memic portland maine

annual report 06 the memic group DIV $12.0M > WARD 50 > SURP +13.2% > DIV +300% > SFTY WKSHP 330 > LICENSES +13 > PYMNT 91% > P-to-S RATIO .90:1 > RETENTION 98.8% the bigger picture • Expanded to 25 State approvals • Premiums reached 1.2 million in 2006 • Launched new technology asistant on line employers who get their workers’ compensation through memic in maine and across the northeast 21,909 dear policyholder When MEMIC started in this business, we told our policyholders, agents and other stakeholders that we were looking at the long term. In the face of what were difficult decisions, that was not always the most popular view and we heard that – sometimes loudly – from many corners. Still today, more than 14 years later, we take that same view – not because we are stubborn – but because that philosophy is what has worked for your company not only in a remarkable 2006 but in the years leading to this record year. Quite literally, we found that in 2006, this philosophy paid dividends. I am pleased to report to you that, in a year full of highlights, one of the most important occurred in November when we paid our largest dividend ever. Based upon success in our 2003 year, our Board of Directors voted to pay out more than $12M to our qualifying policyholders. That amount tripled the dividend paid the previous year. The better news is that we see this as a signal of even better things to come from your company. the long view Further, in 2006, our policyholder surplus surpassed the $200M mark, and our total assets grew to more than $600M. Despite a softening market, we wrote more than $182M in premium and we saw MEMIC Indemnity Company continue its strong and steady growth both in its market share and in its geographical reach. Today, that company is licensed in 37 states with more to come. But while these numbers tell a good story, our results are so much more than these figures can tell. Our efforts to reduce workplace injuries have continued to succeed with injury rates more than 30 percent below rates that existed before we came to be. Premium rates for our employer policyholders are similarly down and staying down, thanks to the partnerships we have put in place to create and keep safer workplaces. As you know, we continue to provide the best support in our industry in the area of workplace safety. We have 40 people whose job it is to help customers develop and promote safety. I’m especially proud to report that my e-mail in-box is constantly filled with messages complimenting their efforts. They really do make a difference. We focus, as well, on compassionate claims management. From our people who handle the customer service telephone lines to our claim handlers, disability management nurses, and our vocational rehabilitation specialists, we give you and your injured workers a well-qualified and experienced team of people to help with recovery and the return to work. We depend upon the good work of our underwriters who work with your independent insurance agent to serve you well and to offer you costs that fairly reflect the risk over the long term. All of these direct customer efforts are supported by our teams in finance, audit, information technology, human resources and communications. Their back-office efforts provide a solid foundation for all that we do for you. In my position, I hear many accolades about the company’s performance. 2006 was no different, as we were affirmed by A.M. Best as “excellent,” identified once again as one of the top 50 property casualty insurers by The Ward Group, and received an award for economic development from the Maine Development Foundation. Yet, I am particularly proud that, as a result of an independent review, our headquarters office was named as one of the “Best Places to Work in Maine”. This is important because it shows that the people who serve you enjoy their surroundings and their work. I am assured because this is an indication that these people will stay with us and help us continue our quest to be the best workers’ compensation insurer in the country. Please enjoy this annual report and thank you for your business. Sincerely, John T. Leonard, President and CEO DIV $12.0M > WARD 50 > SURP +13.2% > DIV +300% > SFTY WKSHP 330 > LICENSES +13 > PYMNT 91% > P-to-S RATIO .90:1 > RETENTION 98.8% DIV $12.0M > WARD 50 > SURP +13.2% > DIV +300% > SFTY WKSHP 330 > LICENSES +13 > PYMNT 91% > P-to-S RATIO .90:1 > RETENTION 98.8% 2 3 $12m memic’s dividend paid to policyholders in 2006 The long term value of a mutual insurance company is, of course, stability and the promise that success is shared with policyholders. The tangible manifestation of that promise is a dividend payment. MEMIC’s record $12M dividend in 2006 brought many notes of appreciation. We heard stories about how the money helped employers to do everything from staff appreciation parties to purchasing new equipment to offering an new employee benefit. Among the best stories came from policyholder North East Mobile Health Services with offices along the Maine coast from Rockport to South Portland. North East’s ambulances travel a million miles a year on Maine roads. That comes with its own risks, yet the larger potential risk of paramedic injury is due to the handling of patients. With that in mind, North East reinvested its MEMIC dividend in powered hydraulic stretchers which allow a single worker to move a patient of virtually any size in and out of the ambulance with minimal risk. Says North East’s Director of Operations Doug Remington: “That’s safer for our clients and better for our employees.” NorTh eaST MoBile healTh SerViceS Paramedics Jon Degner, left, and Kristi Hamblet, right, of North East Mobile Health Services with their newest pieces of safety equipment -- a powered hydraulic stretcher which allows transport of patients up to 700 pounds and a new ambulance replete with safety features. Their company used their MEMIC dividend to help pay for these items which should help to further their safety program. 4 5 20,283 dividend checks mailed 3,674 visits by memic representatives to construction sites since 2005 100% In home construction, taking the long view means paying attention to every single step, particularly the ones you take on a roof. Assuring safety for all of your workers takes on a added emphasis when your brother is on the crew. That’s the case for Jason Marshall of Marshall’s Arts, Inc. of mid coast Maine. This small home builder works under the framework of MEMIC’s Contractor Certification Program, a focused effort to help small contractors make their jobsites safer. Since this effort began in 2005, MEMIC has made hundreds of visits to worksites, offering instruction and advice on best practices. Protection from potentially life-threatening falls is a prime focus. By using a simple harness and lanyard system, many a tragedy has already been averted. Says Jason Marshall: “It’s our family up there and so we’re interested in keeping them as safe as possible.” fall protection at construction sites MarShall’S arTS Jason Marshall (center) with brothers David Marshall and Alex Marshall on a Marshall’s Arts jobsite in Phippsburg, Maine. The company has used MEMIC’s Contractor Certification Program to help assure that they are making their work as safe as possible for the brothers. 6 7 porTlaNd piraTeS calls responded to When it comes to promoting workplace safety, MEMIC looks far and wide to find ways to remind employers and employees about the importance of the issue. It was this kind of thinking that led to a unique partnership with the Portland Pirates hockey team of the American Hockey League. Already a MEMIC policyholder, the Pirates and MEMIC teamed up to make MEMIC the sole sponsor of the team’s most important piece of safety equipment – the player’s helmet and face shield. In addition, to the reminder that the MEMIC logo stands for safety, the company’s safety message was read over the public address system at the arena before each game, reaching hundreds of thousands of fans over the course of the season. fans attended home games by a safety conscious hockey team Brian Petrovek (right), managing partner for the Portland Pirates, and Eric Weinrich (left) former NHL defenseman and player/coach for the Pirates, pose with their MEMIC-logo helmet. The sponsorship between MEMIC and the Pirates has helped the company to further highlight its workplace safety message. 8 9 210,417 years as an innovative family-owned business 80 1993 The Hews Company of South Portland, Maine knows a little about taking the long view. Established in 1927, this MEMIC policyholder is now in its fourth generation of Hews family management. There’s little doubt that part of that longevity comes from attention to detail, whether it’s in creating a custom truck body or in making sure its employees have the tools to safely perform what can potentially be dangerous work. John Harrington, a member of the Hews family and the company’s Director of Operations, knows that it’s those little details which can make all the difference in providing a safe work environment. Recently as he reviewed safety equipment, Harrington recognized that the correct eye protection could not only prevent injury, it could help provide a boost to the aging eyesight of some of the company’s long-time installers. Magnified safety glasses now allow Hews’ workers to clearly focus on details while the company is satisfied that, in the big picture, safety is assured. 30% approximate reduction in workplace injuries since memic’s inception in hewS coMpaNy John Harrington (center), Director of Operations for Hews Company, pictured at the company’s headquarters garage in South Portland, Maine, with Dan McQuarrie (left) and Russell Boivin (right). The company makes custom truck bodies and understands that attention to every detail not only makes for a great product but also a safer workplace. 10 11 returned to work through disability management teams 994 MEMIC’s philosophy for compassionately providing assistance to injured workers is, in itself, testimony to big picture thinking. It’s well known that an injured worker who receives good treatment and care, and is encouraged by constant communication will be more likely to return to work promptly than one who does not. For this reason, MEMIC’s claim teams include the claim handler, a disability management nurse, vocational rehabilitation experts, advocates and other specialists. Beyond those experts, MEMIC also employs the guidance and assistance of its own Medical Advisory Board. This group of medical providers helps the company better understand new technology, new procedures and other new ways to think about recovering from an injury. In every case, this wider view means better care. MeMic Medical adViSory Board Inset above: Seated from left to right: Denise Dumont-Bernier, PT; David Bourne, MD; Jonathan Torres, MD; and Patricia Bittermann, OTR/L. Standing left to right: Timothy Saulter, DC; John Marr; Suanne Singer, President - MHIC; Larry Catlett, MD; Steven Rodrigue, MD; John Pier, MD; Jane Glass, DO and John Leonard. Not present: Kathy Boulet, DC. 12 13 Members of the MEMIC Indemnity Company claim team, based in Manchester, New Hampshire, use their wide range of skills to help injured workers get well and back to work. From left to right are: Marti Poole, Disability Management Consultant; Jolanta SwensonShea, Employer Advocate; Matt Harmon, Director; Jeff Rasanen, Compensation Specialist; and Mary Chmieleski, Compensation Specialist. board of directors fiNaNcial summary In Thousands of Dollars 2006 2005 2006 2005 Assets Invested Other totAl Assets liAbilities Loss and Loss Expense Reserves Other totAl liAbilities $361,200 $116,192 $477,392 $328,092 $361,200 $117,347 $116,192 $445,439 $487,392 $328,092 $117,347 $445,439 $600,361 $ 80,196 $680,557 $548,055 $600,361 $ 76,887 $80,196 $624,942 $680,557 $548,055 $76,887 $624,942 Policyholders’ Surplus Key stAtistics Dividend Net Written Premium Premium-to-Surplus Ratio Number of Policyholders Combined Ratio $ 12,002 $182,062 .90:1 21,909 93.84 $ 3,990 $12,002 $183,416 $182,062 1.02:1 .90:1 22,193 21,909 91.51 93.84 $3,990 $183,416 1.02:1 22,193 91.51 $203,165 $179,503 $203,165 $179,503 DIV $12.0M > WARD 50 > SURP +13.2% > DIV +300% > SFTY WKSHP 330 > LICENSES +13 > PYMNT 91% > P-to-S RATIO .90:1 > RETENTION 98.8% ; senior management team Seated: Michael P. Bourque, Vice President, Corporate Marketing and Communications; Catherine F. Lamson, Vice President, Human Resources and Administration Standing: Donald V. Hale, Senior Vice President, Underwriting and Chief Operating Officer, MEMIC Indemnity Company; John F. Marr, Senior Vice President, Claims; Gary R. Baxter, Senior Vice President, Information Services; John T. Leonard, President and Chief Executive Officer; Robert S. McMann, Senior Vice President, Finance and Chief Financial Officer; Daniel S. Cote, Senior Vice President, Loss Control and Safety. 14 Standing: M. Jane Sheehan; Jolan F. Ippolito; Katherine M. Greenleaf; Ward I. Graffam, Chairman; John T. Leonard, President and CEO Sitting: Robert D. Umphrey, Jr.; S. Catherine Longley; David M. Labbe; and Vicki W. Mann financial highlights • The MEMIC Group, once again, earned affirmation from A.M. Best with an A (Excellent) rating. • MEMIC was named to the Ward 50 for the fifth consecutive year, connoting its financial strength and performance. • With the disbursement of its $12.0M dividend in 2006, the company has now returned more than $70.0M to policyholders in dividend and capital since 1998. • In 2006, the company offered more than 330 safety workshops for its customers. • The company once again earned praise for its record of paying injured workers promptly, achieving better than nine out of 10 payments within the prescribed period. • MEMIC’s average discount for small policyholders who remain without a loss was over 19% in 2006. a $70m returned to policyholders in dividend and capital since 1998