General Manager's Report 2017

To the Policyholder / Members of PEI Mutual it has been a pleasure to serve in my new role as CEO & General Manager. I have been blessed to work with such talented and engaged people in our Staff, Service Agents and Board of Directors. We continually keep the best interests of our Members in mind as we do our work for you.

Growing our Staff and Transitions

We have completed a year of transition with retirements of longstanding staff, hiring of new staff and transfers within.

Notably we said farewell this year to our CEO Terry Shea, Service Agent Tom Kickham and Safety Surveyor Franklin Sanderson, who each had more than 30 years of dedicated service with the company. We welcomed new field Service Agents Thomas Clark (Brackley), Lisa Roche (Lower Montague), and Gary Sheehan (Rollo Bay). We also hired our new Manager of Claims Services Josh Toombs and Safety Surveyor Gary Bryson. In addition we added 5 new personnel within our office. Our staffing compliment has increased to 29 staff at head office and 16 field Service Agents who live and work in their areas.

I would like to thank the Board of Directors who supported the hiring processes in the interests of service excellence for our growing Policyholder / Membership base. To our Staff and Agents you deserve much credit for your support in ensuring that all transitions have gone smoothly. We make an excellent team!

Strategic Planning

A major initiative for the Board of Directors this year has been to renew the path forward in a Strategic Planning process. The theme is "Looking Forward for our Members". We began the process in 2017 and are enthusiastically engaging with all personnel to chart our priorities for the next 3 years.

Excellent Financial Results

PEI Mutual has experienced excellent financial results in 2017. This was due to reduced net claims experience, a stable expense ratio, and positive overall returns on investments. While our members experienced some significant losses, these have been offset by reinsurance arrangements with Farm Mutual Re that are designed to smooth out our longer term claims experience.

Eighty three percent (83%) of the company’s surplus is held in secure bonds where we have been in a lower yield environment. Equity or common stock investments represent seventeen percent (17%) of surplus. Our common stocks have provided good returns. They are held in relatively stable companies with positive longer term outlooks however they can be subject to greater market volatility than bonds.

I would like to say a special thank you to Rudy Smith our Chief Financial Officer who has provided the Board and me with excellent financial support and guidance.

Mutual Rebates

Policyholders of PEI Mutual share a special relationship as Members of the Company. Due to our shared financial success in 2017, Members of the company will receive approximately $4,800,000 in Mutual Rebates that have been declared by the Board of Directors. A Special Mutual Rebate representing 10% of premiums will be paid to all members, as at December 31, 2017, in the form of a cheque. In Addition 10% will be deducted from your 2018 renewal premiums.

This is Mutuality at its best. We strive to provide fair pricing for insurance products and when financial results allow we are able to provide Rebates to our Members.

Thank you for choosing PEI Mutual as your insurance provider.

Blair Campbell,

General Manager / CEO