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Medical Mutual Reports Operating Results For The Year Ended December 31, 2007
Medical Mutual is delighted to share with you that fiscal 2007 was another outstanding year for your Company. Like last year,
the two areas impacting our solid financial performance were the
continued moderation of incurred losses and significant drawdown
on claims reserves from prior years in response to betterthan-
expected loss experience.
Pre-tax operating income (ignoring capital gains/losses) was
$17,820,000 in 2007 compared to $11,534,000 in 2006. The
$6,286,000 increase in 2007 operating results is primarily due to a
$9,047,000 decrease in loss adjustment expenses. Based on actuarial
calculations of reserves at 12/31/07, prior year reserves have
been drawn down by $10.1 million, of which $7.1 million reflects
changes in ultimate expected losses for the 2005 and 2006 report
years. In 2006, reserves for prior years were reduced by $5.5 million.
Other financial highlights for the year ended December 31, 2007 include:
- Pre-Tax Income: Income before taxes was $12,533,000. This
compares to $11,534,000 in 2006.
- Pre-Tax Operating Income: Pre-tax operating income (ignoring
capital gains/losses) was $17,820,000, a $6,286,000
improvement over the $11,534,000 reported at year-end 2006.
- Dividend Declaration: A dividend of $3,907,000, 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 decreased
slightly to $41,007,000 from $42,996,000 primarily because of
an increase in reserves for the free death, disability and retirement
reporting endorsements.
- Losses on Claims: Losses were $16,731,000, a 14.2 percent
increase from the $14,651,000 reported in 2006
- Insurance Operations: The Company reported a $10,080,000
underwriting gain in 2007, reflecting a $5,214,000 improvement
over the $4,866,000 reported at year-end 2006.
- Investment Income: Investment income increased 16.6 percent
to $7,667,000 primarily because the issuance costs for the
surplus note were netted against investment income in 2006,
higher average balances invested and higher yields also contributed
to the increase.
- Surplus: Surplus increased $10,409,000 since year-end 2006
because of positive net operating results, an increase of
$1,277,000 in the net unrealized capital gain in the equity
portfolio, a $432,000 increase in deferred tax assets, and an
$876,000 reduction in non-admitted assets.
Commenting on the year-end results, Medical Mutual’s Executive
Vice President and CFO, Dom Restuccia, said, "By all accounts,
2007 was one of the most successful years in the Company’s history.
Our excellent financial position allowed us to hold rates
steady and pay a dividend to policyholders in all three states.
We’re already off to a great start in 2008 with another dividend
declaration. The next important step for our policyholders will
come in the spring when our independent actuarial firm completes
its annual comprehensive study of our rate structure."