A quarterly review of Company and industry news for Medical Mutual member-policyholders.
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The Advocate
Second quarter 2007
Medical Mutual Reports Very Strong First Half Operating Results
The significant drop in claims experience over the past three and one-half years has allowed the Company to enjoy the favorable side of our industry’s inherent volatility.
Driven again by yet another period in which claims experience
has significantly improved, Medical Mutual is pleased to
announce its very strong financial performance for the first six
months of 2007. In the first half of the year, member insureds
reported 142 new claims compared to 177 for the same period in
2006. At the height of the “hard market” in 2003, 253 new
claims were reported to Medical Mutual in the first half of the
year. The significant drop in claims experience over the past three
and one-half years has allowed the Company to enjoy the favorable
side of our industry’s inherent volatility.
Commenting on the Company’s financial performance,
President and CEO, Terrance Sheehan, MD, said, “While I’m
extremely gratified that our claims experience has dramatically
improved, we mustn’t forget that our member insured physicians
and hospitals are still paying record high premiums. My goal is
to continue efforts that provide for rate stabilization and relief.
To that end, Medical Mutual remains committed to sound
underwriting principles, aggressive defense of non-meritorious
claims, best-in-class risk management services and presentations
of specialty-specific case-based learning programs.”
Highlights and significant results for the first half of 2007 include:
- Pre-Tax Income: Income before taxes was $4,308,000. This
compares to $3,322,000 for the same period in 2006. (2007
results are net of the $3,966,000 dividend declared by the
Board on May 2, 2007).
- Pre-Tax Operating Income: Pre-tax operating income (ignoring
capital gains/losses) was $8,193,000, a $4,863,000 improvement
over the $3,330,000 reported for the same period in 2006.
- Dividend Declaration: The dividend, paid out in the form of
premium credits to eligible policyholders in Maine, New
Hampshire and Vermont, reflects one of the greatest benefits of a
mutual company like ours – the ability to return excess premiums
collected to member insureds when claims activity proves to
be better than expected.
- Net Earned Premiums: Net earned premiums rose slightly to
$21,457,000 from $21,124,000 reported in the same period
in 2006.
- Losses on Claims: Losses were $6,285,000, a 15 percent
decrease from the $6,756,000 reported in 2006.
- Insurance Operations: The Company reported a $4,438,000
Underwriting gain. This compares to $281,000 for the same
period in 2006.
- Investment Income: Investment income increased 24 percent
to $3,719,000 primarily because the issuance costs for the surplus
note were netted against investment income in 2006.
- Surplus: Surplus increased $4,892,000 to $77,210,000 since
year-end 2006 because of positive net operating results for the
half-year, an increase in the net unrealized capital gains in the
equity portfolio and a reduction in non-admitted assets.