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Medical Mutual Reports Robust Operating Results for the Nine Months Ended September 30, 2008
New Claims Filed
(first nine months)
Although claims activity is not consistent year-to-year, the Company has now experienced almost five years with new claims activity significantly below levels seen in 2003 and 2002.
Because of the extended cycle – almost five years now – of significantly
reduced claims activity, Medical Mutual is in solid position
to exceed year-end projections. New claims activity in 2008 was
31 percent lower than the high watermark for new claims activity
in the first nine months in 2003. True to form, the loss costs were
highly correlated with the number of filed claims.
The big question: are we at a new set point in the medical
professional liability insurance industry or just experiencing a
remarkable extended cycle of favorable claims frequency?
Whatever the eventual answer, this experience is the single largest
factor contributing to Medical Mutual’s improved bottom line.
Net income was $9,768,000 for the nine months ended
September 30, 2008, a $6,556,000 increase over the $3,212,000
reported in the same period in 2007. Best of all, most of our
member insureds are benefiting in the form of reduced rates and
two consecutive dividend declarations totaling nearly $8 million.
"Without a doubt, it’s great news for all of our member
insured physicians and hospitals" said Terrance Sheehan, MD, the
Company’s President and CEO. "In 2007 we held the line across
the board so there were no filed rate increases. And this year we’ve
been able to reduce physician premiums, on average, by 10.8%,
8.6% and .9% in Maine, New Hampshire and Vermont respectively.
Our ability to declare a third consecutive dividend next
year currently looks very promising."
Dom Restuccia, Medical Mutual’s Executive Vice President
and CFO commented on the Company’s third quarter performance
stating, "Due to our focus on medical professional liability
insurance in northern New England and our conservative investment
philosophy, Medical Mutual has not been as significantly
impacted by recent downturns in the investment markets or by
natural disasters as other property and casualty insurers. Our continued
financial strength and ability to provide premium relief
have enabled us to help offset some of the financial pressures our
member insureds are facing during these tough economic times."
Other highlights and significant results for the first nine months of 2008 include:
- Income Before Taxes and Dividends: Income before taxes and dividends was $15,612,000. This compares to $8,653,000 for the same period in 2007.
- Pre-Tax Operating Income: Pre-tax operating income (ignoring capital gains/losses) was $11,898,000, a $3,386,000 improvement over the $8,512,000 reported for the same period in 2007.
- Dividend Declaration: A dividend of $3,858,000, paid out in the form of premium credits to eligible policyholders in Maine, New Hampshire and Vermont.
- Net Earned Premiums: Net earned premiums decreased slightly to $31,508,000 from the $32,081,000 reported in the same period in 2007.
- Losses on Claims: Net losses were $10,203,000, a decrease of 22.65% from the $13,191,000 reported in the same period in 2007.
- Insurance Operations: The Company reported a $6,616,000 underwriting gain for the nine month period, reflecting a $3,759,000 improvement over the $2,857,000 reported in the same period in 2007.
- Investment Income: Because of a significantly higher investment in tax exempt securities, Investment Income decreased $373,000 to $5,282,000 from the $5,655,000 reported in the first nine months of 2007. The $3,643,000 net realized capital gain for the nine month period is net of $1,085,000 Federal income tax allocable to the gains. The gains resulted from the restructuring of the portfolio after changing investment advisors at the end of 2007.
- Surplus: Surplus increased $1,658,000 to $84,385,000 since yearend 2007 because of positive net operating results for the nine month period and a $466,000 reduction in non-admitted assets.