General Manager's Report 2019
It is our vision to make PEI Mutual the insurer of choice on PEI. Our people strive to achieve this through the products and personal service that we offer to our Members.
Hard Market and Mutuality
The insurance industry has and continues to experience a ?hard market? where property owners may have a difficult time finding affordable insurance. PEI Mutual was formed in 1885 because of these same conditions where Island farmers experienced difficulty arranging insurance for their property. The original Members of the Company joined together to insure one another mutually. Today we continue to accept many new members that share in our values of mutual protection and shared loss prevention.
2019 Financial Results
Financially PEI Mutual experienced a very good year illustrating responsible financial management and stewardship by the Board of Directors.
Gross Written Premiums increased by $2.2 Million dollars in 2019. This increase can be attributed to new Members purchasing policies, existing Members purchasing additional coverages and rising costs of construction.
2019 was our largest claims year ever with over $21.5 million in incurred losses. On September 7th and 8th Hurricane Dorian alone added just over $8 million dollars to our claim payments. Fortunately we receive excellent support from our reinsurer, Farm Mutual Re based in Cambridge Ontario. Under our catastrophe reinsurance treaty our hurricane losses were reduced by more than $6.7 million dollars.
Although operating expenses increased they were slightly lower relative to premiums written. This resulted in PEI Mutual realizing an underwriting profit of $1.1 million.
Investment Income followed the markets with 2019 seeing very positive results.
We saw continued downward pressure on fixed income yields and are continuing to maximize returns in a low interest rate environment. We continue to invest 79% of our assets in secure high quality fixed income products.
Common stock reporting is again affected by accounting standard IFRS 9 which requires that all gains or losses are booked on December 31st. During 2019 North American stock markets rebounded and made further gains following their decline toward the end of 2018. Investment income from stocks includes Dividend Income along with realized and unrealized gains. We continue to invest 21% of our assets in high quality North American companies that have very good longer term outlooks and favorable commitments to shareholders.
Our net income after tax was very positive at just under $4.2 million.
Following our 2019 year end the Board of Directors declared a Mutual Rebate of 10% that will be applied to policy renewal premiums effective May 1, 2020 through to April 30, 2021.
Hurricane Dorian caused an extremely busy year in claims activity. Our Members suffered damage across the Island. We have an excellent team that responded to our Members when they needed us most. PEI Mutual staff worked many weekends and evenings to handle the additional workload. A big thanks goes out to all who pitched in.
Member Service has been a major focus for our agents and support staff over the 2019 year. Our 16 field agents have been busy contacting and meeting with Members to update policies ensuring that they are current. If you would like to arrange a visit with one of our agents please contact our office.
I would like to close by thanking our entire staff for their dedication and continued commitment to excellence in Member Service.
Finally I will say thank you to you, our loyal Members, who choose PEI Mutual as their insurer.
CEO / General Manager