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STATE OF NORTH CAROLINA'if •>

COUNTY OF NEW HANOVER

AMERICAN TRANSPORTATION------- )GROUP INSURANCE RISK )RETENTION GROUP, )

)Plaintiff, )

)v. )

)MVT INSURANCE SERVICES, INC., )AMRIT SINGH, ELEAZAR ROJAS, )And SHAMSHER SINGH )

))

Defendants. )

bl THE GENERAL COURT OF JUSTICE

, SUPERIOR COURT DIVISION DOCKET NO.

COMPLAINT

clerknewhano V|RRa^RT

Lindsay TauCk Deputy Clerk of Superior Court

Plaintiff American Transportation Group Insurance Risk Retention Group (“American

Transportation”) brings this Complaint against Defendants MVT Insurance Services, Inc.

(“MVT”), Amrit Singh (“A. Singh” or “Andy Singh”), Eleazar Rojas (“Rojas”), and Shamsher

Singh (“S. Singh”) (collectively “Defendants”), and states as follows:

INTRODUCTION

1. American Transportation is an insurance entity that provides a critical service to

its insureds, most of whom are small independent trucking companies and owner-operators

without long histories on the road. These truckers often must pay sky-high premiums for the

liability insurance that is required to operate. American Transportation helps them obtain

liability insurance at more affordable pricing, which helps keep the small business in business.

2. Although American Transportation is continuing to serve its insureds, it recently

discovered that its now-terminated Managing General Agent, MVT, as well as MVT’s CEO,

Andy Singh, were covertly using American Transportation as a vehicle for their own wrongful

and illegal gain. MVT, A. Singh, and others at their direction engaged in a multi-faceted pattern

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of misconduct, which culminated in wrongfully funneling money belonging to American

Transportation and its policyholders into MVT’s and A. Singh’s pockets. They fueled their

scheme by selling and collecting fees from millions of dollars of insurance policies, which put

American Transportation well beyond the limits of the net written premiums-to-surplus ratio of

2:1 imposed upon American Transportation by the North Carolina Department of Insurance (the

“Department of Insurance”). In so doing, MVT breached its contractual and fiduciary duties to

American Transportation by, among other things, taking funds that were being held in trust for

American Transportation and converting them to MVT’s own use.

3. MVT and A. Singh repeatedly lead American Transportation into regulatory

trouble with the Department of Insurance for violating the mandated net premiums-to-surplus

ratio. Even worse, in order to convince the Department of Insurance that American

Transportation had corrected its premiums-to-surplus ratio problem, MVT and A. Singh falsely

represented that they contributed sufficient surplus to enable American Transportation to write

more insurance. They claimed that the supposed surplus was funded by MVT utilizing the

commissions and fees to which MVT claimed to be entitled under its agreement with American

Transportation. In truth, MVT and A. Singh were taking premium payments from the dedicated

trust account, the beneficiary of which is American Transportation, and contributing them as

MVT’s assets as well as using them for the personal spending of A. Singh.

4. MVT and A. Singh artificially inflated American Transportation’s surplus so that

they could sell more policies and earn more fees and commissions for MVT and A. Singh while

appearing to be in compliance with the net premium-to-surplus ratio.

5. This scheme came to light only after independent consultants (engaged by

American Transportation’s Board of Directors) dug into the finances. The consultants

discovered that MVT and A. Singh had stolen over a million dollars in commissions and fees on

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premiums that had not yet been collected and wrongfully used multiple millions of dollars to

create false surplus to try and dupe the Department of Insurance into allowing them to continue

to write policies.

6. Through the false representations of A. Singh and MVT to the Department of

Insurance, policyholders, and others that they were operating appropriately and in compliance

with applicable regulations, American Transportation was able to operate for an additional

twelve months despite not truly being in compliance with the mandated net premiums-to-surplus

ratio.

7. The Department of Insurance placed American Transportation under confidential

administrative supervision on April 3, 2020, and American Transportation terminated MVT’s

contract that same day.1

8. Undeterred, MVT and A. Singh continue to hold themselves out as American

Transportation’s agents in order to try and draw down its accounts and interfere in American

Transportation’s orderly operations, all of which put American Transportation in danger of

violating the Department of Insurance’s supervision order. American Transportation believes

MVT and A. Singh’s efforts in this regard are designed to confuse all parties involved and make

it more difficult to uncover their wrongdoing.

9. MVT and A. Singh are liable to American Transportation for potentially millions

of dollars in wrongfully diverted and converted funds. Moreover, their attempt to regain control

over American Transportation and to hide their wrongdoing must be stopped. Their misconduct

threatens American Transportation’s ability to meet the promises and obligations contained in

1 The confidentiality of the NCDOI administrative supervision is intended to protect the entity placed under supervision and does not restrict the entity from disclosing the order or the fact of such supervision. Nonetheless, prior to disclosing the fact of and the terms of such administrative supervision, American Transportation discussed such disclosure with NCDOI and obtained NCDOI’s permission.

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their insurance policies, placing policyholders in potential jeopardy if there are not sufficient

funds to pay claims and defend such policyholders.

10. This lawsuit seeks to remedy the wrongs perpetrated by MVT and A. Singh and

confirm their total disassociation from American Transportation.

PARTIES

11. American Transportation is a North Carolina corporation that was licensed by the

Department of Insurance as a captive insurance company, specifically a risk retention group, on

July 2, 2018. As of March 26, 2020, American Transportation’s registered principal place of

business is in Wilmington, North Carolina.

12. MVT is a California corporation with its principal place of business, upon

information and belief, at 100 Saratoga Avenue #310, Santa Clara, California 95051. From

American Transportation’s inception until April 3, 2020, MVT served as MVT’s general agent,

responsible for marketing, underwriting, and other services pursuant to a contract between the

parties. MVT’s agent for service of process is A. Singh.

13. Amrit (Andy) Singh is a resident of California. At all times relevant hereto, A.

Singh controlled MVT, all persons affiliated with MVT, and even two directors of American

Transportation. Until March 2020, A. Singh also controlled all aspects of American

Transportation’s business even though he was neither an officer nor a director. Upon

information and belief, A. Singh can be served at 20975 Valley Green Drive #276, Cupertino,

California 95014.

14. Eleazar Rojas is, upon information and belief, a resident of California. At all

times relevant hereto, Rojas has been and continues to be a member of the Board of Directors of

American Transportation, as well as an agent of MVT. Upon information and belief, Rojas can

be served at 20975 Valley Green Dr. Cupertino, CA 95014.

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15. Shamsher Singh is, upon information and belief, a resident of California. At all

times relevant hereto, S. Singh has been and continues to be a member of the Board of Directors

of American Transportation. S. Singh is also A. Singh’s brother-in-law. Upon information and

belief, S. Singh can be served at 5130 W. Fir Ave. Fresno, CA 93722.

JURISDICTION AND VENUE

16. This Court has personal jurisdiction over MVT because MVT has purposefully

availed itself of North Carolina, engaged in substantial activity within the State, and caused

injury within this State. MVT contracted with American Transportation, a North Carolina

domiciled and regulated insurance entity, to provide services directly related to American

Transportation’s provision of insurance in North Carolina. The parties’ agreement specifies that

it is governed by North Carolina law. In addition, MVT, through its agents, represented

American Transportation before the Department of Insurance on multiple occasions and held

itself out as one with authority to so interact and negotiate with the Department of Insurance.

MVT also misappropriated millions of dollars from American Transportation. MVT engaged in

an artifice designed specifically to dupe the Department of Insurance into believing that

American Transportation had a sufficient net premiums-to-surplus ratio to write the millions in

dollars in premiums beyond what was permissible for American Transportation under North

Carolina law and to earn commissions and fees thereon. As recently as last month, MVT

engaged a North Carolina attorney specifically to deal with the Department of Insurance and the

North Carolina Department of Justice. By its actions, MVT purposefully availed itself of the

privilege of doing business in North Carolina and is subject to personal jurisdiction in this Court.

17. This Court has personal jurisdiction over A. Singh because A. Singh has

purposefully availed himself of North Carolina, engaged in substantial activity within the State,

and caused injury within this State. Specifically, A. Singh directed MVT to engage in the

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actions set forth in this Complaint, including participating personally and through MVT in the

conversion of funds from American Transportation and the wrongful scheme to dupe the

Department of Insurance regarding American Transportation’s net premiums-to-surplus ratio. A.

Singh aided and abetted MVT’s breaches of fiduciary duty in connection with its responsibilities

to a North Carolina domiciled and regulated insurance entity, and he aided and abetted Rojas’s

and S. Singh’s breaches of fiduciary duty to a North Carolina corporation. A. Singh perpetrated

a scheme specifically designed to deceive the North Carolina Department of Insurance and to

divert and convert funds belonging to a North Carolina corporation. A. Sign has solicited, and

caused others to solicit, individuals and entities within this State as part of the above-referenced

actions, which caused injury within this State. As recently as last month, A. Singh engaged a

North Carolina attorney specifically to deal, on A. Singh and MVT’s behalf, with the North

Carolina Department of Justice.

18. This Court has personal jurisdiction over S. Singh and Rojas because at all times

relevant to this lawsuit they have been officers or directors of American Transportation, and the

claims against them arise out of their conduct as officers and directors of American

Transportation.

19. Venue is appropriate in this Court because American Transportation maintains its

principal place of business at 6752 Rock Spring Road, Suite 310 Wilmington, North Carolina

28405 and because all of the Defendants reside outside of North Carolina.

FACTUAL ALLEGATIONS

20. A risk retention group (“RRG”) is a small insurance company permitted to issue

liability insurance policies across the United States. Traditional insurance companies, in

contrast, typically can only write insurance policies in their states of licensure.

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21. RRGs exist thanks to the federal Liability Risk Retention Act of 1986 (“LRRA”)

(15 U.S.C. §§ 3901-3906), which partially preempts state insurance laws to allow an RRG

licensed in the home state to register in any other state and issue insurance policies to residents

of those states. The LRRA vests virtually all regulatory oversight over RRGs in their state of

licensure while placing various restrictions on these companies. These restrictions limit RRGs

to writing only liability insurance coverage and require that all insureds be equity owners of the

RRGs and all equity owners of the RRG be insureds.

22. RRGs rely on different types of contracted services providers in order to operate.

The primary service providers for an RRG typically include:

• a managing general agent, who usually runs the RRG’s day-to-day operations, makes underwriting decisions, and works with retail third-party agents to market and sell RRG policies;

• a captive manager, who is an insurance professional that coordinates and serves as a liaison between the service providers, the RRG’s board of directors, and government regulators;

• a third-party administrator, who receives, adjusts, and pays claims; and

• attorneys, actuaries, accountants, investment advisers, and other consultants.

23. American Transportation was incorporated in 2018 in North Carolina to write

liability policies in the over-the-road trucking space. Upon information and belief, American

Transportation was the brainchild of A. Singh. Together with his wife, A. Singh owns and runs

MVT and intended to (and did) use American Transportation as a mechanism to write policies

and collect commissions fees on as many insurance policies as he could get away with.

24. A. Singh could not be the public face of American Transportation, however, as

that would have required disclosure of his checkered history with insurance regulators

elsewhere. This past includes an order (later rescinded) from California’s Department of

Insurance that barred him from the insurance industry.7

25. North Carolina law also restricts the influence any service provider may have

over a Risk Retention Group. See NC Stat 58-22-15(d)(2)a. (restricting term length of material

service provider contracts and requiring approval of majority of independent directors to enter

into such contracts); NC Stat 58-22(15)(d)(l)b. (requiring RRGs to have a majority of

independent board members); NC Stat 58-34-2(1) (barring insurance companies from

appointing to its board of directors any officer, director, employee, subagent or controlling

shareholder of its managing general agent).

26. At the time of its formation, American Transportation had three directors, Rojas,

S. Singh and Wesley Deaton. Its officers were S. Singh (President and Treasurer), Parmveer

Singh (Assistant Treasurer) and Rojas (Secretary).

27. As mandated by law, those purchasing American Transportation policies became

stockholders of American Transportations while their policy was in force. Nonetheless,

American Transportation has never held an annual meeting nor formally distributed any stock.

28. The law also requires that a majority of American Transportation’s directors be

independent. American Transportation was not compliance with this requirement until very

recently. Upon formation, Deaton was the only independent director, despite representations to

the Department of Insurance otherwise. Rojas is an insurance agent connected to MVT and A.

Singh; S. Singh is the brother of Nirmal Kaur, who is an executive officer of MVT and A.

Singh’s wife; Parmveer Singh is A. Singh’s son.

29. The formation of American Transportation included appointing MVT as

managing general agent, in charge of marketing, underwriting, and risk management service

provider.

30. American Transportation and MVT executed a Service Agreement dated My 2,

2018 (the “Service Agreement”). MVT agreed to perform various services for American

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Transportation, including collecting premium funds and other funds due American

Transportation from policyholders. MVT promised to deposit premium payments in a bank

account used solely for such purposes (the “Premium Trust Account”) and to remit such

payments to American Transportation (minus any fees due to MVT) along with other funds

collected from policyholders. A true and correct copy of the Service Agreement is attached

hereto as Exhibit A.

31. The Service Agreement also required that MVT and its agents and employees,

“act in an independent capacity and not as officers, employees or agents of [American

Transportation].” (Exh A. Service Agreement Art.VI(e)).

32. The Department of Insurance licensed American Transportation in North

Carolina as an RRG on July 2, 2018. A condition placed on the license required American

Transportation to maintain a net written premiums-to-surplus ratio of 2 to 1, until determined

otherwise by the Commissioner.2 In other words, American Transportation had to maintain a

surplus equal at all times to at least half of all written premiums, or, vice versa, American

Transportation was limited to writing net premiums in excess of two times its given surplus.

33. The Department of Insurance also approved American Transportation’s business

plan, which projected annual gross written premium projections of $1,891,275 for 2018 and

$3,963,750 in total for 2019. Based on these projections, American Transportation would have

needed between approximately $1,000,000 to $2,000,000 in surplus over that same time frame.

34. Nevertheless, A. Singh and MVT immediately set out to market and sell as many

American Transportation policies as possible, without much regard for proper underwriting and

risk analysis or the Department of Insurance mandated net premiums-to-surplus ratio.

2 The International Risk Management Institute defines “surplus” as: “the amount by which an insurer’s assets exceed its liabilities.” It is the equivalent of “owner’s equity” in standard accounting terms. The ratio of an insurer’s premiums written to its surplus is one of the key measures of its solvency. (See IRMI Glossary (https ://www. irmi. com/term/insurance-definitions/surplus)).

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35. Indeed, up until March 2020, A. Singh was the “man behind the curtain” at

American Transportation. He made every decision, negotiated every contract with other service

providers, and otherwise ran the company as if it was his own. A. Singh did so despite the

express contractual condition that neither MVT nor any of its employs or agents act on behalf

of American Transportation.

36. A. Singh, and numerous other MVT employees, consistently communicated with

email addresses containing the acronym “ATGI” and otherwise made decisions for and on

behalf of American Transportation. A. Singh and other MVT personnel even had authority

over American Transportation’s bank accounts.

37. Less than a year into its operations, American Transportation was already

writing net premiums at three or four times the dollar amounts of the projections provided to

and approved by the Department of Insurance.

38. As a result, the Department of Insurance notified American Transportation on

June 12, 2019, that its business plan was not in compliance with N.C. General Statute § 58-22-

15(a) and (b), as its gross written premium far exceeded its approved business plan, totaling

$8,620,305 for 2018 and $7,380,908 as of March 31, 2019.

39. On two separate occasions, American Transportation submitted a plan of change

of business plan with the Department of Insurance. The Department did not approve either

submission as they were lacking in several material aspects, including updated projections.

40. With American Transportation’s net premiums-to-surplus ratio climbing to 3.05

to 1 as of March 31, 2019, and the 3.12 to 1 as of June 30, 2019, the Department of Insurance

ordered American Transportation to either maintain a rolling 2:1 ratio or stop writing new

policies.

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41. The Department of Insurance also suggested American Transportation enter into

a Voluntary Settlement Agreement (“VSA”). The VSA required American Transportation to

maintain a 12-month rolling net written premiums-to-surplus ratio of 2 to 1, with full compliance

by American Transportation to be achieved by September 3 0, 2019.

42. American Transportation voluntarily entered into the VSA with the Department

of the Insurance on September 12, 2019. Per the VSA’s terms, American Transportation had to

maintain a 12-month rolling net written premiums-to-surplus ratio of 2 to 1 at all times;

otherwise, it would voluntarily cease writing business until the Department of Insurance

approved American Transportation’s revised plan of operation and projections and American

Transportation regained compliance with the 12-month rolling net written premiums-to-surplus

ratio of 2 to 1.

43. Yet that same day it signed the VSA, American Transportation requested that the

specified compliance date be pushed back from September 30, 2019, to November 30, 2019.

American Transportation represented that it was sourcing an additional $1.25 million in surplus

notes from MVT to obtain compliance with its ratio and would be aided by American

Transportation decreasing policy writings in September and October 2019.

44. A surplus note is a mechanism for investing an insurance company through debt.

Under traditional accounting rules, a loan must be shown on the company’s books as a liability.

An insurance company can count a surplus note as equity for insurance regulatory purposes

because the terms of the note include conditions where repayment of the principal or interest on

the note is subject to approval by state insurance regulators. Insurance regulators treat requests

to make payments on surplus notes in the same light as they treat requests to issue dividends to

equity shareholders.

45. The Department of Insurance did not contest the requested deferral and on11

October 4, 2019, a revised VS A (the “Revised VS A”) was executed requiring American

Transportation to obtain compliance by November 30, 2019, with the 12-month rolling net

written premiums-to-surplus ratio of 2 to 1 and to thereafter maintain such ratio at all times. A

true and correct copy of the October 4, 2019 Revised VS A is attached hereto as Exhibit B.

46. Despite MVT and A. Singh’s representations, it took little time before American

Transportation was violating the Revised VS A. American Transportation notified the

Department of Insurance on December 11, 2019, that it was not in compliance with the net

premium-to-surplus ratio in the Revised VS A. At that time, American Transportation had a 12-

month rolling net written premiums-to-surplus ratio of 2.3 9 to 1.

47. Accordingly, the Department of Insurance asked American Transportation to

confirm by December 26, 2019, that it had voluntarily ceased writing business as required

under the Revised VS A.

48. On December 24, 2019, an American Transportation representative confirmed to

the Department of Insurance that American Transportation had stopped writing any new or

renewal business.

49. Around this time, American Transportation’s then-Captive Manager, Jonathan

McKenzie, began to suspect that the surplus notes MVT provided to prop up American

Transportation’s ratio were derived from premium dollars due to American Transportation, not

fees and commission due to MVT. Funds that were already due to American Transportation

could not count towards surplus.

50. On information and belief, McKenzie informed Wesley Deaton, an independent

director and American Transportation’s required North Carolina resident director, of his

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suspicion. Soon thereafter, Deaton resigned his position as a director of American

Transportation.

51. In mid-December 2019, one of American Transportation’s largest third-party

agents, Phillip Winter, introduced A. Singh to Michael Hunter, a respected accounting and

insurance consultant. Winter suggested that Hunter might be able to assist American

Transportation with its ongoing regulatory issues with the Department of Insurance.

52. Hunter was ultimately hired to help, and one of his first acts was to arrange a

conference call with A. Singh, McKenzie, and Satya Narayan, American Transportation’s CPA.

On that call, McKenzie disclosed his suspicion that MVT’s source of contributions to American

Transportation’s surplus were premiums received by MVT that were already due to American

Transportation.

53. In response, A. Singh protested that McKenzie was mistaken. A. Singh insisted

that the surplus notes instead consisted of fees and commissions due to MVT and that, rather

than taking money it was owed, MVT put those funds into American Transportation.

54. Thereafter, Hunter contacted the Department of Insurance to see if American

Transportation could begin operating normally again after making necessary changes to its

operations. On the call, the Department of Insurance informed Hunter that McKenzie had

tendered his resignation.

55. On January 30, 2020, the Department of Insurance announced that American

Transportation could provisionally write renewal business between February 1, 2020 to March

31, 2020, while it continued to resolve all remaining items outstanding per the Revised VSA.

56. On February 10, 2020, American Transportation provided the Department of

Insurance its monthly net written premiums-to-surplus report. The report stated that American

Transportation’s 12 month rolling net written premiums-to-surplus ratio was below 2 to 1,

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within the range of 1.62 to 1.75 to 1 as of January 30, 2020, supporting American

Transportation’s ability to begin writing business.

57. To get American Transportation to this satisfactory surplus, MVT represented

that it was contributing millions of dollars in surplus notes supposedly drawn from MVT’s

shares of fees and commissions on business produced for American Transportation.

58. Concerned by the suspicions raised by McKenzie, Hunter began investigating

the source of American Transportation’s surplus.

59. Through his investigation, Hunter determined that: (a) MYT was contributing

premium moneys already due to American Transportation as surplus notes while falsely

claiming that such moneys represented fees and commission due to MVT; (b) in many instances

MVT was contributing, as putative surplus notes, premiums that would be due to American

Transportation but that had not yet even been collected; and (c) MVT was taking an amount

well in excess of its earned fees and commissions and then using such wrongfully transferred

amounts for MVT operating expenses and personal spending by A. Singh and his wife, Nirmal

Kaur.

60. The Department of Insurance met with American Transportation on March 6,

2020. During this meeting, American Transportation informed the Department of Insurance

that $4 million of surplus notes recorded as of September 30, 2019 were actually invalid as they

consisted of premium dollars already due to American Transportation as receivables.

61. Then, on March 10, 2020, Hunter provided a report to the Department of

Insurance that disclosed how he had determined that the $4 million of surplus notes were invalid.

62. To try to achieve compliance with the Department of Insurance regulations and

mandates, American Transportation’s Board of Directors (now down to Rojas and S. Singh

given Deaton’s resignation) passed a series of resolutions on March 13, 2020, by unanimous

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action on written consent executed by each of Rojas and S. Singh (the “March 13th

Resolutions”). A true and correct copy of the March 13th Resolutions is attached hereto as

Exhibit C.

63. Among other things, the March 13th Resolutions made effective the appointment

of three new members of American Transportation’s Board of Directors, Ron Gionet, Scott

Syphers and E. Paul Shaefer, all of whom are independent under the applicable North Carolina

laws and regulations, and one of whom is a resident of North Carolina, as required by law.

64. The March 13th Resolutions also instituted, among other things, the following:

• Appointment of Hunter as Assistant Secretary of American Transportation;

• Establishment of an Audit Committee of the Board, composed of Gionet, Syphers and Schaefer;

• Appointment of new auditors;

• Engagement of Palmetto Consulting as the new Captive Manager for American Transportation;

• Engagement of Butler Snow LLP as corporate counsel for American Transportation;

• Confirmation of American Transportation’s relationship with Michael Hunter Consulting LLC as American Transportation’s insurance entity and operations and financial advisor;

• Designation of Hunter and Matt Holycross (Palmetto Consulting’s managing member) as authorized signers on all American Transportation bank and investment accounts;

• American Transportation’s acceptance of the Department of Insurance’s January 30, 2020 provisional renewal-only writing authority and agreement to stop writing new and renewal insurance business effective March 2, 2020 per the Department’s request; and

• Authorization of Hunter to work with Palmetto and American Transportation’s legal counsel “to address any [Department of Insurance] concerns ....”

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65. On March 16, 2020, American Transportation filed its 2019 NAIC Annual

Statement, which revealed a declining financial position due in part to the $4 million of invalid

surplus notes. The statement also disclosed a 12-month rolling net written premiums-to-surplus

ratio of 3.85 to 1, a violation of the Revised VS A and American Transportation’s licensure.

66. On March 18, 2020, Nirmal Kaur, President of MVT and A. Singh’s wife, filed a

written disclosure to the Department of Insurance. In this disclosure, Kaur, one of the signers

of the surplus notes, admitted the surplus notes lacked funding from outside sources and were

therefore invalid. As an excuse, she claimed McKenzie, the prior captive manager, had

somehow misled her.

67. Following passage of the March 13th Resolutions, A. Singh and MVT began to

realize that they were losing the control of American Transportation. Upset, A. Singh

threatened to terminate Hunter’s contract with American Transportation if he did not get it

compliant with the Department of Insurance immediately. (Of course, as neither an officer nor

a director of American Transportation, A. Singh had no such power. MVT had no such power

either.)

68. On March 30, 2020, a special telephonic meeting of American Transportation’s

newly constituted Board of Directors was noticed for April 3, 2020.

69. On or about March 31, 2020, Kaur attempted to remove the signatory authority

of Hunter and Holycross (which had been granted in the March 13th Resolutions at the express

direction of the Department of Insurance). She also tried to withdraw (via a cashier’s check) $1

million from an American Transportation bank account held within the Bank of the West

depository.

70. Kaur holds no officer or director position within American Transportation.

Further, she disclosed neither a business purpose either for the funds she was attempting to

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withdraw, nor approval from the Board for the termination of the noted signatory authority.

Fortunately, the bank refused Ms. Kaur’s attempted withdrawal and notified management of

American Transportation.

71. On April 2, 2020, the day before the scheduled board meeting, Rojas and S.

Singh, the two non-independent Directors, tried to “revoke” their consent to the March 13 th

Resolutions. In their “revocations,” Rojas and S. Singh declared that the March 13th

Resolutions supposedly were “null and void,” and that as a result they were the only valid

members of American Transportation’s Board of Directors. These “revocations” (which have

the same effect as a director purporting to change his or her vote after valid passage of a

resolution) are invalid under North Carolina law.

72. The three independent directors timely called into the April 3rd telephonic board

meeting, as did Hunter, Holycross, and American Transportation’s legal counsel. Rojas never

called in, while S. Singh called in late and moved to adjourn, which motion was defeated.

73. Holycross gave a detailed presentation at the meeting regarding the history of the

American Transportation’s net premiums-to-surplus ratio issues and the invalid and wrongful

nature of the surplus notes issued by MVT.

74. Hunter also detailed numerous other issues and irregularities within American

Transportation. This included, but was not limited to, improper financial statements, failure to

provide numerous items the Department of Insurance had expressly demanded, and lack of

internal controls and any form of a valid corporate governance structure.

75. After much discussion and after S. Singh had joined the meeting, the Board of

Directors passed several resolutions intended address the numerous identified problems,

including those that had also been raised by the Department of Insurance. These resolutions

included:

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termination of the Service Agreement with MVT for cause;

• termination of all of American Transportation’s officers (excluding only Hunter);

• rescission of all authorizations (absent those given to Hunter and Holycross) having to do with financial institutions, banks, investment companies, or other entities holding funds belonging to American Transportation;

• appointment of Hunter as President of American Transportation;

• consenting to the Department of Insurance’s placing American Transportation under confidential administrative supervision;

• directing the audit committee to undertake an audit and bring legal action for any deficiencies with respect to American Transportation’s services providers; and

• directing Hunter to issue stock certificates and proxy materials to shareholders so that American Transportation could hold a proper annual meeting of shareholders.

76. All of these resolutions passed. Notably, S. Singh voted in favor of the

termination of MVT, with that resolution passing by a vote of 4-0. While S. Singh voted

against all remaining resolutions, they still each passed by a margin of 3-1.

77. That same afternoon, the Department of Insurance issued a Summary Order

placing American Transportation under immediate confidential administrative supervision

pursuant to N.C. General Statute §§ 58-30-60 and 58-30-62. A true and correct copy of the

Summary Order is attached hereto as Exhibit D.

78. The Commissioner of the Department of Insurance may subject an insurer to

administrative supervision if it appears that the insurer has done any of the following:

• exceeded its powers;

• failed to comply with applicable provisions of this Chapter;

• conducted its business in a manner that is hazardous to the public or to itsinsured; or

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• consented to administrative supervision.

N.C. General Statute § 58-30-62(c),

79. In its April 3rd Summary Order, the Department of Insurance made numerous

findings of fact, many of which include or mirror the facts recounted in this Complaint. For

example, the Department of Insurance expressly found that:

Mr. Andy Singh, director of MVT, has exerted undue influence over American Transportation although Mr. Singh holds no officer or director position within American Transportation. In addition, Mr. Singh represented himself as a representative of American Transportation, as evidenced by an email provided to the Department on March 30, 2020, by a prospective captive manager (“Prospective Captive Manager”) stating that they were engaged as the new captive manager of American Transportation. On a call held by the Department with the Prospective Captive Manager, the Prospective Captive Manager stated that they were engaged by Mr. Singh and disclosed that Mr. Singh communicated to them that the current captive manager had been terminated. Mr. Singh also attempted to negotiate reinsurance on behalf of American Transportation. Mr. Singh’s attempt to engage captive management services and negotiate reinsurance on behalf of American Transportation were without authority from American Transportation and were with blatant disregard of the use of the retained reinsurance intermediary.

80. Based upon these and other facts identified in its Summary Order, the

Department of Insurance found American Transportation in such condition that its continued

operations were hazardous to the public or to its insureds, as defined in subsections (2), (6a),

(11), (12), (13), (14), (15), and (19) of N.C. General Statute § 58- 30-60(b).

81. The Department of Insurance’s Summary Order places American Transportation

under administrative supervision and expressly restricts it from taking 18 different actions

absent the express written prior approval of the Department. Those actions for which American

Transportation must seek approval include:

• disposing or encumbering any assets in amounts greater than $1,000;

• withdrawing any funds in excess of $ 1,000;

19

• making any loans to affiliates, officers, directors, shareholders, or third parties;

• investing in anything other than US. Treasury obligations;

• transferring any property in excess of $ 1,000;

• incurring any debt;

• writing any new or renewal insurance business;

• entering into any reinsurance contract;

• entering or terminating any service provider agreement;

• making any material changes in management;

• being represented by any service providers who do not have express authorization; and

• making any material changes in business operations.

82. Notice of termination of the Service Agreement was sent to MVT after the April

3rd board meeting. In addition, the Department of Insurance’s Summary Order was provided to

A. Singh, MVT, and other individuals affiliated with A. Singh and MVT.

83. Despite receiving notice of MVT’s termination and the Summary Order, MVT

and A. Singh have engaged (and continue to engage) in numerous improper and illegal

activities purportedly in American Transportation’s name or on its behalf.

84. Many of these activities violated the Department of Insurance’s Summary Order.

The misconduct included, but was not limited to:

• attempts to obtain reinsurance for American Transportation;

• requests to selling agents to divert premium and other funds from American Transportation to MVT;

• telling service providers, agents, and, on information and belief, insureds, that A. Singh, MVT, and/or persons under their control are the lawful authority for American Transportation;

20

• renewing policies;

• improperly extending policies;

• collecting and failing to remit premium monies due to American Transportation;

• attempting to lock American Transportation’s management out of computer systems necessary to maintain American Transportation’s policies, including a Quick Base account used to manage policies (pricing, issuing, etc.);

• using email addresses that include “ATGI” to falsely portray themselves to third parties as authorized agents of American Transportation;

• attempting to engage service providers for American Transportation;

• sending emails to American Transportation’s service providers claiming that the current Board of Directors is illegitimate;

• telling American Transportation’s seivice providers to not communicate with American Transportation’s authorized representatives but instead only with A. Singh and MVT; and

• soliciting American Transportation policyholders with promises of cash and/or discounts if they vote in favor of some measure intended to allow A. Singh to take over American Transportation.

85. American Transportation’s authorized management has investigated and

continues to investigate and trace MVT’s actions and omissions during its time as American

Transportation’s Managing General Agent. As of this time, American Transportation has

determined numerous instances of wrongdoing on the part of MVT and A. Singh, the most

important of which is the failure to remit to American Transportation tremendous amounts of

money due to American Transportation as premium and related fees. American

Transportation’s audit in this respect remains ongoing, although as of this time, on information

and belief, American Transportation believes that MVT tunneled to itself and/or A. Singh more

than a million dollars rightfully belonging to American Transportation.

21

COUNT I(Declaratory Judgment)

86. American Transportation repeats and incorporates the foregoing allegations as

though fully set forth herein.

87. The March 13th Resolutions increased the Board of Directors from three to five

and elected Gionet, Syphers and Schaefer to fill the vacancies created by the combination of

Deaton’s resignation and the two additional Board seats.

88. The March 13th Resolutions effected numerous other corporate actions, all as set

forth in the resolutions.

89. The March 13th Resolutions were adopted based upon the unanimous action of

the two then-existing Board members, Rojas and S. Singh. Both undisputedly provided their

signatures evidencing their (a) consent to taking all such actions therein without a meeting and

(b) affirmative vote in favor of each such resolution. As such, the March 13th Resolutions were

passed in full accordance with North Carolina law and American Transportation’s bylaws.

90. E. Rojas’s and S. Singh’s consent to the March 13th Resolutions is further

evidenced by the attempt by each of them, more than two weeks later, to revoke such consent.

Revocation of a consent after the action has been passed is ineffective as a matter of law. Thus,

the March 13th Resolutions, and the actions effected therein, remain valid and binding actions of

American Transportation’s then-Board of Directors. Accordingly, the current Board of Directors

of American Transportation consists of Rojas, S. Singh, Gionet, Syphers, and Schaefer.

91. The current Board of Directors issued a valid notice of a special telephonic

meeting to occur on April 3, 2020. At the April 3rd meeting, the Board validly passed the April

3rd Resolutions, which included a 4-0 vote to terminate MVT’s contract with American

22

Transportation and to remove all American Transportation officers other than Hunter and to

name Hunter Acting President of American Transportation.

92. Despite these valid actions of the American Transportation Board, MVT, Rojas,

S. Singh, and A. Singh have publicly disputed the current make-up of the Board and the validity

of the March 13th and the April 3rd Resolutions. Thus, a case or controversy currently exists as

to the current make-up of American Transportation’s Board of Directors and its actions on

March 13, 2020 and beyond.

93. American Transportation seeks a declaration that the March 13th Resolutions are

valid and binding on American Transportation, MVT, Rojas, S. Singh, A. Singh, as well as all of

their agents, and that all actions taken therein are valid and binding; that the current valid Board

of Directors of American Transportation consists of Rojas, S. Singh, Gionet, Syphers and

Schaefer; and that all actions of the Board in the March 13th Resolutions and thereafter,

including passage of the April 3rd Resolutions, are valid and binding.

COUNT II(Against MVT For Breach of Contract)



95. American Transportation and MVT entered into the Service Agreement effective

July 2, 2018, pursuant to which MVT was to perform marketing, policy administration, risk

management, and underwriting services on behalf of American Transportation. In reality, MVT

used the Service Agreement as a vehicle to write as many policies as possible, collect as many

premiums as possible, collect as many fees off of such premiums as possible, and even to convert

premium fees due to American Transportation to its own use or that of its agents. Tellingly, the

Service Agreement was executed on behalf of American Transportation by Rojas, an officer and

23

director of American Transportation who was also, despite falsely representing independence to

the Department of Insurance, an officer of MVT.

96. Pursuant to the Service Agreement, MVT was to perform such services “in

accordance with sound insurance practices.” (Exh. A, Service Agreement, Art. 11(a)). In breach

of the Service Agreement, MVT failed to perform policy administration, risk management, and

underwriting services “in accordance with sound insurance practices.” Rather, MVT hardly

performed such services at all, let alone in accordance with sound insurance practices. MVT’s

underwriting essentially was nonexistent and A. Singh volunteered that he priced accounts “on

feel.” Indeed, MVT had no documentation or basis for otherwise pricing accounts; had no

documentation regarding adherence to underwriting guidelines; and did not follow any rating

guidelines or utilize any structure in its “underwriting.” To the extent MVT took any action with

respect to proper processes, it was at the request of agents/brokers and not initiated by MVT. In

further breach of the Service Agreement, MVT failed to keep any proper financial or accounting

records of any nature and utilized no internal controls. MVT’s services were performed so

haphazardly and improperly that American Transportation’s reinsurer terminated its relationship

with American Transportation following an audit of MVT’s practices. MVT’s breaches of its

duties have damaged American Transportation.

97. Pursuant to the Service Agreement, MVT was to collect funds from insureds

(premiums, capital funds, etc.) on behalf of American Transportation and deposit those funds

into an account solely utilized for American Transportation. MVT was to remit such funds, net

of applicable fees due to MVT, to American Transportation on a monthly basis. Although MVT

established the Premium Trust Account and did occasionally remit funds due to American

Transportation, it otherwise: (a) failed to timely and properly remit all premium and related

funds due to American Transportation on a monthly basis (resulting in a receivable at American

24

Transportation of millions of dollars); (b) failed to provide any proper reporting identifying

premium and related funds received, fees due MYT, etc.; (c) improperly diverted funds from the

Premium Trust Account and belonging to American Transportation for use in MVT’s operations

and for personal use of A. Singh and others; and (d) improperly diverted funds from the

Premium Trust Account for fraudulent use as surplus for American Transportation in order to

dupe the Department of Insurance into believing American Transportation was compliant,

thereby allowing MVT to write even more policies and engage in the above mentioned

wrongdoings and diversions of money.

98. Pursuant to the Service Agreement, MVT also was to monitor account

performance and undertake quality assurance measures; maintain true and correct records of all

business conducted under the agreement; and to return all files to American Transportation upon

termination of the Service Agreement. In breach of the contract, MVT failed to monitor account

performance and undertake quality assurance measures; failed to maintain true and correct

records; and has failed to return all files to American Transportation.

99. MVT’s numerous breaches of the Service Agreement have damaged American

Transportation in an amount to be proven at trial but which, in any event, is in excess of

$1,000,000.

COUNT III(Against MVT for Breach of Fiduciary Duty)



101. In its role of Managing General Agent to American Transportation and in its role

as a custodian and trustee of millions of dollars of funds belonging to American Transportation,

25

MVT was in a fiduciary relationship with American Transportation. As a fiduciary, MVT had a

duty to act in good faith and with due regard to the interests of American Transportation.

102. By MVT’s actions recounted herein, including but not limited to its: (a) failure to

timely and properly remit all premium and related funds due to American Transportation on a

monthly basis (resulting in a receivable at American Transportation of millions of dollars); (b)

failure to provide any sort of proper reporting identifying premium and related funds received,

fees due MVT removed, etc.; (c) improper diversion of funds from the Premium Trust Account

and belonging to American Transportation for use in MVT’s operations and for personal use of

A. Singh and others; and (d) improper diversion of funds from the Premium Trust Account for

fraudulent use as surplus for American Transportation in order to dupe the Department of

Insurance into believing American Transportation was compliant, thereby allowing MVT to

write even more policies and engage in the above-mentioned wrongdoings and diversions of

money, MVT breached its fiduciary duties to American Transportation.

103. MVT’s breaches of fiduciary duty have damaged American Transportation in an

amount to be proven at trial but which, in any event, is in excess of $1,000,000.

COUNT IV(Against MVT for Conversion)



105. By its actions recounted herein, including but not limited to failing to remit funds

due to American Transportation and diverting such funds to its use or the use of others, including

A. Singh, MVT has converted property (money) rightfully belonging to American Transportation

for its own use.

26

106. As such, MVT is liable to American Transportation in an amount to be proven at

trial but which, in any event, is in excess of $1,000,000.

COUNTY(Against Rojas and S. Singh for Breaches of Fiduciary Duties)



108. Under North Carolina common law and statutory law (N.C.G.S.A. § 55-8-30),

Rojas and S. Singh, as directors and officers of American Transportation, owed American

Transportation fiduciary duties of due care and loyalty. Rojas and S. Singh are required to

discharge their duties as directors and officers in good faith and to subordinate their personal

interests to those of American Transportation.

109. Rojas and S. Singh breached their fiduciary duties of care and loyalty to American

Transportation. They did so by: (a) abdicating total control of American Transportation to A.

Singh and MVT, as alleged throughout this Complaint; (b) failing to govern American

Transportation in any meaningful way; (b) failing to issue stock and hold appropriate

shareholders meetings; (c) allowing MVT and A. Singh to wrongfully inflate American

Transportation’s surplus and knowingly misrepresent such information to the Department of

Insurance; (d) allowing MVT and A. Singh to divert and convert to their own use monies

belonging to American Transportation; and (e) failing to establish any proper internal controls,

accounting, or corporate governance at American Transportation.

110. As such, Rojas and S. Singh are liable to American Transportation in an amount

to be proven at trial but which, in any event, is in excess of $1,000,000.

111. Further, Rojas and S. Singh have grossly abused their authority and discretion

with respect to American Transportation, and their removal from the Board of Directors is in the

27

best of interest of American Transportation. Accordingly, American Transportation is entitled to

an order removing both Rojas and S. Singh from the Board of Directors.

COUNT VI(Against A. Singh for Aiding and Abetting Breaches of Fiduciary Duty)



113. A. Singh is the face of, voice of, and primary actor for MVT. All of the actions of

MVT alleged herein were undertaken by or at the direction of A. Singh. A. Singh knowingly

directed and/or assisted MVT and all persons working in concert with MVT in breaching MVT’s

fiduciary duties to American Transportation, and A. Singh is thereby liable for aiding and

abetting MVT’s breaches of fiduciary duty.

114. Until stopped by the current management of American Transportation, A. Singh

acted as the voice of and primary actor for American Transportation, including exerting (and

continuing to exert) control over Rojas and S. Singh in their role on the Board of Directors of

American Transportation. A. Singh knowingly directed and/or assisted Rojas and S. Singh in

breaching their fiduciary duties to American Transportation, and A. Singh is thereby liable for

aiding and abetting Rojas and S. Singh’s breaches of fiduciary duty.

115. Asa result of A. Singh’s aiding and abetting MVT’s breaches of fiduciary duty to

American Transportation, A. Singh has caused damage to American Transportation in an amount

to be proven at trial but which, in any event, is in excess of $1,000,000.

COUNT VII(Against A. Singh for Conversion)


though folly set forth herein.

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117. The premiums and related fees collected by MVT were the property of American

Transportation and were to be remitted to American Transportation following deduction of any

fees and commissions due to MVT. As recounted herein, on numerous occasions, MVT failed to

remit such funds to American Transportation but diverted such funds to MVT’s own accounts.

From there, such funds were at times used to fund MVT operations. At other times, such funds

were diverted directly to A. Singh for his own personal use, including to buy properties, personal

goods, and other similar things.

118. A. Singh took such funds and put them to his own personal use despite his

knowledge that such funds rightly belonged to, and should have been remitted to, American

Transportation. By his actions A. Singh wrongfully converted American Transportation’s

property (money) to his own personal use and is liable to American Transportation in an amount

to be determined at trial.

COUNT VIII (Injunctive Relief)



120. MVT, A. Singh, Rojas, S. Singh, and others acting at their behest have taken, and

on information and belief will continue to take, various improper actions to the detriment of

American Transportation. This includes, but is not limited to, the following:

• holding themselves out as having authority to act on behalf of American Transportation;

• attempting to negotiate contracts for and on behalf of American Transportation;

• attempting to induce third party agents to remit funds belonging to American Transportation to MVT rather than to American Transportation;

29

• ordering American Transportation’s service providers to ignore American Transportation’s current management and deal only with A. Singh or his other MVT designees;

• utilizing email addresses incorporating the acronym “ATGI” in order to falsely convey a connection to American Transportation;

• improperly renewing or extending American Transportation policies in violation of the Department of Insurance Summary Order;

• entering false information regarding American Transportation policies into federal databases; and

• attempting to keep current American Transportation management out of American Transportation’s databases.

121. MVT, A. Singh, Rojas, and/or S. Singh have engaged in this misconduct despite:

(i) termination of the Service Agreement; (ii) the Department of Insurance’s Summary Order

restricting American Transportation’s actions; and (iii) direct demands from American

Transportation that they cease such action.

122. American Transportation also suspects that MVT and A. Singh may affirmatively

be selling and binding American Transportation policies or at least attempting to do so,

unbeknownst to American Transportation.

123. Unless enjoined from doing so by this Court, upon information and belief, MVT,

A. Singh, Rojas, S. Singh, and others acting at their behest will continue such actions to the

detriment of American Transportation. Such actions could put American Transportation in

violation of the Department of Insurance Summary Order, could materially increase American

Transportation’s exposure on policies written without American Transportation’s authorization,

and cause irreparable harm to American Transportation’s reputation.

124. As to these types of activities by MVT, A. Singh, Rojas, and S. Singh, American

Transportation has no adequate remedy at law.

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PRAYER FOR RELIEF

WHEREFORE, premises considered, American Transportation prays for judgment and

relief as follows:

1. A declaratory judgment that the March 13th Resolutions are valid and binding

resolutions of American Transportation’s then-Board; that Rojas, S. Singh, Gionet, Syphers and

Schaefer constitute the current and validly constituted Board of Directors of American

Transportation; and that all actions of the Board of American Transportation since the March

13th Resolutions (including but not limited to the April 3rd Resolutions) are valid and binding

actions of American Transportation’s Board of Directors.

2. Damages in an amount to be proven at trial against MVT for breach of contract

and conversion;

3. Damages in an amount to be proven at trial against MVT and A. Singh, jointly

and severally, for MVT’s breaches of its fiduciary duties to American Transportation;

4. Damages in an amount to be proven at trial against A. Singh, Rojas, and S. Singh,

jointly and severally, for Rojas and S. Singh’s breaches of their fiduciary duties to American

Transportation;

5. Damages in an amount to be proven at trial against A. Singh for conversion.

6. An award of punitive damages given that, as detailed above, Defendants

committed torts against American Transportation with actual malice, oppression, gross and

willful wrongdoing, and reckless and/or wanton disregard of American Transportation’s rights.

7. Upon motion properly made, preliminary and permanent injunctive relief against

MVT, A. Singh, Rojas, S. Singh, and all persons acting in concert with them, preventing them

from continuing to mispresent their authority as to American Transportation, taking action on

behalf of American Transportation, using American Transportation-related email addresses or

31

other communications, writing, renewing, or extending American Transportation policies,

attempting to interfere in any manner with American Transportation’s business, and enjoining

and ordering all such persons to comply with any and all Department of Insurance requirements

as to American Transportation.

8. An order removing both Rojas and S. Singh from the Board of Directors of

American Transportation.

9. An award of all costs and fees recoverable by law incurred in this action including

American Transportation’s attorney’s fees.

10. Such other and further relief as the Court deems just and proper.

This the /y day of May, 2020.

52844917.vl

: Lewis (#22167)Butler Snow LLP6752 Rock Springs Road, Suite 310 Wilmington, NC 28405 (910) 550-1320 (910) 550-1321 scott.lewis@butlersnow. com

Counsel for Plaintiff American Transportation Group Insurance Risk Retention Group

32

DocuSign Envelope ID: E596C0A2-A573-42B0-B16A-37A484CAAEF8

SERVICE AGREEMENTThis Agreement, made as of the 2nd day of July, 2018, between MVT Insurance Services, Inc. hereafter referred to as "Service Company" and American Transportation Group insurance Risk Retention Group, Inc., hereafter referred to as "the Client".

WHEREAS, the Service Company operates a business that provides marketing, policy administration, risk management and underwriting services; and Client operates a Risk Retention Group.

WHEREAS, the Client has requested that the Service Company perform certain services on its behalf with respect to policy service, risk and claims management on the terms set forth below,

NOW THEREFORE, in consideration of the foregoing mutual promises the parties hereby agree:

ARTICLE ITerms of Agreement

This Agreement shall commence on the 2nd day of July, 2018 and ending 31st day of December, 2019. Thereafter this Agreement shall renew for one (1) year, every year thereafter with the affirmative approval of a majority of the Board of Directors of the Company unless terminated pursuant to the terms of the Agreement or by operation of law.

ARTICLE IIService Company Agrees To:

a. Provide adequate personnel and facilities to perform the services and do the acts described below and otherwise in this Agreement that Service Company has agreed to for the Client, all in accordance with sound insurance practices;

b. Solicit, market, receive and accept or reject applications for insurance to be issued by the Client in accordance with underwriting guidelines approved by the Board at the time of application from eligible entities, all to be performed consistent with sound insurance practices. The Service Company shall underwrite, classify, rate, issue policies and binders of insurance and reinsurance for the Client which are in accordance with sound and accepted insurance practices and with such standards as may be fixed by the Board;

c. Collect funds (member premium, member capital, etc.) on behalf of the Client. The Service Company will deposit the Clients funds into an account solely utilized for the Client's activities. The Service provider will remit funds, net of applicable fees, to the Client on a monthly basis within 30 days of the month end.

d. Day to day policy services, including: processing vehicle and driver changes, cancellation and nonrenewals, and all administrative and clerical work.

e. Hire and terminate, as appropriate and in accordance with sound insurance practices, insurance producers (agents and brokers) and determine appropriate commission level. Commissions to agents and brokers shall be payable by and the responsibility of the Service Company;

f. Monitor accounts performance and undertake quality assurance measures.

A


g. Maintain electronic files for all accounts and policies with all changes and endorsements for the term of the contract.

h. Maintain true and complete records of all business conducted under this Agreement, in a manner and form approved by the Client, and will make available for examination and inspection to a duly authorized Client representative or the Commissioner, all such books and records.

i. Develop, maintain and administer the Client's marketing program conducted through its brokers in the jurisdictions where the Client is eligible and authorized to sell insurance to eligible members. Prepare mailings, advertisements, newsletters and other promotional material for the Client.

j. Maintain accept professional liability insurance coverages during the term of the Agreement.k. Provide secure storage for files during the term of the Agreement. Files will be returned to the Client

after the contract is terminated at the Client's expense or incur other fees for storage charges.

ARTICLE IIIThe Client Agrees To:

a. Notify Service Company of any broker representation change, in writing within 30 days.b. Pay all service fee invoices within 30 days of receipt unless a trust fund is established whereby the

fees will be deducted automatically. All disputed service invoices must be reported to the Service Company within 15 days of receipt for resolution.

c. Notify Service Company of any insurance policy cancellation requested by the Client or issued by the insurance company.

d. Notify Service Company of any adverse business events such as mergers, acquisitions, or bankruptcy filings.

e. Grant Service Company authority to underwrite policies.f. Submit all business to Service Company for underwriting.g. Agrees not to solicit and not to hire any of Service Company employees during the term of the

contract and for one year after the termination date.

The Client agrees to pay the Service Company for services rendered for each insurance policy term under the Fee Schedule attached as Exhibit I. Client agrees to pay all allocated loss adjustment expenses as defined in the Fee Schedule, including applicable sales tax.

ARTICLE VIndemnification

The Client agrees that it will indemnify and hold harmless the Service Company and its directors, officers, employees, subsidiaries, shareholders and affiliates from and against any and all claims, loss, liability, costs, damages, and reasonable attorney's fees incurred by the Service Company as the direct or indirect result of any misconduct, error or omission of the Client or any of the Client's directors, officers, employees, subsidiaries or affiliates, in connection with the furtherance or performance of any provision of this Agreement, or as a result of instructions given by the Client to the Service Company, which the latter follows, provided that said claims, losses, liability costs, damages and reasonable attorney's fees have not been directly caused by any misconduct, error or omission by the Service Company, its directors, officers, employees, subsidiaries and affiliates.


The Service Company agrees that it will indemnify and hold harmless the Client and its directors, officers, employees, subsidiaries and affiliates from and against any and all claims, loss, liability, costs, damages, and reasonable attorney's fees incurred as the direct or indirect result of any misconduct, error or omission of the Service Company or any of its directors, officers, employees, subsidiaries, subcontractors, shareholders, or affiliates, taken in connection with the furtherance or performance or any provision of this Agreement, provided that said claims, loss, liability, costs, damages, and reasonable attorney's fees have not been directly caused by any misconduct, error or omission of the Client, its directors, officers, employees, subsidiaries and affiliates.

Limitation of Liability

Notwithstanding any provisions herein to the contrary, in no event shall a party be liable for any indirect, incidental, special, consequential, punitive or exemplary damages including, without limitation, damages, for loss of profits, data or use, incurred by a party, whether in an action in contract or tort, even if the other party has been advised of the possibility of such damages.

ARTICLE VIThe Parties Agree That:

a. Either party may terminate this Agreement, with or without cause, by giving at least 90 days prior written notice of termination to the other party, under the notice provision. Prior notice must be provided to the Commissioner for the termination of this agreement.

b. Upon termination of this Agreement, the Client and the Service Company have the option to negotiate terms and conditions of a run-off service agreement, including the storage and maintenance of closed files.

c. With respect to any claims that are open or policies active on the date of termination and which are not subject to a run-off service agreement, the Service Company shall return all such files to the Client within 30 business days following the date of termination.

d. Article V above and any other indemnification provisions of this agreement are continuing, absolute, and unconditional obligations of the parties and shall survive the termination of this Agreement.

e. The Service Company and its agents and employees, in the performance of this Agreement, shall act in an independent capacity and not as officers, employees, or agents of the Client.

f. No assignment of this agreement, or any rights or interest arising hereunder, shall be valid without express written approval of each party. Prior notice must be given to the Commissioner for the assignment of authority under the agreement.

g. The Client and its agents and employees, in the performance of this Agreement, shall act in an independent capacity and not as officers, employees, or agents of the Service Company.

h. Service Company and Client mutually agree to allow for the company names to be used for extended marketing efforts unless otherwise instructed not to.

i. The parties acknowledge that any and all escheat and unclaimed property obligation of any type or variety lie with the Client and not the Service Company. Pursuant to the other terms and conditions of this Agreement, the Service Company shall provide the Client with such information and ' eports as reasonably required by the Client to perform this function.

j. Any and all notices or demands (collectively, "Notices") given pursuant to this Agreement, or required by law to be given by one party to the other in connection with the services described


herein, shall be given or served in writing by means of (1) personal delivery (which shall include delivery by overnight courier service)) or (2) deposit in the U.S. mail, certified or registered mail, with first class postage prepaid. Notices sent by mail shall be deemed given on the third business day following deposit in the U.S. mail as specified above. Unless otherwise specified in this Agreement, Notices shall be given to the parties at the address, and to the attention of the individuals, that are set forth below as the receiving party's "Name & Address for Notices." Each party shall promptly notify the other parties of any change in address in the manner set forth above.

Name and Address for Notices:

To the Client: American Transportation Group InsuranceRisk Retention Group, Inc.

555 Fayetteville St. Ste 201 Raleigh, NC 27601

To the Service Company: MVT Insurance Services, Inc.20975 Valley Green Drive Cupertino, CA 95014

k. The validity of this Agreement, the construction and enforcement of its terms, and the interpretation of the rights and duties of the parties shall be governed by the laws of the State of North Carolina. This agreement constitutes the whole and entire Agreement between the parties and thus supersedes all prior oral and written agreements.

l. Any amendments to this contract must be done in writing and signed by both parties with express reference to this agreement. Prior approval must be obtained from the Commissioner for any amendments to the agreement.

IN WITNESS WHEREOF, the parties have caused the Agreement to be executed by the persons duly authorized as of the date written above.

MVT INSURANCE SERVICES, INC.s-----DocuSigned by:

Xk----- 611EAD1AE83047F

„ AMRIT SINGH By:Title: president

AMERICAN TRANSPORTATION GROUP INSURANCE RISK RETENTION GROUP, INC.

X

—DocuSigned by:

flu/} at tya,SV ngnF^7QflArftQ4Pn

gy. Eleazar Rojas

Title: secretary


EXHIBIT IFee Schedule

Client Name: American Transportation Group Insurance Risk Retention Group, Inc.

Feature Type Fee DescriptionMarketing, PolicyAdministration, & Underwriting

7/2/2018-12/31/2018:15% of all Direct WrittenPremium net of policy refunds and cancellations

To be calculated at the end of each month. Fees are to be paid by 15th of the following month.

1/1/2019-12/31/2019:16.5% of all Direct Written Premium net of policy refunds and cancellations

Risk Management 7/2/2018-12/31/2018:0% of all Direct WrittenPremium net of policy refunds and cancellations.

To be calculated at the end of each month. Fees are to be paid by 15th of the following month.

1/1/2019-12/31/2019:1.5% of all Direct Written Premium net of policy refunds and cancellations

NORTH CAROLINA DEPARTMENT OF INSURANCE RALEIGH, NORTH CAROLINA

STATE OF NORTH CAROLINA COUNTY OF WAKE

BEFORE THE COMMISSIONER OF INSURANCE

IN THE MATTER OF THE LICENSURE VOLUNTARY SETTLEMENTOF AMERICAN TRANSPORTATION GROUP AGREEMENTINSURANCE RISK RETENTION GROUP, INC.,LICENSE 113540 NAIC16384

NOW COMES AMERICAN TRANSPORTATION GROUP INSURANCE RISK RETENTION GROUP, INC. ("ihe Company") and the North Carolina Department oflnsurance ("the Department"), and hereby voluntarily and knowingly enter into the following Voluntary Settlement Agreement (hereinafter, the "Agreement”);

WHEREAS, the Department has the authority and responsibility for enforcement of insurance laws of this State and for regulating and licensing insurance companies, including risk retention groups; and

WHEREAS, the Company is a North Carolina corporation that was licensed by the Department as a captive insurance company, specifically a risk retention group, on July 2, 2018; and

WHEREAS, the Company's license was approved by the Department subject to a license stipulation requiring the Company to maintain a net written premium to surplus ratio ofless than 2 to 1 unless determined otherwise by the Commissioner; and

WHEREAS, the Company’s rolling annual net premiums written to surplus ratio as of March 31,2019 was 3.05 to 1 and was 3.12 to 1 as of June 30,2019; and

WHEREAS, the Department has determined it is necessary to ensure adherence to the net written premium to surplus ratio license stipulation for the best interest of the public and the policyholders of the Company; and

WHEREAS, the Company enters into this agreement with the knowledge ofits right to have an administrative hearing on the foregoing issues and waives such right; and

WHEREAS, the Department and the Company hereby agree to a mutually acceptable agreement as to the status of the Company's license.

NOW THEREFORE, in consideration of the promises and agreements set out herein, and other good and valuable consideration, the Department and the Company hereby agree as follows:

1. The Company's net written premium to surplus ratio license stipulationcalculation shall be calculated on a rolling annual basis going forward.

1 44H:il-.Jkfc,

2. The Company agrees to obtain compliance with the 2 to 1 rolling annual net premium written surplus ratio as of November 30, 2019.

3. The Department will issue to the Company a license with the following restriction: "Restricted to a 12-month rolling net premiums written to surplus ratio of 2:1".

4. On a monthly basis, the Company shall submit a rolling annual net written premium to surplus ratio calculation to the Department which will be due 15 days following each month-end.

5. If noncompliance is identified with the license stipulation calculation, the Company agrees it shall immediately cease writing business. Subsequently, if the Company desires to commence writing business, the Company will submit for the Commissioner's review and approval:

* a revised complete plan of operation.• revised 3-ycar projections utilizing financial estimates and assumptions based

upon their historical loss development and/or provide adequate justification for financial estimates and assumptions utilized that are a departure from the Company's past performance. The projections will include the rolling annual net written premium to surplus ratio calculation.

6. Within 15 days from the executed date of this Agreement, the Company shall disclose to the Department the amount of direct written premium the Company has written as of the date of the executed agreement.

7. Within 30 days from the executed date of this Agreement, the Company will provide updated balance sheet and income statement financial projections utilizing financial estimates and assumptions based upon its historical loss development and/or provide adequate justification for financial estimates and assumptions utilized that arc a departure from the Company's past performance. The projections will include information disclosing the financial estimates and assumptions utilized, estimates of the Company's annual risk-based capital ratio and the rolling annual net written premium to surplus ratio calculation.

8. The Company shall obey all provisions of Chapter 58 of the North Carolina General Statutes that are applicable to the Company.

9. This Agreement shall have the full force and effect of an Order of the Commissioner. In the event the Company commits a breach of this Agreement, the Company acknowledges and understands that the Department may initiate further regulatory action under Chapter 58 of the North Carolina General Statutes applicable to the Company.

10. The Department shall conduct such compliance investigations or examinations as it shall deem appropriate to verify the Company's compliance with this Agreement and all other laws, rules or regulations within the jurisdiction of the Department, and such investigations or examinations shall be scheduled within the discretion of the Department of Insurance.

2

11. This Agreement does not in any way affect the Department's regulatory or disciplinary authority with regard to any follow-up analysis and examinations of the Company, or with respect to future complaints involving the Company.

12. This Agreement, when finalized, will be a public record and is not confidential. The Department is free to disclose the contents of this Agreement to third parties upon request or pursuant to any law or policy providing for such disclosure.

13. This Agreement shall become effective when signed by the Company and the Department.

3

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed.

AMERICAN TRANSPORTATION GROUP INSURANCE RISK RETENTION GROUP. INC.

By: .________________

Eleazar Rojas Secretary

Date: 9/27/2019

NORTH CAROLINA DEPARTMENT OF INSURANCE

By: U/MUn. /a)01£W.

Debra M. WalkerSenior Deputy CommissionerCaptive Insurance Companies Division

Da,o: /njMjln t <1_____________

4

ACTION OF THE BOARD OF DIRECTORS OF

AMERICAN TRANSPORTATION GROUP INSURANCE RISK RETENTION GROUP,INC.

Taken on Written Consent In Lieu of a Meeting

The undersigned, pursuant to the North Carolina Business Corporation Act, being all of the directors of the American Transportation Group Insurance Retention Group; Inc. (the “Corporation”), hereby consent to taking this action without a meeting, hereby adopt the following resolution as the action of the directors in lieu of a called meeting of the Board of Directors, and hereby direct that this written consent be filed with the minutes of the proceedings of the Corporation:

RESOLVED, that the current Board of Directors and Officers shall complete the annual documentation requirements, including Conflict of Interest Statement and evaluations. This is to be immediately completed by the board and provided to Palmetto Consulting of Columbia (“Palmetto”);

RESOLVED, that pursuant to the corporation bylaws, there is established as an officer of the Corporation an “Assistant Secretary.” The Assistant Secretary shall have concurrent power and authority as set forth in the bylaws as the Secretary. Michael Hunter is elected and appointed as Assistant Secretary. However, this appointment shall not become effective until acceptance of this appointment by Michael Hunter as evidenced by an executed written acknowledgement delivered by Michael Hunter to all members of the board.

RESOLVED, that pursuant to the Corporation bylaws, the number of directors shall be increased from three to five in order to meet North Carolina corporate governance requirements.

RESOLVED, that pursuant to the Corporation bylaws, the existing directors elects the following persons to fill the newly created board positions: Ron Gionet, Scott Syphers, and E. Paul Schaefer and shall be compensated from Corporation funds for their services at the rate of $2,500 per meeting of the board.

RESOLVED, that Scott Syphers, a resident of North Carolina, is hereby designated as the Corporation’s resident director.

RESOLVED, that pursuant to North Carolina law, the board has determined that Ron Gionet, Scott Syphers, and E. Paul Schaefer have no material relationship with the corporation as defined in NC Stat § 58-22-15(d) and meet the requirements of being independent directors and are designated as the independent directors of the corporation.

RESOLVED, that pursuant to the Corporation bylaws, an Audit Committee is hereby established to serve as a subcommittee of the board. The Audit Committee shall have such

»l I O I

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authority to review all corporation records and engage a qualified auditor and other service providers it deems to be appropriate to prepare all appropriate reports and regulatoiy filings as required by law or contractual agreements. All independent directors of the Corporation are hereby designated as members of the Audit Committee.

RESOLVED, that those persons shown on Exhibit A, had satisfied the requirements of the Bylaws and Membership Agreement to become a “member” as defined by the Membership Agreement and a stockholder pursuant to the Bylaws. Each person listed in Exhibit A is hereby issued one share of Corporation stock at no par value. A record of all stockholders shall be kept by the Secretary of the Corporation. Unless directed by the board, no physical stock certificates shall be issued.

RESOLVED, that the Corporation appoints and enter into a service agreement with the following service providers and directs Palmetto to submit draft contracts for the North Carolina Department of Insurance approval:

- Rives & Associates as Auditor- Palmetto Consulting of Columbia, LLC as Captive Manager- Ben Whitehouse with Butler Snow as General Counsel- National Registered Agents, Inc. as the North Carolina registered agent for the service of process- Maple Technologies as consultant to provide a policy management system for the Corporation.

RESOLVED, that ATGI ratify their relationship with the following service providers, including:

- Gene Brodsky with GB Group LLC as the Corporation’s Third Party Administrator (TPA),- Robert Walling with Pinnacle Actuarial as the Corporation’s Actuary,- Nirmil Kaur and Andy Singh with MVT Insurance as the Corporation’s Managing General Agent (MGA),- Michael Hunter with Michael Hunter Consulting as the Corporation’s insurance entity operations and financial advisor,

RESOLVED, that Michael Hunter and Matt Holycross are designated as authorized signers on all Corporation bank and investment accounts;

RESOLVED, that the Corporation accepts the following revised fee schedules and enter into amended agreements, effective January 1,2020, with the following service providers:

- GB Group LLC revised their fees for TPA services from 7.75% of Direct Written Premium to 4%- MVT Insurance revised their fees for MGA services from 18.0% of Direct Written Premium to 15%.

RESOLVED, that Michael Hunter is directed to review all fees paid by ATGI to make sure they are appropriate and if any additional service agreements need to be added or amended.

2

to report his findings to the Board;

RESOLVED, that Michael Hunter is authorized to engage a reinsurance broker and procure a quote for reinsurance, in order to present the quote to the Board and North Carolina Department of Insurance for approval;

RESOLVED, that Michael Hunter is directed to develop a revised Plan of Operations and financial projections that will be acceptable by North Carolina Department of Insurance to allow ATGI to restart its operations of writing new and renewal insurance business and make sure ATGI meets it net written premium to surplus ratio requirement. He is to present, once completed, the revised Plan of Operation for approval by the Board for submission to the North Carolina Department of Insurance;

RESOLVED, that Michael Hunter and Palmetto Consulting are directed to develop and propose an internal control structure for ATGI, including:

- development of protocols for opening bank and/or investment accounts and who will be signers on accounts- development of protocols on how premium dollars come in and out of the Company and make sure appropriate checks and balances are set-up,- development of protocols related to handling ATGI’s account receivables,- development of protocols for conducting internal audits of any ATGI service providers,- development of protocols related to any required day-to-day functions of an RRG,- development of protocols for any required issuance of stock,- development of protocols for making sure any underwriting guidelines are kept and all required documentation is completed by insureds,- review with ATGI’s corporate counsel, all service member contracts and make sure they appropriately reference duties to be performed,- review with ATGI’s corporate counsel, all ATGI’s corporate documents and determine if they are sufficient for ATGI’s operations or if the documents are required to be modified,- Recommend any additional skill sets required by ATGI to the Board.

RESOLVED, that ATGI accepts NCDOI’s Provisional Renewal-only Writing Authority Letter of January 30,2020, and agrees to stop writing new and renewal insurance business effective March 2,2020, per the request of NCDOI;

RESOLVED, that Michael Hunter and Palmetto is authorized to hire a risk management firm that will provide appropriate risk avoidance consulting and devices to help deter future ATGI claims;

RESOLVED, that Michael Hunter or Palmetto Consulting are authorized to work with an insurance broker to immediately procure and bind Directors & Officers insurance and other required insurance coverages for ATGI;

RESOLVED, that Michael Hunter and Palmetto are authorized to work with ATGI’s

3

. X ■■ i

actuary to determine the reasonability of premium rates and report back to the Board any required modification, including if specific rates need to be modified due to reinsurance requirements;

RESOLVED, that Michael Hunter is authorized to continue his work with Palmetto Consulting and the Corporation’s General Counsel to address any NCDOI concerns and to update the Board of any findings and/or actions that the Board need or should take;

RESOLVED, that the revised ATGI Underwriting Guidelines, which includes the updated capital contribution from $600 per unit to $2000 per unit, be accepted and submitted to North Carolina Department of Insurance for approval;

RESOLVED, that ATGI approves the expansion into Arizona, California, Oklahoma, Tennessee, Virginia, South Carolina, Mississippi, Wisconsin, Maryland, California, New Mexico, Alabama, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Missouri and Washington. Palmetto Consulting and Michael Hunter are instructed to file the expansion request and explain it was ATGI’s understanding from the prior captive manager that ATGI did not need to file the expansion because it was referenced in our original Business Plan filing that we would expand into other States based on Member interests. Further Michael Hunter and Palmetto are to determine if that appropriate filings had been made related to State registrations and required filings and taxes/fees have been made/paid as required by each venue ATGI operates in;

RESOLVED, that Michael Hunter and Palmetto are to submit the appropriate information to North Carolina Department of Insurance for any required approvals related to the actions outlined above.

WITNESS, the consent of all of the members of the Board of Directors of the Corporation, each of whom by his or her signature (i) consents to taking this action without a meeting and (ii) casts his or her affirmative vote for adoption of the resolutions set forth herein, effective the 13th day of March, 2020.


By;___________________Shamsher Singh, President

4

actuary to determine the reasonability of premium rates and report back to the Board any required modification, including if specific rates need to be modified due to reinsurance requirements;

RESOLVED, that Michael Hunter is authorized to continue his work with Palmetto Consulting and the Corporation’s General Counsel to address any NCDOI concerns and to update the Board of any findings and/or actions that the Board need or should take;

RESOLVED, that the revised ATGI Underwriting Guidelines, which includes the updated capital contribution from $600 per unit to $2000 per unit, be accepted and submitted to North Carolina Department of Insurance for approval;

RESOLVED, that ATGI approves the expansion into Arizona, California, Oklahoma, Tennessee, Virginia, South Carolina, Mississippi, Wisconsin, Maryland, California, New Mexico, Alabama, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Missouri and Washington. Palmetto Consulting and Michael Hunter are instructed to file the expansion request and explain it was ATGl’s understanding from the prior captive manager that ATGI did not need to file the expansion because it was referenced in our original Business Plan filing that we would expand into other States based on Member interests. Further Michael Hunter and Palmetto are to determine if that appropriate filings had been made related to State registrations and required filings and taxes/fees have been made/paid as required by each venue ATGI operates in;

RESOLVED, that Michael Hunter and Palmetto are to submit the appropriate information to North Carolina Department of Insurance for any required approvals related to the actions outlined above.

WITNESS, the consent of all of the members of the Board of Directors of the Corporation, each of whom by his or her signature (i) consents to taking this action without a meeting and (ii) casts his or her affirmative vote for adoption of the resolutions set forth herein, effective the 13 th day of March, 2020.


By:____ __________Elezar Rojas, Secretary

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to report his findings to the Board;

RESOLVED, that Michael Hunter is authorized to engage a reinsurance broker and procure a quote for reinsurance, in order to present the quote to the Board and North Carolina Department of Insurance for approval;

RESOLVED, that Michael Hunter is directed to develop a revised Plan of Operations and financial projections that will be acceptable by North Carolina Department of Insurance to allow ATGI to restart its operations of writing new and renewal insurance business and make sure ATGI meets it net written premium to surplus ratio requirement. He is to present, once completed, the revised Plan of Operation for approval by the Board for submission to the North Carolina Department of Insurance;

RESOLVED, that Michael Hunter and Palmetto Consulting are directed to develop and propose an internal control structure for ATGI, including:

- development of protocols for opening bank and/or investment accounts and who will be signers on accounts- development of protocols on how premium dollars come in and out of the Company and make sure appropriate checks and balances are set-up,- development of protocols related to handling ATGI’s account receivables,- development of protocols for conducting internal audits of any ATGI service providers,- development of protocols related to any required day-to-day functions of an RRG,- development of protocols for any required issuance of stock,- development of protocols for making sure any underwriting guidelines are kept and all required documentation is completed by insureds,- review with ATGI’s corporate counsel, all service member contracts and make sure they appropriately reference duties to be performed,- review with ATGI’s corporate counsel, all ATGI’s corporate documents and determine if they are sufficient for ATGI’s operations or if the documents are required to be modified,- Recommend any additional skill sets required by ATGI to the Board.

RESOLVED, that ATGI accepts NCDOI’s Provisional Renewal-only Writing Authority Letter of January 30,2020, and agrees to stop writing new and renewal insurance business effective March 2,2020, per the request of NCDOI;

RESOLVED, that Michael Hunter and Palmetto is authorized to hire a risk management firm that will provide appropriate risk avoidance consulting and devices to help deter future ATGI claims;

RESOLVED, that Michael Hunter or Palmetto Consulting are authorized to work with an insurance broker to immediately procure and bind Directors & Officers insurance and other required insurance coverages for ATGI;

RESOLVED, that Michael Hunter and Palmetto are authorized to work with ATGI’s

3

authority to review all corporation records and engage a qualified auditor and other service providers it deems to be appropriate to prepare all appropriate reports and regulatory filings as required by law or contractual agreements. All independent directors of the Corporation are hereby designated as members of the Audit Committee.

RESOLVED, that those persons shown on Exhibit A, had satisfied the requirements of the Bylaws and Membership Agreement to become a “member” as defined by the Membership Agreement and a stockholder pursuant to the Bylaws. Each person listed in Exhibit A is hereby issued one share of Corporation stock at no par value. A record of all stockholders shall be kept by the Secretary of the Corporation. Unless directed by the board, no physical stock certificates shall be issued;

RESOLVED, that the Corporation appoints and enter into a service agreement with the following service providers and directs Palmetto to submit draft contracts for the North Carolina Department of Insurance approval:

- Rives & Associates as Auditor- Palmetto Consulting of Columbia, LLC as Captive Manager- Ben Whitehouse with Butler Snow as General Counsel- National Registered Agents, Inc. as the North Carolina registered agent for the service of process- Maple Technologies as consultant to provide a policy management system for the Corporation.

RESOLVED, that ATGI ratify their relationship with the following service providers, including:

- Gene Brodsky with GB Group LLC as the Corporation’s Third Party Administrator (TPA),- Robert Walling with Pinnacle Actuarial as the Corporation’s Actuary,- Nirmil Kaur and Andy Singh with MVT Insurance as the Corporation’s Managing General Agent (MGA),- Michael Hunter with Michael Hunter Consulting as the Corporation’s insurance entity operations and financial advisor,

RESOLVED, that Michael Hunter and Matt Holycross are designated as authorized signers on all Corporation bank and investment accounts;

RESOLVED, that the Corporation accepts the following revised fee schedules and enter into amended agreements, effective January 1,2020, with the following service providers:

- GB Group LLC revised their fees for TPA services from 7.75% of Direct Written Premium to 4%- MVT Insurance revised their fees for MGA services from 18.0% of Direct Written Premium to 15%.

RESOLVED, that Michael Hunter is directed to review all fees paid by ATGI to make sure they are appropriate and if any additional service agreements need to be added or amended.

2

ACTION OF THE BOARD OF DIRECTORS OF

AMERICAN TRANSPORTATION GROUP INSURANCE RISK RETENTION GROUP,INC.

Taken on Written Consent In Lieu of a Meeting

The undersigned, pursuant to the North Carolina Business Corporation Act, being all of the directors of the American Transportation Group Insurance Retention Group; Inc. (the “Corporation”), hereby consent to taking this action without a meeting, hereby adopt the following resolution as the action of the directors in lieu of a called meeting of the Board of Directors, and hereby direct that this written consent be filed with the minutes of the proceedings of the Corporation:

RESOLVED, that the current Board of Directors and Officers shall complete the annual documentation requirements, including Conflict of Interest Statement and evaluations. This is to be immediately completed by the board and provided to Palmetto Consulting of Columbia (“Palmetto”);

RESOLVED, that pursuant to the corporation bylaws, there is established as an officer of the Corporation an “Assistant Secretary.” The Assistant Secretaiy shall have concurrent power and authority as set forth in the bylaws as the Secretary. Michael Hunter is elected and appointed as Assistant Secretary. However, this appointment shall not become effective until acceptance of this appointment by Michael Hunter as evidenced by an executed written acknowledgement delivered by Michael Hunter to all members of the board.

RESOLVED, that pursuant to the Corporation bylaws, the number of directors shall be increased from three to five in order to meet North Carolina corporate governance requirements.

RESOLVED, that pursuant to the Corporation bylaws, the existing directors elects the following persons to fill the newly created board positions: Ron Gionet, Scott Syphers, and E.Paul Schaefer and shall be compensated from Corporation funds for their services at the rate of $2,500 per meeting of the board.

RESOLVED, that Scott Syphers, a resident of North Carolina, is hereby designated as the Corporation’s resident director.

RESOLVED, that pursuant to North Carolina law, the board has determined that Ron Gionet, Scott Syphers, and E. Paul Schaefer have no material relationship with the corporation as defined in NC Stat § 58-22-15(d) and meet the requirements of being independent directors and are designated as the independent directors of the corporation.

RESOLVED, that pursuant to the Corporation bylaws, an Audit Committee is hereby established to serve as a subcommittee of the board. The Audit Committee shall have such

NORTH CAROLINA DEPARTMENT OF INSURANCE

Raleigh, North Carolina

To: American Transportation Group Insurance Risk Retention Group, Inc.555 Fayetteville Street, Suite 201 Raleigh, North Carolina 27601

COMMISSIONER’S SUMMARY ORDER

It appearing to the Commissioner of Insurance for the State of North Carolina

(“Commissioner”) that American Transportation Group Insurance Risk Retention Group, Inc.

(“American RRG”) is subject to immediate confidential administrative supervision pursuant to the

provisions of N.C. General Statute §§ 58-30-60 and 58-30-62, by the Commissioner because the

Commissioner has reasonable cause to believe that American RRG has exceeded its powers, has

failed to comply with applicable provisions of Chapter 58 and is in such condition as to render the

continuation of its business hazardous to the public or to holders of its policies or certificates of

insurance. This opinion is based on the following findings of fact:

1. On July 2, 2018, American RRG was licensed in North Carolina pursuant to a licensure

stipulation requiring American RRG to maintain a net written premium to surplus ratio of

2 to 1, until determined otherwise by the Commissioner.

2. On July 2, 2018, American RRG’s business plan, filed and approved during licensure,

detailed annual gross written premium projections of $1,891,275 for the year 2018 and

$3,963,750 in total for the year 2019.

3. On June 12, 2019, American RRG was notified that their business plan was not in

compliance with N.C. General Statute § 58-22-15(a) and (b), as their gross written

premium far exceeded their approved business plan, totaling $8,620,305 for the year 2018

and $7,380,908 as of March 31, 2019. American RRG filed a plan of operation change

jumnn*

Dv_______y

request on May 24, 2019, which included updated projections; however, American RRG

failed to obtain prior approval of the revision to its plan of operation as required under N.C.

General Statute § 58-22-15(b).

4. On July 24, 2019, American RRG filed an updated plan of operation change request,

because the plan of operation change request filed on May 24, 2019, was lacking material

aspects, including adverse projections, and was not approved by the North Carolina

Department of Insurance (“Department”).

5. Upon the receipt of the updated projections, the Department began discussions with

American RRG to implement a Voluntary Settlement Agreement (“VSA”), requiring

American RRG to maintain compliance with a 12-month rolling net written premium to

surplus ratio of 2 to 1, with full compliance by American RRG to be achieved by September

30, 2019.

6. On September 12, 2019, American RRG voluntarily entered into the VSA with the

Department requiring them to maintain a 12-month rolling net written premium to surplus

ratio of 2 to 1 at all times; otherwise, American RRG would voluntarily cease writing

business until the Department approved American RRG’s revised plan of operation and

projections and American RRG regained compliance with the 12-month rolling net written

premium to surplus ratio of 2 to 1.

7. On September 12, 2019, after signing the VSA, American RRG requested that the VSA be

revised to alter the compliance date of September 30, 2019 to November 30, 2019, because

American RRG would be sourcing an additional $1.25 million in surplus notes from MVT

Insurance Services, Inc. (“MVT”) to obtain compliance, and would be aided by American

RRG decreasing policy writings in September and October 2019.

Page 2 of 12

8. The Department did not contest the requested deferral and on October 4, 2019, a revised

VSA (“Executed VSA”) was executed between American RRG and the Depaitment

requiring American RRG to obtain compliance by November 30, 2019, with the 12-month

rolling net written premium to surplus ratio of 2 to 1 at all times.

9. On December 11, 2019, American RRG notified the Department that American RRG was

not in compliance with the Executed VSA as of November 30, 2019, with a 12-month

rolling net written premium to surplus ratio of 2.39 to 1. Therefore, on December 18,2019,

the Department requested American RRG confirm that it had voluntarily ceased writing

business pursuant to the agreed upon Executed VSA, by December 26, 2019.

10. On December 24,2019, a representative of American RRG confirmed that American RRG

had stopped writing any new or renewal business.

11. On January 30,2020, at American RRG’s request, the Department allowed American RRG

to provisionally write renewal business only from the period of February 1, 2020 to March

31, 2020, while American RRG continued to resolve all remaining items outstanding per

the Executed VSA.

12. On February 10,2020, American RRG provided its monthly net written premium to surplus

report, which stated that American RRG’s 12 month rolling net written premium to surplus

ratio was calculated to be below 2 to 1, within the range of 1.62 to 1.75 to 1 as of January

30, 2020, supporting its ability to begin writing business.

13. On March 6, 2020, a meeting was held between the Department and representatives of

American RRG, during which the representatives stated that upon further internal review,

they had concluded that of the $4.9 million in surplus notes contributed to date to American

RRG, $4 million were invalid as they did not represent monies contributed by MVT as

detailed within the executed surplus notes and as represented to the Department, but were

Page 3 of 12

in fact premium dollars paid to MVT for policies written by American RRG that were

misrepresented to the Department as an outside source of funding to increase capital.

14. On March 10, 2020, Mr. Michael Hunter and Mr. Ron Gionet, who at the time were

engaged representatives of American RRG, provided a memo to the Department disclosing

the methods they utilized to determine that $4 million of American RRG’s surplus notes

were invalid. Ms. Nirmal Kaur, President of MVT, who was one of the signers of the

surplus notes, filed a written disclosure to the Department attesting to the invalid nature of

the surplus notes and their lack of funding from outside sources rendering them invalid.

15. On March 16, 2020, American RRG filed its 2019 NAIC Annual Statement, which

revealed a declining financial position due in part to the $4 million of invalid surplus notes

no longer attributable to surplus and disclosed a 12-month rolling net written premium

balance of $25,983,612 and a surplus balance of $6,744,291, resulting in American RRG’s

12-month rolling net written premium to surplus ratio to be 3.85 to 1, a violation of the

Executed VS A.

16. On March 13, 2020, American RRG provided a Board Resolution, which confirmed that

American RRG had agreed to stop writing business as of March 2, 2020, due to the

Executed VSA noncompliance until all concerns had been remedied.

17. On March 31, 2020, the Department was informed that Ms. Kaur, President of MVT,

attempted to remove the signatory authority of the Assistant Secretary of American RRG,

Mr. Michael Hunter, and American RRG’s captive manager, Mi'. Matt Holycross, and to

remove $1 million from an American RRG bank account held within the Bank of the West

depository. Ms. Kaur holds no officer or director position within American RRG and

disclosed no business purpose for said funds at the time of the attempted withdrawal nor

approval from the Board for the termination of the noted signatory authority.

Page 4 of 12

18. Mr. Andy Singh, director of MVT, has exerted undue influence over American RRG

although Mr. Singh holds no officer or director position within American RRG. In

addition, Mr. Singh represented himself as a representative of American RRG, as

evidenced by an email provided to the Department on March 30, 2020, by a prospective

captive manager (“Prospective Captive Manager”) stating that they were engaged as the

new captive manager of American RRG. On a call held by the Department with the

Prospective Captive Manager, the Prospective Captive Manager stated that they were

engaged by Mr. Singh and disclosed that Mr. Singh communicated to them that the current

captive manager had been terminated. Mr. Singh also attempted to negotiate reinsurance

on behalf of American RRG. Mr. Singh’s attempt to engage captive management services

and negotiate reinsurance on behalf of American RRG were without authority from

American RRG and were with blatant disregard of the use of the retained reinsurance

intermediary.

19. Pursuant to N.C. General Statute § 58-30-60(b), the Commissioner may subject an insurer

to administrative supervision if he determines that the insurer is in such condition as to

render the continuance of its business hazardous to the public or to holders of its policies

or certificates of insurance.

20. Based upon the foregoing, American RRG is in such condition that the continued

operations of its business is hazardous to the public or to its insured, as that term is defined

in subsections (2), (6a), (11), (12), (13), (14), (15), and (19) of N.C. General Statute § 58-

30-60(b).

21. Furthermore, pursuant to N.C. General Statute § 58-30-62(c), the Commissioner may

subject an insurer to administrative supervision if it appears to the Commissioner that the

insurer has done any of the following:

Page 5 of 12

a. Has exceeded its powers;

b. Has failed to comply with applicable provisions of this Chapter;

c. Is conducting its business in a manner that is hazardous to the public or to its

insured; or

d. Consents to administrative supervision.

22. Based upon the foregoing, American RRG has failed to comply with applicable provisions

of this Chapter. Specifically, American RRG’s violation of the Executed VS A and its

Department-approved business plan violates N.C. General Statute §§ 58-22-15(b), 58-10-

395 and 58-2-45.

IT IS THEREFORE ORDERED by the Commissioner that American RRG, effective upon

execution of this Order, be placed under the Commissioner’s supervision pursuant to the

provisions of N.C. General Statute §§ 58-30-60 and 58-30-62, which shall be confidential pursuant

to N.C. General Statute § 58-30-62(f), and that the Commissioner be vested with all authority to

effect and apply the provisions of said statute.

IT IS FURTHER ORDERED that, during the period of supervision, American RRG shall

not do any of the following acts without the prior written approval of the Commissioner or his

appointed representative for supervision:

1. Dispose of, convey, or encumber any of its assets or its business in force in amounts of

more than $1,000.00;

2. Withdraw from any of its bank accounts amounts of more than $1,000.00 or

$3,000.00/month in aggregate to any payee, other than amounts due for insurance claims

and existing contracts for goods and service negotiated prior to the inception of this order

Page 6 of 12

as set forth in Exhibit A hereto (NOTE - as further stated in the abatement terms of this

Order, the items identified in Exhibit A shall be updated and submitted to the Department

by American RRG by no later than April 15, 2020, to provide complete information to the

Commissioner and are subject to further review and change by the supervisor);

3. Lend any of its funds to affiliates, officers, directors, shareholders, or third parties;

4. Invest any of its funds other than in US Treasury obligations, common stocks actively

traded on an exchange, or such assets as described in N.C. General Statute § 58-7-173(1)-

(8);

5. Transfer any of its property in amounts of more than $ 1,000.00;

6. Incur any debt, obligation or liability;

7. Merge or consolidate with another company;

8. Write any new or renewal business without the express written approval of the Department,

after American RRG has provided a revised business plan acceptable to the Department

and verification of compliance with the 12-month rolling net written premium to surplus

ratio of 2 to 1. If the writing of business is allowed, American RRG shall not write any

new or renewal business which shall cause the company to become non-compliant with the

12-month rolling net written premium to surplus ratio of 2 to 1;

9. Enter into any new reinsurance contract or treaty or amepd any existing reinsurance

contract or treaty;

10. Enter into or terminate any service provider contracts or amend any existing service

provider contracts;

11. Terminate, forfeit, convert, or lapse any policy or contract of insurance, except for

nonpayment of premiums due;

Page 7 of 12

12. Release, pay, or refund premium deposits, accrued cash, or loan values, unearned

premiums, or other reserves on any insurance coverage;

13. Make any material change in management;

14. Be represented by any individuals or service providers not granted express authority to do

so, as outlined within American RRG’s bylaws;

15. Assign underwriting and binding authority to any individuals, services providers, affiliates,

or third parties, which shall include underwriting and binding privileges already

outstanding pursuant to contracts currently in force;

16. Increase salaries or benefits of officers or directors or make preferential payments of

bonuses, dividends, or other payments considered preferential;

17. Make any withdrawals or transfers or issue checks from bank or investment accounts of

American RRG until the Commissioner is satisfied that funds of American RRG may only

be accessed by the appropriate individuals; or,

18. Make any other change in its operations that the Commissioner considers to be material.

IT IS THERPORE ORDERED by the Commissioner that American RRG meet the

following requirements of the Commissioner to abate the determination as set forth in this Order:

1. Until abatement item 2 below is completed, the bank and investment accounts of American

RRG are to be placed on hold such that transactions such as withdrawals and transfers

cannot occur without the Commissioner’s prior written consent.

2. On or before April 15, 2020, American RRG shall assign sole signatory authority on

American RRG bank accounts to the independent officers and directors of American RRG,

with independence to be identified pursuant to N.C. General Statute § 58-22-15(d).

Further, without the Department’s prior approval, no other parties shall have access to

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American RRG bank and investment accounts. Dual signatory authority shall be

maintained on all accounts.

3. On or before April 15, 2020, American RRG shall provide to the Commissioner accurate

and complete information in the form of Exhibit A.

4. On or before July 1,2020, American RRG shall obtain compliance with the Executed VSA

requiring adherence to the 12-month rolling net written premium to surplus ratio of 2 to 1.

5. On or before July 1, 2020, American RRG shall prepare a revised plan of operation for

Department approval, which shall contain all items detailed within N.C. General Statute

§§ 58-22-15; 58-22-10(7); 58-10-395; and 58-10-345, including 5-year projections;

6. On or before June 1, 2020, American RRG shall have a full and true record of all books

and records, including, but not limited to, an inception to date policy bordereaux, stock

listing, and surplus balance.

7. On or before April 30, 2020, American RRG shall provide to the Department a conclusion

from its review of its corporate governance documents to determine if the documents

adequately provide, in accordance with the laws of the State of North Carolina, for a

meeting of stockholders, no less than annually, to vote on the board of directors of

American RRG and on other American RRG matters. Additionally, American RRG is to

provide to the Department its proposed plan for holding its next stockholders meeting.

8. On or before April 15, 2020, American RRG shall establish and implement procedures,

subject to the Department’s approval, to obtain fund payments directly from agents,

premium finance companies, and policyholders, which shall encompass the use of a

lockbox as well as timely premium and bank account reconciliations.

9. Prior to the Commissioner releasing American RRG from this Order, American RRG must

demonstrate to the Commissioner that it is in compliance with the laws of North Carolina

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and the Executed VS A, including the 12-month rolling 2 to 1 net premium written to

surplus ratio

10. The deadlines set forth in paragraphs 1 through 9 above may be extended by the

Commissioner for good cause shown by American RRG.

IT IS THEREFORE ORDERED by the Commissioner, effective upon execution of this

Summary Order, that during the period provided for American RRG to meet the above

requirements that American RRG shall continue under the Commissioner’s supervision pursuant

to the provisions of N.C. General Statute §§ 58-30-60 and 58-30-62, which shall be confidential

pursuant to N.C. General Statute § 58-30-62(1), and that the Commissioner be vested with all

authority to effect and apply the provisions of said statute.

IT IS FURTHER ORDERED that Debra M. Walker, Senior Deputy Commissioner for the

North Carolina Department of Insurance is appointed as supervisor of American RRG to carry out

the provisions of this Order and Kaitlin A. Chase, Risk Retention Group Analysis Manager for the

North Carolina Department of Insurance is appointed as assistant supervisor of American RRG to

act in the absence of the supervisor. The supervisor or his representatives shall conduct an

examination of American RRG’s operations and financial condition as the supervisor deems

appropriate. The administrative supervision of American RRG shall continue until the

Commissioner shall release American RRG from supervision.

Pursuant to N.C. General Statute § 58-30-60(f) and 11 N.C.A.C. 01 .0401, American RRG

may request an administrative hearing before the Commissioner or his designee to review this

Order. The request for hearing shall not stay the effect of this Order.

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Issued under my hand this 3rd day of April 2020.

Mike CauseyCommissioner of Insurance

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Exhibit A

American RRGContractual Obligations in 2020 exceeding $1,000 Payments

Vendor Type of Service Payment Frequency Payment Amount

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2 0 0 I !j 3 7 - ATGIRRG

Documents

Transcript of 2 0 0 I !j 3 7 - ATGIRRG