CHARTER PARTNERS RISK SERVICES, INC. STANDARDS AND FORMULAS FOR MEMBERSHIP ACCOUNT VALUATION AND DISTRIBUTIONS (Adopted as of March 17, 2022) These Standards and Formulas (“Standards”) for the valuation of Membership Accounts of and distributions by Charter Partners Risk Services, Inc. (the “Company”), have been adopted by the Company’s Board of Directors pursuant to Article IV of the Company’s Bylaws and Article III of the Company’s Membership Agreement by and between the Company and each of its Members. Specifically, these Standards provide for: 1) Valuation of Membership Accounts; 2) Declaration, calculation and payment of distributions to Members; and 3) Valuation of Membership Accounts for payments to be made upon withdrawal of a Member; and 4) Distributions to Members upon liquidation of the Company. Under the Company’s Bylaws, these Standards are subject to amendment from time to time by the Board of Directors. In the event of any inconsistency between these Standards and the Bylaws, the Bylaws shall control. Calculation of Membership Account balances and distributions under these Standards are, in all cases, subject to applicable regulatory considerations and may, in some cases, require prior approval of Cooperative Partnership Insurance Company (the “Sponsored Captive”) and the Commissioner. An example model for the calculation of Membership Account balances under these Standards is attached hereto as Exhibit A. In the event of a conflict between examples contained in Exhibit A and these Standards and Formulas, these Standards shall prevail. Any ambiguity or question regarding these Standards shall be resolved by the Board in its sole discretion. 1. Definitions. Commissioner means the Commissioner of the Vermont Department of Financial Regulation. Board means the Board of Directors of the Company. Membership Account is the account established for each Member to which amounts may be allocated or deducted from time to time in accordance with the Bylaws and these Standards. 2. Annual Membership Account Calculations. At the Board’s direction, the Company shall from time to time, but in no event less often than annually, make adjustments to each Member’s Membership Account. In making adjustments, the Company shall adhere to the following guidelines: 1. A Member’s initial Membership Account balance shall be the surplus contribution made by the Member upon joining the Company as a Member, or in the case of any Member then participating in the Company’s insurance program, commence without surplus in the year 2012. 2. A Member’s Membership Account shall be adjusted to reflect the insurance loss funding attributable to such Member for each policy year minus the insurance losses attributable to such Member for corresponding policy years, taking into account incurred but not reported reserves allocated to such Member. 3. Deficits resulting from losses of a Member exceeding its loss fund for a year may be charged against loss funding in other policy years. 4. Investment income shall not be credited to Membership Accounts. 5. The Board may on any reasonable basis credit or debit Membership Accounts to account for income tax liabilities or credits. 6. Loss performance used to determine Membership Account adjustments shall be made at projected expected ultimate loss. 7. The analysis underlying valuation is not static – loss performance underlying adjustments will change as losses develop and IBNR is reduced (or increased). 8. Dividends or other distributions paid to a Member shall be subtracted from the Member’s Membership Account when the dividend is declared and accepted by the Member. 9. Allocations for “Stub Periods” created by new Members with dissimilar initial policy years shall be limited to reflect the Member’s limited participation in the policy year in which the “Stub Period” occurred. 10. Initial surplus contributions and all Membership Account balances shall be placed in the general pool of assets and are not to be specifically reserved or limited to support of a particular Membership Account. Until paid, they remain subject to loss, reduction or further adjustment. 3. Distributions to Members. The Board may, in its sole discretion, declare and pay cash distributions, returns of surplus and/or policyholder dividends to Members. All such distributions are subject to the prior approval of the Sponsored Captive and the Commissioner, and to the Company’s ability to pay such amounts as determined by the Board in its sole discretion. No Member shall have any entitlement to any distribution unless and until declared by the Board and approved by the Sponsored Captive and the Commissioner. All policyholder dividends declared shall be designated as payable from one or more policy years and on the basis of the Membership Account balance of Members participating in such year. Such distributions shall general not exceed fifty percent (50%) of the Membership Account balance of any Member in such year. Unless otherwise determined by the Board, no distribution may be paid to a Member before completion of at least three (3) years as a Member of the Company. 4. Payment of Membership Account upon Termination of Membership. Upon cancellation or termination of a Member’s participation in the current insurance or reinsurance programs of the Company, the Company shall pay to the Member a portion of the balance of its Membership Account in accordance with Article 1, Section 7 of the Bylaws of the Company. In all cases, such payment and termination shall be subject to the prior approval of the Sponsored Captive and the Commissioner and may be reduced, delayed or paid in installments at the sole discretion of the Board. The Board may, but need not, provide for the payment of reasonable interest upon unpaid Membership Account balances to be returned. For purposes of calculating the amount of a Member’s Membership Account balance payable upon withdrawal, the total amount shall not exceed fifty percent (50%) of such Member’s Membership Account for each policy year, valued using ultimate reserve values calculated at ninety percent (90%) confidence level (the sum the “Payable Balance”). Additionally, the Payable Balance shall be further reduced to account for the duration of the Member’s time of participation in the Company’s insurance or reinsurance programs in keeping with the following: Less than three (3) years- No Payment of Any Kind Completion of three (3) years, but less than five (5) years- 50% of Payable Balance Completion of five (5) years, but less than seven (7) years- 75% of Payable Balance Completion of at least seven (7) years- 100% of Payable Balance The Board may additionally set-off against a departing Member’s Membership Account any amounts owed by such Member to the Company and any amount which the Corporation would have received from others as a result of the departing Member’s participation in the Company’s insurance programs, but for the Member’s failure to pay such sums, including, but not limited to unpaid premium and audit premiums. The Board may also adjust any amount owed to a Member to account for uncertainty, expected (though unvalued) future business circumstances of the Company and concepts of equity between and among the Members and the Company. Payment of a portion of a Payable Balance under this Section 4 shall conclude a Member’s rights as a Members and its rights in or to any Membership Account. No further payment shall be made, regardless of future development of loss reserves or other profitability of the Company. 5. Distributions to Members upon Liquidation of the Company. Upon liquidation of the Company, any assets remaining after discharge and satisfaction of non-insurance liabilities and provision for all insurance liabilities, shall be distributed to the Members based on the ratio that the value of each Member’s Membership Account bears to the total value of all Membership Accounts, or in accordance with a Plan of Liquidation recommended by the Board and approved by the Members.