purchase price of $23.60 per share during 1998. 

On May 11, 1999 the Board of Directors approved the repurchase of an additional 200,000 shares of the Company' s common stock. Pursuant to this approval, the Company repurchased 174,234 shares in the twelve months ended December 31, 2000 at an average per share price of $12.18. 

On May 9, 2000 the Board of Directors approved the repurchase of an additional 500,000 shares of the Company' s common stock. As of March 29, 2001, no shares have been repurchased pursuant to this approval. 

During the twelve months ended December 31, 2000, the Company repurchased common stock for $2,230,797 and issued common stock totaling $142,680 in satisfaction of stock option exercises, stock bonuses and other stock issuances. In 2000, retained earnings had a net increase of $709,657, after repurchases and issuances reduced retained earnings by $2,088,117. 

Management believes that funds generated from operations (primarily underwriting and investment income) will enable the Company to adequately meet its operating needs and is unaware of any trend likely to result in adverse liquidity changes. In addition to operational liquidity, the Company maintains a high degree of liquidity within its investment portfolio in the form of short-term investments and other readily marketable securities. 

## $^{ }$QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

The Company' s primary exposure to market risk relates to the impact of adverse changes in interest rates and market prices of its investment portfolio. Increases in interest rates diminish the value of fixed-income securities and preferred stock and decreases in stock market values diminish the value of common stocks held. 

## $^{ }$CORPORATE OVERSIGHT 

The Company generates substantial investable funds from its two insurance subsidiaries. In formulating and implementing policies for investing new and existing funds, the Company has emphasized maximizing total after-tax return on capital and earnings while ensuring the safety of funds under management and adequate liquidity. The Company' s Board of Directors oversees investment risk management processes. The Company seeks to invest premiums and other income to create future cash flows that will fund future claims, employee benefits and expenses, and earn stable margins across a wide variety of interest rate and economic scenarios. The Board has established specific investment policies that define the overall framework for managing market and other investment risks, including the accountabilities and controls over these activities. The Company may use the following tools to manage its exposure to market risk within defined tolerance ranges: 1) rebalance its existing asset portfolios or 2) change the character of future investments. 

