A quarterly review of Company and industry news for Medical Mutual member-policyholders.
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First Half Operating Results Strong
Company sees Notable Increase in Claims Activity
New Claims Filed
(first six months)
The volatile nature of the medical professional liability insurance industry is demonstrated by the inconsistency of claims from year to year. Time will tell whether the current year-to-date spike in new claims is isolated or an early sign of a market shift.
Company sees Notable Increase in Claims Activity
Medical Mutual Insurance Company of Maine is pleased to report
its Operating Results for the Six Months Ended June 30, 2008.
The financial performance of Medical Mutual continues to be
as solid as ever. Net income increased $2,807,000 to $6,014,000
over the $3,207,000 reported in the first half of 2007. Loss
adjustment expenses decreased by $3,466,000 to $2,819,000
compared to the $6,285,000 reported in the same period in
2007. And surplus reported at June 30, 2008 increased
$4,523,000 compared to that reported at the end of June 2007,
to $81,733,000.
As mentioned in the last issue of The Advocate, the Company
is keeping a watchful eye on new claims activity. Two hundred
eleven new claims were filed in the first half of 2008, compared
to 142 in 2007. One particular item of interest is the fact that for
the first half of 2008, there are 36 claims involving four or more
policies compared to only 17 for the entire year in 2007. Time
will tell whether this spike in new claims activity is isolated or an
early sign of a market shift.
Other highlights and significant results for the first half of 2008 include:
- Income before Taxes and Dividends: Income before taxes and dividends was $10,281,000. This compares to $8,274,000 for the same period in 2007.
- Pre-Tax Operating Income: Pre-tax operating income (ignoring capital gains/losses) was $6,419,000, a decrease of $1,774,000 from the $8,193,000 reported in 2007.
- Dividend Declaration: A dividend of $3,867,000, 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 $20,771,000 from $21,457,000 reported in the same period in 2007.
- Losses on Claims: Losses were $9,734,000, an increase over the $5,724,000 reported in the same period in 2007.
- Insurance Operations: The Company reported an underwriting gain of $2,922,000, or $1,516,000 lower than in 2007, primarily due to lower earned premiums and higher net losses.
- Investment Income: Investment income was $3,452,000, a slight decrease from the $3,719,000 reported in the first half of 2007, due to a higher investment in tax- exempt securities in 2008. Capital gains were $3,862,000 — significantly higher than the $81,000 gain reported in 2007.
- Surplus: Surplus decreased $994,000 since year-end 2007 primarily because of the declaration of the dividend (based on 2007 results) in the first quarter of 2008.