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Medical Mutual Reports Operating Results For The Year-Ended December 31, 2009
Decade Closes With Fifth Straight Year of Strong Operating Results
Since claims frequency began taking a turn for the better in
2004, Medical Mutual’s financial operating results have consistently
mirrored the improved claims environment and the Company’s
decade-ending 2009 report year was no exception. With a
fifth consecutive year of new claims activity well below the high
watermark in 2003, Medical Mutual once again posted solid
operating results with pre-tax income of $8,622,000.
The sustained improvement in claims frequency has also been
integral to other positive news during the last half of the decade.
Rates stabilized during the five-year time period across all three
states the Company serves, with actual rate relief coming in select
years, markets and lines of business. The Company returned over
$7.8 million dollars to policyholders with two separate dividend
declarations. In addition, the Company significantly enhanced its
surplus position to just over $90 million, in part with the aid of a
$10 million surplus note.
As Medical Mutual enters the new decade, new business
momentum is building as the Company added two hospitals in
New Hampshire to its book of business this past October and
anticipates quoting several more in 2010.
Looking specifically at the year-ended December 31, 2009,
Medical Mutual’s financial highlights include:
- Pre-Tax Income: Income before taxes and dividends was $8,622,000 in 2009, compared to $12,045,000 in 2008, a $3,423,000 reduction. The decrease is primarily reflective of a reduction in earned premiums along with an increase in loss and loss adjustment expenses and a decrease in investment income.
- Pre-Tax Operating Income: Pre-tax operating income (ignoring capital gains/losses) was $7,739,000 compared to $11,217,000 reported for the year-ended 2008.
- Net Earned Premiums: Net earned premiums decreased 5 percent to $39,489,000 from $41,763,000 in 2008. The decrease is primarily reflective of rate and class plan reductions filed and approved in late 2008.
- Losses and Loss Adjustment Expenses(LAE) on Claims: Net losses and LAE were $28,455,000, an increase of $667,000 from the $27,788,000 reported at year-end 2008.
- Insurance Operations: The Company reported a $1,227,000 underwriting gain which is significantly less than the $4,032,000 gain reported in 2008. The reduction was primarily due to the decrease in earned premiums.
- Investment Income: In spite of an increase in the average balance invested, investment income decreased $656,000 to $6,444,000 from the $7,100,000 reported for the year-ended December 31, 2008 because as higher yielding securities matured the proceeds were being reinvested at much lower rates.
- Surplus: Surplus increased by $10,395,000 to $90,159,000 from $79,764,000 at December 31, 2008 primarily because of favorable operating results and significant improvement in the market value of the equity portfolio.
