Annual Report Lawyers Mutual Insurance by jolinmilioncherie

VIEWS: 6 PAGES: 12

									                       Annual Report 2011
                              Fitting Kentucky’s Legal
                                    Malpractice Needs




By Kentucky Lawyers
For Kentucky Lawyers
Lawyers Mutual Insurance Company of Kentucky



EXECUTIVE COMMITTEE




President                      Board Chair                                  Treasurer                                   Secretary
Ruth H. Baxter                 John G. Prather, Jr.                         Daniel P. Stratton                          David L. Yewell
Carrollton – 6th district      Somerset – 3rd district                      Pikeville – 7th district                    Owensboro – 2nd district
cbjruthbaxter@aol.com          pratherlaw@msn.com                           dpstratton@setel.com                        dyewell@yewelllaw.com


BOARD OF DIRECTORS




Bruce K. Davis                Glenn D. Denton                               Charles E. “Buzz” English, Jr.              Margaret E. “Maggie” Keane
Lexington – 5th district      Paducah – 1st district                        Bowling Green – 2nd district                Louisville – 4th District
bkdavis@insightbb.com         gdenton@dklaw.com                             benglish@elpolaw.com                        mek@gdm.com




 Anne McMillin                John G. McNeill                               Dustin E. Meek                               Escum L.“Trey” Moore, III
 Louisville – 4th District    Lexington – 5th District                      Louisville – 4th District                    Lexington – 5th district
 ammatty@bellsouth.net        jmcneill@landrumshouse.com                    dmeek@tachaulaw.com                          trey@moorepllc.com




W. Douglass Myers             Marcia Milby Ridings                         Beverly R. Storm                             Marcia L. Wireman
Hopkinsville – 1st District   London – 3rd district                        Covington – 6th district                     Jackson – 7th district
dmyers@dmlfirm.com            marcia@hmrkylaw.com                          bstorm@arnzenlaw.com                         wiremanmarcial@bellsouth.net




                                    Table of Contents
                                    Letter to Our Policyholders . . . . . . . . . . . . . .1            Statements of Changes in
                                    Claims Data . . . . . . . . . . . . . . . . . . . . . . . . . .2    Policyholders’ Surplus . . . . . . . . . . . . . . . . .6
                                    Lawyers Mutual’s Features . . . . . . . . . . . . . .3              Statements of Cash Flows . . . . . . . . . . . . . . .7
 Stephen D. Wolnitzek               Statements of Admitted Assets, Liabilities                          Lawyers Mutual Insurance Agency . . . . . . .8
 Covington – 6th district           and Policyholders’ Surplus . . . . . . . . . . . . . .4             QR Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
 swolnitzek@wrblaw.com
                                    Statements of Operations . . . . . . . . . . . . . . .5             Management and Staff . . . . . . . . . . . . . . . . .9

Annual Report 2011
                                                                       Lawyers Mutual Insurance Company of Kentucky


 April 2010
       2012
 Letter to Our Policyholders
 Thanks to your continued support and loyalty Lawyers              for all practioners, and the production and distribution of
 Mutual Insurance Company of Kentucky (LMICK) made                 The Risk Manager to all Kentucky lawyers.
 2011 another landmark year. We are happy to report we
 made a profit for the fifth consecutive year, and our renewal       In 2011, we:
 rate for policyholders was 95%.                                   • presented at each district bar meeting and New
                                                                     Lawyer Program
 The Company’s success is due to the support of our                • sponsored 63 meetings and events for various
 policyholders, a dedicated Board of Directors, sound                local bar associations
 underwriting and efficient claims management. We                   • distributed The Risk Manager quarterly
 maximize the staff’s capabilities and operate responsibly.        • presented at 34 continuing legal
 We continue to stand by the fundamental principle for               education events
 which we were founded: we are here for Kentucky lawyers           • developed five new CLEs on topics we believe
 to provide malpractice insurance for the generations                valuable to the profession
 to follow.                                                        • promoted “Lawyers as Leaders” for lawyers with
                                                                     one to five years experience.
 Our policyholders understand our premiums are based
 solely on the claims experience of Kentucky lawyers. We           Anyone interested in scheduling a CLE can view the
 operate in a conservative manner, and provide exceptional         complete list of topics at http://lmick.com/resources/
 service in claims prevention and repair, as well as in our        schedule-an-ethics-cle.html or contact Nancy Meyers at
 defense of our insureds.                                          502-568-6100 or e-mail meyers@lmick.com.

 Claims frequency and severity are challenging to predict.         This past year we welcomed two new faces to the Board of
 We continue to protect Kentucky lawyers from financial             Directors. Anne McMillin from Louisville filled the vacancy
 loss by assuming millions of dollars of risk each year. As the    created when Ronald Gaffney retired from the Board, and
 charts on page two indicate, the highest number of claims         W. Douglas Myers from Hopkinsville began his three
 continues to arise from the personal injury plaintiff area        year term as an officer of the Kentucky Bar Association.
 of practice.                                                      Anne, Doug, and all members of our Board, welcome any
                                                                   questions or feedback. Complete contact information for the
 The personal injury plaintiff area of practice has historically   entire Board can be found on the inside cover of the Annual
 been responsible for the most claims reported, and resulted       Report or on our web site http://lmick.com/about-us/board-
 in a 15% increase in 2011 over 2010. Real estate claims are       of-directors.html.
 a close second in number. We are dedicated to preventing
 claims through risk management and strive to be accessible        To ensure you are maximizing your policy coverage, a list
 to address questions about potential claims, provide              of features can be found on page three. As always, we are
 guidance, and resolve issues in a timely manner at no             thankful for your continued support. Please contact us if
 additional cost to our insureds.                                  you have questions and again we thank you for allowing us
                                                                   to serve you as we embark on our 25th year.
 Lawyers Mutual also provides free continuing education
 programs, sponsorship of a variety of meetings and events




Asa P. “Pete” Gullett, III                             John G. Prather, Jr.
                                                       Jo        ather,                              Ruth H. Baxter
Chief Operating Officer                                 Bo        ir
                                                       Board Chair                                   President




                                                                                                                                 1
    Lawyers Mutual Insurance Company of Kentucky


               Claims Frequency by Areas of                                                                   Claims Frequency by Areas
              Practice since 1986 *=since 2005                                                                    of Practice in 2011
     Area of Law                                            Percent                             Area of Law                                            Percent
     Personal Injury Plaintiff ......................... 24%                                    Personal Injury Plaintiff ......................... 36%
     Real Estate .............................................. 21%                             Real Estate .............................................. 13%
     Collection & Bankruptcy ........................ 10%                                       Collection & Bankruptcy ........................ 13%
     Estate, Trust & Probate ............................. 8%                                   Family Law ............................................... 8%
     Family Law ............................................... 7%                              Workers’ Compensation ........................... 7%
     Workers’ Compensation ........................... 6%                                       Criminal Law ............................................ 5%
     Criminal Law ............................................ 4%                               Estate, Trust & Probate ............................. 5%
     Corporate & Business Organization .......... 3%                                            Labor & Employment Law ........................ 3%
     Labor & Employment Law* ...................... 3%                                          Personal Injury Defendant ........................ 3%
     Personal Injury Defendant ........................ 2%                                      Corporate & Business Organization .......... 1%
     Other ...................................................... 12%                           Other ........................................................ 6%



                                                                     Claims Reported
                                                                     Incident         Claims           Total
                                                                                                          170
                                        170
                                        160                                                                                 152
                                                          144
                                        140
                                                                          122             122
                                        120
                                        100          96                                                               94
                                                                     77                           86 84
                                         80
                                                                                     65
                                                                                57                               58
                                         60     48              45
                                         40
                                         20
                                          0
                                                     2007            2008            2009              2010            2011




                                                                Frequency of Claims
                                                            (Number per 100 lawyers insured)

                                         4.00                                                                          3.79
                                                     3.66                                                 3.49
                                         3.50
                                                                      3.11
                                         3.00                                         2.71
                                         2.50

                                         2.00

                                         1.50

                                         1.00

                                         0.50

                                         0.00
                                                     2007             2008            2009                2010             2011



2          Annual Report 2011
                               Lawyers Mutual Insurance Company of Kentucky




   Lawyers Mutual’s Features
• Immediate assistance in claims avoidance and
  claims repair
• Up to $10,000 for attorneys fees in defending a
  bar complaint (outside of policy limits) per
  policy period
• $500 loss of earnings, for each named insured,
  each day when attending a trial, arbitration,
  mediation, or deposition up to $10,000 (outside
  of policy limits) per policy period
• Coverage for acts, errors, and omissions anywhere
  in the world
• Mediator/arbitrator coverage
• Coverage for non-lawyers for services performed
  in the course and scope of employment with the
  insured firm
• Penalty-free reporting for incidents or
  potential claims
• Immediate coverage for new partners, associates,
  and employees during the term of the policy,
  with no additional premium due until
  policy renewal
• Free extended reporting period endorsement
  (“tail” coverage) provided upon death
• Free extended reporting period endorsement
  (“tail” coverage) for retiring or disabled attorneys
  who have been with Lawyers Mutual for five
  consecutive years
• CLE premium discounts
• New lawyer discount of 60% in the first year
  of practice (with graduated discounts through the
  fourth year of practice)




                                                                              3
    Lawyers Mutual Insurance Company of Kentucky


    Dean Dorton Allen Ford, PLLC, performed an independent audit of the Company’s 2011 financial
    statements. A complete copy of the audited statements with all explanatory notes and the
    Independent Auditors’ Report is available upon request and is posted on Lawyers Mutual’s Web site
    http://lmick.com/about-us/financial-reports.html.




                                   Statements of Admitted Assets, Liabilities and Policyholders’ Surplus
                                                      December 31, 2011 and 2010
                                                                                 2011              2010
                                      Admitted Assets
                    Cash and invested assets:
                      Bonds                                                 $ 17,218,665      $ 17,974,949
                      Cash, cash equivalents and short-term investments          762,485           570,393

                         Total cash and invested assets                         17,981,150        18,545,342

                    Accrued investment income                                      211,643          219,716
                    Uncollected premiums                                         1,129,443          880,618
                    Reinsurance balances receivable                                205,763           16,467
                    Deferred tax asset                                             378,360          367,559
                    Federal income tax recoverable                                   6,948           53,809
                    Other admitted assets                                           18,783           35,325


                       Total admitted assets                                $ 19,932,090      $ 20,118,836

                           Liabilities and Policyholders’ Surplus

                    Reserves:
                      Losses                                                $    5,800,364    $    5,649,437
                      Loss adjustment expenses                                   4,237,152         4,471,495
                      Unearned premiums                                          2,148,251         2,130,139
                      Advance premiums                                             405,496           398,353

                       Total reserves                                           12,591,263        12,649,424

                    Reinsurance balances payable                                  144,687           400,750
                    Provision for reinsurance                                      45,000            38,000
                    Accrued expenses and other liabilities                        238,140           235,448


                         Total liabilities                                      13,019,090        13,323,622


                    Policyholders’ surplus:
                      Paid-in surplus                                            4,325,792         4,336,967
                      Unassigned surplus                                         2,587,208         2,458,247

                         Total policyholders’ surplus                            6,913,000         6,795,214

                         Total liabilities and policyholders’ surplus       $ 19,932,090      $ 20,118,836




4         Annual Report 2011
                                                  Lawyers Mutual Insurance Company of Kentucky




                                  Statements of Operations
                          Years ended December 31, 2011 and 2010

                                                           2011               2010

Premiums earned                                       $   4,930,139    $   4,555,471

Losses and loss adjustment expenses incurred              4,674,152        4,038,353

Other net underwriting expenses incurred:
  General expenses                                        1,054,746        1,144,439
  Net commissions (from) to reinsurers                      (76,901)         (97,652)

     Total other net underwriting expenses incurred         977,845        1,046,787

     Underwriting loss                                     (721,858)       (529,669)

Investment gain:
   Investment income earned                                 719,694          682,012
   Net realized capital (losses) gains                        2,134          (31,717)

     Net investment gain                                    721,828          650,295

Other income                                                 56,478           48,087

     Income before federal income taxes                      56,448          168,713

Federal income tax benefit                                    64,049              -

     Net income                                           $ 120,497    $     168,713




             Net Investment Gain (Dollars in Thousands)
          1,000 -      966

            800 -                              746
                                                                       722
                                                           650
                                     614
            600 -


            400 -


            200 -


               0-
                       2007          2008      2009       2010         2011




                                                                                                 5
    Lawyers Mutual Insurance Company of Kentucky




                                           Statements of Changes in Policyholders’ Surplus
                                              Years ended December 31, 2011 and 2010
                                                                                                                      Total
                                                                       Paid-in             Unassigned            Policyholders’
                                                                       Surplus              Surplus                 Surplus

              Balance, December 31, 2009                           $   4,344,031       $     2,418,652       $     6,762,683

                Net income for the year ended December 31, 2010                 -              168,713               168,713
                Change in surplus subscriptions                            (7,064)                 764                (6,300)
                Change in net unrealized capital losses                         -               31,254                31,254
                Change in net deferred tax asset                                -              (44,934)              (44,934)
                Change in non-admitted assets                                   -             (128,202)             (128,202)
                Change in provision for reinsurance                             -               12,000                12,000

              Balance, December 31, 2010                               4,336,967             2,458,247             6,795,214

                Net income for the year ended December 31, 2011                -              120,497               120,497
                Change in surplus subscriptions                          (11,175)               1,275                (9,900)
                Change in net unrealized capital losses                        -                4,494                 4,494
                Change in net deferred tax asset                               -               20,244                20,244
                Change in non-admitted assets                                  -              (10,549)              (10,549)
                Change in provision for reinsurance                            -               (7,000)               (7,000)

              Balance, December 31, 2011                           $   4,325,792       $     2,587,208       $     6,913,000




                                Policyholders’ Surplus (Dollars in Thousands)
                                                                                     6,795           6,913
                                7,000 -                  6,564         6,763
                                           6,331
                                6,000 -

                                5,000 -

                                4,000 -

                                3,000 -

                                2,000 -

                                1,000 -

                                     0-
                                            2007          2008          2009           2010          2011




6         Annual Report 2011
                                                        Lawyers Mutual Insurance Company of Kentucky
                                      Statements of Cash Flows
                              Years ended December 31, 2011 and 2010
                                                                        2011                    2010

Cash flows from operating activities:
  Premiums collected, net of reinsurance                         $     4,450,507       $    3,110,861
  Net investment income                                                  785,246              724,410
  Miscellaneous income                                                    56,478               48,087
  Losses and loss adjustment expenses, net of reinsurance             (4,946,864)          (2,513,610)
  Underwriting expenses                                                 (985,676)          (1,224,846 )
  Federal income taxes refunded                                          110,910                    -

     Net cash (used in) provided by operations                         (529,399)               144,902

Cash flows from investment activities:
  Proceeds from investments sold, matured or repaid:
     Bonds                                                            2,550,000               1,756,900
     Other invested assets                                                  270                   1,383

       Total investment proceeds                                      2,550,270               1,758,283

Cost of investments acquired:
     Bonds                                                            (1,849,332)          (2,664,421)

       Total investments acquired                                     (1,849,332)          (2,664,421)

          Net cash provided by (used in) investment activities          700,938                (906,138)

Cash flows from financing and miscellaneous activities:
  Change in surplus subscriptions                                           (9,900)              (6,300)
  Other cash received (applied)                                             30,453             (270,635)

          Net cash provided by (used in) financing activities                20,553             (276,935)

Net increase (decrease) in cash, cash equivalents and
  short-term investments                                                192,092            (1,038,171)

Cash, cash equivalents and short-term investments,
  beginning of year                                                     570,393               1,608,564

Cash, cash equivalents and short-term investments,
  end of year                                                    $      762,485        $       570,393


            Gross Premiums Written (Dollars in Thousands)

           7,500 -    7,242
           7,000 -                                                                    6,681
                                     6,659        6,506          6,650
           6,500 -

           6,000 -

           5,500 -

           5,000 -

           4,500 -

           4,000 -

           3,500 -

           3,000 -
                       2007            2008          2009            2010              2011


                                                                                                           7
    Lawyers Mutual Insurance Company of Kentucky


        Probate & Court Bonds by Lawyers Mutual Insurance Agency
         Lawyers Mutual continues to offer a full range of                   individual needs of attorneys and their clients. It
         probate and court bonds through The Bar Plan.                       is easy to apply for a bond. In addition to phone,
         This program distinguishes itself by offering                       fax and e-mail, we offer instant quotes and a fully
         24-hour turnaround service, competitive rates and                   automated online application option at
         an attorney managed underwriting staff dedicated                    https://lmia.onlinecourtbonds.com/.
         to working closely with attorneys to meet the


           Rate Structure
           Administrator, Executor, Conservator, Guardian and Small Estate Bonds

              Amount of Bond                                                             Rate (All rates based on per annum basis)
              Up to $15,972                                                              $100.00
              $15,973 to $50,000                                                         $100.00 plus $5.57 per thousand over $15,972
              $50,001 to $200,000                                                        $290.00 plus $4.45 per thousand over $50,000
              $200,001 to $500,000                                                       $957.00 plus $2.76 per thousand over $200,000
              $500,001 to $1,000,000                                                     $1,784.00 plus $1.12 per thousand over $500,000
              $1,000,001 and up                                                          $2,348.00 plus $.56 per thousand over $1,000,000

               Court Bonds
               (Replevin, Injunction, Appeal and Attachment)                              $5.97 - $22.18 per thousand depending on the type of bond
               Premium


             Lost Instrument Bond                                                        $5.97 - $30.05 per thousand depending on the risk of the
             Premium                                                                     security that has been lost and whether or not the bond has
                                                                                         a fixed or open penalty.

             Notary Bonds
                                                                                         $35.00
             Term Premium
                                                                                Note: All bonds are subject to a $100.00 minimum annual premium except notary.


           Visit us at   www.lmia.onlinecourtbonds.com or call our underwriters at 877.553.6376 from 8:00 a.m. to 5:00 p.m. Central Time.


        QR Codes
         For immediate access to the information in the annual report on Lawyers Mutual’s website, scan the
         codes below with your smartphone. If you do not have a QR reader on your smartphone, go to this site
         and download the free app. http://www.mobile-barcodes.com/qr-code-software/.




                                       Annual Reports and                                       Board of Directors
                                       Audited Financials




                                            Schedule an                                             Court Bonds
                                             Ethics CLE


8         Annual Report 2011
                                                                            Lawyers Mutual Insurance Company of Kentucky



MANAGEMENT AND STAFF
CLAIMS




Asa P. “Pete” Gullett, III Jane Broadwater Long        Dulaney L. “Del”             Robert G. Breetz         Jennifer S. Bicknell
Executive Vice President &   Vice President & Claims   O’Roark, Jr.                 Claims Counsel           Claims Administrator
Chief Operating Officer      Counsel                   Newsletter Editor; Claims,   breetz@lmick.com         bicknell@lmick.com
gullett@lmick.com            long@lmick.com            and Loss Prevention
                                                       Consultant
                                                       del914@bellsouth.net

UNDERWRITING                                           MARKETING                    FINANCIAL
                                                       & SALES




Lois A. Smith                Connie S. Harper          Nancy L. Meyers              John F. Reesor, CPA      Sarah B. Kessinger
Vice President,              Underwriting Assistant    Marketing Director           Vice President & Chief   Accounting Assistant
Underwriting                 harper@lmick.com          meyers@lmick.com             Financial Officer        kessinger@lmick.com
smith@lmick.com                                                                     reesor@lmick.com


COMMITTEES                                                                     ADVISORS & CONSULTANTS

Audit & Finance – Daniel P. Stratton,                                          Actuary
Glenn D. Denton, Charles E. “Buzz” English, Jr.,                               Pinnacle Actuarial Resources, Inc.
John G. Prather, Jr., Marcia L. Wireman                                        Roswell, GA

Claims – David L. Yewell, Ruth H. Baxter, Glenn D. Denton,                     Auditor
Charles E. “Buzz” English, Jr., Anne McMillin,                                 Dean Dorton Allen Ford, PLLC
John G. McNeill, Dustin Meek, Marcia Milby Ridings,                            Lexington, KY
Beverly R. Storm, Stephen D. Wolnitzek,
                                                                               Investment Broker
Marketing – Ruth H. Baxter, Dustin E. Meek,                                    PNC Investments, Inc.
Escum L. “Trey” Moore, III, David L. Yewell                                    Louisville, KY

Nominating – Marcia L. Wireman, Bruce K. Davis,                                Reinsurance Broker
Glenn D. Denton, Escum L. “Trey” Moore, III                                    Guy Carpenter & Company, LLC
                                                                               Boston, MA
Underwriting – John G. Prather, Jr., Bruce K. Davis, Glenn
D. Denton, Margaret E. “Maggie” Keane, W. Douglas Myers,
Marcia Milby Ridings, Beverly R. Storm, Daniel P. Stratton,
Marcia L. Wireman, Stephen D. Wolnitzek
Waterfront Plaza
323 West Main Street, Suite 600
Louisville, KY 40202




2012 Annual
Policyholders Meeting
The Annual Policyholders Meeting of Lawyers Mutual
Insurance Company of Kentucky is scheduled for 8:00 a.m.,
Wednesday, June 6, 2012 in the Nunn Room, Galt House
East, Louisville, KY. Included in the items of business are
the election of a class of the Board of Directors and a report
on Company Operations. As a reminder all proxies must be
received by June 1, 2012.
We look forward to seeing you at the meeting.




Annual Reports and                                                      502.568.6100 • 800.800.6101
Audited Financials                                               www.lmick.com • Meyers@lmick.com

								
To top