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2016LOOKING FORWARD

Insuring the FutureSince 1915

Insurance · Risk Management · Benefits

WORTHAM YEAR IN REVIEW

Wortham, L.L.C., General PartnerJohn L. Wortham & Son, L.P.

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537Insurance & Benefits Professionalsacross five cities in Texas

25New Employee Designations & Recognitions Earned (CPCU, CIC, MRM)

4New Managing Directors

6O�icesincluding an additional o�ice in Houston after merger with John R. Ray & Sons, Inc.

Billion$1.2In Annual Premium

11Average Years of Serviceof Wortham Professionals

SignificantDonation of Time and Resources helping various charitable organizations in the communities we serve

19+Seminars, Conferences, and Events Held by and/or participated in by Wortham

101Years of Continuous Operations

2016Wortham Facts & Figures

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2 Wortham Facts & Figures

3 Table of Contents

4 Reflection

5 About Our Great Company

6-7 Community - Wortham Gives Back

8 Rounding Up 85 Years with the Houston Livestock Show & Rodeo

9 News from the Wortham Group

10-11 Seminars, Conferences, Events, and Benefits Webinars

12 Our Business Model

13 An Award Winning Broker

14-15 Our People - A Great Place to Work

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Reflection

Richard M. Blades, CPCUChairman

2016 marked the beginning of Wortham’s second century of continuous operations. As proud as we are of our rich history and track record of giving back to the community, we are even more excited about the future be-cause of our outstanding team members.

Wortham’s private partnership business model is unique for insurance brokers and it enables us to:

• Focus on servicing our clients versus outside shareholders• Attract and retain talented people who desire an opportunity to become an owner

New additions to Wortham’s partnership in 2016 include:

• Marc Crane – San Antonio• Tim Hayden – Dallas• Elliot Witt – Houston• Steve Hartwig – Houston

Steve Hartwig became a Managing Director in Wortham when John R. Ray & Sons, Inc. merged into Wortham in November 2016. John R. Ray & Sons, Inc. provides us with an additional office in Houston and they have an outstanding reputation for providing “hands on” service for both commercial and personal lines insurance.

The insurance market remains “soft” with capacity continuing to grow as capital providers seek return on in-vestment in the low interest rate environment. In fact, United States policy holder surplus is up over 50% since 2009. Also contributing to the soft market conditions is the lack of named windstorms in the Gulf Coast area since 2008 and worldwide catastrophe losses continuing to be within underwriters’ expectations.

These soft market conditions enabled us to negotiate attractive risk transfer options for our clients on most lines of coverage. In 2016, we saw an uptick in the demand for cyber insurance and social engineering coverage. The need for surety bonds for decommissioning liability in the Gulf of Mexico also increased in 2016; although, this trend may not continue in 2017 with potential changes under the Trump administration.

Looking forward to 2017, we anticipate the soft market conditions will continue to prevail although the pace of rate reductions will slow down as underwriters endeavor to hold the line on their rating level.

The employee benefits area continues to evolve with Wortham’s benefits practice group extremely busy providing the desired services to clients. They are also prepared to assist clients as the benefits world enters into a new phase with the current administration looking to replace the Affordable Care Act.

We appreciate the opportunity to be of service in 2016 and look forward to assisting you in achieving your risk management and benefits goals in 2017.

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For more than 100 years, Wortham has managed our clients’ insurance needs with a comprehensive port-folio of services, including insur-ance brokerage, risk management and employee benefits consulting.

As one of the largest private-ly held insurance firms in Tex-as, we serve local, regional and global companies as well as in-dividuals. Our team of over 530 insurance and benefits profes-sionals brings diverse industry experience and a strong con-viction for outstanding service.

Wortham is an independent firm owned by over 100 Managing Directors throughout the State of Texas. The Wortham Group consists of offices in Houston (headquarters), Austin, Dallas, Fort Worth, and San Antonio. Our independence allows us to seek the best possible insurance and risk management solutions for our clients, on an unbiased

basis, as we do not have owner-ship in ancillary service provid-ers, nor are we tied to the short-term needs of shareholders.

Representing more than 300 in-surance carriers worldwide, the Wortham Group places over $1.2 billion in premiums an-nually. We provide property &

casualty, employee benefits pro-grams, professional indemnity, personal lines and life insurance placements, and surety bonds.Wortham develops consultative relationships with clients to un-derstand their operations, ex-posures, and risk management philosophies, and executes insur-

ance and risk management strat-egies that best meet their needs.

A key component of our service is the comprehensive market-ing that we perform for clients.

To achieve the most advanta-geous insurance structure for clients, our team assesses all vi-

able and financially acceptable markets for respective coverage lines. Leveraging our years of ex-perience with global insurance markets, we identify and nego-tiate with all potential carriers or combinations of carriers to provide the most efficient and cost-effective options for clients.

Wortham develops consultative relationships with clients

to understand their operations, exposures, and risk

management philosophies, and executes insurance and

risk management strategies that best meet their needs.

About our great companyIn 1915 Wortham was founded in Texas with a client service-based philosophy. Our goal is to

provide innovative insurance solutions and superior client service. Wortham ranks as one of

the largest independent insurance brokers in the United States and has over 530 insurance

and benefits professionals.

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CommunityWortham gives back

Houston Heart Walk • Light the Night Walk • Go Red Day • Mission Road Development • Walk for the Cure RIMS 2016 • Olympics Kicko� • Bu�alo Bayou Cleanup • IIFC Corn Hole Tournament • Caritas Soup Kitchen

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CommunityWortham gives back

Houston Heart Walk • Light the Night Walk • Go Red Day • Mission Road Development • Walk for the Cure RIMS 2016 • Olympics Kicko� • Bu�alo Bayou Cleanup • IIFC Corn Hole Tournament • Caritas Soup Kitchen

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Rounding Up 85 Years

During the Houston Livestock Show and Rodeo™, there is something for everyone to enjoy. The expansive show grounds contain everything from a bustling carnival with thrilling rides to an enormous Western shopping mall.

This annual event has played an important role in Houston and in Texas by creating scholarships and other educational benefits for our youth for the last 85 years. Jack has been a member of the Show’s Executive Committee since 2008.

We sat down with Jack to reflect on his last three years as Chairman of the Houston Livestock Show and Rodeo™.

What have you enjoyed most about being the Chairman of the Houston Livestock Show and Rodeo™ for the last three years? As Chairman of the Board, I have had the opportunity to meet our scholarship recipients and hear how the Hous-

ton Livestock Show and Rodeo™ scholarship has changed their lives.

Is there some advice you would give to the next Chairman? We live in one of the most philanthropic cities in the Unit-ed States, which has enabled us to contribute $430 mil-lion to our educational initiative. If our total educational contribution stays consistent for the next three years, we will surpass $500 million dollars…Half a Billion Dollars, truly incredible. The community, volunteers and staff will con-tinue to do what they do well because they do it for all the right reasons. What do you want to say to all the Houston Livestock Show and Rodeo™ supporters?Thank you for your ongoing support and commitment which has enabled us to carry on the legacy which was set in place 85 years ago.

Wortham congratulates our Managing Director, Jack A. Lyons, on his tenure as

Chairman of the Board for the Houston Livestock Show and Rodeo™ for the last

three years.

In 1932, Wortham was the sponsoring agent of the new Houston Fat Stock Show and Livestock Exposition, which later became known as the Houston Livestock Show and Rodeo™ in 1961.

Wortham’s Founder, Gus Sessions Wortham, served two consecutive terms as President of the Houston Fat Stock Show and Rodeo. He finished his last term in 1935.

Another former Wortham Chairman, Allen “Buddy” Carruth, was President of the Houston Livestock Show and Rodeo™ from 1979-1981.

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News from the Wortham GroupFor the Houston (headquarters) office, 2016 was another active year assisting clients, especially those impacted by the energy downturn. The focus was to “right size” clients’ insurance programs and/or benefits programs for the reduced activity, payroll and other exposures. We continue to endeavor to reduce clients’ total cost of risk, seeking multiple program options from underwriters to determine the optimal program structure and retention. Community service continued with volunteer service days in nearby Buffalo Bayou Park, and a client appreciation event was hosted for the first time in the new Wortham Insurance Visitor Center at Buffalo Bayou Park.

The Austin office continued to grow in 2016 and added their 70th team member in the 4th quarter. The Austin office played a key role in winning Wortham’s new endorsement by both the Texas Hospital Association and the Texas Restaurant Association. Wortham’s broad geographical footprint around the state, technical expertise, and over 530 employees, were all contributing factors to being chosen by these two impactful associations.

The Dallas office continued to position itself for growth in 2017 by hiring a couple of new producers in November 2016. This investment was designed to increase presence in the Dallas marketplace, add a specialization for the growing elder care industry, and diversify our office focus. We successfully maintained our position as the leading provider of commercial and industrial insurance for the explosives industry as well as increased the number of our core energy industry clients. Our risk management accounts remained consistent despite downward industry pressure.

The Fort Worth office continued another year of top line growth in spite of significant headwinds associated with the downturn in the energy space. During 2016, the Fort Worth office developed specialized risk management expertise related to transportation risks and implemented a proprietary stop-loss purchasing program that has been utilized by all Wortham Group offices and other Assurex partners. The development of these specialty risk management programs as well as the continued hard work of over 75 insurance professionals in Fort Worth bodes well for another positive year in Wortham’s Fort Worth office.

For 2016, the San Antonio office had the pleasure of welcoming Marc Crane and Jennifer Hicks to the team from a public broker. This was the conclusion of almost a year of conversations about the Wortham model and how it would benefit the two of them coming from a public broker environment. The year was also highlighted with the success of obtaining several large accounts that had been solicited for quite some time by the San Antonio office. These accounts were from a variety of industries including: aviation, heavy equipment dealer, restaurants and others. On a sad note, we lost a valuable team member when Managing Director Burton Barnes passed away at the age of 47 after a yearlong fight with cancer. Burton was a long-time Wortham team member and will be greatly missed by all who knew him.

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Benefits Webinars• Jan 28 ACA 1094/1095 Reporting Details• Feb 25 EEOC Wellness Regulations• Apr 28 Making Sense of the Employee

Classification Puzzle• May 26 Plan Affordability Under the ACA• Jun 23 OCR Begins New Phase of HIPAA

Audits• Jul 28 Assurex Global - HRA/HSA

Compliance and Administration Issues

• Aug 18 Wellness Plan Regulations Update• Aug 23 EBPG Webinar - ACA Reporting

Broadcast• Sep 22 ACA and Benefits Compliance

Update• Oct 27 ACA 1094/1095 Employer

Reporting Year 2• Nov 17 How Will the Election Impact

Employee Benefits Regulations & A Look Forward to 2017

• Dec 15 Into the Weeds! Answers to Specific Employer Benefits

Questions We Have Received

1986BUSINESS MODELThe Firm moves to a business model practiced by leading law firms – a consultative emphasis with broad ownership

1915FOUNDINGFounded by Gus Wortham and his

father, John L. Wortham, in Houston

1926AGC FOUNDINGAmerican General Corporation founded by Gus Wortham and others

2016MERGERWortham merges with John R. Ray & Sons, Inc. - leading to an additional o�ice in Houston, TX, making 6 o�ices statewide

1965 SEC dissolves management

agreement between Wortham and

American General

AGC SEPARATION

1999-2007

MERGERSWortham merges

with Consolidated Insurance Agency

(Austin), The Brants Company (Fort Worth), Eichlitz, Dennis, Wray &

Westheimer Agency (San Antonio), and Texas AGA

(Dallas)

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Seminars, Conferences, and Events

• Jan 14 Market Update Seminar, Houston • Feb 11 NAPE Client Appreciation Luncheon, Houston• Mar 1-3 IRMI Energy Risk & Insurance Conference, Houston • Apr 6-8 Claims & Litigation Management (CLM) Annual Conference, Orlando • Apr 12 RIMS Client Appreciation Dinner, San Diego• Apr 27-29 ABA Spring Lawyers’ Professional Liability Conference, New Orleans • May 22-26 Association of Legal Administrators (ALA) National Conference & Expo, Los Angeles • Jul 26 AEGIS PHC Client Appreciation Dinner, Boston • Sep 18-20 Houston Marine Insurance Seminar, Houston• Oct 8-12 The Council of Insurance Agents & Brokers (CIAB) Insurance Leadership Forum, Colorado

Springs• Nov 1-2 Pipe Line Insurance Managers Conference, The Woodlands• Nov 6-9 IRMI Construction Risk Conference, Orlando

held by and/or participated in by Wortham in 2016

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Private Partnership Structure – Similar to many law firms, our structure leads to a culture of teamwork with Managing Directors (approximately 125 owners of the Firm) and other professionals working together with a sense of urgency to provide our clients with superior results and service.

Management by Insurance Professionals – Wortham is managed by its 12 member Executive Committee which is chaired by Richard Blades. These senior executives are actively involved with clients, market negotiations and claims management.

Stability – The stability and continuity desired in a service provider is visible in the leadership of the company. During its 101 year history, only six people have served as Chairman of the Firm. The stability of our top manage-ment enables us to focus our attention on our clients.

Independence – Wortham does not own any wholesale, London or international brokerage firms. This allows us to obtain every available option for our clients and provide them with unbiased recommendations.

Consultative Practice/Compensation Model – Our culture is based on a consultative approach to service de-livery, and is embodied in our compensation structure where Managing Directors and employees are primarily compensated by the Firm’s profit and salary, respectively, not sales commissions. This organizational structure results in a client-based business model with a team approach, resulting in the best possible services.

Specialization – Our technical and service departments each specialize in specific lines of coverage or service, as well as industry specialization, that is very important in complex exposure and coverage situations.

Technical Expertise – Our emphasis on technical expertise cannot be overstated and we are viewed in the insurance industry as having a foremost position in insurance coverage negotiation/placement and overall tech-nical expertise. This assists our clients in many ways including understanding exposures, negotiating coverage and policy wording as well as premiums, and hands-on participation in the management of claims.

Employees and Managing Directors Milestone Anniversaries – Wortham’s model leads to high retention of clients and Wortham insurance and benefits professionals. We are proud to recognize 82 Wortham profession-als who celebrated milestone anniversaries with the Firm during 2016.

• 5 years - 21

• 10 years - 24

• 15 years - 13

• 20 years - 9

Our Business Model

• 25 years - 8

• 30 years - 4

• 35 years - 1

• 40 years - 2

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An Award Winning BrokerWortham’s hard working and dedicated professionals were continuously acknowledged for their exemplary ef-forts. In 2016, Wortham was recognized by the Independent Insurance Agents & Brokers of America, Inc. as one of their Best Practices Agencies; Wortham’s Houston office was named one of the Top Workplaces by the Houston Chronicle; and Risk & Insurance magazine has named multiple Wortham professionals as Power Broker award winners.

New Associations | Endorsements | PartnershipsWortham gained new partnerships and endorsements across the state during 2016, including partnerships with American Public Power Association (APPA), Hometown Connections, the American Road & Transportation Builders Association (ARTBA), Texas Hospital Association (THA), Texas Restaurant Association (TRA), and Kelsey-Seybold Clinic.

Insurance Industry AssociationsAssurex Global is the world’s largest privately held commercial insurance, risk management, and employee benefits brokerage group with $28 billion in annual premium volume, and provides Wortham with access to the best local brokers in more than 100 countries.

The Council of Insurance Agents & Brokers is the premier association for the top regional, national and international commercial insurance and employee benefits intermediaries worldwide, and fosters industry wide relationships for this group.

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Our PeopleA Great Place to Work

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Our PeopleA Great Place to Work

HOUSTONWortham Tower2727 Allen ParkwayHouston, TX 77019 713-526-3366

DALLAS5950 Sherry LaneSuite 500Dallas, TX 75225214-740-6000

SAN ANTONIO131 Interpark BoulevardSan Antonio, TX 78216210-223-9171

FORT WORTH1600 West Seventh StreetFort Worth, TX 76102 817-336-3030

AUSTIN221 West Sixth StreetSuite 1400Austin, TX 78701512-453-0031