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2010 ... a “Double Up The Middle”
Using baseball as an analogy, 2010 was neither a home run nor a strikeout, more like a “double up the middle”. The unique structure of a mutual insurance company, being owned by its policyholders, allows the company to measure its success by policyholder value, as opposed to public companies, whose ultimate objective is to provide shareholder value. As a mutual company, our financial and operational objectives are much more modest than a public company and would align with a “double up the middle”. Performing well in both areas of the operation, underwriting & investments, the company was able to increase its capital strengthening its ability to meet its policyholder obligations.
Direct written premium increased 8.7%, going from $151.4 million to $164.5 million, an all-time high for the company.
Incurred losses for the year decreased slightly, going from $86.9 million to $86.5 million.
One of the company’s most recent concerns is the net underwriting results on our two largest lines of business, personal automobile and homeowners.
The personal automobile line, which is our largest line, continues to be our biggest challenge. 2010 produced another unprofitable year ending with an underwriting loss of $2.5 million; however, it is a significant improvement over last year’s $7.7 million dollar underwriting loss. We continue to see an increase in loss frequency and severity. It is our opinion that reasonable and prudent insurance reform is needed to help reduce these losses and make personal automobile insurance more affordable to our policyholders.
The homeowners line, which is our second largest line, produced a small underwriting profit of $300,000. This too was a significant improvement over 2010 which resulted in a $1.9 million dollar underwriting loss. The company continues to experience an increase in losses attributed to the deterioration of the economy, such as vacant and foreclosed properties and fraud. Our loss prevention department is diligent in looking for ways to prevent and/or control these types of losses.
Our assets increased over $24.5 million ending at $349 million.
Our reserve for policyholder protection increased 8.3% or $15.9 million, ending at $207.9 million.
2010 will be remembered as an average year regarding underwriting results and a better than average year from our invested assets. The positive results from a conservative and consistent philosophy will enable the company to continue moving forward with its business objectives without interruption.
In addition, we received notification from the A.M. Best Company that our A+ rating has again been affirmed with a stable outlook for 2011.
2011 will be another year of a challenging environment both on an underwriting and investment income basis.
The management team and all our associates remain focused and poised to take on the challenges and opportunities the future presents.
We are blessed to be affiliated with such a loyal group of policyholders, strong network of independent agents and dedicated team of employees.
We are proud of the protection, services and financial stability we have provided for over 100 years to Michigan individuals and families.
We appreciate your confidence in placing your insurance with us and do not take it for granted.
Thank you for your business.
Sincerely,
Kurt P. Foley
President, CEO |
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