It has been a privilege and a pleasure to serve as President of PEI Mutual Insurance Company during 2014. It was a challenging year for everyone in the Company, as the number of claims doubled from the previous year, due to the many weather-related losses that occurred. Thanks to everyone in the Company for your efforts during those busy times.

Premiums were up 6% from last year and although we had a large number of losses, we ended the year with a bottom line profit of $1.5 million.

2014 has been very exciting for the Company as we broke ground on our new office building on Walker Avenue in Summerside. Construction began during the summer and we hope to be in our new office by late spring or early summer of 2015. Wellington Construction is the contractor and is doing a great job.

During 2014, we had two long-time agents retire. Both Peter Johnston and Dave MacAdam have been valued employees of our Company and will be greatly missed. We wish you both the best in your retirement. We also welcomed three new agents - John Flood, Jill Abbott and Jeff Trainor. We hope you will enjoy your work here at PEI Mutual.

In December 2014, one of our board members, Debbie MacLellan, resigned and we would like to thank Debbie for the years she gave PEI Mutual on the board. All the best Debbie.

In closing, it has been a very busy year with all the weather-related claims and the construction of our new office building. I would like to thank all our office staff, agents, management team and fellow directors for collectively helping to make PEI Mutual a leader in the insurance industry.

Gordon Vessey,

President