American Academy of Actuaries Long-Term Care Risk-Based Capital Work Group NAIC Risk-Based Capital Task Force December 6, 2002 Presented to 1993 1994 1995 1996 1997 1998 1999 2000*2001* Source: LTC Loss Experience Form ASource:LTCLossExperienceFormA * Estimate*Estimate 50% 20% 25% 30% 35% 40% 45% $5,000 $1,000 $2,000 $3,000 $4,000 $0 ($Million)($Million) 100 200 400 300 500 20% 40% 0% Page 3 0 Greater Than $50 Million 88% of Total ($Million) Less Than $50 Million