The Fotherington Insurance Group is an insurance and reinsurance company operating in SL.

We provide three types of insurance:

1. we insure the shares held by residents in various companies listed on SL exchanges against those shares becoming worthless as a result of the company going bankrupt or  through fraud. See here for a list of companies we are willing to cover and here for how it works, what you get and what you pay.

2. we provide reinsurance to other SL insurance companies.

3. we provide insurance direct to other SL financial institutions

surplus funds not required to underwrite the insurance contracts are to be invested in land and investments to generate a return whilst preserving their capital.

the dividend policy is considered key by myself and the aim is to start by distributing most of the earnings.

dividends will be paid twice a month: in the middle of the month; and on publication of the monthly results which will be within 3 days of the month end.

in the initial months the dividend payout will be 90% of earnings.  starting at L$0.020 per share per month (i.e. L$0.010 at the start of the month and in the middle of the month).

as the insurance written by the company grows then the dividend payout may fall below 90% of earnings, but it is not expected that the dividend will fall below L$0.020 per month and indeed the aim is to have a flat or growing monthly dividend (this is, of course, all subject to earnings being able to cover the monthly dividend).

financials will be published monthy and within a few days of the month end, as has been the case since 2007.

the company will operate a buyback policy where i would allow the public shares to fall to a minimum of 15% of the share capital and to rise to a maximum of 30%.  Public shares at IPO will be 27%.  therefore, the company will provide liquidity to the shares to allow investors to buy and sell at tighter spreads.  hence, shares bought back will not be cancelled but held in treasury to be re-issued by the company as demand requires.  the company will buy shares only at net asset value, and sell shares at the higher of net asset value or current demand in volume.

while it is not for me to determine how the shares are valued, i am working on the premise that the shares are valued relative to net assets and hence the IPO is being done at net asset value (including the new monies raised).  the nature of insurance is that losses are unexpected and therefore earnings can be volatile, hence valuing off net assets appears to provide less volatility.

**I appreciate that i am proposing that i be the only board member.  therefore, as a safeguard to the shareholders, i will ensure that 150% of the IPO proceeds are kept in an ISE account either invested in shares, on deposit or in open orders.

Shareholder communications and the issue of additional equity are dealt with http://www.thefotheringtongroup.com/corporate/Investorrelations/Investorrelations.html, but in summary i have detailed when i expect, as a minimum, to be communicating with shareholders and i have put in place measures to prevent dilution of existing shareholders upon the issue of new equity.

Risks associated with Second Life (usual)

SecondLife could cease to exist
The L$ could devalue against the US$
Second Life could man Insurance Companies

Risks associated with the Business

the company may not have sufficient funds to meet insurance claims as they fall due
demand for insurance may not exist or may be reduced such that the dividend payout is less than expected
assets held by the company (land and shares) may fall in value and therefore erode the capital base and so restrict the amount of insurance able to be written

(all estimates for November 2008, may fall, may grow)

Insurance premiums 1730**
Investment income 3000
Reserve releases 7000**
stipend 1200

for November 2008 i am targeting 12,930 earnings

in addition to the above, i am in disccussions with some companies in SL to provide bespoke insurance for their needs.  the outcome of such discussions is uncertain and will likely be protracted though i am hopeful of reaching an agreement in the future.

**if the insurance premiums remain at this level then the 262,000 insurance reserve put in place can be reduced (262,000 insurance reserve would be too high for such a low level of premiums).  the aim is to have a minimum level of insurance premiums + reserve releases of 10000 per month
 

the aim is to value assets at sale value.  therefore customers and shareholders can get a true and fair view as to what the net assets of the company are worth if the company was to wind up.

Invesments held (valued as they appear on my account page in the ISE):
JCF 100,000 shares L$103,000
SIM 35,452 shares L$35,452
JAM 19,000 shares L$0
 
Land: 30,720 (valued at L$2.0 per m2)
(the building and furniture were written down to zero prior to IPO given their resale value is nil).

The cash is split:
Cash held on avatars 444,014
cash on deposit as ISE (including open orders) 75,902

The Insurance Provision: when the company initially started back in 2007 i put in a L$265,000 provision into the Balance Sheet.  therefore, the company can now take L$262,000 of insurance losses before the losses are reflected in the P&L and thus before any such losses affect the net assets.