It has been a privilege and pleasure to serve as President of PEI Mutual Insurance Company during 2007.

Premiums continue to grow and were up 5% this past year. Claims were also up 8% over the previous year, but were average when comparing our claims ratio to the last 10 year period. Although our claims were up significantly in 2007, we ended the year on quite a positive note. Our Manager and Treasurer have done a great job with our investment portfolio. Due to this and the hard work of all the PEI Mutual team we ended the year with quite a healthy surplus.

I would like to report that we now have 56% of policyholders on a Claims Free Discount.

PEI Mutual is always striving to meet the insurance needs of our policyholders whether it be Farming, Fishing, Commercial, Residential or Liability. During the past year we continued to make changes that we hope will be beneficial to policyholders.

I would like to thank Cam Trail who retired on June 1st, 2007, for his many years of dedicated service as agent for the West Prince area. Cam came to PEI Mutual in September of 1980 and spent 27 years with us. Congratulations and thank you Cam.

I would also like to welcome our two new agents, Eddie Trail and Randy Wedge who will serve the western end of the province. We hope your time with us will be both productive and enjoyable.

It has been very rewarding to serve as President of PEI Mutual during 2007 and at this time I would like to extend my thanks to our Management Team, Office Staff, Agents and to the Board of Directors for all their hard work, guidance and support over the past year.

Gordon Vessey,

President