Central Insurance reports profitable year

VW independent/submitted information

“Why fit in when you were born to stand out?” was the message at the Central Mutual Insurance Company’s annual policyholders’ meeting held May 10 in Van Wert. important highlights of the meeting were the announcement that the company’s Policyholders’ Security Fund — its reserve fund — was at an all-time high, while commercial and personal lines insurance increased in both written premiums and policy count.

President and Chairman of the Board F.W. Purmort noted that the insurance industry was founded in homogeneity, forcing insurance companies to be very similar in their product offerings, services, and operations. In contrast, Central is investing in technology, people, services, and products that differentiate the company from the rest of the market.

“Our industry is about anything but standing out,” said Purmort. “To set yourself apart, you have to innovate and do things that create value.”

Purmort reiterated this is the premise on which the Central Insurance Companies were founded and the company’s continued goal of maintaining the financial strength to provide security, protection, and peace of mind to its policyholders.

“The Policyholders’ Security Fund’s all-time high of $743 million speaks to how financially strong the company is and how we can protect the 350,000 people who have invested in our company,” he said. The fund not only allows the company to be adequately prepared to respond to a catastrophe, but to maintain a long-term viewpoint on products and pricing, as well as the ability to invest in the future.

“There are a lot of factors that affect Central and the insurance industry, but only some of those are within our control,” said Purmort. “The strength and stability of the fund allows us to focus our time and energy on those factors we can control. If we do just that, we should be successful.”

In conclusion, Purmort thanked policyholders for their investment in the company and noted that Central will continue to work on standing out in the industry.

“We believe there is value in building capabilities into our company that our agents and policyholders will recognize as worthwhile and meaningful,” he said. “We’re very motivated to continue being a company that isn’t satisfied being one of the pack.”

“Central Mutual recorded another positive financial result in calendar year 2016 with a consistent story of positive underwriting results and steady investment returns,” said Vice President and Treasurer Thad Eikenbary to begin his Treasurer’s Report.

The treasurer noted that direct written premiums for the company increased from $630.5 million in 2015 to $667.3 million in 2016. Commercial premium writings increased by 5.1 percent to $269 million and policy counts increased by 4 percent. Personal lines business increased by 6.4 percent to $398 million with a 2.2 percent increase in policy count.

After paying out $384 million in losses and loss adjusting expenses and $207 million in underwriting expenses, the company recorded a $7.4 million underwriting gain resulting in a combined ratio of 97.7 percent for 2016, which compares quite favorably to the industry’s 101 percent.

Net investment income decreased by $1.5 million from $42.1 million in 2015 to $40.6 million in 2016, and action taken on individual non-affiliated holdings during the year led to realized capital losses of about $500,000 as compared to gains of $1.4 million in the prior year. In a year where the S&P 500 was up 9.8 percent, Central’s portfolio experienced $10.5 million in unrealized capital gains on non-affiliated holdings, as compared to $9.5 million in unrealized losses in 2015.

“Steady income from the company’s investment portfolio continues to be a positive and consistent supplement to the insurance operation,” said Eikenbary.

After combining both the insurance operations and investment results, Central registered a net income after taxes and dividends of $39 million in 2016.

Central’s assets increased by 4 percent to $1.64 billion by the end of 2016. Central’s bond portfolio totaling $998.4 million made up 60 percent of those total assets. The quality of the portfolio remained very solid and Central continued to manage the maturity of the portfolio to ensure that it maintained the liquidity necessary to meet the company’s financial needs. Central’s stock portfolio investments represented nearly 19 percent of the company’s total assets.

By the end of 2016, the company’s Policyholders’ Security Fund had another great year, increasing by $37.2 million to an all-time high of $743 million.

The company also maintained its “A” excellent rating with A.M. Best while continuing to provide high quality customer service, enhanced Internet technology, and support to its agency partners.

In other business, Senior Vice President and Secretary Keith Moore read the minutes from the 141st policyholders’ meeting. E.R. Buhl and J.L Covington were re-elected to the Board of Directors for a three-year term, while other directors include Purmort, E.J. Noonan, D.D. Stripe, T.B. Kearney, S.K. Moore, and J.E. White.

Central Mutual Insurance Company is a personal and commercial property and casualty insurance company operating exclusively through independent insurance agents in 20 states. The home office is in Van Wert, with regional offices in Dallas, Atlanta, Boston, and Van Wert.