Capital Adequacy (E) Task Force
September 30, 2007

The Capital Adequacy (E) Task Force met on Sunday, Sept. 30, 2007.

During this meeting, the Task Force:

• Adopted the Sept. 10, Aug. 14, July 23 and June 21, 2007, conference call minutes. These minutes included the adoption of a response to the Principles-Based (EX) Working Group, adoption of a 2007 health Medicare Part D premium stabilization reserve modification and a life RBC proposal for reinsurance dividend adjustments to total adjusted capital. Finally, a draft governance document was released for a comment period of 45 days.

• Adopted the report of the Life Risk-Based Capital (E) Working Group. The Working Group held three conference calls Sept. 10, July 18, and July 11, 2007. Mainly, work was done for the American Academy of Actuaries (AAA) C-3 Phase III proposal.

• Received the report of the Property Risk-Based Capital (E) Working Group. The Catastrophe Risk Subgroup had a call Aug. 14 to discuss a document on catastrophe risk RBC modeling and other issues. A conference call of the Working Group will be held Oct. 9, 2007, to discuss an AAA report on revising the underwriting risk factors.

• Adopted the report of the Health Risk-Based Capital (E) Working Group. A conference call of the Working Group had been held June 26, 2007. A conference call to potentially adopt a proposal for vision business is scheduled for Oct. 11, 2007.

• Discussed the C-3 Phase II Results Subgroup. The Subgroup did not meet during the last three months. It was discussed that though other items had become priorities, it was important that the work of this Subgroup continue, before further refinements are adopted to C-3 Phase II.

• Released for a comment period of 45 days a proposal from the Securities Lending Subgroup to modify RBC treatment to reduce the C-1 off balance sheet charge for “conforming programs.” A proposal both regulator and industry Subgroup members agreed upon had been finalized. The proposed changes were only for Life RBC and further work would be done for P&C and health.

• The Task Force adopted the 2008 Task Force charges.

• The Task Force discussed the RBC treatment of collateral held for authorized reinsurance. A concern was raised about whether the Task Force should address the issue. The Task Force will study the issue further before deciding how it would be handled.

Action Items:

1. Adopted the Sept. 10. Aug. 14, and June 21, 2007, conference call minutes.
2. Received the July 23, 2007, conference call minutes.
3. Adopted the Life RBC Working Group report which included the adoption of the 2007 life RBC formula and instructions, releasing for comment the July AAA C-3 Phase III report.
4. Received the Property RBC Working Group report.
5. Adopted the Health RBC Working Group report which included the adoption of the 2007 health RBC formula and instructions, releasing for comment a vision proposal.
6. Released for comment a Securities Lending Subgroup proposal for RBC, and annual statement reporting of securities lending transactions.
7. Adopted the 2008 Task Force charges.