Central has annual Policyholders Meeting

VW independent/submitted information

Central Mutual Insurance Company held its annual Policyholders’ Meeting on May 13 at the Home Office in Van Wert.

Newly-elected President Evan Purmort began by addressing the unprecedented times Americans are currently experiencing. 

“There is both a health crisis and a financial crisis occurring simultaneously,” Purmort said. “We’d like to recognize the contributions made by medical professionals, first responders, and all essential workers during this time. We are safer and the communities we serve are stronger because of their selfless actions.”

Purmort noted that COVID-19 has impacted all businesses and Central is no different. The collective response by the company’s 630 employees has been led by a business continuity plan that was established nearly a decade ago and includes plans for the event of a pandemic. 

“Our plan focused on fulfilling our promise to our employees, agents, and policyholders,” Purmort said. “To do so we had to keep our people safe and our systems and service top notch. I’m thrilled to report that we succeeded on all of those fronts.”

Purmort also addressed recent financial market volatility and its impact on the company. Central entered this period in a position of great financial strength, and while the company’s policyholder surplus is not where it stood at the end of 2019, the company’s overall ability to meet its obligations to its employees, agents, and policyholders has not been affected.

“With regards to the COVID 19 pandemic we could not be more proud of how our company pulled together to serve our agents and policyholders,” Purmort said. “And we are proud that our conservative investment philosophy proved to be prudent.”

Purmort next commented on the company’s achievements in 2019. 

“We measure ourselves on the degree to which we fulfill the promise in any given year, and on how well we positioned ourselves to continue to do so in the future. On that basis, 2019 was a wonderful year.” 

Purmort emphasized the importance of the company’s people and culture to Central’s continued success. The evolution of the corporate structure and the addition of top talent throughout the company have resulted in important gains, as has Central’s continued commitment to its distribution partners. Investments made in improving the company’s technology systems and building its data analytics skill set will yield benefits well into the future. 

In conclusion, Purmort recognized Bill Purmort, who retired as president after 41 years with the company. 

“It isn’t possible to overstate Bill’s impact on this company,” Evan Purmort said. “Bill made sure everyone who works, or has worked, at Central got to leave their mark on the company and that service to others will undoubtedly be the mark he left on all of us.”

The Board of Directors also expressed its sincere gratitude to the retired president for his leadership of the company.

“I am pleased to report that Central Mutual continued to add to its historically strong financial position in 2019,” said Vice President and Treasurer Thad Eikenbary, “Overall favorable performance by the investment portfolio helped provide a buffer against challenges faced in the underwriting operation.” 

Direct written premiums for the company increased from $770 million in 2018 to $779 million in 2019. Commercial premium writings increased by 8 percent, to $355 million, and policy counts increased by 4 percent. Personal lines premiums decreased by 4 percent, to $424 million, and policy counts decreased by 8 percent as a result of continued efforts to balance personal versus commercial exposures. 

After paying out $522 million in losses and loss adjusting expenses, and $219 million in underwriting expenses, the company recorded a $21 million underwriting loss resulting in a combined ratio of 103 percent for 2019, nearly a full point favorable, when compared to the 103.9 percent recorded in 2018. 

“Following a year of transition for the company’s investment portfolio to external portfolio managers in 2018, the portfolio performed very well in 2019,” said Eikenbary. “Continuing to leverage this newly added expertise and market exposure helped provide the lift needed to overcome this year’s underwriting challenges.”

Net investment income increased by $7.4 million, from $36.9 million in 2018 to $44.3 million in 2019, favorable results stemming from the income enhancing investment model implemented alongside the portfolio managers.  

As a supplement to investment income, action taken on specific holdings throughout the year also generated $12.8 million in net realized capital gains in 2019. While not comparable to the atypical gains generated in 2018, this was a strong result and more indicative of what the company would expect going forward. 

Aided by tailwinds in the equity markets in 2019, the portfolio also recorded $62 million in net unrealized capital gains that helped to bolster asset values in the investment portfolio as of year-end.

After combining both the insurance operations and investment results, Central registered a net income after taxes and dividends of $32 million in 2019.

Central’s assets increased from $1.8 billion at the end of 2018 to $1.9 billion as of December 31, 2019. Central’s bond portfolio totaling $1.1 billion made up 57 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 19 percent of the company’s total assets.

By the end of 2019, the company’s Policyholders’ Security Fund had increased by $88.2 million to an all-time high $896.8 million reflecting a Premium-to-Policyholders’ Security Fund leverage ratio of 0.80 to 1.     

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, Vice President and Secretary Ben Faurote read the minutes from the 144th Policyholders’ Meeting. E.P. Purmort, E.R. Buhl, and J.L. Covington were re-elected to the Board of Directors for a three-year term. C.M. Hurless was elected to a two-year term and Faurote to a one-year term. Other directors include F.W. Purmort, S.K. Moore, T.B. Kearney, E.J. Noonan, D.D. Stripe, and D.C. Ward.

Central Mutual Insurance Company is a personal and commercial property and casualty insurance company operating exclusively through independent insurance agents in 24 states. The home office is located in Van Wert, with regional offices located in Dallas, Atlanta, Boston, and Van Wert.