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Medical Mutual is pleased to provide details of its operating
results for the year-ended December 31, 2008.
Medical Mutual is pleased to provide details of its operating
results for the year-ended December 31, 2008.
With 307 new claims filed for 2008, the Company has now
experienced five consecutive years with new claims activity significantly
below the historic high of 484 new claims filed in 2003.
Because the number of new claims significantly impacts expected
losses – and therefore premiums needed to cover expected losses
and operating costs – the persistence of this positive trend has
enabled the Company to stabilize and decrease coverage rates.
Domenic Restuccia, Medical Mutual’s Executive Vice
President and CFO, commented, “I’m very pleased with our solid
financial performance this past year. It’s important for our members
to know that because of our conservative investment philosophy,
the Company weathered the investment market’s steep
decline and maintained its financial stability. The Company is in
as strong a position as ever to meet all of its obligations now and
in the future as well as to weather the volatility inherent in the
medical professional liability industry.”
The bottom line – Medical Mutual realized net income of $6,196,000 for 2008. Other financial highlights for the yearended December 31, 2008 include:
- Pre-Tax Income: Income before taxes was $8,187,000. This compares to $12,534,000 in 2007.
- Pre-Tax Operating Income: Pre-tax operating income (ignoring capital gains/losses) was $11,217,000 compared to $17,822,000 reported at year-end 2007. The $6,605,000 decrease is primarily due to a $6,210,000 increase in loss and loss adjustment expenses. (The increase in loss and loss adjustment expenses is primarily due to a $3,917,000 decrease in drawdown of reserve redundancies for prior report years. An increase in actuarial expected ultimate losses of $2,465,000 for the 2008 report year over 2007 contributed most of the remainder.)
- Dividend Declaration: A dividend of $3,857,000, 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 and investment results prove to be better than expected.
- Net Earned Premiums: Net earned premiums increased $756,000 to $41,763,000 from $41,007,000 reported in 2007 primarily because of a decrease in reserves set aside for free tails in the event of death, disability or retirement.
- Losses on Claims: Losses were $20,956,000, a 25.25 percent increase from the $16,731,000 reported in 2007. The increase was primarily due to a decrease in drawdown of reserve redundancies for prior report years.
- Insurance Operations: The Company reported a $4,032,000 underwriting gain in 2008 which is significantly less than the $10,080,000 gain reported in 2007. The primary difference between the two years is the reduction in drawdown of reserves for prior report years.
- Investment Income: Investment income decreased $567,000 to $7,100,000 from the $7,667,000 reported at year-end 2007 because of a much higher balance invested in tax exempt securities. The benefit of investments in tax exempts is reflected in lower income tax expense than would otherwise have been reported. The overall portfolio yield was 4.1% in 2008 on a fully taxable equivalent basis.
- Surplus: Surplus decreased $2,963,000 to $79,462,000 from $82,727,000 reported in 2007 primarily because of the dividend declared in the first quarter in 2008 based on 2007 yearend operating results. A decline in the value of the equity portfolio also contributed to the decrease.