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HOW INSURANCE COMPANY, A RISK RETENTION GROUP
HOME WARRANTY CORPORATION, AND
HOME OWNERS WARRANTY CORPORATION
IN RECEIVERSHIP

 To: Home Owners, Member Builders, Creditors, and Other Interested Persons

  As Commissioner of Insurance for the Bureau of Insurance, State Corporation Commission of the Commonwealth of Virginia, it is my responsibility to oversee and regulate insurance companies domiciled or authorized to do business in Virginia in the interest of policyholders and creditors. Enclosed is a Report on the receivership of HOW Insurance Company, a Risk Retention Group ("HOWIC") domiciled in Virginia, and its affiliates (collectively, the "Companies") for whom I was appointed Deputy Receiver. The next two pages provide a brief summary of the Report. The summary does not discuss all of the important information covered by the Report, and thus, the Report should be read in its entirety to determine how the receivership proceedings affect your interests. The Companies, which operate a home warranty protection plan known as the HOW Program, were placed in receivership in October 1994. This Report is being sent to the owners of homes insured by HOWIC, and home builders who participated in the HOW Program, as well as creditors of the Companies and other persons interested in their affairs.

  The insurance coverage provided by HOWIC under the HOW Program remains in effect. Home owners who submit covered claims to HOWIC for defects in workmanship or construction of their homes will receive partial payment of policy benefits at this time because of HOWIC's financial condition, and may be eligible to receive additional payments later if funds become available.

  The enclosed Report is intended to provide you fundamental information regarding the impact of receivership on your relationship with the Companies and your rights and benefits under the policies and contracts that they have issued. You are encouraged to read the Report carefully. Among other things, it describes how to present a claim for HOW coverage and how that claim will be adjudicated. Moreover, the "Deputy Receiver's Directives" section in Part 3 of the Report provides you with important information in order to avoid the waiver of certain rights. We hope the Report will answer most or all of your questions and will assist you in understanding the effect that these proceedings have on you.

  Please rest assured that first and foremost my goal is to protect your interests in the HOW Companies. We will take all measures reasonably available to us to accomplish that goal. As you can see from the materials that follow, significant efforts are being made to address the many issues that arise from these complicated and difficult proceedings. If you have any questions that are not addressed in the Report, please feel free to forward them to us in writing. Late this Summer, the Report and certain receivership information can be reviewed on-line at the Companies' Internet web site as follows: http://www.howcorp.com.

  All communications with the Companies should be directed to their office address at P.O. Box 901021, Fort Worth, Texas 76101-2021. For urgent matters only, you may call 1-800-834-0577.

Very truly yours,

 

Alfred W. Gross
Commissioner of Insurance and Deputy Receiver of HOW Insurance Company, A Risk Retention Group, Home Warranty Corporation, and Home Owners Warranty Corporation

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