President's Report 2018
2018 was a very busy year for PEI Mutual. We paid out $2.41 million in special mutual rebate cheques to our policyholders. Premiums increased by $1.8 million or 7.5% over last year. Total policies in force at December 31, 2018 were 36,066, which included 874 new policies added during the year. PEI Mutual now has property insured on PEI in the amount of $11.9 billion. The Company is very financially secure and has a policyholder security fund greater than the minimum requirements of the PEI Insurance Act.
Net claims increased by $3.27 million over last year, with $15.8 million in covered claims paid out to policyholders during the year. The total number of claims incurred this year was 1,463 up 48% from the 986 claims incurred in 2017. Fire losses continue to be the Company’s loss leader with 101 losses incurred in 2018, totaling $5.9 million. Other loss leaders were: water, rupture and freezing; windstorm and hail; and sewer back up.
Although we had a significant rise in claims due to very adverse weather conditions, PEI Mutual still had a very successful year. Our
staff and management team are cutting our operating expenses with their hard work and dedication to detail. Due to the large increase
in claims, we experienced an underwriting loss of $722,000 for the year. Investment income was also down this year, mainly due to the
adoption of a new accounting standard (IFRS 9). This new standard required the Company to recognize its
unrealized gains/losses on
stock in its investment income starting this year. The impact of this new standard was magnified as the stock markets were near their
52 week low at December 31, 2018. Total comprehensive income for the year was still $1.0 million, and this has been added to our
Member’s Surplus, which now stands at $53.3 million. As a result of our financial success, PEI Mutual will be able to provide a 10%
Mutual Rebate to our policyholders to be deducted off premiums when policies are renewed in 2019.
During the past year, PEI Mutual directors, management, agents and staff participated in a very successful Strategic Planning process, which resulted in the following positive outcomes: a new Vision Statement, a new Mission Statement, a new Core Values Statement and over 60 new action items, all of which will guide the Company strategically and cohesively over the next three to five years.
It has been a rewarding year to serve as President of PEI Mutual and I would like to thank the directors, management, agents and staff for making PEI Mutual the best insurance company on PEI.