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Executive Summary

 This Report is being sent to all persons interested in the affairs of Home Warranty Corporation and its subsidiaries (collectively, the "Companies").

  On October 7, 1994, the Circuit Court for the City of Richmond, Virginia, issued a temporary order placing the Companies in receivership and on October 14, 1994, issued a final order ("Receivership Order") placing the Companies in permanent receivership. The Receivership Order also appointed the State Corporation Commission of the Commonwealth of Virginia (the "Commission") Receiver and Steven T. Foster, Commissioner of Insurance, Bureau of Insurance ("Bureau") as Deputy Receiver of the Companies. On May 1, 1996, Alfred W. Gross succeeded Steven T. Foster as Commissioner of Insurance for the Bureau and as Deputy Receiver of the Companies.

  Action on pending litigation against the Companies has been stayed pending review by the Deputy Receiver. All claims against the Companies or their assets, including claims in litigation, must be submitted to the Deputy Receiver in a manner consistent with the Administrative Claims Process established by the Deputy Receiver as described in Part 3 of the Report.

  The HOWIC Warranty/Insurance documents (the "HOWIC Warranty") issued as part of the HOW Program provides excess coverage. As such, claimants must first seek recovery for the amount of their claimed loss from other insurance they have available such as their homeowners policy, their builder's commercial general liability carrier, or any other insurance that may apply to the claimed loss. In this connection, all other insurance must be exhausted before the Companies will consider the payment of a loss submitted by a Home Owner or Member Builder.

  All Home Owners who believe their homes have Major Structural Defects covered by the HOWIC Warranty, which have not been previously considered by the Companies, must detach, complete, and sign before a notary the Major Structural Defect Questionnaire For Home Owners attached to this Report as Exhibit A. The Major Structural Defect Questionnaire and all appropriate information should be mailed to:

HOW Insurance Company, A Risk Retention Group
In Receivership
P.O. Box 901021
Fort Worth, Texas 76101-2021

  Member Builders who believe the Companies are responsible for amounts they have spent repairing covered defects in their customers' homes and want to submit claims, must complete and sign before a notary the Repair Cost Questionnaire For Builders attached to this Report as Exhibit C. The Repair Cost Questionnaire and all appropriate information should be mailed to the address noted above this paragraph. The Repair Cost Questionnaire should not be submitted by a Member Builder if the claim at issue was previously considered by the Companies. All other persons who wish to file claims with the Companies can do so by submitting their claims to the address noted above this paragraph.

  All claims which are submitted to the Companies, including requests for warranty performance (covered defects which arise during the first two years of HOWIC Warranty coverage), Major Structural Defect claim coverage (covered defects which arise during years three through ten of HOWIC Warranty coverage), Member Builder's requests for reimbursement, and claims for legal defense will be reviewed by HOWIC claim representatives. Claimants will receive a Notice of Claim Determination once all information requested by the Companies has been submitted and reviewed by the claim representatives. All decisions reflected in the Notices of Claim Determination may be appealed as provided in the "Right to Appeal" section in Part 3 of this Report. All appeals must be made in accordance with the Receivership Appeal Procedure which is the exclusive method of appealing decisions of the Deputy Receiver. A copy of the Receivership Appeal Procedure is attached to the Report as Exhibit B.

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