A quarterly review of Company and industry news for Medical Mutual member-policyholders.
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The Advocate
Third quarter 2007
Medical Mutual Reports 2007 Third Quarter
Operating Results
With solid gains in operating income and an improving loss ratio, the Company is on track to exceed year-end projections
"Should the current trend of moderated claims
activity hold for the remainder of the year,
its actuarial impact on future rates, or our ability to
declare another dividend, can only be positive."
Dom Restuccia,
Executive Vice President and CFO
In the midst of a remarkable cycle that is yielding improvements
in claims frequency, Medical Mutual delivered another quarter of
solid operating results for the period ending September 30, 2007.
The $5,724,000 increase in 2007 operating results over the same
period last year is primarily due to a $2,536,000 decrease in loss
adjustment expenses and a $2,063,000 reduction in losses
incurred. Comparing the high watermark for new claims activity
during the first nine months in 2003 with the same period in
2007, new claims activity has been reduced by 36 percent. True
to form, the ultimate loss costs to the Company were highly correlated
with the number of filed claims.
Commenting on the operating results, Dom Restuccia, the
Company’s Executive Vice President and CFO said “I am incredibly
pleased with the financial performance of the Company. In
an industry like ours that historically goes through periods of
peaks and valleys, the past few years have truly been unprecedented.
Should the current trend of moderated claims activity hold
for the remainder of the year, its actuarial impact on future rates,
or our ability to declare another dividend, can only be positive.”
Highlights and significant results for the first nine months of 2007 include:
- Pre-Tax Income: Income before taxes was $4,694,000. This compares to $2,779,000 for the same period in 2006.
- Pre-Tax Operating Income: Pre-tax operating income (ignoring capital gains/losses) was $8,512,000, a $5,724,000 improvement over the $2,788,000 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 $32,081,000 from $31,819,000 reported in the same period in 2006.
- Losses on Claims: Losses were $13,191,000, a 13.52% decrease from the $15,254,000 reported in the same period in 2006.
- Insurance Operations: The Company reported a $2,857,000 underwriting gain in 2007, reflecting a $4,768,000 improvement over the $1,911,000 underwriting loss for the same period in 2006.
- Investment Income: Higher average balances invested due to positive cash flows from operations coupled with higher yields were the primary factors driving a 20.34% increase in investment income to $5,655,000.
- Surplus: Surplus has increased by $5,461,000 since year-end 2006 because of positive net operating results for the nine month period, an increase in the net unrealized capital gains in the equity portfolio and a reduction in non-admitted assets.