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<SEC-DOCUMENT>0001193125-07-042490.txt : 20070228
<SEC-HEADER>0001193125-07-042490.hdr.sgml : 20070228
<ACCEPTANCE-DATETIME>20070228152111
ACCESSION NUMBER:		0001193125-07-042490
CONFORMED SUBMISSION TYPE:	8-K/A
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20070223
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20070228
DATE AS OF CHANGE:		20070228

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ALFA CORP
		CENTRAL INDEX KEY:			0000743532
		STANDARD INDUSTRIAL CLASSIFICATION:	FIRE, MARINE & CASUALTY INSURANCE [6331]
		IRS NUMBER:				630838024
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-11773
		FILM NUMBER:		07657360

	BUSINESS ADDRESS:	
		STREET 1:		P O BOX 11000
		STREET 2:		PO BOX 11000
		CITY:			MONTGOMERY
		STATE:			AL
		ZIP:			36191-0001
		BUSINESS PHONE:		3342883900

	MAIL ADDRESS:	
		STREET 1:		P O BOX 11000
		CITY:			MONTGOMERY
		STATE:			AL
		ZIP:			36191-0001

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FEDERATED GUARANTY CORP
		DATE OF NAME CHANGE:	19870505
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K/A
<SEQUENCE>1
<FILENAME>d8ka.htm
<DESCRIPTION>FORM 8-K/A
<TEXT>
<HTML><HEAD>
<TITLE>Form 8-K/A</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">
<HR SIZE="3" NOSHADE COLOR="#000000" ALIGN="left"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"><B>Washington, D.C. 20549 </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="17%" SIZE="1" NOSHADE
COLOR="#000000"> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"><B>FORM 8-K/A </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P
STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="4"><B>CURRENT REPORT </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="4"><B>PURSUANT TO SECTION
13 OR 15(d) OF THE </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="4"><B>SECURITIES EXCHANGE ACT OF 1934 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>Date of Report (Date of earliest event reported): February 28, 2007 (February 23, 2007) </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P
STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="6"><B>ALFA CORPORATION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>(Exact name of
Registrant as specified in its charter) </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="34%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>
<TR>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Delaware</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>0-11773</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>63-0838024</B></FONT></P></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(State or other jurisdiction of incorporation)</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Commission File Number)</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(IRS Employer Identification No.)</B></FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>2108 East South Boulevard</B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>P.O. Box 11000, Montgomery, Alabama</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>36191-0001</B></FONT></P></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Address of principal executive offices)</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Zip Code)</B></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Registrant&#146;s telephone number, including area code: <U>(334) 288-3900</U> </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>N/A </B></FONT></P><HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="1"><B>(Former name or former address, if changed since last report) </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </FONT></TD></TR></TABLE> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </FONT></TD></TR></TABLE> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </FONT></TD></TR></TABLE> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR SIZE="3" NOSHADE COLOR="#000000" ALIGN="left"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Item 2.02. Results of Operations and Financial Condition </B></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The following information is furnished to the Securities and Exchange Commission and shall not be deemed &#147;filed&#148; for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a
filing. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">On February 23, 2007, Alfa Corporation issued a press release announcing its financial results for the quarter ended and year ended December 31,
2006. A copy of this press release was filed February 23, 2007 with the SEC on Form 8-K. On February 23, 2007, Alfa Corporation also held a conference call that was broadcast online through the Alfa Corporation website and that was complementary to
the press release announcing financial results for the quarter and year ended December 31, 2006. A transcript of the conference call presentation is attached as Exhibit 99.1 to this report, and is incorporated herein by reference. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Item 9.01. Financial Statements and Exhibits </B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>(c)</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibits </B></FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

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<TD></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD WIDTH="90%"></TD></TR>
<TR>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="1"><B>Exhibit&nbsp;No.</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-right:0px;margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="1"><B>Description of Document&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></P></TD></TR>
<TR>
<TD HEIGHT="5"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">99.1</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Presentation transcript, February 23, 2007</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B><U>SIGNATURE</U> </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Dated: February 28, 2007 </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2"><B>ALFA CORPORATION</B></FONT></TD></TR>
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<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2"><B>/s/&nbsp;&nbsp;&nbsp;&nbsp;S<SMALL>TEPHEN</SMALL> G. R<SMALL>UTLEDGE</SMALL></B></FONT></P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="1"><B>Stephen G. Rutledge</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="1"><B>Senior Vice
President,</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="1"><B>Chief Financial Officer and</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="1"><B>Chief
Investment Officer</B></FONT></P></TD></TR>
</TABLE></DIV>
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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>dex991.htm
<DESCRIPTION>PRESENTATION TRANSCRIPT
<TEXT>
<HTML><HEAD>
<TITLE>Presentation transcript</TITLE>
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 <BODY BGCOLOR="WHITE">
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 99.1 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Alfa Corporation </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Fourth Quarter 2006 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Conference Call
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Friday, February&nbsp;23, 2007 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">9:30 A.M. Central Time
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>Please stand by the call is about to begin. Good day and welcome to the Alfa Corporation Conference Call. Today&#146;s call is being recorded. At this
time for opening remarks and introductions, I would like to turn the call over to the Executive Vice President of Operations, Mr.&nbsp;Lee Ellis. Please go ahead, Sir. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Thank you. Good morning. I would like to welcome you and thank you for joining us on our year end conference call. With me today is Steve Rutledge, Chief Financial Officer and Ralph Forsythe,
Assistant CFO. Ralph, before we begin, would you please read our Safe Harbor Statement? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Ralph Forsythe:</B> Good morning. Investors are cautioned that
statements during this conference call which relate to the future, are by their nature uncertain and dependent upon numerous contingencies, including political, economic, regulatory, climatic, competitive, legal and technological. Any of which could
cause actual results and events to differ materially from those indicated in such forward-looking statements. Additional information regarding these and other risk factors and uncertainties may be found in Alfa Corporation&#146;s filings with the
Securities and Exchange Commission. Alfa uses non-GAAP financial measures of operating income, operating income per share, mortality ratio, lapse ratio, and persistency in evaluating Company performance. These measures may be discussed during this
conference call. A link to our definitions of these measures can be found in the &#147;Invest in Alfa&#148; section of our website, located at www.alfains.com. At this point, I&#146;d like to turn the call back over to you, Lee. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Thank you, Ralph. We are pleased to report another record year of earnings for Alfa Corporation. We completed the year with operating income of $103.7
million or $1.28 per share compared to $95.1 million, or a $1.18 per share in 2005. This represents an increase of 8.4% over last year on a per share basis. Debt income for 2006 was $105.9 million, or $1.30 per share, which is a 6.3% increase on the
per share basis over the prior year. Growth in the top line and outstanding core loss ratios were the primary drivers behind these results. Our property and casualty segment maintained its growth trends in both written and earned premiums with
overall increases of 6% and 9% respectively for the year. Our Alabama and Georgia operations experience nominal growth with a very competitive marketplace. Our Mississippi operation finished the year with healthy increases in written and earned
premium. Alfa Vision, which writes our non-standard automobile in nine states, had an outstanding growth in earned premium of 152% for the year. I will remind you that Alfa Vision got off to a slow start in 2005 due to delays in licensing. 2006 was
their first year of being fully operational in all nine states, and we do not anticipate this level of growth in 2007. Virginia Mutual experienced challenges in growing their top line during 2006. In fact, earned premium decreased 3% for the year.
As we announced in January 2007, we completed the demutualization of Virginia Mutual and have formed a new entity, Alfa Alliance Insurance Corporation. This company is a wholly owned subsidiary of Alfa Corporation. Additionally, we have taken steps
that we believe will help to grow their top line profitably in 2007. We expanded their operations to Tennessee which now gives them a market presence in three states. </FONT>
</P>

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<FONT FACE="Times New Roman" SIZE="2">We added two senior level executives to our Alfa Alliance team, including a vice-president of sales and marketing with over 20 years experience in agency
ownership and carrier sales, and a vice-president of product development who also has over 20 years experience with a national automobile carrier in the area of product development. Finally, we have made significant product and rate changes in our
Virginia markets, which with an emphasis on targeting the married multi-car policyholder. In our property and casualty business, we had an outstanding overall combined ratio of 90.8% for the year. This completed a very consistent 10-year run of
combined ratios in the high 80&#146;s and low 90&#146;s. Alfa Life had another good quarter with operating income up 20% over the fourth quarter of 2005 and 10% for the year. We were able to achieve these results despite a challenging year in
policyholder claims which resulted in a mortality ratio of 104% compared to 96% in 2005. Strong top line growth of 8% and good returns on our investment portfolio contributed to this performance. The majority of the increase in the top line was from
sales of our return of premium product which we introduced in January 2006. Our non-insurance segments had mixed results in 2006, with operating income of $326,000 for the year compared to a loss of $40,000 in 2005. However, I think it is important
to note that within this business unit, both our investment in MidCountry and Vision MGA had very solid performance. Alfa Financial&#146;s performance was negatively affected by the single incident of employee fraud that occurred in the second
quarter. Steve will discuss the performance of our non-insurance operations in more detail. At this time, I&#146;ll turn the call over to Steve. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve
Rutledge:</B> Thank you, Lee, and good morning everyone. I&#146;m gonna begin my comments with the consolidated results of Alfa Corporation and its subsidiary. Revenue for the fourth quarter increased 7.8% to $208.1 million. P &amp; C premium, life
premium and policy charges and net investment income all increased consistent with the overall revenue growth in the 7% to 7.5% range. In addition, other income increased 35.5% to $7.6 million. This was another quarter of consistent top line growth
and in line with the total revenue growth for the full year 2006 of 7.7%. Other income has grown consistently fast this year due to the influence of additional fee income coming from Alfa Vision. The growth rate for the year in other income was
24.2%. For the quarter, the other income growth rate ticked up to 35% as a result of a contingent commission pay to the Vision Insurance Group, MGA, for run-off business that Vision had written during the transition from their old carriers to Alfa
Vision paper. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Operating income increased 42.4% to $32.3 million. A portion of this increase came as we benefited from a much lower than normal effective
tax rate. The tax expense line was impacted by the completion of an IRS examination for tax years 99 through 2001. As a result of this exam, we were able to release approximately $3.5 million in contingency reserves and in addition, include a tax
refund of $900,000. A normalized effective rate would have been approximately 26.6% in the current quarter versus an adjusted 26% effective rate in the fourth quarter of 2005. In the fourth quarter of 2005, we reported a 30.1% effective rate, but
this had a one time adjustment to establish a deferred tax liability in one of our non-insurance subs. Again, without these two non-recurring items, we would have had an effective tax rate this quarter of 26%, compared to 26.6% in 2005&#146;s fourth
quarter. The impact of this fourth quarter 2006 tax settlement was to increase earnings per share by approximately 5.4 cents per share. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">For the full year,
Alfa Corporation had revenue growth of 7.7%, operating income of $103.7 million, and operating earnings per share of $1.28, which translates to an 8.4% increase over 2005. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Looking at our results by product line, we will first look at our property and casualty operations. Our growth rate for
our property and casualty written and earned premium in the fourth quarter was 5.7% and 8.6% respectively. Growth in our three contiguous states, Alabama, Georgia and Mississippi was 3.5% for written premium and 2.8% for earned premium. Alfa Vision
added $6.5 million more in earned premium this quarter versus the same quarter last year, and Virginia Mutual&#146;s earned premium dropped approximately $270,000. We had a loss ratio of 56.5% for the quarter and there was no impact from storm
claims in this current quarter. This was better than the 59% in the fourth quarter of 2005, but was pretty much in line with the 55.7% full year 2006 non-CAT loss ratio. Catastrophes added 2.3% to the full year loss ratio, and we ended the year with
a loss ratio of 58% compared to a full year 2005 loss ratio of 61%. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">For the quarter, our loss ratios by state are very good for our core states. Alabama
Georgia came in at just over 54% and Mississippi came in at just under 51%. At Virginia Mutual, now Alfa Alliance, the loss ticked up to 81.9% as a result of several large claims in the quarter. We experienced 40% of our large losses, and we define
those as losses greater than $100,000 at Virginia Mutual, in the fourth quarter of 2006. This included a large business owner fire, two large commercial auto claims, and a large uninsured motorist claim on personal auto. This appears to be a state
of bad luck and there&#146;s nothing to indicate that anything has changed in that operation. Even with this difficult fourth quarter, Virginia Mutual delivered a very good full year &#145;06 loss ratio of 56.8%. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Vision is our non-standard auto company. It&#146;s loss ratio was 68.8% for the fourth quarter of 2006. Considering the fast growth in this subsidiary, this was not an
unreasonable outcome and for the year, Vision&#146;s loss ratio came in at 65.4%. Looking at the loss ratios by line of business, excluding the Virginia Mutual quota share, for the fourth quarter these were as follows: Automobile was 63.8% in
&#145;06 versus 70.6% in 2005; Homeowner was 42.9% in &#145;06 versus the fourth quarter &#145;05 homeowner loss ratio of 40.6%; and our other area was 63.2% for the fourth quarter versus 43.5% in 2005. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Moving over to our expense area, and again Vision and Virginia Mutual continue to have an impact on our overall expense structure, and again there are reasons for this
and the example we use is Vision charges a much higher fee than our normal preferred operation. These fees are collected at the insurance company and included in other income. For segment reporting, these fees are also included in expense and the
insurance company as they are transferred to our managing general agency, Alfa Vision Insurance Group. So for the insurance operation, fees are included in expense but not in premium skewing the expense ratio calculation. In an effort to compare an
old standard ratio, I&#146;ve stripped out Virginia Mutual and Vision&#146;s premium and expenses and recalculated the expense ratio. This leads to an adjusted expense ratio of 27.3% in the fourth quarter of 2006, for our core operations versus the
28.5% that we reported. This compares the 27.3% adjusted expense ratio in the fourth quarter of 2005. Both of these expense ratios have been impacted by investments in technology. This totals $3.1 million in the current quarter compared to $2.4
million in the fourth quarter of 2005. In addition, we have the impact from FASB 123R which is the share based compensation expense of roughly $300,000 this year. FASB 123R increased our expense ratio approximately 2/10 of 1% and Exceed System
expenses increased it approximately 2%. Excluding these two expenses that are present in &#145;06, the adjusted ratio for the fourth quarter of &#145;06 would have been 25.3% and that would have compared to 25.1% in the fourth quarter of 2005.
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Our loss adjustment expense was 5.2% for the quarter compared to 5.1% in the fourth quarter of 2005. LAE without the
impact of Vision and Virginia Mutual would have been 4.5% and that compared to an adjusted 4.7% in the same quarter last year. The claims area is also an area impacted by the amortization of Exceed, which is our new policy administration system, and
that added approximately 1/10 of 1% to our loss adjustment expense. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2">Investment income was down for
the quarter 0.8% primarily as a result of decrease in partnership distributions from $2.2 million in the fourth quarter of 2005 to <FONT SIZE="1"><SUP>&nbsp;3</SUP></FONT><FONT SIZE="2">/</FONT><FONT SIZE="1">4</FONT><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"> of a million this quarter. Without the impact of partnership distributions, investment income would have been $9.9 million, up 15% on a 6% increase in bond interest to $8.4 million and a doubling of dividend income to
$477,000. </FONT></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Finally, we had a very good non-storm GAAP combined ratio of 90.2% compared to 92.6% in the fourth quarter of 2005, which also had no
impact from storms. For the full of 12/31/06, our combined ratio was 90.8% compared to 90% in 2005. I took a look back and compared the 90.8% combined ratio in &#145;06 to our combined ratio over the last ten years. Over this period of time, our
combined ratios have been extremely consistent with an average combined ratio over this period of time of 91.3%. Over this same ten year period, our high combined ratio was 92.8% in 2001, and our low combined ratio was 89% in 1999. As a side note,
we had no catastrophes in 1999. This has been a very consistent result over a significant period of time. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Year-to-date, Alfa Corporation&#146;s share of
Alfa Vision&#146;s total earned premium is $52.3 million, netting fees collected against expenses, combined ratio on a direct basis year-to-date was 101.5%. As a result of a 65.4% loss ratio, 10.9% premiums spent on LAE, and 25.2% expense ratio,
again net of fees. This translates to an underwriting loss of approximately $1.1 million. This underwriting result including fees, plus investment income resulted in approximately a $1.6 million direct pre-tax operating income compared to $1.8
million in 2005. In addition, the managing general agency added $4.6 million in pre-tax operating income in 2006, compared to a $118,000 loss in 2005. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Year-to-date, Alfa Corporation&#146;s share of Virginia Mutual&#146;s total earned premium from the quota share is $21.2 million versus $21.8 million in 2005. Year-to-date, Virginia Mutual&#146;s loss ratio was 56.8% and in addition to
quota share, participants paid a 35% commission on written premium and approximately a 3/4% claim fee. Alfa Group received $2.8 million in underwriting gain with Alfa Corporation&#146;s pooled share being approximately $1.8 million. The acquisition
of Virginia Mutual will eliminate the 80/20 quota share and the newly capitalized Alfa Alliance will be a wholly owned subsidiary of Alfa Corporation. This means that 100% of Alfa Alliance business will enter the pool versus 80% in 2006. This will
have an estimated $8 million impact on premium growth in Alfa Corporation. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Moving over to our life insurance company, total premium and policy charges for
the quarter increased 7.6%. This was driven by growth in the traditional life area, which increased 12.5% or $1.3 million. As mentioned in previous conference calls, we rolled out a new return of premium level term product in 2006, and this has had
a positive impact on top line growth. Net operating income was up 19.9% for the quarter. Total revenue which includes net investment income increased 10.5% while total benefits losses and expenses only increased 6.8%. Our life claims increased 15%
or $4 million as a result of our mortality ratio increasing to 111% versus 103% in the prior year&#146;s fourth quarter. The impact of this increase was offset by an adjustment to reserves in the fourth quarter related to our year-end work in review
coupled with the movement of </FONT>
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<FONT FACE="Times New Roman" SIZE="2">this book of business to our new system. For the quarter, benefits, claims, losses and settlement expenses were flat and for the year this same line
increased 7.2% or $5.3 million. Annualized new business premium increased 30.4% in the fourth quarter of 2006 versus the fourth quarter of 2005 and 29% for the full year. Again this growth is coming from the new product roll-out with traditional
life annualized new business increasing 61% in the quarter and 62% year-to-date. We also had a nice increase to our life company investment income, with an increase for the quarter of 14.7% or $1.9 million. This came from increase in bond income up
12.4%, 56% increase in dividends to $700,000 and an increase in short-term investments to $679,000, which is about 121% increase. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Looking at our
non-insurance operations, these consist of our consumer finance agency operation, and our investment in MidCountry Financial, which is a thrift holding company, and the remnants of our commercial lease portfolio which is now in run-off. For the
quarter, non-insurance added $200,000 to the bottom line compared to $1.2 million loss in the prior year. The bright spots were our Vision MGA operation contributing $785,000 in net income, our consumer finance operation which contributed $480,000
in net income, and our investment in MidCountry Financial which contributed $890,000 gross and $312,000 after our internal capital charge and after tax. These positive results were partially offset by the loss in commercial lease run-off book and a
loss in our benefits subsidiary. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">For the year, the non-insurance area had $328,000 in net income compared to $39,000 in the prior year, and again, this
was from outstanding performance in our MidCountry investment with a net income more than doubling to $1.8 million, coupled with $2.8 million in net income at our Vision MGA. These annual results were partially offset by the loss in our run-off book
of commercial lease and the loss in our consumer finance operation created by an agent fraud in the second quarter of 2006. I have an update on recent developments related to this event. We have just received additional payment by this former agent
who has pled guilty to mail fraud charges as a result of these transactions. This will mean we will recover an additional $815,000 that will be recorded in the first quarter of 2007, and in addition we&#146;ve received an assignment of life
insurance policies with a face value of $1.8 million and approximately $100,000 in cash value. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2">A
quick first quarter update. Lee mentioned that we&#146;ve gotten off to an excellent start on P &amp; C and life sales. We have had one storm event in first quarter. A line of thunderstorms including hail went through Alabama on the night of
February&nbsp;13</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">. At this point and time, it&#146;s too early using claim data to give you an estimate on the
ultimate impact. We have had approximately 820 claims reported and using average claim data, the impact to Alfa Corporation is $1.6 million after tax. We are, however, still receiving claims from this event. We will keep you updated and as soon as
we have a reasonable estimate. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">We have also adjusted the ranges on our catastrophe sharing agreement as we do each year. Because of the progress
we&#146;ve made in lowering our catastrophe exposure, our model probable maximum loss curves continue to decline. The new ranges we have increased for 2007, but by a much smaller change than in recent years. This year Alfa Corporation will
participate on an aggregate basis for its pooled share of the first $21.4 million in catastrophe losses, and its relative surplus share of aggregate catastrophe losses above $530.5 million. </FONT></P> <P
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">And finally, we have added $71 million to stockholders equity in 2006, which increased the book value to $10.15 a share.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Lee, that concludes my comments and I&#146;ll turn it back over to you. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Lee Ellis: </B>Thank you very much, Steve. We&#146;d now like to open the floor for questions. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>Thank you. The
question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit one on your touchtone telephone. If you are using a speaker phone, please make sure your
mute function is turned off to allow your signal to reach our equipment. Once again please press star one on your touchtone telephone to ask a question. And we&#146;ll go first to Eric Saxon with Suntrust Robinson-Humphrey. Go ahead please.
</I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Eric Saxon:</B> Good morning. I&#146;m taking a call for David Lewis this morning. I&#146;m just gonna stick with a few big pitch of questions. Can
you talk a little bit about the pricing you&#146;re seeing in your market particularly on the non-standard auto side and also, what about M &amp; A opportunities for 2007? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> First of all, on the M &amp; A opportunities, we don&#146;t comment on those. It&#146;s &#133;it&#146;s just our practice. If we&#146;re working on something, we certainly don&#146;t want to talk to
the public about it until we&#146;re ready to make an announcement. From a pricing standpoint in the automobile sectors, we&#146;re&#133;we&#146;re seeing mostly mixed signals. You&#146;re certainly not seeing the decreases that we were seeing for
awhile. In Alabama, it seems that possibly in the early stages of a moderation. Georgia and Mississippi are still a little more mixed with some, some people moving up and down. In the homeowner, in Alabama, we&#146;re a little confused because
you&#146;re seeing mixed signals there. Some, some people, including State Farm taking slight decreases. We think everybody should be taking increases, and in Georgia and Mississippi, you&#146;re seeing more of the expected trend of increases.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Dav&#133;Eric, I&#146;m sorry. Specific to your ah non-standard question, we, you know we, we continue to see extremely competitive
market in non-standard. We are looking state-by-state at loss ratios and we&#146;re taking rate action where necessary. We have seen tremendous growth in, in our non-standard in &#145;06, and we&#146;ll be working, especially in the states where we
do have, have seen a creep-up in our loss ratios to take rate action. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Eric Saxon:</B> Yes. Alright now also, and I know one of your biggest
competitors, State Farm, is pulling back&#133;in the gulf. I wanted to get your view on this and if this creates an opportunity, I mean, how do you all feel about this? </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Well, as, as we understand where they have made the recent announcement on
February&nbsp;14</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">, they&#146;ve discontinued writing any homeowner business and commercial property in the state of
Mississippi. I assume that&#146;s what you&#146;re talking about? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Eric Saxon:</B> Right um hum. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Let me say that we are also concerned about the legal and regulatory environment in the state and remain cautious regarding the void created by our
competitor&#146;s retreat. We have evaluated our business exposure in Mississippi particularly in the property side, and currently, we&#146;re in the late stages of preparing our </FONT>
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<FONT FACE="Times New Roman" SIZE="2">homeowner rate filing. If approved as filed, we feel it will put us in a better position to operate profitably in Mississippi. Along with these
considerations, we have initiatives which we think will enhance our automobile growth in that state. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Eric Saxon:</B> Okay. Okay, that&#146;s all I have
for now. Thank you. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>We&#146;ll move next to Chuck Hamilton with FTN Midwest. Go ahead please. </I></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> Good morning, thank you. Congratulations on a very strong quarter. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Thank you, Chuck. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Thank you. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Good morning. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> Good morning.
Say, just, I think I&#146;ve got two questions this morning perhaps you can clarify. In terms of the Vision MGA and the conting&#133;contingency check they got for the run-off business in the fourth quarter, when I take a look at the non-standard
supplement that you&#146;ve got, or non, non-insurance break-out that you&#146;ve got, I&#146;m trying to identify how much that was&#133;somewhere around what two, $2 to $3 million or abouts in the quarter? </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> No it was roughly <FONT SIZE="1"><SUP>&nbsp;3</SUP></FONT><FONT SIZE="2">/</FONT><FONT
SIZE="1">4</FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> of $1 million. </FONT></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> 0.75. Okay so what, what that says
though in the quart&#133; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> I think about $800,000. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> Okay. You had a very strong performance end of the fourth quarter, is that related to timing then for that, for that segment? We&#146;re showing the commission business of $9.4 million in the
fourth quarter compared to $6.1 last fourth quarter? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Well to keep in mind, their business is just growing so fast. That, that, that
is attributable to the growth in written premium. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> Okay alright. And the second question I guess, Steve, is in terms of the life
insurance segment, we&#146;re showing I guess in the P &amp; C part, it&#146;s an 88.7% loss, 83.3% loss ratio in the fourth quarter. You&#146;d said that it was a fourth quarter adjustment for, for mortality in terms of your annual review. How much
did that affect that loss in, in that quarter? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> The loss was really on the reserve side, not really on the claims paid side. But
it&#133;really there&#146;s two adjustments there. One is the one we do every year which is, you know is, a year end review which is normally positive or negative. It, it can go either way after actuaries go through all their work and. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> Sure. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> And there&#146;s
always a little true-up there. The other was a result of our movement to a new system and the calibration of that new system. The combination of </FONT>
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<FONT FACE="Times New Roman" SIZE="2">those were&#133;you know, in the, in the $2 to $3 million range and I don&#146;t have those broken down which was, you know how much each one was.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> Guess that was roughly about a 10% if it&#146;s $2 million, roughly about a 10% of premium impact then in the quarter. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Right in the quarter. I think your year-to-date comparison in number takes some of that noise out because that true-up would have impacted
previous quarters so. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> Um hum. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><B>Steve Rutledge:</B> I think some of that noise can be taken out by just looking at the year end number. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck Hamilton:</B> Okay I was just
trying to get to a run rate&#133;impact for it&#146;s likely to be in the life book. And I think that&#146;s&#133;.you&#146;d indicated that you got a $4.4 million total tax impact in the quarter of 5.3 cents. Is that the correct, correct
understanding? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Yes. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Chuck
Hamilton:</B> Okay good. That&#146;s it for my questions. Thank you. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Alright. Thank you. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>We&#146;ll move next to the line of Robert Green with Sandler O&#146;Neill. Go ahead please. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Robert Green:</B> Good morning. Thanks for taking my question. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Good morning, Robert. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Robert Green:</B> Just a couple of different things. First just going to the&#133;.just the P &amp; C loss ratio. You know, obviously very good underwriting
results here. And I was wondering has there been any prior year reserve&#133;rer&#133;development that&#146;s affected this at all or is this just really reflecting current year results? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> No it was pretty much, you know&#133;there was, you know obviously we look at reserves on a quarterly basis and try to keep those up. I think in the year-to-date number, there&#146;s, you know
minimal reserve impact. You know there may be a little bit of carry over from the prior year, but, but not a material number. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Robert Green:</B> Okay
and so then going, kinda going forward, loss cost trends, what are you seeing on you know I guess both the frequency and severity side? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve
Rutledge:</B> I think relative to you know the national numbers that we look at, let me get a sheet of paper here real quick. Our frequency trends have been you know downward sloping but pretty much in line with the industry on the, on bodily injury
severity trends have grown about 3% annually over the last three years, and that&#146;s pretty much in line with the industry. I think the industry&#146;s a little more flat than that. Property, we&#146;ve been trending favorable to the industry,
and our annual loss cost growth has been basically flat on the property side. So, you know the, probably the area that we&#146;ve </FONT>
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<FONT FACE="Times New Roman" SIZE="2">attacked most recently has been the liability picture in Georgia and we&#146;ve, we&#146;ve gotten some rate relief there so that should improve. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Robert Green:</B> Okay great. And then just another question, just with respect to your AM Best rating. Yeah, I think you guys got taken down a notch from A++ to I
think just A+ and you know not that I think the you know the additional plus is gonna be all that important on the margin. But I believe in the rating assessment, you know AM Best mentioned your coastal exposure in Alabama and so I think my question
is two-fold here. You know one, does the down grade affect, you know, your business at all and then secondly, you know do you expect to, I guess, pair back any of your coastal exposures or is it just kinda business as usual for you guys? </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Well, they&#146;ve talked to us about our coastal exposure in Alabama since the 80&#146;s, with every review and we, yes, we do have a program that
is in place that we&#146;ve implemented and we&#146;re in about the third stage of that program, and we&#146;ll have a fourth stage where we&#146;re monitoring our business down there, and that&#146;s the reason that our PMLs have started to turn
down instead of grow. From a, from your question about does it have any effect on our business, the answer would be we don&#146;t think so at all. In the preferred automobile and property business, most of our customers do not understand or even
know what our rating is. In the life insurance business, we sell the &#147;Mom&nbsp;&amp; Pop&#148; product, not the large annuities where the rating becomes so important. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> And Robert, we were obviously disappointed with that down grade. We&#146;ve been through you know about five years of difficult storm period with, with several large hurricanes and our group of
companies have grown surplus during that period of time, which we think was an outstanding result. We&#146;ve very conservative on the reinsurance side and of course, the public company does have the benefit of the catastrophe sharing agreement with
the mutual group taking a lot of their direct exposure or retaining a lot of their direct exposure on the catastrophe side. We&#146;ve been doing catastrophe management for many years, using rate deductibles and that is beginning to impact our
exposures. And to give you an example, our 200 PML in March of &#145;05 for our group of companies was a billion dollars and as of, as, when we complete the renewal cycle we&#146;re in, that PML will be $650 million so we&#146;ve shaved that
tremendously. And we buy reinsurance, our limits are much higher than that, so you know we&#146;ve always managed these companies conservatively and I think that&#146;s demonstrated by what we were able to accomplish through a very difficult time
period. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Robert Green:</B> Okay so I, I think, I mean, is there something, is AM Best basically changing um you know the way they are looking at your
guys&#146; PML because I mean I don&#146;t think anything&#146;s really changed in terms of you know your guys&#146; coastal exposure over the, you know the past you know 20 years or so? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> AM Best is definitely changing the way they look at catastrophic exposure. They&#146;ve changed their stress tests related to their best capital adequacy ratio where they use to stress your
capital with one 100-year storm and today they stress it with two 100-year storms. So they are definitely taking a different look. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> And,
and all the rating agencies are looking hard at&#133;they&#146;re trying to see what was the risk that I don&#146;t realize is out there and they&#146;re, they&#146;re digging a lot deeper. I think Katrina caught a lot of them off guard with the
flooding in Mississi&#133;in Louisiana when the dikes broke and they&#146;re wondering what, what&#146;s, what&#146;s the other shoe out there that they don&#146;t know about because they didn&#146;t get caught a little bit on that </FONT>
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<FONT FACE="Times New Roman" SIZE="2">particular event. I will remind you that less than 5% of the companies in America have the A++ rating, and the A+ rating puts you in the top 10%. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Robert Green:</B> Okay terrific. Thank you very much for answering my questions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><I>We&#146;ll move next to Daniel Baransky with Fox-Pitt, Kelton. Go ahead please. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Yes&#133;I,
I had a question&#133;back on sort of the M &amp; A front. I know you wouldn&#146;t want to comment, you don&#146;t want to comment on any specific actions or figures but given you know, the expansion to kinda see in the rrr.and ramping up Virginia
Mutual and sort of the Vision thing, do you feel like you could at this point in time you could handle another, sort of acquisition, or you, or do you feel like your plate&#146;s kinda full trying to get all these operations sort of up and running?
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Well we, we have a full plate, but I will remind you that the way we have done our acquisitions is in the beginning, the people we have
required run their own shop. We haven&#146;t counted on a lot of synergies to make them work and then we gradually move to the synergies. So, if we found a strong free-standing operation that could operate on its own, with a little more supervision
operate better, and then integrate it as we go down the road, we could, we could do that. Although we&#146;re not aggressively looking right now. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve
Rutledge:</B> Dan, we&#146;ve taken a lot of integration steps at the two companies that, that we&#146;ve acquired and there&#146;s probably some more opportunity there as well. But, you know we got great management teams in place at both entities,
and I think we have the capability to look at acquisitions that are, that are that size at least or, or even somewhat larger. You know I think, I don&#146;t think they&#146;re in any way straining our operation today. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Okay and since you didn&#146;t mention anything, I imagine there wasn&#146;t really any significant buy back activity during the quarter.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> There was not. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel
Baransky:</B> Alright. &#145;m curious.Vir.Virginia Mutual last two quarters the growth hasn&#146;t, year over year, hasn&#146;t been there. Can you tell me just sort of what&#146;s going on within that book of business? I would think that&#146;s
sort of your desires to expand those operations and now you&#146;re in a third state that we would start to see a little more traction there. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve
Rutledge:</B> I think the management team we brought in and coupled with the people who were there, the solid management that was involved from the beginning worked extremely hard for several years to get back to a profitable operation, and that was
their internal focus. And during that period of time, there was probably less focus on the top line. In the second half of &#145;06, we&#146;ve revamped our marketing and product development team up there, and that has included the roll-out in
Tennessee as well as a different product structure that will also be implemented in Virginia and I think we&#146;ve even gotten new marketing in, in, on the lower levels at, in North Carolina. So you know we&#146;re positioned now with a profitable
entity and systems in place to do something. The next step is just to grow that top line. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Maybe you can fill me in. I&#146;m not
quite sure what you mean by revamped product structure. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Well, they&#146;re looking at more of a tiered type rating where they&#146;re gonna, you know
price for the preferred customer, and you know, have an opportunity to grow that into business. They are a preferred writer and just be more competitive on that end. Just really more of a tiered rating system with a roll-out in Tennessee.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Okay. If I could circle back on a numbers question, did you say the Vision Insurance Group had 100.5 combined ratio? Is that for
the fourth quarter or was that for the full year &#145;06 or? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> The, let&#146;s see&#133; Vision had year-to-date 101.5 combined.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> 101.5, okay. Is there any sense, I guess how do you feel about that operation? I mean I&#146;m sure you feel positive about it,
but given where sort of non-standard market&#146;s been going for, you know a lot of people in the industry and sort of the increased competitiveness there, do you feel like maybe you&#146;re late for the table on, on that line of business, or how
do you feel about that? That operation. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> We are very confident with that operation. We have a very, very strong management team. We know
there are people that think tiered rating is gonna make non-standard business a thing of the past. We have a different approach and a different opinion and we still think there&#146;s room for growth and we have the management team that&#146;s
capable of doing that. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Okay. The P &amp; C net investment income year over year really didn&#146;t move at all. Is there any sort
of one time items we should think of or was there a limited partnership impact we&#146;re not catching in that? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT
FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> It was a limited, limited partner impact and it was $2.2 million in the fourth quarter of 2005, versus about <FONT SIZE="1"><SUP>&nbsp;3</SUP></FONT><FONT SIZE="2">/</FONT><FONT
SIZE="1">4</FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> of a million dollars in the fourth quarter of 2006. If you take that out, the investment income growth would have been 15% in the quarter. </FONT></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Is there any way that we can sort of think about the LP income moving forward? Is there something we can look to, some sort of? </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> No, Dan. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Index or something
or? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Yeah it&#146;s just choppy. Ah you know when you invest in, we invest in a lot of different things, you know venture capital
private equity, independent power producers. I mean we&#146;ve got a pretty diversified portfolio and you know it just depends on those exit strategies and when they occur and it&#146;s kind of in fits and starts so it&#146;s a difficult number to
budget. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Okay and then, now on the tech. spending front, when do you anticipate those effects sort of being more diminished on the,
on the expense ratio or just the cost being more diminished? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Well, oh.&#146;07 you&#146;re gonna have some pressure as we roll out
this Exceed System into Alabama. You know that&#146;s our largest state and you know we don&#146;t, we don&#146;t have any desire to, to mess that up, so we&#146;re gonna make sure that we have </FONT>
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<FONT FACE="Times New Roman" SIZE="2">the people in place to train, to answer questions as we roll this out. Ah the good news is I think when we get this Alabama roll-out behind us and what
we&#146;ve learned from our Mississippi roll-out, when we start looking at other lines, for example, property or commercial or farmowner, number one from a training standpoint these screens look a lot alike and that was our initial goal, and number
two, you&#146;re going to have a lot of your systems that support property and, and commercial and farmowner already in place. For example, your billing will already be in place, your claims will already be in place. So we&#146;re not gonna have to
reinvent the wheel on all of those. So I think you&#146;ll see it smooth, but, but you know you&#146;re still talking about some more time here as we get this in place. We are hearing great feedback from Mississippi where we&#146;ve put this in,
where people are enjoying more flexible payment plans, less down payment up front, ease of use by the exclusive agents, and you know, Mississippi has been one of our bright stars are far as production so you know I think that&#146;s probably
two-fold, it&#146;s probably a little bit of Katrina hang-over and it&#146;s also I think a better system. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> But.I&#146;m, I&#146;m
sort of lost of what you&#146;re trying to get at. You must have your own sort of internal amortization and spending schedules. I mean would we expect the spending to come down or the cost to come down in &#145;08 or how should we think about the
duration of this, this increase, this spending? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Well the amortization of Exceed will actually drop in &#145;07, unfortunately that
will be offset by additional headcount to roll this big system out in &#145;07. The, the variable will be the timing and determination of what book of business we roll out next and at that point, that decision hadn&#146;t been made so it&#146;s a
little difficult to come up with those numbers. But you know, this management team will decide probably sometime this summer as we get through the auto roll-out in Alabama whether we continue the auto roll-out in Georgia or whether we look at ah
speeding up the homeowner process. Where do we think we can get the most bang for our buck? So, it&#146;ll be awhile before we have those final determinations. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><B>Daniel Baransky:</B> Okay and I guess I&#146;ll ask the question in Alabama you, you continue to have fairly decent growth considering the level of penetration that you have in the state, &#145;m just curious what, sort of how, what your
attribute your, your ability, can you continue to grow premiums in Alabama? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> I think it&#146;s an outstanding agency force. Herman
Watts who took over as our chief marketing officer last year has really challenged the group and, we had a kick-off in January in Birmingham for the majority of our agents and he challenged them again on auto and we&#146;re seeing pickup in auto
sales in January, February, so I think it&#146;s just this tremendous agent plant we have in Alabama, and you know an outstanding group of individuals, and I think that&#146;s the difference and you know our leaders are, are pushing a little harder
and you know I think people still enjoy personal service. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Daniel Baransky:</B> Okay alright great thanks. I&#146;ll jump back in the queue. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>Again for questions, please press star and one. And we&#146;ll move next to Phillip Young with UBS. Go ahead. . </I></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Phillip Young:</B> Steve, Lee, congratulations on another great year and a great quarter. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Thank you, Phillip. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Phillip Young:</B> On the going back to the system integration on the technology, how integrated are we integrating
the systems of Vision and Virginia Mutual, on the same platforms? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> They&#146;re currently on completely separate platforms. We analyze on
a regular basis when will be the right time to put them on the same platform if we do. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Phillip Young:</B> Okay. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> They&#133;They have advant&#133;each one of them has their own little advantages so that&#146;s, that&#146;ll be a work in progress. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> We are doing things like though, Phillip, where we have such a nice facility for business continuity, we are looking at being near primary
location for their, their hardware and that, that should help with cost as well. We are on a similar platform with Virginia Mutual. The actual platform that we&#146;re installing is by the same company so that&#146;s an opportunity in the future.
Vision being a non-standard entity and really more browser based will probably remain separate as, as they grow their book. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Phillip Young:</B> On the
share buy-back, how many shares are still authorized and is that more of a price issue of the stock or a cash flow situation? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> We
still have over 2&nbsp;million authorized, Phillip. We only bought about 90,000 back in &#145;06. Um, it&#146;s really&#133;it&#146;s, it&#146;s, it&#146;s share price, it&#146;s capital&#133;there&#146;s a lot of variables in that equation. You
know when you, when you make an acquisition or you have to capitalize a new entity that obviously uses up some of that capital, so it&#146;s a lot of variables that go into that. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Bottom line is where can we best put our capital, buy buying out stock or by making some investments. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><B>Phillip Young:</B> Thanks. Last one, there&#146;s a lot of talk in the press on the sub-prime markets on mortgages and all sub-primes loans. I guess looking, the increase in the loan loss at the, on the Alfa portfolio was related to the
employee situation is that correct? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Entirely. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><B>Phillip Young:</B> Entirely. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Steve Rutledge:</B> Yes. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><B>Phillip Young:</B> On looking at, from a portfolio exposure and also on the investment front at MidCountry, what do we feel any exposure to the sub-prime area? </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> MidCountry definitely lends in their finance company to a higher risk client than our preferred clients in Alfa Finance, but it&#146;s nothing to the extent that you&#146;re reading about in the
paper, and we feel like that particular division to MidCountry may be one of the best managed groups we have. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Phillip Young:</B> Thank you. That&#146;s
all. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Any other questions? Okay, in closing let me focus on a couple of comments for 2007. Ah Steve&#146;s
already touched&#133;.is anybody on the line? They cut us off. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>Yes, we have no other questions at this time. I&#146;d like to turn it back over to Lee
Ellis for any additional or closing remarks. </I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Lee Ellis:</B> Okay thank you. In closing let me focus a couple of comments on 2007. As Steve
mentioned, we are off to a very good start in sales, particularly in the automobile area where we have added focus for this year. As you know the insurance marketplace, particularly in the automobile lines is a very challenging and competitive
environment. There have been unprecedented amounts of advertising dollars are being spent by the national carriers as they try to increase their market share. We will maintain our discipline in underwriting and continue to push to sell more
automobile though. We have already taken steps to lower our expense ratio to remain as competitive as possible. We will continue to identify ways to gain efficiencies from our investment in technology, as well as control other expenses within our
business units. We have faced similar challenges before and I am confident that our team is up for the challenge. We remain committed to managing our risks proactively and to protect the financial well-being of our companies. Thank y&#146;all very,
very much for joining us today. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>That does concludes today&#146;s conference. You may now disconnect your lines and thank you for participating.
</I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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