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Medical Mutual Reports First-Half Operating Results
Medical Mutual’s operating performance for the Six Months
Ended June 30, 2009, was in line with management’s expectations.
The Company realized net income of $3,082,000. A comparison
of operating results for the first half of 2009 and 2008
adjusted to eliminate the impact of changes on prior years’
reserves, capital gains/losses and to reflect investment income on
a full tax equivalent basis indicates that the Company continues
to strengthen its solid financial position. The comparison shows
that adjusted operating income improved $1,893,000 in first half
of 2009 to $2,208,000 from the $315,000 in 2008, indicating
that the insurance portion of the Company’s business significantly
improved over last year.
Medical Mutual’s Executive Vice President and CFO, Dom
Restuccia, said, “The number of new professional liability cases
brought against our physicians and hospitals this year compared
to five or six years ago has decreased remarkably. It’s hard to
imagine that in an industry as volatile as ours this favorable trend
has persisted. We firmly believe that our excellent operating
performance reflects efforts to improve patient safety and quality
of care, the results of which have been good for everyone in the
healthcare equation — the Company, our policyholders, the
greater medical community and, of course, patients.”
Restuccia also noted that new actuarial studies will begin early next year to make certain that rates in all three states continue to be in alignment with actual results and expectations. Other highlights and significant results for the first half of 2009 include:
- Income Before Taxes and Dividends: Income before taxes and dividends was $3,957,000. This compares to $10,281,000 for the same period in 2008.
- Pre-Tax Operating Income: Pre-tax operating income (ignoring capital gains/losses) was $3,877,000, a decrease of $2,542,000 from the $6,419,000 reported in 2008.
- Net Earned Premiums: Net earned premiums decreased 4.45% to $19,846,000 from the $20,771,000 reported in the same period in 2008. The reduction in net earned premiums is primarily due to changes in class relativities and rate reductions filed and approved in last year.
- Losses On Claims: Net losses were $7,316,000, a decrease of 24.84% from the $9,734,000 reported in the same period in 2008.
- Insurance Operations: The Company reported an Underwriting gain of $349,000, $2,573,000 lower than the $2,922,000 reported in the same period in 2008 because of lower earned premiums and higher loss adjustment expenses.
- Investment Income: Investment income was $3,495,000, a slight increase over the $3,452,000 reported in the same period in 2008
- Surplus: Surplus increased $4,149,000 to $83,611,000 since year-end 2008 primarily because of favorable operating results.
New Claims reported in the first half of 2009 totaled 149 (second lowest
since 2004) compared to 211 in 2008. Although claims activity is
not consistent year-to-year, the Company has now experienced over
five years with new claims activity significantly below levels seen in the
first half of 2003 and 2002.