REPORT ON EXAMINATION AS TO THE CONDITION OF

RIDER INSURANCE COMPANY

SPRINGFIELD, NEW JERSEY

AS OF DECEMBER 31, 2014

NAIC GROUP CODE 0000

NAIC COMPANY CODE 34509

Filed

May 16, 2016

Commissioner Department of Banking &

Insurance

TABLE OF CONTENTS Salutation …………………………………………………………………………………... Scope of Examination..……………………………………………………………………..

3 3

Compliance with Prior Examination Recommendations ………….….………….……….... 4 History and Kind of Business ……………………………………….………………….….. 5Management and Control ………………………………………………………………….. 6Conflict of Interest ………………………………………………………………………… 7Corporate Records.……………………………………………………………………….... 7Regulation Of Insurance Holding Company Systems ………………………………….….. 8Inter-Company Agreements..……………………………………………………………….. 8Fidelity Bond and Other Insurance Coverages ……….………….………………………… 10Employees Welfare and Pension Plans ……………………………………………………. 10Statutory Deposits ...………………………………………………………………………... 11Policy Forms and Underwriting Guidelines…..…………………………………..………... 11Territory and Plan of Operation ………………………………...…………………………. 12Reinsurance ….………………………………………………………………………....,,.... 13Continuity of Operations ……………………………………………………………….….. 13Accounts and Records ……………………………………………………………..………. 13Audited Financials …………………………………………………………………………. 14Advertisement Materials ……………………………………………………….…………... 14Treatment of Policyholders………………..…....………......…….………………….…….. 14Significant Subsequent Events……………………………………………………………… Financial Exhibits………………………………………………………………….………...

14 15

Exhibit A: Statement of Assets, Liabilities, Surplus and Other Funds as of December 31, 2014……………………………….……………………….…..

16

Exhibit B: Underwriting and Investment Exhibit for the Three-Year Period Ended December 31, 2014……….………………………………….…………….……

17

Exhibit C: Capital and Surplus for the Three-Year Period Ended December 31, 2014..….………………………………………………………...

18 Notes to the Financial Statements…………………………………………………….……. 19Examination Recommendations………………..……………………………………….….. 19Conclusion …………………………………………………………………………………. 20Notarization …………………………………………………………………………….….. 21

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CHRIS CHRISTIE Governor

KIM GUADAGNO Lt. Governor

State of New Jersey DEPARTMENT OF BANKING AND INSURANCE

OFFICE OF SOLVENCY REGULATION PO BOX 325

TRENTON, NJ 08625-0325

TEL (609) 292-5350 FAX (609) 292-6765

RICHARD J. BADOLATO Acting Commissioner

PETER HARTT Director

October 19, 2015

Honorable Richard J. Badolato Acting Commissioner of Banking and Insurance State of New Jersey 20 West State Street Trenton, NJ 08625-0325 Commissioner: In accordance with the plan adopted by the National Association of Insurance Commissioners for association examination of insurance companies, a financial condition examination has been made of:

Rider Insurance Company Springfield, New Jersey 07081

NAIC Group Code 0000 NAIC Company Code 34509

Hereinafter referred to as the “Company”, “RIC” or “Rider” SCOPE OF THE EXAMINATION This financial condition examination was called by the Commissioner of the New Jersey Department of Banking and Insurance of the State of New Jersey pursuant to the authority granted by N.J.S.A. 17:23-22. The examination covers the period January 1, 2012 through December 31, 2014. The examination was conducted at the located at the Company’s Home Office at 120 Mountain Avenue, Springfield, New Jersey 07081. The examination was conducted in accordance with the Association Plan of Examination guidelines established by the National Association of Insurance Commissioners.

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The prior examination was for the period ended December 31, 2011. The current examination addressed the three year period from January 1, 2012 to December 31, 2014. During the three year period under examination, the Company’s reported assets increased from $40,771,877 to $46,908,017, the Company’s reported liabilities increased from $25,719,293,413 to $33,550,350 and Rider’s reported surplus as regards policyholders decreased from $15,052,584 to $13,357,668. . The examination was conducted in accordance with the 2014 NAIC Financial Condition Examiner’s Handbook to evaluate the Company’s solvency and identify prospective risks of the Company by obtaining information about the Company including corporate governance, identifying and assessing inherent risks within the Company and evaluating system controls and procedures used to mitigate those risks. An examination also includes assessing the principles and significant estimates made by management, as well as evaluating the overall financial statement presentation, management’s compliance with Statutory Accounting Principles and annual statement instructions when applicable to domestic state regulations. All accounts and activities of the Company were considered in accordance with the risk-focused examination process as defined in the 2014 NAIC Financial Condition Examiners Handbook. COMPLIANCE WITH PRIOR EXAMINATION REPORT RECOMMENDATIONS

History It was noted that in the first quarter 2012 statement the Company reported common capital stock of $2,550,000. The increase in capital stock has not been approved by the Attorney General of the State of New Jersey or by the New Jersey Department of Banking and Insurance. It is recommended in future filed statements that the Company report the common capital stock at $1,200,000 until the current request for increase is approved.

The Company complied with this recommendation.

Continuity of Operations It was noted the Company's Business Continuity and Disaster Recovery Plan has not been tested. It is recommended the Company simulate a disaster recovery test to identify and document essential deficiencies that might exist, which could potentially impede the process necessary to establish and restore either basic or critical systems and functions in a timely manner. The Company did not comply with this recommendation. It is recommended as in the last report that the Company simulate a disaster recovery test to identify and document essential deficiencies that might exist, which could potentially impede the process necessary to establish and restore either basic or critical systems and functions in a timely manner.

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Other Expenses Although not material, it was also noted that the Company did not accrue an examination fee liability. The Company complied with this recommendation. HISTORY AND KIND OF BUSINESS Rider Insurance Company was incorporated on May 25, 1977 and began doing business on June 3, 1977. The Company issued 120,000 shares with a par value of $10 per share. The Certificate of Incorporation was filed with the Department of Insurance on May 25, 1977. Initial capital of $300,000 was raised to $1,200,000 divided into 120,000 shares of ten dollars ($10) each by amending the Certificate of Incorporation on November 30, 1994, which was filed with the Department on December 22, 1994. A capital increase examination was performed on June 30, 1995. The Certificate of Authority dated June 3, 1977 permits the Company to transact the kinds of insurance specified in paragraphs “b” and "e” of the New Jersey Revised Statue 17:17:1. Authority under paragraph “e” to write worker’s compensation and employer’s liability is specifically excluded. By a second amendment to the Certificate of Incorporation dated May 7, 2002 and filed with the Department, the Company decided to move its principal place of business from 1360 Morris Avenue, Union, New Jersey 07083 to the present location 120 Mountain Avenue, Springfield, New Jersey 07081. An amendment to the Certificate of Incorporation dated June 27, 2006 and filed with the New Jersey Department of Banking and Insurance on July 28, 2006 increased the amount of outstanding shares issued to 160,000 and decreased the par value of the capital stock from $10 per share to $7.50 per share. Gross paid in and contributed surplus increased $400,000 to $550,000 from the issuance of this 33 1/3% stock dividend. Unassigned surplus decreased $400,000 as a result of this transaction. An amendment to the Certificate of Incorporation dated May 17, 2007 increased the amount of outstanding shares issued to 240,000 and decreased the amount of par value of capital stock from $7.50 per share to $5.00 per share. Gross paid and contributed surplus increased $600,000 to $1,150,000 from the issuance of this 50% stock dividend. Unassigned surplus decreased $600,000 as a result of this transaction. An amendment to the Certificate of Incorporation dated April 12, 2013 increased the amount of outstanding shares to 510,000 and increased the amount of authorized capital stock to $2,550,000. As a result of this 1.125 (1 1/8) stock dividend, unassigned funds decreased $1,350,000. Gross paid in surplus remained at $1,150,000.

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The outstanding shares are owned by Harry Bleiwise who owns 49.8%, Charles Bleiwise who owns 24.48%, Susan Greenfield who owns 24.48% and the Bleiwise grandchildren’s trust portion is 1.250%. Rider writes business in Delaware, District of Columbia, Indiana, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Virginia and West Virginia. Rider writes Auto Liability and Auto Physical damage lines of business. The Company is licensed to transact bodily injury and property damage liability for motorcycles, and mini-bikes. Business is cyclical in nature in that most of its volume of business occurs at peak seasons, which creates variances in business writings and claims during the course of the year. The Company is producer-controlled. The controlling producer is Rider Insurance Agency who writes and collects premiums for the Company. The Agent upon whom process may be served is Kelly Prol, Controller. MANAGEMENT AND CONROL As of December 31, 2014, the following five directors were serving on the Board of Directors: Harry R. Bleiwise: Chairman (Director since 1977) Charles D. Bleiwise: Vice President (Director since 1986) Susan D. Bleiwise-Greenfield: Treasurer (Director since 1991) Jerold Goldberg: Director (since 1996) Self-Employed Consultant Elliot Abrutyn, Esq.: Director (since 1996) Attorney: Morgan, Melhuish, Monaghan, Arvidson, Abrutyn and Lisowski Committees The Company's current By-laws stipulate that "the Board of Directors shall establish one committee known as the auditing, nominating and compensation committee. The committee shall be responsible for recommending the selection of an independent certified public accountant, reviewing the insurer's financial condition, the scope and results of independent audit and any internal audit, nominating candidates for director for election by shareholders, evaluating the performance of officers deemed to be principal officers of the insurer, and recommending to the Board of Directors the selection and compensation, including bonuses or other specific payments, of the principal officers." At December 31, 2014 the Company’s auditing, nominating and compensation committee consisted of two members, Elliot Abrutyn, Esq. and Jerold Goldberg; both are outside members of the board of directors since 1996. It was noted that the Company’s audit

7

committee was comprised of all outside directors in accordance with N.J.S.A. 17:27A-4d (4).

Officers

The elected officers of the Company serving at December 31, 2014, were as follows:

Name

Office

Harry R. Bleiwise Chairman Lauren Belfiore President Charles D. Bleiwise Vice President Susan Greenfield Treasurer Donald Parisi Secretary

The President of the Company shall be deemed Chief Executive Officer and shall maintain the general powers and duties of management usually vested in the office of the President. The Treasurer shall have the custody of the funds and securities of the Company and shall keep the regular books of account for the Company. The Secretary shall cause notices of all meetings to be served as prescribed in the Company's By-laws and shall keep the minutes of all meetings of the shareholders and the Board. The Board of Directors location for all correspondence and meetings is the RIC home office, 120 Mountain Avenue, Springfield, New Jersey 07081. POLICY ON CONFLICT OF INTEREST The Company has a questionnaire regarding conflict of interest in which the officers and directors are informally required to disclose any possible conflict. This questionnaire is to be completed annually. Rider Insurance Company does have a formal policy to complete conflict of interest questionnaires. Upon review of the conflict of interest questionnaire for the year 2014, it was determined that the Company did not have any reported conflicts of interest. CORPORATE RECORDS A review of the minutes of the Board of Directors indicated that transactions and events of the Company operations overall are adequately reviewed, approved and supported. It was noted that the Company does not have a Charter for the Audit Committee. It is recommended that the Company establish a Charter for the Audit Committee.

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It was noted that the Company does not have minutes of the Audit Committee meetings. It is recommended that the Company provide written minutes of the Audit Committee meetings REGULATION OF INSURANCE HOLDING COMPANY SYSTEMS Affiliated Companies As of December 31, 2014, the Company was a member of an Insurance Holding Company System in accordance with N.J.S.A. 17:27A-1. An organizational chart of this system follows:

Mr. Charles Bleiwise and Ms. Susan Greenfield are Mr. Harry Bleiwise’s son and daughter, respectively. A review of the holding company filings was made for the period under examination identifying the Company as registrant to the requirements and standards under N.J.S.A. 17:27A-3. INTERCOMPANY AGREEMENTS Agency Agreement Rider Insurance Company has entered into an agency agreement with Rider Insurance Agency, Inc. (RIA), its sole agent and an affiliate of the Company. The agreement

33.333% Charles Bleiwise

33.333% Susan Greenfield 33.334% Harry Bleiwise

45% Harry Bleiwise

40.2% Charles Bleiwise 40.2.% Susan Greenfield 19.6% Harry Bleiwise

49% Harry Bleiwise 25% Charles Bleiwise 25% Susan Greenfield 1% Bleiwise Grandchildren’s Trust

Rider Insurance Company

Rider Insurance

Agency

Security First Holdings, LLC

The Superior Group, LLC

9

authorizes the agent to "solicit and submit applications; to issue and deliver policies, certificates, endorsements and binders; to collect and receipt for, hold as fiduciary and pay over to Company, in accordance with procedures. As full compensation for services all premiums written generated and commissions are paid to the Agency. This agreement was first amended on March 16, 2009 to provide for a contingent commission payable to the agency to a formula reflecting RIC’s profitability in the calendar year. In a second amendment to the agreement dated November 19, 2009 the commission payable to the agency formula was revised and this amendment superseded the first amendment. In a third amendment dated December 22, 2014 the Agent agreed to forego $1.2 million in commission payments for calendar year 2014 and the Company agreed to accept that in lieu of revising the agreement’s commission percentage. In a fourth amendment dated February 16, 2015 Section IX of the agreement was revised to change the commission rate from 20% to 16.25% effective for policies that are new or renewed with effective dates beginning January 1, 2015. All other provisions of the agreement remained unchanged. Lease Agreement The Company leases its office facility from The Superior Group, LLC; an affiliate of the Company. The lease agreement extends until August 31, 2016. Loan Agreements By a promissory note dated May 11, 2007, the Company loaned $1,000,000 to Security First Insurance Holdings, LLC; an affiliate of Rider Insurance Company. The loan is unsecured, subordinated, and carries a prepayment penalty. The loan bears interest at prime plus 4.5% and is payable in equal monthly installments of $15,000 through June 15, 2017. This loan was subsequently paid off in March of 2015. The Company provided a loan to the Superior Group, LLC, an affiliate of the Company, in the amount of $3,000,000 between late 2009 and May 2010 for the purpose of construction on Rider Insurance Company's corporate headquarters at 120 Mountain Ave, Springfield, N.J. Once the construction was completed, the loan converted to a fixed rate of 5.75% loan secured with a mortgage on the premises, amortized over 30 years. In 2013, Rider Insurance Company agreed to refinance the loan to the fixed interest rate of 4.00% on the outstanding principal and reduce the term to 20 years.

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FIDELITY BOND AND OTHER INSURANCE COVERAGES Rider is covered by a fidelity bond insuring forgery or alteration, securities and computer crime for a single loss limit of $1,000,000 subject to a $25,000 deductible. This fidelity coverage is deemed adequate to satisfy the minimum amounts of fidelity insurance coverage as suggested by the National Association of Insurance Commissioners (NAIC) exposure index. The Company also maintains additional insurance coverages for the protection of its assets on the various policies in effect at December 31, 2014 which include the following: Workers’ Compensation and Employers’ Liability Insurance

Commercial Property Liability (Building 1) Commercial General Liability Commercial Inland Marine Liability Commercial Automobile Liability Employment Liability Directors’, Officers’ and Fiduciary Liability Insurance Services Professional Liability Certified Acts of Terrorism Coverage EMPLOYEE WELFARE AND PENSION PLANS A description of the benefits that Rider Insurance Company employees may be entitled to are: Group Health Benefits (Medical, Dental and Prescription Plans) Group Life Insurance, LTD and AD&D Coverage Medical and Disability Leave Flexible Spending Accounts Health Savings Account 401K Profit Sharing Plan The Company sponsors group medical, prescription and dental plans. Rider will contribute a portion of the total monthly premium for any eligible employee who joins these plans. All full-time associates are eligible to become members of the Rider Insurance Agency, Inc. 401K Profit Sharing Plan, to which Rider contributes a matched percentage set amount based on the profitability of the agency and: 1. The employee must work at least 1,000 hours during the plan year of January 1st through December 31st to qualify.

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2. The employee must contribute to the 401k plan in order to receive a contribution from Rider. 3. Must be at least 21 years of age. The associate can contribute to the plan upon completion of eligibility requirements. An associate will receive a year of credit for the first year of service. Contributions by the employer begin the second year the employee qualifies and enrolls in the 401k plan. Rider will contribute 100% of an employee's first 3% of contribution and 50% of the next 2% of an employee's contribution. Employees who contribute at least 5% of their base salary and meet eligibility requirements will receive the full match of 4% from Rider. STATUTORY DEPOSITS As of December 31, 2014, the Company maintained a statutory deposit with a Book Value amount of $1,240,252 with the Commissioner of Banking and Insurance of the State of New Jersey for the benefit of the policyholders of Rider Insurance Company. In addition, the Company has deposits with Florida and Virginia with Book Values of $101,440 and $400,000, respectively. POLICY FORMS AND UNDERWRITING GUIDELINES The Company will insure in the states where it is licensed the following types of personal lines motorcycles: Regular Motorcycles Sport/High Performance Motorcycles Scooters (Have Foot Pegs) Mopeds (Have Pedals) ATVs (4 Wheelers) Custom Motorcycles Salvage Motorcycles Reconstructed Motorcycles Road/Trail Enduro Moto Cross Cross Country Trikes Leased Motorcycles UTV(UTL) Racers (Not used for racing) Rider Insurance Company insures everything in the National Automobile Dealers’ Association (NADA) for liability except for the following: 6-wheelers, 8-wheelers, vehicles with more than 1 passenger, select utility vehicles, motorcycles used for racing, motorcycles used for commercial purposes and motorcycles used for emergencies. The

12

motorcycle must be used for recreational use only. Rider Insurance Company will not cover any bodily injury or property damage sustained while the insured motorcycle is used on any race course or other facility designed for racing or practicing racing. The Company offers twelve month policies based on different age groups. Premiums are based on the type of motorcycle, category, coverage type and types of endorsements. The limits of liability depend on the state where the coverage is purchased. The limits of liability for the State of New Jersey are as follows:

15/30/5: $15,000 bodily injury, $30,000 each accident and $5,000 property damage.

25/50/10: $25,000 bodily injury, $50,000 each accident and $10,000 property damage.

50/100/25: $50,000 bodily injury, $100,000 each accident and $25,000 property damage.

100/300/50: $100,000 bodily injury, $300,000 each accident and $50,000 property damage.

250/500/100: $250,000 bodily injury, $500,000 each accident and $100,000 property damage.

TERRITORY AND PLAN OF OPERATION The Certificate of Authority issued on June 3, 1977 authorizes the Company to insure automobiles amongst other vehicles and to insure losses against bodily injury except to write workers’ compensation and employer's liability. Rider Insurance Company transacts bodily injury and property damage liability for motorcycles, motorized bicycles and minibikes with various limits per occurrence and per policy. As of December 31, 2014 the Company was licensed in the states of New Jersey, Pennsylvania, Delaware, Michigan, Indiana, Maryland, Virginia, West Virginia, Florida, and Ohio. In addition, the Company was licensed in but not actively writing business at December 31, 2014 in the states of Texas and Kentucky. All policies, renewals, cancellations, and endorsements are processed in-house. The Company markets most of its business through its agent, Rider Insurance Agency, an affiliate of the Company from its home office located at 120 Mountain Avenue, Springfield, New Jersey. All premiums written by the Company are generated by the Agent and commissions are paid to the Agency. The Company has also begun to use independent agents and relies on the advertisements of the affiliated Company, RIA.

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REINSURANCE Rider Insurance Company entered into an excess of loss reinsurance contract with three subscribing reinsurers through Guy Carpenter, effective April 1, 2014 with a reinsurance limit of $675,000 per occurrence and Company retention of $75,000 per occurrence. The subscribing reinsurers are Odyssey America Reinsurance Company, Partner Reinsurance Company of the US and JRG Reinsurance Company, Ltd. The contract also includes clash coverage that eliminates the need for separate retentions by Rider Insurance Company if multiple losses arise from one occurrence. There is no relationship between Rider Insurance Company and these parties. CONTINUITY OF OPERATIONS The Company maintains a formal disaster recovery and business continuity plan to meet its needs in the event of a disaster and or catastrophe. Current backup or programs, essential documents, records and files are stored in an off-premises location and as part of its by-laws maintains a provision for the succession of Officers It was noted that the Company did not do any testing of their disaster recovery system. It is recommended as in the last examination report that the Company simulate a disaster recovery test to identify and document essential deficiencies that might exist, which could potentially impede the process necessary to establish and restore either basic or critical systems and functions in a timely manner. ACCOUNTS AND RECORDS The Company uses a premier accounting software as its general ledger system (i.e., QuickBooks), and a software called "Renaissance", which is maintained by Systems Task Group International Ltd. (STG), for its premium and loss system. Rider receives all premium receipts from its affiliate RIA. When the premiums are received, cash account is debited and premium written account is credited. Commissions are deducted when premiums are paid. Interest is recorded as a debit to cash account and credited to the applicable interest on a monthly basis. The Company investigates all claims reported to them. All suspected fraudulent claims are reported to the New Jersey Department of Banking and Insurance, and a Statement Under Oath may be requested, if necessary. All first party physical damage claims are assigned to an independent appraiser within 24-48 hours of obtaining the location of the motorcycle. A proof of loss is mailed to the insured immediately upon receipt of the appraisal. The need for a Proof of Loss is waived if damages are less than $2,000, and/or if the motorcycle is repairable and the insured signs a Direction to Pay. All checks in payment of first party physical damage losses are issued as soon as possible, generally within 24-48 hours of receipt of signed proof of loss or other settlement forms by the policyholder. A Motorcycle Owner's form is mailed to each insured, and if a witness for a third party property damage claim is identified, a driver's statement and/or witness form is

14

mailed to each respective party once the coverage is verified. Forms may be e-mailed or downloaded from the Company’s website in lieu of physically mailing. Theft claims are assigned to field investigators, as are any claims that are suspect. In addition, most bodily injury claims are assigned to a field investigator. The Company makes, depending on the power and type of the motorcycle, a reserve of $5,000, $6,000, or $8,500 for a first party claim. For a third party property damage claim, a reserve of either $1,500 or $3,000 is made depending upon the liability pattern. Arrangements for the appraisal are then made. For UM/UIM or third party bodily injury, minimal reserve is $7,500, and adjusted based upon severity. For questionable UM/UIM claims, the Company may set a precautionary $1,000 reserve, in order to properly allocate investigative expenses. The reserve is then adjusted accordingly based on the investigation, or closed if it is determined there is no exposure. AUDITED FINANCIALS Pursuant to N.J.A.C. 11:2-26.4 an annual audit was performed by the CPA firm of EisnerAmper, LLP located in Tampa, Florida and an audited financial CPA report with the qualification letter was filed with the Commissioner of Banking and Insurance of the State of New Jersey for the examination period. The report contains a synopsis of the major audit activities and the results of these activities on the Company’s financial statements. ADVERTISEMENT MATERIALS The review of the advertisements indicated that the Company is in compliance with N.J.S.A. 17:18-10, which requires a company that is advertising its assets to also advertise liabilities in an equally conspicuous manner. TREATMENT OF POLICYHOLDERS A review of the Company's complaint log indicated that the Company maintains its complaint log in accordance with N.J.S.A. 17:29B-4(10). SIGNIFICANT SUBSEQUENT EVENTS In January, 2015 the Company’s three owners each contributed an additional $1,000,000 in capital. The asset was recorded as surplus receivable as of December 31, 2014 and this transaction increased paid in surplus to $4,150,000. The funds were received in January, 2015. In February, 2015 three $1,000,000 Surplus Notes totaling $3,000,000 were issued in exchange for cash with an issuance date of December 31, 2014. The interest rate is 4%

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and the date of maturity of the Note is December 31, 2019. Each payment of principal and interest may be made only with the prior approval of the New Jersey Department of Banking and Insurance and only to the extent the Company has sufficient policyholder’s surplus to make such payments. Elliot Abrutyn resigned from the Board of Directors effective April 2, 2015. He was replaced temporarily by Kurt Schwamberger, who then resigned shortly thereafter. The position is currently vacant but as of this writing a candidate has been identified. Effective January 22, 2015 the Company changed their reinsurance intermediary to JLT Re. Effective April 1, 2015 the Company entered into an Excess of Loss Reinsurance Agreement and a Quota Share Reinsurance Agreement with the following Reinsurers: Excess of Loss Reinsurance Agreement Everest Reinsurance Co. - 5.00% of $600,000/occurrence, that is, $90,000 Odyssey Reinsurance Co. - 5.00% of $600,000/occurrence, that is, $30,000 Partner Reinsurance Co. of the U.S. - 17.50% of $600,000/occurrence, that is, $105,000 Transatlantic Reinsurance Co. - 12.50% of $600,000/occurrence, that is, $75,000 Quota Share Reinsurance Agreement Everest Reinsurance Co. - 15.00% of $750,000/occurrence, that is, $112,500 Odyssey Reinsurance Co. - 8.00% of $750,000/occurrence, that is, $60,000 Partner Reinsurance Co. of the U.S. - 12.50% of $750,000/occurrence, that is, $93,750 Transatlantic Reinsurance Co. - 14.50% of $750,000/occurrence, that is, $108,750 It should be noted that subsequent to the examination date N.J.S.A. 17:27A-4.d(6) was amended so that companies who have less than $300 million in direct and assumed premiums can request a waiver for the Independent Director and Audit Committee requirements. FINANCIAL EXHIBITS The financial statements consist of the following exhibits and notes to financial statements showing the financial condition as of December 31, 2014, as shown in the Annual Statement: Exhibit A- Statement of Assets, Liabilities, Surplus and Other Funds as of December 31, 2014 Exhibit B - Underwriting and Investment Exhibit for the Three-Year Period Ended December 31, 2014 Exhibit C - Capital and Surplus for the Three-Year Period Ended December 31, 2014

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Rider Insurance Company Statement of Assets, Liabilities, Surplus and Other Funds as of December 31, 2014 Exhibit A

Balance per Balance per

Examination Company Examination Note

@ 12/31/14 @ 12/31/14 Change Number

Assets:

Bonds 25,429,616 25,429,616

Preferred stocks

Common stocks

Mortgage loans on real estate: First liens

Cash, Cash Equivalents & Short - term investments

495,000

7,565,876

2,583,600

649,458

495,000

7,565,876

2,583,600

649,458

Other invested assets

Investment income due and accrued

Amounts recoverable from reinsurers

2,766,605

231,331

155,727

2,766,605

231,331

155,727

Other amounts receivable under reinsurance contracts

Guaranty funds receivable or on deposit

Electronic data processing equipment & software

Receivables from parent, subsidiaries and affiliates

Aggregate write-ins for other than invested assets

Total Admitted Assets

593,050

302,934

97,489

37,331

6,000,000

$46,908,017

593,050

302,934

97,489

37,331

6,000,000

$46,908,017

Liabilities, Surplus and Other Funds:

Losses

Loss adjustment expenses

7,522,051

1,818,880

7,522,051

1,818,880

1 1

Commissions payable, contingent and other charges

Other expenses

Taxes, licenses & fees due or accrued

Borrowed money

Unearned premiums

Total Liabilities Surplus and Other Funds Common capital stock Surplus notes Gross paid in & contributed surplus Unassigned funds (surplus) Total Surplus and Other Funds Total Liabilities, Surplus and Other Funds

238,076

212,003

195,956

11,017,267

12,546,116

$33,550,350

2,550,000

3,000,000

4,150,000

3,657,668

13,357,668

$46,908,017

238,076

212,003

195,956

11,017,267

12,546,116

$33,550,350

2,550,000

3,000,000

4,150,000

3,657,668

13,357,668

$46,908,017

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Rider Insurance Company Underwriting and Investment Exhibit for the Three Year Period Ended December 31, 2014

Exhibit B

2012 2013 2014

UNDERWRITING INCOME Premiums Earned Deductions: Losses Incurred Loss Adjustment Expenses Incurred Other Underwriting Expenses Incurred Aggregate Write-Ins for Underwriting Total Underwriting Deductions Net Underwriting Gain or (Loss) INVESTMENT INCOME Net Investment Income Earned Net Realized Capital Gains or (Losses) Net Investment Gain or (Loss) OTHER INCOME Finance Charges Aggregate Write-ins Total Other Income Dividends to Policyholders Net Income after dividends to policyholders, after capital gains tax & before federal & foreign income taxes Federal and Foreign Income Taxes Incurred

Net Income (Loss)

$25,152,127

17,936,5643,210,770

12,995,9640

34,143,296

($8,991,169)

343,9972,025,591

$2,369,588

00

$0

0

(6,621,581)

0

($6,621,581)

$26,203,178

14,091,441 2,929,990

12,712,874 (1)

29,734,304

($3,531,125)

76,570 1,711,587

$1,788,157

0 0

$0

0

(1,742,969)

0

($1,742,969)

$27,113,484

18,509,6053,408,887

11,729,0870

33,647,579

($6,534,095)

88,1341,065,545

$1,153,679

00

$0

0

(5,380,416)

0

($5,380,416)

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Rider Insurance Company Capital and Surplus for the Three Year Period Ended December 31, 2014

Exhibit C

2012 2013 2014

Surplus as Regards Policyholders, December 31, Previous Year Net Income or (Losses) Change in Net Unrealized Capital Gains or (Losses) Change in Net Deferred Income Tax Change in Non-Admitted Assets Change in Provision for Reinsurance Change in Surplus Notes Cumulative Effect of Changes in Accounting Principles Capital Changes: Transferred from Surplus (Stock Dividend) Surplus Adjustments: Paid In Transferred to Capital (Stock Dividend) Change in Surplus as Regards Policyholders for the Year Surplus as Regards Policyholders, December 31, Current Year

$15,052,584

(6,621,581)(253,215)

(2,092,011)7,204,447

21,0000

209,485

1,350,000

0(1,350,000)

($1,531,874)

$13,520,710

$13,520,710

(1,742,969)

461,737 55,389

790,983 21,000

0 0

0

0 0

($413,860)

$13,106,850

$13,106,851

(5,380,416)(60,452)

(483,701)175,385

03,000,000

0

0

3,000,0000

$250,815

$13,357,666

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NOTES TO FINANCIAL STATEMENTS Note 1: Losses and Loss Adjustment Expenses The loss reserve as reported by the Company at December 31, 2014 was $7,522,051 and the loss adjustment expenses reserve was $1,818,880. A review of the Gross and Net Loss and Loss Adjustment Expense reserves was performed by the New Jersey Department of Banking and Insurance, Office of Solvency Regulation, Actuarial Unit. On the basis of this review the Company’s Loss and Loss adjustment Expense Reserves were found to be reasonably stated and were accepted without adjustment. Data supplied to the actuaries was reconciled to the Company’s Annual Statement and other supporting records without exception. Samples of outstanding reserves at December 31, 2014 as well as loss and loss adjustment expense payments made during 2014 were traced to individual claim files without material exception. EXAMINATION RECOMMENDATIONS Page Corporate Records

8 It was noted that the Company does not have a Charter for the Audit Committee. It is recommended that the Company establish a Charter for the Audit Committee.

8 It was noted that the Company does not have minutes of the Audit Committee

meetings. It is recommended that the Company provide written minutes of the Audit Committee meetings.

Continuity of Operations 13 It was noted that the Company did not do any testing of their disaster recovery

system. It was recommended in the last examination report and reiterated that the Company simulate a disaster recovery test to identify and document essential deficiencies that might exist, which could potentially impede the process necessary to establish and restore either basic or critical systems and functions in a timely manner.

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LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES - STATEMENT BY NJDOBI ACTUARY

Rider Insurance Company

The New Jersey Department of Banking and Insurance has performed an actuarial review of the reported December 31, 2014 loss and loss adjustment expense reserves for the Rider Insurance Company. Based upon this review the Company’s booked gross and net loss reserves will be accepted as stated.

Actuarial findings as stated above and in this examination report are the sole responsibility of the New Jersey Department of Banking and Insurance’s Property and Casualty Actuarial Unit of the Office of Solvency Regulation.

CONCLUSION

The examination of Rider Insurance Company was conducted by the undersigned with the assistance of field and office staff and the Actuarial Unit of the New Jersey Department of Banking and Insurance Office of Solvency Regulation.

I would like to take this opportunity to acknowledge the courtesy and assistance extended to the examiners by officers and personnel of the Company throughout the course of this examination.

Respectfully Submitted,

/S/

Daniel J. Fialkowski CFE, AIE, FLMI, CPM Examiner –In- Charge

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Rider Insurance Company I, Daniel J. Fialkowski, do solemnly swear that the foregoing report of examination is hereby presented to be a full and true statement of the condition and affairs of Rider Insurance Company as of December 31, 2014, to the best of my knowledge and belief. Respectfully Submitted,

/S/

_________________________________ Daniel J. Fialkowski, CFE, AIE, FLMI, CPM Examiner-In-Charge __________________________________ State of New Jersey County of Mercer Subscribed and sworn to before me. On this 2nd day of February,_2016. /S/ ___________________________________ Sheila M Tkacs Notary Public of New Jersey