November 1, 2005

TO: MEMBERS OF THE GEORGIA SELF-INSURERS GUARANTY TRUST FUND

RE: Annual Report for 2005

As of October 31, 2005, the Georgia Self-Insurers Guaranty Trust Fund (“Fund”) has continued payment of workers’ compensation benefits, medical expenses, and rehabilitation services to nearly 350 injured workers and their dependents. Approximately $18,206,374 of benefits have been paid to these workers or to their dependents on their behalf. The Fund has recovered over $6,159,862 in reimbursement from the Subsequent Injury Trust Fund, bankruptcy courts, and excess insurance carriers. These funds have been recovered as a result of an aggressive program implemented by the Fund to seek all remedies and relief available to it in mitigation of the cost of servicing the claims of insolvent members.

The Fund consists of approximately 272 active members. This membership figure has remained relatively constant for the last five (5) years. However, a significant firming of the insurance market since September 11, 2001 has resulted in a steady increase in applications for new membership. It appears clear that this trend will continue for the foreseeable future in light of the current insurance climate.

To date, forty-four (44) members of the Fund have become insolvent since 1991. In 26 of these insolvencies, the Fund has been called upon to take over the obligation of the employers. Over 300 of the open claims have been resolved, and we are currently servicing only 62 open matters. Of the 26 bankruptcies, security being held by the Fund was adequate to respond to liabilities in all but ten (10) employer bankruptcies.

In late 2003, the security requirements in Georgia for self insured employers were significantly revised due to inadequacies which were revealed through prior bankruptcies. An objective formula was adopted to calculate the appropriate level of security for each employer. The formula also provided reasonable flexibility to take into account subjective variables on a case-by-case basis. Since the new formula was implemented, security has been adequate in all new bankruptcies. The total security posted by all self insured employers has been increased from $228,000,000 to $495,000,000.

Based on further study, the security formula has now been revised to provide that when the formula reveals the need to increase security by $500,000 or more, an employer’s security requirement will be increased, even if it represents less than a twenty percent (20%) increase.

In previous years, security and excess insurance policies named the member company and oftentimes listed separate subsidiaries or affiliated companies. In future years, the Trustees have decided that all security and excess policies should be issued in the name of the member and also add the term “ and self-insured subsidiaries and affiliates, if any.” This change will eliminate the risk that a subsidiary or affiliate might not be named on the security or excess policy.

As of today, the Self-Insurers Guaranty Trust Fund’s total assets exceed $9 million and reserves for total liabilities are approximately $3.7 million.

For more information about the Georgia Self-Insurers Guaranty Trust Fund, please visit our website at www.gaguaranty.com.

As in the past, the members of the Board of Trustees appreciate your cooperation and participation in the continued operation and funding of this necessary endeavor.

Sincerely,

Steve Johnson, Chairman 
WellStar Health System

Sheldon Fram 
Bankhead Services

Chris H. Hunt 
Georgia Power Company

Art Kirchoffer 
BellSouth Corporation

Dr. Frank McElroy, Jr. 
Presbyterian Homes of Georgia

Mark G. Whyte 
John Wieland Homes and Neighborhood, Inc.