President's Report 2008
This was my third term as President of PEI Mutual. It is a great honour and I feel privileged to have held this position.
We made money - hurray! This year we saw a 5% growth in premiums and added $804,000 to the Policyholders' Security Fund - a fund that has been built up over 124 years. To maintain a premium growth rate of 5% into the future, I recognize the need to add significantly more dollars to this Security Fund. However, we can be thankful that PEI Mutual is very financially secure. Prior years of growth in the Policyholders Security Fund leaves us with a balance much greater then the minimum requirements of the PEI Insurance Act, putting our Company on a secure footing.
Our claims were up $1.4 million this year, mainly due to a 26% increase in the total number of claims incurred. The high cost of oil spill clean ups has been a growing concern for the last ten years. PEI Mutual has been pro-active with our policyholders to have their oil installations improved. Unfortunately, oil spills are still happening and, therefore, we will be implementing an additional liability premium charge of $25 for all properties that have an oil tank on the premises. This will mean everyone with an oil tank will have to pay more.
Our investment income has declined due to the world wide financial crisis. Your Board of Directors is happy that 80% of the Policyholders' Security Fund is invested in interest bearing bonds. This downturn has reduced the value of PEI Mutual's Common Stock holdings by approximately 25%.
I would like to thank Allison Johnson for his 27 years of service as a director of PEI Mutual. The by-laws state that on a director's 70th birthday they must retire. Allison served PEI Mutual and its Policyholders very well. His sense of humour was always a blessing for those he was dealing with. His presence is missed at our monthly board meetings and around the office. I would like to announce that Deborah MacLellan, of Wellington, has been appointed by the Board of Directors to serve the Policyholders in the area from Summerside to O'Leary. Welcome Deborah.
Everyone contributes to the Company doing well, including Policyholders who make claims when losses occur, as well as the 14,234 Policyholders who currently enjoy a claims free discount. I enjoy my time with my fellow board members, and always appreciate the wisdom that arises from the group. We are very fortunate to have a young and vibrant management team. They serve on several local, regional and national boards. They are approachable, professional, and truly an asset to this Company. I would like to take this opportunity to thank our 13 agents for their hard work and we acknowledge that between them they would know more than 30% of Prince Edward Islanders. I would like to thank the staff at head office who keep operations running smoothly and, last but not least, our well informed Safety Surveyor. Everyone has an important contribution.
It has been a pleasure to serve as President of such a fine, Island Company.
George D. Matheson,