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c c c Florida Municipal Insurance Trust NOTES TO FINANCIAL STATEMENTS September 30,2010 Note 8 - Claims and Claim Expenses (Continued) The following represents changes in the liability during the past two years: Year Ended September 30, 2010 2009 Liability for Claims and Claim Expenses - BeQinninQ of Year $ 158,932,749 $ 173,829,685 Claims and Claim Expenses Provision for Insured Events of the Current Year Increase in Provision for Insured Events of Prior Years 81,966,822 83,172,360 3,359,126 699,377 Total Claims and Claim Expenses 85,325,948 83,871,737 Payments Claims and Claim Expenses Attributable to Insured Events of the Current Year Claims and Claim Expenses Attributable to Insured Events of Prior Years 32,325,712 33,280,225 35,070,848 35,694,576 Total Payments 67,396,560 68,974,801 Liability for Claims and Claim Expenses - End of Year $ 191,759,073 $ 173,829,685 Note 9 - Hurricane Claims~ As indicated in Note 8, any adjustments resulting from the settlement of losses will be reflected in the Trust's earnings at the time the adjustments are determined, One situation which may result in an adjustment to the ultimate cost of settling claims involves the Federal Emergency Management Agency (FEMA) auditing previously adjudicated hurricane claims arising in Florida between 2003 and 2006, One of the questions raised by FEMA was whether the Trust had appropriately adjudicated these claims, Management provided an update on the matter to the Trust's Board of Trustees at its December 2010 meeting, The Board elected to set aside and record on the books of the Trust a designated fund in the amount of $25,000,000 to demonstrate the financial strength of the Trust and its ability and willingness to pay claims if it is ultimately determined the Trust did not appropriately pay claims arising as a result of this matter, It is management's current opinion that the claims were appropriately adjudicated, 18