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Good News on Rates. Better News Ahead?
Medical Mutual President & CEO Terrance Sheehan, MD,
recently announced that rates for both physicians and hospitals
across all three states the Company serves will remain flat for the
coming renewal year. Sheehan added that, “As the recession eases,
and economic growth returns, we’ll have a clearer picture of the
Company’s ability to declare a dividend or modify rates in 2010.
For many policyholders, the announcement marks at least
three years in a row that rates overall have remained steady or
declined. This favorable rate trend has been a reflection largely of
a moderating claims experience.
Delay on Dividend Decision a Matter of Doing The Right Thing
Given the continued uncertainty in the economy, the Company
has delayed a previously anticipated decision on whether to declare
a dividend in favor of further monitoring of the medical professional
liability insurance market and the economy in general. Sheehan
said, “The recession that crippled the financial markets last fall
and dispelled the myth of a recession-proof healthcare industry
casts a different light on the Company’s financial forecasting.”
“As always, our focus is on maintaining a strong financial position
to maintain the best-in-class protection that makes Medical
Mutual the clear market leader in Northern New England. At the
same time, we have always been committed to returning to policyholders
of Medical Mutual, surpluses in excess of the need to pay
projected claims and run the Company — a decision we’ve made
eight times since the Company’s founding in 1978, including a total
of almost $8 million in the last two years (2007 and 2008),” he said.
Sheehan said that while the Company’s financial position
remains as strong as ever, “Given the state of the economy and
our philosophy of doing the right thing, it is prudent to delay any
decision on a dividend declaration until the Company gets a more
definitive picture of the broader outlook for 2010.” He said the
year-end operating results, along with final claims counts and the
financial markets‘ performance will ultimately determine the feasibility
of declaring a dividend.