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064 <br />Mark 191 <br />April 9, 2007 <br />\Is. Joyce McGehee <br />Human Resources Director <br />Lee County Government <br />106 Hillcrest Drive <br />Sanford NC 27330 <br />Re: iVledical 111surance Renewal <br />Dear Ms. McGehee, <br />Per our conversation, the experience for the medical plan has declined over the past <br />several months. The plan is trending up 27% over the previous year. Our renewal <br />® calculation indicates that the rates for the current plan design should increase by <br />approximately 14%, as indicated below: <br />Incurred Claims - Matured <br />Annual <br />Premium 3/06 thru 2/07 <br />$1,774,184.69 <br />Incun-ed Claims 3/06 thru 2/07 <br />SI,439,479.87 <br />Loss Ratio <br />81.13% <br />Trended Loss Ratio - 12% <br />94.93% <br />Target Loss Ratio <br />83.00% <br />Rate Increase <br />114.37% <br />We received the initial renewal from CIGNA and were stunned at the uncompetitive <br />o ffer. <br />Out of the box, CIGNA provided us with at 28% increase. The explanation from the <br />CIGNA account manager was a change in the underwriting model that CIGNA was <br />using. <br />® It is our belief that they are trying to improve the margins on their insured block of <br />business and this has let to their uncompetitive position. <br />