Michigan-based Meadowbrook Insurance Group reported net income for the quarter ended June 30, 2005 of $4.6 million, or $0.16 per diluted share, up 62.4% compared to net income of $2.8 million, or $0.10 per diluted share, in 2004.
Net operating income for the quarter ended June 30, 2005 was $4.5
million, or $0.15 per diluted share, up 58.8% compared to net operating income of $2.8 million, or $0.10 per diluted share, in 2004. This improvement reflects growth of earned premium from profitable programs, a continued favorable rate environment, and overall expense management.
Commenting on the results, Meadowbrook President and Chief Executive Officer, Robert Cubbin stated: “The net income for the second quarter shows strong evidence of our commitment to disciplined underwriting, growth of our profitable specialty programs, and continued success in leveraging our fixed costs.”
During the quarter, gross written premium increased $5.1 million, or 7.2%, to $76.0 million, from $70.9 million for the comparable period in 2004. This increase reflects the growth from modest premium rate increases and new programs implemented in 2004.
Revenues increased $10.6 million, or 16.1%, to $76.0 million for the
quarter ended June 30, 2005, from $65.4 million for the comparable period in 2004.
Net earned premium increased $10.3 million, or 19.4%, to $63.4 million for the quarter ended June 30, 2005, from $53.1 million for the comparable period in 2004. This increase reflects the growth in earned premium from programs written in the second half of 2004 and the first quarter of 2005, which included new programs implemented in 2004.
In addition, this growth includes the impact of overall rate increases of 8.4% and 1.6% achieved in 2004 and 2005, respectively. This growth also includes the impact of the increase in the net retention on the company’s core workers’ compensation reinsurance treaty.
Net commissions and fees decreased $810,000, or 9.2%, to $8.0 million for the quarter. This decrease is primarily related to the anticipated impact from the expected run-off of two limited duration contracts with the State of Missouri.
As announced in the third quarter of 2004, the company accelerated
the recognition of $3.5 million in revenue from those contracts and therefore, fees that would otherwise have been earned this year were earned in 2004.
However, intercompany fees, which are eliminated upon consolidation, have continued to increase. Therefore, gross commissions and fees, before consolidation, remained consistent at $20.9 million.
Incurred losses increased $4.9 million, or 14.9%, to $37.7 million for the quarter ended June 30, 2005, from $32.8 million for the comparable period in 2004. The loss and loss adjustment expense ratio for the quarter ended June 30, 2005 was 64.4%, compared to 66.5% for the comparable period in 2004.