On May 1, 1979 TLIE issued its first policy and in two short years we will celebrate 25 years of continuous service to the attorneys of Texas. During our first 23 years we have received notices of 6191 claims and paid a total of $421,988,149 in indemnity and defense costs. Claims still pending, based on our evaluations, will generate another $20.9 million in costs. These figures clearly demonstrate the importance of attorney's professional liability insurance.

Each day we are bombarded by new reports of professional negligence, corporate fraud and accounting irregularities. When you combine these revelations with the tragic events of September 11th, the insurance industry is being severely tested. Reactions by carriers have ranged from substantial price increases and coverage restrictions to simply withdrawing from individual markets or lines of business. Attorney's professional liability insurance has, to some degree, suffered a similar fate. Numerous carriers have decided to withdraw from this line of business or to restrict coverage only to specific sized firms or firms whose practice areas are perceived to be less prone to claims than others. We have noticed, based on the numerous applications we receive each day, that small firms including solo practitioners and plaintiff oriented firms are having a much more difficult time finding coverage.

Although no TLIE insureds have been directly involved in any of the situations mentioned above, we, like many other specialty carriers, have been impacted by these events indirectly by the escalation in costs for reinsurance. Our most recent reinsurance renewal negotiations were the most difficult since 1989 but they were successful and we achieved full placement of the program. Some carriers and numerous MGA driven programs were not so successful and were forced to withdraw from the market. It is these type situations that led to the creation of TLIE almost 25 years ago.

We greatly appreciate your loyalty and support and we look forward to continuing our service to the attorneys of Texas.

Very truly yours,

James R. Lovell
Chairman of Board

August 23, 2002

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