Live assured.™ 2013 Annual Report
PREFERRED MUTUAL INSURANCE COMPANY
2013
A Year in Review In 2013, Preferred Mutual Insurance Company achieved great success and surpassed many milestones toward its mission of earning the unwavering confidence of its employees, agent partners, and policyholders. As a mutual insurance company, we remain focused on exceeding the evolving needs of our stakeholders and community members by inspiring our employees and partners to be innovative in their use of technology and rewarding great performance. We are committed to helping our employees, partners, and customers live and work assured. Our empowered employees continue to collaborate with agent partners to help our customers understand their insurance choices and identify the right solutions to meet their needs. We have increased our commitment to electronic communications, including social media, to deliver meaningful content and improved our communications with both agents and policyholders to identify ways individuals and businesses can protect their interests.
Christopher Taft, President and CEO of Preferred Mutual Insurance Company (right) with his daughter, Leah, presenting Preferred Mutual’s donation to Toys for Tots of Chenango County at the annual Holiday Parade in Sherburne, New York on December 7, 2013.
We continuously challenge ourselves to be innovative in the ways we go about creating value for those we serve. We promise to always have the foresight and courage to make exceptional levels of investment in our employees, technology, and our future. For example, in 2013 we implemented two strategies to attract and retain the most talented employees. First, we renovated our buildings to create the most efficient and professional office environment. Second, we advanced many technology applications to ensure we could attract and retain talent, including our growing remote personnel. These investments in our employees’ experiences demonstrate our passion for inspiring confidence in our empowered workforce. In addition to our commitment to creating an exceptional work environment, we also achieved great success in advancing our online capabilities and “customer relationship” strategies to enhance our agents’ and policyholders’ experiences. For instance, in 2013, Preferred Mutual implemented an online Business Center to help our agent partners more easily and efficiently quote new opportunities. We also began to accept e-signatures, enhancing our agents’ ability to process new business electronically. Most recently, we implemented a new online claims system which, in tandem with our investments, will improve our efficiency, turnaround time, and the quality of information available to our policyholders. In 2013, Preferred Mutual also made significant investments in its business continuity plans and as such, has developed industry-leading capabilities that we feel confident will exceed agent and customer expectations. These investments ensure that our employees, agent partners, and customer policyholders can live assured that we are well positioned to provide unsurpassed customer service, even in the event of a disaster.
Our Mission: Preferred Mutual will be the most highly-regarded insurance company, recognized for its ability to consistently exceed the ever-changing needs and expectations of its policyholders. We will achieve this through an exceptional culture which fosters professional success for our employees and agency business partners and empowers our team in the delivery of superior insurance products and unsurpassed customer service.
Throughout our evolution, Preferred Mutual remains a secure, steady, and financially stable Company. As testimony, Conning Inc., an investment management company for the global insurance industry, released a 2013 Strategic Study entitled “Growth and Profit Leaders in Personal Lines Insurance” that named Preferred Mutual as one of only 18 companies in the United States that outperformed all others in both growth and profitability over a ten-year period. Conning’s independent study acknowledged that although the ten-year period was marked by a recession and elevated catastrophe activity, Preferred Mutual still grew by an annual compounded growth rate of 6.2%, while the industry grew at a rate of only 2%. As further evidence of our financial strength, A.M. Best affirmed the Company’s “A” rating. These accomplishments provide both our customers and agent partners with confidence in our commitment to long-term success and innovative approaches to conducting business, while growing the loyalty of our mutual customers. Commitment to our community and industry continues to be a key enterprise-wide value. This year we launched an employee match corporate philanthropy program designed to support those organizations that are important to our employees. The Company also continued to sponsor community events and organizations, like the New Berlin Youth Days, Norwich Family YMCA, American Heart Association, American Cancer Society, Chenango Council of the Arts, Northeast Classic Car Museum, Chenango United Way, Chenango Memorial Hospital Foundation, Bassett Hospital, Chenango Blues Association, Make a Wish Foundation, New Berlin Art Forum, Toys for Tots, and Colorscape Chenango Arts and Music Festival. Not only did we provide support through donations, we also supported our employees’ volunteerism efforts through service on local nonprofit boards, as well as
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participation in community cleanup efforts and flood relief work in New York’s Mohawk Valley. The Preferred Foundation also awarded four high school students with scholarships in 2013. Preferred Mutual has taken a leadership role in shaping our industry. Officers of our company serve on the boards of the National Association of Mutual Insurance Companies (NAMIC. org) and the New York Insurance Association (NYIA.org). We continue to be an active industry leader in the Independent Insurance Agents & Brokers of America, the Independent Insurance Agents and Brokers of New York Inc., and the Massachusetts Insurance Federation. We have also sponsored insurance industry scholarships to support the continued development of talented leaders for our industry. As we look ahead to 2014 and beyond, we intend to continue our vision of implementing the necessary innovations that improve the customer experience and secure the loyalty of those we serve. We will invest in our workforce and other important initiatives that increase the ease of doing business for our agent partners and policyholders. We will utilize information and deploy new technology to enhance our processes and deliver greater value to our customers, and we will always work to strengthen our agent partner relationships. As we have proven through history, you can rely on us to deliver on our promises and be there when you need us. With Preferred Mutual, you can live assured.
Christopher P. Taf t, CIC, CPA President and Chief Executive Of ficer
A.M. Best rated Preferred Mutual Insurance Company with an A (Excellent) Financial Strength Rating. Membership & Participation in: Awarded Outstanding Super Regional Personal Lines Company Partner and Outstanding Super Regional Commercial Lines Company Partner by Independent Insurance Agents and Brokers of New York Inc. Preferred Mutual Insurance Company was identified as a growth and profit leader in Personal Lines Insurance by Conning, Inc.
Financial Review SURPLUS $200,000 $180,000 $160,000 $140,000
New York 57%
$120,000
Massachusetts 24%
territory
New Jersey 18% New Hampshire 1%
0
10
20
0
10
20
30
40
30
40
50 50
60
$100,000 $80,000 (000’s omitted)
2009
2010
2011
2012
2013
60
Homeowners & Mobile Homes 43%
PREMIUMS
Automobile 32% Businessowners 11%
$280,000
product
Commercial Package 9%
$270,000
Other 5%
$260,000 0
0
10
10
20
20
30
30
40
40
50
50
$250,000 $240,000 $230,000 $220,000 $210,000 (000’s omitted)
2009
2010
2011
2012
2013
2012
2013
assets Nearly 30 employees from Preferred Mutual volunteered to help flood victims in the Mohawk Valley from July 8 through July 12 through the Salvation Army’s Disaster Relief Command in Herkimer, New York. Volunteers delivered food, water, and care items to those in need.
$500,000 $480,000 $460,000 $440,000 $420,000 $400,000 $380,000 $360,000 (000’s omitted)
2009
2010
2011
2013
2012
$310,371
$294,675
44,148
33,754
4,470
4,403
Cash & Short-Term Investments
30,476
21,266
Premiums Due
54,185
51,721
Reinsurance Recoverables
7,056
16,078
Interest & Dividends Due & Accrued
2,786
2,894
10,665
8,843
1,124
789
10,299
11,056
9,261
10,914
$484,841
$456,393
Liabilities & Surplus
2013
2012
Loss & Loss Adjusting Expense Reserves
$150,370
$143,944
105,471
99,775
Accrued Expenses
17,519
17,652
All Other Liabilities
26,251
28,726
$299,611
$290,097
Policyholders’ Security Fund
185,230
166,296
Total Liabilities & Surplus
$484,841
$456,393
(000’s omitted)
Bonds Common Stocks Real Estate
Cash Surrender Value Federal Income Ta xes Recoverable Net Deferred Ta x Asset All Other Assets
Total Assets
Unearned Premiums
Total Liabilities
Preferred Mutual helped Chenango County elementary schools prepare for National Fire Prevention Week October 6 through 12 by providing fire-safety items to students, along with lesson plans and activity sheets for teachers.
balance sheet
Assets
2013 Company Of ficers Robert A. Wadsworth Chairman of the Board, Corporate Secretary Paul O. Stillman Vice Chairman of the Board Christopher P. Taft President & Chief Executive Officer Martin M. Doto Senior Vice President, Government Affairs & Claims Brian D. Lopata Senior Vice President, Profit Center Operations & Customer Relations
Company Quick Facts Year Founded:
1896
Employees:
262
Independent Agents: 457 Policyholders:
235,000
Geographic Footprint:
New York New Jersey New Hampshire Massachusetts
Direct Written Premium:
$279,000,000
Personal Lines pRODUCTS:
Aaron J. Valentine Senior Vice President, Treasurer & Chief Financial Officer Eugene T. Heaney Vice President, Claims Timothy R. Hyle Vice President, Finance & Risk Management Jeffrey M. Lopata Vice President, Strategic Business Solutions & Chief Information Officer Ronald R. Martin Vice President, Personal Lines Profit Center FredERICK J. Schneider Vice President, Field Agency Marketing & Enterprise Communications
Homeowners, High Value Home, Condominium, Renters/Tenant, Personal Auto (NY&MA), Mobile Homeowners, Dwellings Rented to Others, Personal Umbrella, Snowmobile, Boat Coverage
Dennis W. Halaquist Assistant Vice President
Commercial LineS pRODUCTS:
William R. Holliday Assistant Vice President
Contractors, Businessowners, Commercial Package, Commercial Auto (NY), Commercial Umbrella
John J. DiStefano Assistant Vice President
David H. Starkweather Assistant Vice President
Board of Directors Front Row
Back Row
Robert A. Wadsworth Chairman of the Board; Chairman and Chief Executive Officer, Preferred Mutual Insurance Company (Retired) Paul O. Stillman Vice Chairman of the Board; Chairman and Chief Executive Officer, Preferred Mutual Insurance Company (Retired) Christopher P. Taft President & Chief Executive Officer, Preferred Mutual Insurance Company Mary Ellen Luker, Esq. Controller & General Counsel, Kids Oneida, Inc. William C. Westbrook Vice President, BB&T Westbrook-Branch Banking & Trust Company (Retired) Matthew T. Cooney, Jr. President, Cooney Communications Corporation (Retired) Patrick J. Flanagan, Esq. Attorney at Law, Nelson & Flanagan John C. Mitchell Martin A. Dietrich Rip Reeves David B. Emerson William C. Craine Geoffrey A. Smith
President, I.L. Richer Co., Inc. (Retired) President & Chief Executive Officer, NBT Bank, NA Senior Vice President & Chief Investment Officer, Aegis Insurance Services Chairman of the Board, Blueox Corporation Chenango County Treasurer President, Medical Coaches, Inc.
Preferred Mutual Foundation, the corporate giving arm of Preferred Mutual Insurance Company, awarded scholarships to four high school students from New York’s Southern Tier. Preferred Foundation Committee pictured from left: Martin Doto, Amy Law, Michael Freeman (2013 Preferred Foundation Scholarship Winner), Jessica Solomon and Eugene Heaney.
Community Involvement Volunteers from Preferred Mutual, along with two other local businesses, spent several hours cleaning up a stretch of Route 8 in New Berlin on October 12. Employees collected and bagged garbage from the side of the road as part of the Adopt-A-Highway Program. As part of our National Customer Service Week celebration, Preferred Mutual employees collected over $300 in loose change to donate to Hospice of Chenango County. The Change for Change Challenge was one of many ways that employees participated in the “Pay-it Forward” theme. Employee teams participated in various runs and walks throughout the community, including the American Heart Walk, Relay for Life, and Unadilla River Run. Preferred Mutual Insurance Company contributed $3,500 to the Make-A-Wish Foundation on behalf of its independent insurance agents, in lieu of its traditional holiday gift. Preferred Mutual sponsored a number of after-prom activities at area high schools in the spring. These events provided local students with a safe, alcohol and substance-free option for fun with peers. Preferred Mutual was named a Gold-Level Fit-Friendly Worksite by the American Heart Association. The Company achieved this recognition by promoting physical activity and health in the workplace. In addition, the Central New York Business Journal honored Preferred Mutual with a Workplace Wellness Award.
PREFERRED MUTUAL INSURANCE COMPANY
One Preferred Way • New Berlin, NY 13411 1.800.333.7642 • preferredmutual.com
