASH FLOW

Casll from Operallons 1 Premiums collected net of reinsurance

2 Current Year Prior Year to

lo Date Dale

3 Prior Year

Ended December31

2 _Net _investment _income................................................................................................................................................................................................... . .. ... 171606 ............. 18,654 ................... 251013. 3 Miscellaneous Income 65

4 Total_tlines 1 _to.3).. .................................................................................................................................................................................................................... 171608 ............. 18/19 .................... 251013. 5 Benefit _and _loss _related .Pay1110nts ............................................................................................................................................................................................................................... , . . .............................. .. 6 Net.transfers to Separate.Account, .s8\!re~ated Accounts.and .Protected. CeHAccounts .................................................................................................. ........................................................... . 7 _Commisslons,.expenses,pald.and_ag9regate write-Ins_ for.deductions .............................. , ........................................................................................ 27,661 .............. 61,007 .. ................. 81,175. 8 Dividends paid lo policyholders

9 _Federal_ and ,foreign _Income taxes _paid.(recovered, net of .. $ ............. tax ,on_ capital ........................ .................................................................................................................................................. . gains .(lossesL ................................................................................................................................................................................................................. 1-- -------1---~1---~

10 Total(Lines. 5_ through 9) ................................................................................................................................................................................... ...... .,____,2=',7.1.:.,67'61:+-_..:.61'-",0,..:.0:,...+-7----'8;.;;1,""17""-l5 11 _Not cash. from operations (Line. 4 .minus. Line_ 10L .............................................................................................................................................. .,___,(c.:'1 O:.i.:,2:.:.5~3 .,_ _ _._ <4:.::.2:.::.,28;;.;8"'+---·'5~6 ""16=!2

Cash from Investments

12 Proceeds. from. lnvestmonts. sold,. matured or repaid:.......................................................................................................................................... ........................... .. ............ ............................................ . ,12.1 .. Bonds .......................................................................................................................................................................................................................... .. ... __ 125,000 . ............... 3,000 ...................... 31000. 12.2 Stocks

_12.3 .MortgaQe,loans ....................................................................................................................................................................................................................................................................... ...................... . 12.4 Real estate 12.5 Other invested assets · · " ......... · · · ·

_12.6 Net _gains or.(tosses)on_ cash 1. cash. equivalents. and _short-term investments, ............................................................................. ............................. . ......................... ............................... .. _12.7 _Miscellaneous proceeds ...................................................................................................................................................................................... J----,-:-=-,..,,..,,.-l---,-,..,,..,,.-l----=-=-:-:-J .12.8 Total ,lnvestment_proceeds(Lines. 12 to. 12.7) ............................................................................................................................................. ........... 1251000 .............. 3,000 ...................... 3,000.

13 .Cost. or investment. acquired.(lon9-term. only): ....................................................................................................................................................... ............................. .. .......................................................... . 13.1 Bonds 13.2 'stocks . . ......................... .

_ 13.3. MorlQaQe ,loans........................................................................................................................................................................................................ ............................ .. ......................................... · .... ·· ·....... . 13.4 Real estate 13.5 Other

0

lnvested assels .. ·

_13.6Miscellaneous.applicatlon ................................................................................................................................................................................. '-----4----4-----1 _13.7 Total ,lnvestments_acquired(Linas. 13.1.to 13.6J.. ........................................................................................................................................ ----+---- +-------1

14 Net _lncreasc.(or.docrease} In _contract. loans. and _premium. notes .................................................................................................... ......... '------4-----4-----1 15 Net.cash from.lnveslments.(Llne. 1_2.,6. minus Une. 1_3.7. and. Line.141............................................................................................ ............ 125,000 3,000 3 000

Cash from Financing and Miscellaneous Sources ........................................................ ................................ . 16 .cash.provided Japplied) ................................................................................................................................................................................................................................... ............................................... ..

_ 16.1 .. Surplus. notes, capital. notes............................................................................................................................................................................... ............................. .. .............................................. ,_ .... , ... . _16.2 .Capital _and paid_ In. surplus 1. less. treasury.stock ....................................................................................................................................................................... ............................................................ . 16.3 Borrowed funds

.16.4 .. Net. deposits _on. deposit-t,ype ,conllacts. and. other Insurance. liabilities............................................................................................... ........................... . .......................... ............................... . 16.5 Dividends to stockholders

_16.6 OUier. cash _provlded (applled} ........................................................................................................................................................................ (10,120' (50,0001 150 0001 17 Net.cash ,from.financing.and _miscellaneous.sources (Lines.16.1 .. throu~h Line. 16.4_mlnus. Line. 16.5_plusUno .16.6) .............. (10,120) (50 000 150,0001

RECONCILIATION OF CASH, CASH EQUtLVALENTS AND SHORT-TERM INVESTMENTS 18 Net _chanae _in. cash, cash. equivalents and. short-term ,investments(Line. 1_1, plus_ Lines. 15, and. 17l... ........................................................ 104,627 .......... (89,288) ............. .(1031162) 19 _Cash •. cash. equivalents. and. short-term ,Investments:......................................................................................................................................... ............................. . ........................... ........................... ...

-~~:~ ~~1~~~:ri~~YQ~~e · 1a olus Line 19.1 l ................... ..................................................................................................................................... ........... ~~~·~6~ · ........ ~~~'.~;~ .. ............... ~::~~;: ·

Q05


Ramsey County, MN

62-CV-11-9400

STATEMENT AS OF SEPTEMBER 30, 2016 OFTHE MINNESOTA SURETY & TRUST COMPANY

NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Accounting Practices

Organization Minnesota Surety and Trust Company (the 'Company") was Incorporated and commenced operations on August 28, 1945, under the Statutes of the State of Minnesota. The Company was a licensed property and casualty Insurer under Minnesota Statutes Section 60A.06. Effective November 17, 2011 , the Company's Minnesota Certificate of Authority to operate as an insurer was revoked. Effective November 22, 2011, the Company was ordered into liquidation.

The Company Is a majority owned subsidiary of First Heartland Surety and Casualty Services Company ('First Heartland'). The Company was engaged in underwriting surety and ball bonds in the slates of Minnesota, North Dakota, Montana, Ulah, Soulh Dakota and Colorado. The coverage on the surety and bail bonds was marketed to customers though a neJwork of Independent Insurance agents and brokers. The Company also provided trust services primarily to individuals in Minnesota.

The financial statements have been prepared in conformity with the accounting practices prescribed or permitted by the National Association of Insurance Commissioners and the Minnesota Department of Commerce.

The financial statements are prepared by the Receiver from information available to, known or estimated by the Receiver as of the date or the Quarterly Statement. The Receiver makes no warranty as to the accuracy of the information or of the opinions or evaluations contained in the Quarterly Statement and expressly disclaims any liability arising from the statements of fact, evaluation or opinion contained in the Quarterly Statement. Assets reported In the Quarterly Statement do not include all possible recoveries that may result from various legal and/or collection efforts. Fidelity/surety loss reserves are the Receivers best estimates of outstanding losses and loss adjustment expenses as of September 30, 2016. These estimates will continue to be updated from time to lime.

B. Use of estimates in the Preparation of the Financial Statements & Accounting Polley

The Company records bail bond premiums on the net remittances method. As such, the difference between the fee, generally 10% of lhe bond, and the premium has not been recorded in these financial statements.

Premiums written are recorded on an annual basis to match the billing to the policyholder. Premiums on other than bail bonds are earned on a pro rata basis over the life of the insurance policy. Audit adjustments to premiums are recognized In the period that the adjustment becomes known. Unearned premium reserves are established for the portion of premiums billed applicable lo the unexpired term of the premium.

Certain costs of acquiring new business, prlnclpally commissions, premium taxes and other variable policy Issuance and underwriting expenses, are expensed when due.

Unpaid claim and settlement expenses are based on estimates of reported and unreported claims and related settlement expenses. The Company does not discount the reserve liability for future policy claims settlement expenses.

Investments in fixed maturity bonds are recorded al amortized cost under the valuation standards of the National Association of Insurance Commissioners. No provision is made for temporary declines In fair values below amortized cost, as the Company generally intends to hold these Investments until maturity and does not expect to realize any slgnlncant losses. If, however, a permanent impairment occurs in a security, the Company writes the security down to the new value. Short-term Investments are recorded al cost, which approximates fair value. Investments In common and preferred stocks are carried al estimated fair values based on published market quotations.

Realized gains and losses are computed based on specific ldenllrication of the cost of the securities sold. Unrealized gains and losses of common and preferred stock are included in surplus.

Cash and short-term Investments Include demand and savings deposits at several financial Institutions. At times cash on deposit may exceed federally Insured limits. For purposes of the statement of cash nows, the Company considers all highly liquid investments wilh a maturity of one year or less, when purchased, lo be cash equivalents.

Q06


Ramsey County, MN

62-CV-11-9400


NOTES TO FINANCIAL STATEMENTS 2, ACCOUNTING CHANGES AND CORRECTIONS OF ERRORS None.

3. BUSINESS COMBINATIONS AND GOODWILL The Company was not Involved In eny b\Jsiness combinations during U10 period covered by those financial staloments.

4. DISCONTINUED OPERATIONS The Company was ordered Into llqukfollon by lhe Slate or Minnesota on November 22, 2011.

5. INVESTMENTS During lhe period covered by U1ese financial slatements, lhe Company had no mortgage loans, real ostato loans, debt restructuring, reverse mortgages. loan backed securities or repurchase eg1eements.

6. JOINT VENTURES, PARTNERSHIPS AND LIMITED LIABILITY COMPANIES The Company had no lnveslmenls In Joint venluros, partnerships or limited liability companies that exceeded 10% or Its admiUed assets, during U1e period covered by lhese nnancial s1etemen1s.

7. INVESTMENT INCOME The Company did not exclude any Investment Income due and accn1ed as of September 30. 2016.

8. DERIVATIVE INSTRUMENTS The Company had no dorivaUvo financial lnstrumenls during the period covered by these financial statements.

9. INCOME TAXES There were no Income tax.es lncixred and all deferred tax assets were non,admlltcd as or September 30, 2016.

10. INFORMATION CONCERNING PARENT, SUBSIDIARIES AND AFFILIATES First HearUand owns 380,009 or lhe 500,000 Issued and outstanding shares or company capital common stock, First HearUand also holds surplus notos In tho company In the amount or $215,000. The Company had no wrllten agreements for rental or office space or services provided. There were no intercompany lransacUons In the third quarter or 2016.

11.DEBT As or Seplember 30, 2016, Iha Company had tho following socurod and unsOC1Jred noles payable: 1) Promissory notes payable to First Heartland Surety & Casually Insurance Service company In the amount or $193,516. 2) Demand note payable lo Warren Plunkett In the amounl of $117,144,

12. RETIREMENT, DEFERRED COMPENSATION, POST EMPLOYMENT BENEFITS AND COMPENSATED ABSENCES AND OTHER POSTRETIREMENT BENEFIT PLANS The Company was not a party to any retirement, deferred compensation, postemployment benefits or ouier poslretirement plans al September 30, 2016.

13. CAPITAL AND SURPLUS, DIVIDEND RESTRICTIONS AND QUAI-REORGANIZA TION The Company had 500,000 issued and outstanding shares ol $1 par valuo capital common slock. The COmpeny has no aulhortzed capital preferod stock.

The Company has $1,212,000 of oulstandlng surplus notes payable only wilh the written app,oval of the Minnesota Commissioner of Commcrco.

14. CONTINGENCIES The Company had no known contingent oommitmenls, outsldo tho normal course or business, as or Seplcmber 30, 2016, oxcept potential conllngencles arising from lho tlquldaUon proceeding or the Company.

15. LEASES The Company Is not a party to any leases.

16. INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Company had no financial Instruments with off,belance sheet risk as or Seplember 30, 2016.

17. SALE. TRANSFER ANO SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES None.

18. GAIN OR LOSS TO THE REPORTING ENTITY FROM UNINSURED PLANS The Company has no lnleresls In uninsured plans.

19. DIRECT PREMIUM WRITTEN/PRODUCED BY MANAGING GENERAL AGENTS/ADMINISTRATORS No premiums were written In the third quarter of 2016.

20. FAIR VALUE MEASUREMENTS Bonds: Fair values for bonds are delern1lnec using QiJOled market p~ces from an orderly market at the reporting dale for those or similar lnvestmonls.

2016 Statement Value 2016 Fair Valuo Bonds: $58t,323 $712,640

000.1


Ramsey County, MN

62-CV-11-9400


NOTES TO FINANCIAL STATEMENTS 21. OTHER ITEMS C. Other Disclosures

Atached at the end of the September 30, 2016 Statement is an exhibit titled 'Restatement of Liabilities by Priority". This exhibit is for information purposes only and has been prepared by the Liquidator and has not been approved by the Court.

22. EVENTS SUBSEQUENT None.

23. REINSURANCE None.

24. RETROSPECTIVELY RATED CONTRACTS AND CONTRACTS SUBJECT TO REDETERMINATION Not applicable.

25. CHANGES IN INCURRED LOSSES AND LOSS ADJUSTMENT EXPENSES Reported Loss Reserves as of December 31, 2015, were $5,000. As of September 30, 2016, reported Loss Reserves remained at $5,000, reflecting the estimated value based on the proof-of-claim forms filed in the liquidation. Additional adjustments to Loss Reserves are possible prior to the closure of the liquidation.

Reported Loss Adjustment Expense (LAE) reserves as of September 30, 2016, were $0. Additional adjustments to LAE Reserves are possible prior lo the closure of the liquidation.

26. INTERCOMPANY POOLING ARRANGEMENTS Not applicable.

27. STRUCTURED SETTLEMENTS Not applicable.

28. HEALTH CARE RECEIVABLES Not applicable.

29. PARTICIPATING POLICIES Nol applicable.

30. PREMIUM DEFICIENCY RESERVES Nol applicable.

31. HIGH DEDUCTIBLES Not applicable.

32. DISCOUNTING OF LIABILITIES FOR UNPAID LOSSES Not applicable.

33. ASBESTOS/ENVIRONMENTAL RESERVE Not applicable.

34. SUBSCRIBER SAVINGS ACCOUNTS Not applicable.

35. MULTIPLE PERIL CROP INSURANCE Nol applicable.

36. FINANCIAL GUARANTY INSURANCE Nol applicable.

Q06.2


Ramsey County, MN

62-CV-11-9400


GENERAL INTERROGATORIES Part 1 -COMMON INTERROGATORIES

GENERAL 1.1 Old lhorepo,Ung entity exporionCQ MY mal<K1ol ~ansactlons reqoirlng lho filng of Olsclosuro of Matorlal TronsDCtions lli1h lho Slalt ol

Oomlcllt, ns requl-od by lho Model ~(I

1.2 II yes, has Iha roporl bton 1"4 wllh Ult domlcik'¥'/ , talt?

2.1 Has any chango boon modo during 010 yoav of u,1utnltrnont In lho chrrlor, by-lawa. orfclea oflncorporal/on, c, deed of aeltlomonl of the

ropc,Uno onUt(I

2.2 II yes, dote ol chMgo:

3 Hsvo lhtro boon MY subslMfal changes h lht orgonlzotionolcharhln .. lhe p,lor quor1or end?

II yes, oomplo1o lhs Schaduls Y- Part 1. c,gonlinllonal ehl>'l

4.1 HDS U,e roporting ontity bsen a portyto n me,ger c, coosoldollon during lho ptrlod co,orod by lhls s~'llornont?

4.2 llyaa, p,ovlda Iha name of sntity, NAIC Company Code, andoll>to 01 ~mlcllt (I/SO Mo IIUor stalt ~bllmll!ti<>n) Jo, ony ontitylhalhaa

.. ,sad to exist osro1ull ofU10 morgor c, consoldallon.

5 11 lho repof11ng onlly Is subjocl lo a mon09om1nl agrumonl Including lhltd-prvty admlnls~ol01(a), managing general ll!JOn~a), attornoy-ln

facl or slmllor ogreemsnl hove lhere boon any olgnlflcant ehnngnrog:!fdlng the lorms ol tho aioomon1 of princlpols kwomid?

6.1 Slolo a, ofwhaldate lho latest flnanclal oxamlnotlon of lhoroporing onli1yw,s mMoor ls bolno m#do,

8.2 Slnlll lhe osol dato lhat tho latoat nnanclal uemlnallon report beeon•o ovallpbJo ~om olther the 1talo of domlcllo 0/ lho ropo,lrlg ontily. Thia

dato ehoold bo llladalo of UIO oxnmlnOd b#looco shoot ond not lhe dale tho ropo,l wn, complolod or roleasod.

G.3 Stoto 01 ol 111101 dalo 010 ~,1t1t linonolnl oxorrinollon rtpc,I become avnllablo to ott,o, r.t.lloa or Iha pubic tom ellhar Ula s!Bte of domicile c,

lht ropo,ting ontity. Thia la Iha re Isa so dale c, cornplellon doto ol 010 oxorrinnllon report ond not 010 dato of tho OXOllllnoion (balaneo 1h011 dote).

6.4 8ywholdopot1monlc,doparmon11?

Mnnosola Oepaitnant of Commerce

6.5 Have ell financlal a1a1emenl edjustmonls wl1hln lho 1.1\ost finnnelnl oianllntllon report boon DCC0'"11od ror n • aubsequ,nl linanclal

alntomont filod will Doportmt nls?

8.6 ttnvo nil or lho rocommondalions wi1111n the lalH I flnMclal ,xamlnation report bean complied v,IIJ?

7.1 Hos Uioropottilg tntily had MY Certiflcolo of Authority, llconsos c, rogla~alkln (Including cc,pornle r09ls~otion, 11 oppllcnblo) suspond1d?

7.2 ltyu, glvo ful rnrormollon: ThoCompony cea,ad",i11nD all business In 2011. Sas Nole 1A.

8.1 Is tho Company o subsidiary or a bMk holding compony rogulntod by Iha Fod<wol Re&arva ao,.d?

6.2 ti rosponso lo 8.1 ls yoo, pltoso Identify tho name of Iha bank holding company.

8.3 la Ult Company ol!ialtd wi1h ono c, more bonl<t, thrifts or socurldoa llfms?

8.4 II rospo,1$0 lo 6.3 ls YH, ploast provide below Iha names Md loco ion (city and atata ol Iha main olflce) of MY nfflhtoa r09ulolod by a fod<wol regulalory eer'llcea egency p.e. U,a Fodoral Roservo Dowd (FRO), 110 Oltlco oru,o CornproDor of lht Curroncy (OCC), lhe Fadaral

Ooposll lnsUfanCQ Corpototion (FDIC) and Iha S.CtMIUas Exchange Conmlsslon (SEC) and ldanll'y tl1e affllate'a p,nuvy fod<walrogul•tor.J

0.1 No lho senior omccr, (p<lnclpal ,ueutivo officer, JMln<1>al flnnnclol olllcor, principal accounting office, c, oon~ol~r. c, peraoo1 performing:

(a) Honest and elhk:alconduc\ Including 010 olhlcol hondfrlg 01 ac1Ual 0< oppNont coolle1~ ol lnltrosl belwoon por10nol end p,oleHlonal

relAUonlhlps:

(b) Full, for, accurote, fmaly and undaratnndablt dlsclo1U10 In tho ptrlodloroports roqutod to bo filod by tho ropor~ng onlty;

(cl Com1>ioneo 1~1h ;lf•plcllblo go,ommontol law, ru~, and regulntlona:

(d) The p,omptln!Ofnelreportlng of violations lo en epprop,lale person c, p<waons ldonliflod In U1ocodo: ond

(a) Accounloblity fot lldhorone. lo tho oodo. 0. 11 II u,o ruponst lo 0. I I• No, plooso oxploln:

0.2 Hu lht oodo of olJllct for Hnlor management boon amondad?

0.21 If Iha reaponse lo 0.2 I, Yo,, p,ovldt lho nollro of any wtllver(s).

FJIJANCIAL 10.1 Ooo, 010 re~ng entity ropc,uny ooiounts d\ro t om p:ron~ subsldlo,lasc, alfiialH on Poge 2 of lhla , tatsmenl?

10.2 llyH, Indicate any amoun1a rocelvnb!o tom p,.enl Included In Iha Paga 2 an,ount

007

Yoa()

YIIO

Vos ()

Yoa()

YuO

Yo()

Vos()

No()

No()

No()

12/31/2009

12/31/2009

7/IS/2010

Yoa(X)

YosQ

Yes()()

Yoo 0

Yes()

No(X)

No()

No(X)

No(X)

No(X)

NA(X)

NA(X)

NA(X)

No()

No(X)

No(X)

No()

No(X)

No(X)


Ramsey County, MN

62-CV-11-9400


GENERAL INTERROGATORIES INVESTMENT

11.1 Were any of the stocks, bonds, or other assets of the reporting entity loaned, placed under option agreement. or otherwise made available for use by another person? (Exclude securities under securities lending agreements)

11.2 If yes, give full and complete information relating thereto:

12 Amount of real estate and mortgages held In other invested assets in Schedule BA:

14.1 Does the reporting entity have any Investments In parent, subsidiaries and affiliates? 14.2 If Yes, please complete ll1e following:

14.21 Bonds

14.22 Preferred Stock

14.23 Common Stock 14.24 Short-Term Investments 14.25 Mortgage Loans on Real Estate

14.26 All Other 14.27 Total Investment in Parent, Subsidiaries and Affiliates 14.28 Total Investment in Parent included in Lines 14.21 lo 14.26 above

15.1 Has the reporting entity entered Into any hedging transactions reported on Schedule DB?

15.2 If yes, has a comprehensive description of the hedging program been made available lo the domiciliary state?

Excluding items In Schedule E - Part 3 - Special Deposits, real estate, mortgage loans and Investments held physically in the 16 reporting entitfs offices, vaults or safety deposit boxes, were all stocks.bonds, and other securities

owned throughout the current year held pursuant to a custodial agreement with a qualified bank or trust company in accordance with Section 1.111 • General Examination Considerations, F. Outsourcing of Critical Functions,

Custodial or Safekeeping Agreements of the NAIC Financial Condition Examiners Handbook?

16.1 For all agreements that comply with the requirements of the NAIC Financial Condition Examiners Handbook, complete lhe following:

Name of Custodian(s) Custodian Address Wells Fargo Bank NA Minneapolis, MN

16.2 following:

Name of Custodian(s) Custodian Address

16.3 Has there been any changes, including name changes, In the custodian(s) Identified in 16.1 during the current quarter?

16.4 If yes, give full and complete Information relating thereto:

16.5 1aenury au investment aav1sors, oroKer1aea1ers or 1na1v1oua1s acting on oena11 or or0Ker1oea1ers tnat nave access to the investment accounts, handle securities and have authority to make Investments on behalf of the reporting entity:

17.1 Have all the filing requirements of the Purposes and Procedures Manual of the NAIC Securilies Valuation Office been followed? 17.2 If no, list exceptions:

007.1

Yes()

Yes()

Yes() Yes()

Yes (X)

Yes()

Yes (X)

No(X)

$0

No(X)

No(X) No ()

No ()

No(X)

No()


Ramsey County, MN

62-CV-11-9400


GENERAL INTERROGATORIES ( Responses to these interrogatories should be based on changes that have occurred since prior year end unless otherwise note.)

Part 2 PROPERTY & CASUAL TY INTERROGATORIES

1. If the reporting entity Is a member or a pooling arrangement. did the agreement or lhe reporting enllty's parllclpatlon change? Yes ()

If yes, attach an explanation.

2. Has lhe reporting entity relnsured any risk with any other reporting entity and agreed to release such entity from liability, in whole or In part

from any loss that may occur on tile risk, or portion thereof, reinsured?

If yes, attach an explanallon.

3.1 Have any or the reporting enlity's primary reinsurance contracts been cancelled?

3.2 If yes, give lull and complete information !hereto

4.1 Aro any of the llabllllies for unpaid losses and loss adjustment expenses other than certain workers' compensation tabular reserves

(see Annual Stalement Instructions pertaining to disclosure or discounting for definlllon of ·tabular reserves") discounted at a rate

of interest greater lhan zero?

4.2 11 yes complete the following schedule:

No()

Yes ()

Yes()

Yes()

Total Discount Discou11t taken During Period

1 2 3 4 5 Maximum Unpaid

Line or Business Interest Discount Rate Losses Unpaid LAE

5. Operating Percentages

5.1 A&H loss percent

5,2 A&H cost containment percent

5.3 A&H expense percent excluding cost conlainment expense

6.1 Do you act as II custodian lor health savings accounts?

6.2 II yes, please provido the amount of custodial runds held as of lhe reporting date

6.3 Do you act as an administrator for health savings accounts?

6

IBNR

GA If yes, please provide the balance of the funds administered as or the reporting dato.

Q08

7 8 9 10

TOTAL Unpaid Losses Unpaid LAE IBNR

Yes()

$

Yes()

$

NA(X)

No(X)

No(X)

No(X)

11

TOTAL

%

%

%

No(X)

No(X)


Ramsey County, MN

62-CV-11-9400

STATEMENT 115 OF SEPTEMBER 30. 2016 OF TIIE MINNESOTA SURETY & rnusr COMPANY

Schedule Y

Plunkott Family Linda Plunkett Ohme Plunkclt Other Shnreholders Warren Plunkett Non-Revocable Foundation Wright Latham Less Than S%

Trust 112.39%) (23.07") 123.07%) (.1%) (11.40%)

I l I I

Peter Plunkett Revocable Trust

(29.96%1

First Heartlond Other Shareholders Plunkett and Investment Anthony Trow Patricio Trow Fayvllle Trow Loss Thon 5'.4 Eoch Associates• Company (6.23%] 16,00%1 (6.23%)

(S.S1%1 1100.0%)

I l I I First Heartland

Surety & Cuuolty lnsuran,o Service,

Company 176.0198%)

Minnesota Surety and Trust Company

(100.0%)

I Surety Consultants,

LLC

• Plunkett and Assoclales Is owned by Peter Plunkett (76%) and Waller Plunkelt (25%).

011


Ramsey County, MN

62-CV-11-9400

STATEMENT AS OF SEPTEMBER 30, 2016 OF TIIE MINNESOTA SURETY & lRUST COMPANY

PART 1 · LOSS EXPERIENCE 1 I 2 I 3 4

Cunenl Year lo Dale

Dlrecl Premiums Dlrocl Loss Prior Year lo Dalo Lines orBusiness Earned Dilect Losses Incurred Percentage Direct Loss Perconlllllf

1 Fire u u u.u u.u 2 Allledllnes 0 0 0.0 0.0 3 Farmowners muttlplo poril 0 0 0.0 0.0 ~ Homeowners mulLiple peril 0 0 0.0 0.0 5 Convnerclal mulUple poril 0 0 0.0 0.0 6 Mortgage guaranty 0 0 0.0 0.0 8 Ocean marine 0 0 0.0 0.0 9 Inland marine 0 0 0.0 0.0 10 Financial guaranty 0 0 0.0 0.0 11.1 Medic;,! J)fQronionel liability -ocx;urre"'8 0 0 0.0 0.0 11.2 Medic;,! prorosslonel llebllity-clalms made 0 0 0.0 0.0 12 Earthquake 0 0 0.0 0.0 13 Group accident and health 0 0 0.0 0.0 14 Credit IIC(ldent end health 0 0 0.0 0.0 15 Othor accident and heallh 0 0 0.0 0.0 16 Workers' compensalion 0 0 0.0 0.0 17,1 Other llabiity ocx;unenoo 0 0 0.0 0.0 17.2 OOer llabUly-claims made 0 0 0.0 0.0 17.3 Excess Workers' Compensation 0 0 o.o 0.0 18,1 Products iabll ty«curronce 0 0 0.0 0.0 18.2 Products labifity-claims made 0 0 0.0 0.0 19.1,19.2 Private passenger eu1o liabil!y 0 0 0.0 0.0 19.3,19.i Commercial auto llabltity 0 0 0.0 0.0 21 Aulo physlclll damage 0 0 0.0 0.0 22 Aircian (all perils) 0 0 0.0 0.0 23 Fidelity 0 0 0.0 0.0 24 Suroly 0 (100) 0.0 0.0 26 Bu19lery and thet 0 0 0.0 0.0 27 Boller ond machinery 0 0 0.0 0.0 28 Credit 0 0 0.0 0.0 29 lntornalionel 0 0 0.0 0.0 30 Warranty 0 0 0.0 0.0 31 Roinsuranoo -Nonproportional Assumed Property XXX XXX XXX XXX 32 Re,,surence -Nonproportlonal Assumed Liability XXX XXX XXX XXX 33 Reinsurance · Nonpropottlonal Assumed Financial Lines XXX XXX XXX XXX 34 Aggrogato write-ins for ou,er lines of business 0 0 0.0 0.0 35 TOTALS u '""" u.u u.u

PART 2 • DIRECT PREMIUMS WRITTEN 1 2 3

Lines or Business Cunent Qulllter Cu~ent Year to Dato PriorYearYearlo Dato 1 Fire 0 0 0 2 Alliod lines 0 0 0 3 Farm0Wnors muttiplo peril 0 0 0 4 Homeownors multiple per'I 0 0 0 5 Commercial multiplo poril 0 0 0 6 Mortgage guaranty 0 0 0 8 Qcepn marine 0 0 0 9 Inland marine 0 0 0 10 Financial guaranty 0 0 0 11.1 Medical professional liabilrty -occurrenco 0 0 0 11.2 Medical J)fQressional liability ,claims made 0 0 0 12 Earthquako 0 0 0 13 Group accident end healtll 0 0 0 14 Credit accident and health 0 0 0 15 Other eceidanl and health 0 0 0 16 Wotkcrs' c:omponsation 0 0 0 17.1 Other liabilriy occunonco 0 0 0 17.2 OOer liebility,claims mode 0 0 0 17.3 Exooss Workers' Compensation 0 0 0 18.1 Products liability-occurrence 0 0 0 18.2 Products liability-claims made 0 0 0 19.1,19.2 Private pa;$Cnger auto liability 0 0 0 19.3,19.4 Commercial auto Hablity 0 0 0 21 Auto physical damage 0 0 0 22 Aircraft (all porils) 0 0 0 23 Fklolily 0 0 0 24 Surety 0 0 0 26 Burglary and the~ 0 0 0 27 Boiler and machinery 0 0 0 28 Credit 0 0 0 29 lntomational 0 0 0 30 Warranty 0 0 0 31 Roinsuranoo • Nonproportional Assumed Property XXX XXX XXX 32 Reinsurance - Nonproportional Assumed llabllty XXX XXX XXX 33 Reinsurance - Nonproportional Assumed Financial Lines XXX XXX XXX 34 Agoregate write-ins ror other lines or business 0 0 0 35 TOTALS 0 0 0

013


Ramsey County, MN

62-CV-11-9400

STATEMENT AS OF SEPTEMBER 30, 20160F TIIEMINNESOTA SURETY & TRUST COMPANY PART 3 (000 omitted)

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES SCHEDULE 1 2 3 4 5 6 7 8 9

Known Case Knov,nCase Currenl Year Cunenl Loss and Lossand LAE

Loss and Yeor Loss LAE Reserves on LAE and LAE Resorvos on Claims

Prlor Yoar- Prior Year, TolelPrior Payments Payments Tolal Current Claims Roporledor End Known End IBNR Yellf•End on Claims on Claims Year Loss Reported Reopened OS Date Case Loss Loss and Loss and LAE Reported as Unreported and LAE and Open as Subsequent IBNRLoss

Years in Which Losses and LAE LAE Roservos of Prior Year asof Prior Paymonls of Prior Year lo Prior Year- and LAE Oocurred Reserves Reserves (Cols. 1+2) End Year-End (Cols. 4·'5) End End Reserves

I 2013 +Prior 124 0 124 0 0 0 27 0 0 2 2014 5 0 5 0 0 0 0 0 0 3 Sublolals 2014 •

Prior 5 0 5 0 0 0 0 0 0 4 2015 5 0 5 0 0 0 0 0 0 5 Subeolals 2015 •

Prior 5 0 5 0 0 0 0 0 0 6 2016 XXX XXX XXX XXX 0 0 XXX 0 0 7 Totals 5 0 5 0 0 0 0 0 0 8 Prior Year-End

Sutplus As Regards Policy· holders 490,035

0 14

10 11 12 13

... .. .... PriorYoar,End End IBNR

Known Case Loss and Lon and LAE LAE Prior Year,End

Reserves Reserves Tolal Loss and Developed De, olopod LAE Reserves

TOlal as Loss (Savings)/ (Savings)/ Developed and LAE Deficiency Deficiency (Savings)/ Reserves (Cols. 4•7 (Cols. 5 +8 • Deficiency

(Cols.ha.9) minus Col. 1) 9 minus Col. (Cols. 11+12)

27 0 0 0 0 (97) 0 (97)

0 0 0 0 0 (5) 0 (5)

0 (5) 0 (5) 0 XXX XXX XXX 0 (5) 0 151

Col 11, Une 7 Col. 12, Lino Col. 13, LIM 7 As% or Col. 1. 7 As 'loof As% or Col. 3, Line 7 Col. 2, Line 7 Line 7

-100.0% 0% -100.0% Col.13, Line 7 As3 %ofCol I Lina 6

0.0%


Ramsey County, MN

62-CV-11-9400


SCHEDULE F-CEDED REINSURANCE

NONE SCHEDULE T • EXHIBIT OF PREMIUMS WRITTEN

NONE

SCHEULE A· VERIFICATION

NONE SCHEDULE B • VERIFICATION

NONE SCHEDULE BA· VERIFICATION

NONE

09, 010, QS101


Ramsey County, MN

62-CV-11-9400


SCHEDULED· VERIFICATION 1 2 Prior Year

Bonds and Stocks Year lo Date Ended December 31

1. Book/adjusted carrying value of bonds and slacks, December 31 of prior year 704,789 705,745

2. Cost of bonds and stocks acquired

3. Accrual of discount 1,534 2,044

4. Unrealized valuation Increase (decrease)

5. Total gain (loss) on disposals 0 0

6. Deduct consideration for bonds and stocks disposed of 125,000 3,000

7. Deduct amortization of premium 0

8. Total foreign exchange change in book/adjusted carrying vallue

9, Deduct current yea(s other than temporary impairment recognizaed

10. Book/adjusted carrying value al eand of current period (Lines 1+2+3+4+5·6-7+8-9) 581,323 704,789

11. Deduct total nonadmllled amounts

12. Statement value al end of current period (Line 10 minus Line 11) 581,323 704,789

QS101


Ramsey County, MN

62-CV-11-9400


SCHEDULE D - PART 1 B Showing the Acquisitions, Dispositions and Non,Trading Activity

During the Current Quarter ror all Bonds and Preferred Stock by Rating Class

1 2 3 4 5 6 7 8 Book/Adjusted Book/Adjusted Book/Adjusted Carrying Value AoqulslUons Disposllions Non,Tradlng Carrying Value Book/Adjusted Book/Adjusted Carrying Value Beginning or Du~ng Current Duling Current Activity During End or First Carrying Value End Carrying Value End December 31 Prior

Current Quarter Quarter Quarter Current Quarter Quarter or Second Quarter ofThlrd Quarter Year

BONDS ...................................................... .............................. , ............................ ........................... .......................... ........................ , .. ............................... ................... , ............ ............................... , .. 1. Class 1 (a) 580,811 0 0 512 580,300 580,811 581,323 704,789

2. Class 2 (a)

3. Class 3 (a)

4. Class 4 (a)

5. Class 5 (a)

6. Class 6 (a)

7. Total Bonds 580,811 0 0 512 580,300 580,811 581,323 704,789

PREFERRED STOCK ...................................................... ............................... ................ , .......... , ,., ........... , .. , .. , .. , ... .................... ,,.,, . ........................... ............................... ................................ .................................. 8. Class 1

9. Class 2

10. Class 3

11. Ctass 4

12. Class 5

13. Class6

14. Total Prof erred Stock

15. Total Bonds & Preferred Stock 580,811 0 0 512 580,300 580,811 581,323 704,789

QS102


Ramsey County, MN

62-CV-11-9400


I Schedule DA - Part 1

I NONE

I Schedule DA - Verification

I NONE

I Schedule DB - Part A Verification

I NONE

I

Schedule DB - Part B Verification

I NONE

I

Schedule DB - Part C • Section 1

I NONE

I

Schedule DB· Part C . Section 2

I NONE

I

Schedule DB • Verification

I NONE

I

Schedule E - Verification

I NONE

I

Schedule A -Part 2

I NONE

I

Schedule A. Part 3

I NONE

I

Schedule B -Part 2 & Part 3

I NONE

I

Schedule BA • Part 2

I NONE

QS103, QS104, QS105, QS106,QS107, QS108,QE01,QE02,QE03


Ramsey County, MN

62-CV-11-9400


I Schedule BA - Part 3

I NONE

I Schedule D -Part 3

I NONE

I Schedule D - Part 4

I NONE

I Schedule DB - Part A - Section 1

I NONE

I Schedule DB - Pt. A - Sn. 1 - Footnote (a)

I NONE

I

Schedule DB - Pt. B - Section 1

I NONE

I

Schedule DB - Pt. B - Sn. 1 - Footnotes

I NONE Schedule DB - Part D, Section 1 & Section 2

NONE Schedule DL • Part 1

NONE Schedule DL - Part 2

NONE

Schedule E - Part 2 - CASH EQUIVALENTS

NONE

QE03, QE04, QE06, QE07,QE08, QE09, QE10, QE11 , QE13


Ramsey County, MN

62-CV-11-9400


SCHEDULEE -PART1-CASH 1 2 3 4 5 Book Balanco at End of Eoch Month During Current Ouanor 9

6 7 8 Amounl of Amount of Interest Interest Received Accrued at During Current

Rate of Current Statement Second Deoositorv Location Interest Quarter Date First Month Month Third Month Sterlina State Bank Austin, Minnesota NIA 0 0 55,356 52,341 52,148 XXX Wells Farao Bank NA Minneaoolis, Minnesota 0.25% 152 58 273,442 281,626 281,685 XXX Sterlina State Bank Austin, Minnesota N/A 0 0 116,917 116,917 116,917 XXX 0199999 Totals - Open Deoositories 445,715 450,884 450,750 XXX 0499999 Cash in Comoanv's Office 153 153 153 XXX 0599999 Total 445,868 451,037 450,903 XXX

QE12

Filed in Second Judicial D

istrict Court

12/22/2016 12:13:56 PM

Ram

sey County, M

N

62-CV

-11-9400

STATEMENT AS OF SEPTEMBER 30, 2016 OF THE MINNESOTA SURETY & TRUST COMPAfllY

NOTE 21C Exhibit:

Restatement of Liabilities by Priority

Priority Prority Poority Priorily Priorily Priority Poority PTiority Priorily Priority 2 4 4a 4b 4c 6 7 8 9 10

Build-Up ln1eres1 Misc. Preferred Septeiwer 30, 2016 Fund Mm . Loss lhlamed Federal Residua on Slrbordinated Oll!lelShip

PaoeJ Accounts Costs Claims Prenwms Govt W""""' Classtt. Jn,!n"""""tS Oaimsf>axl Claims Claims Losses 5,000 5,000 Loss adiustment e~ -Commisoons payable, confiMenl commissilns and other similar dlar!les 1,630 1,630 Olher exnenses (exdudino taxes, licenses and fees\ 115,240 26,445 3,176 85,619 Taxes, licenses and tees CexdtdUJQ federal and forem ilcome taxes} 27.635 27,187 448 Booowed money 310.660 310,660 Unearned oremiums 4,295 4,295 Amounts wilhheld or retailed bv oom""nv for account of otllers 84,914 84,914

Total liabili!ies 549.373 84,914 26,445 5,000 4,295 - 3,176 425,096 - - 448 -Surpus Noles 1.212.000 I -I -I - I - I 1.212003]

Q14

Documents

State of Minnesota In Re: The Matter of the Liquidation of ...mn.gov/commerce-stat/pdfs/liquidation-mstc-qtrly-rpt-dec2016.pdfREPORT ON PROGRESS OF LIQUIDATION PROCEEDINGS January