Meadowbrook Insurance Group Inc., based in Southfield, Mich., reported second quarter 2011 net operating income of $8.5 million, compared to $12.6 million for the same period last year.
The accident quarter combined ratio was 100.8 percent in 2011 and includes 3.5 percentage points of higher than normal storm losses. Excluding the higher than normal storm losses, the accident quarter combined ratio was 97.3 percent in 2011. The current accident quarter combined ratio reflects positive impacts of underwriting and pricing actions taken in the prior 12 months, the company said.
While the company was negatively impacted by widespread storm activity during the quarter, Meadowbrook President and Chief Executive Officer Robert S. Cubbin stated: “None of the storms this quarter were severe enough to trigger our catastrophe reinsurance program as no single event resulted in losses greater than $2.4 million. That said, the frequency of storm losses was very high, with 12 ISO designated storms occurring during the quarter. The cumulative effect of the storms led to this greater than usual loss for us in the quarter. Our relatively lower than industry exposure to property catastrophes reduced our potential for even greater losses despite the significant number of severe storms that devastated many parts of the country.”
Second Quarter Highlights:
- Gross written premium increased $22.9 million, to $212.7 million from $189.8 million in the prior year. The increase reflects the maturation of programs initiated in recent years and rate increases that were achieved during the quarter.
- Net losses and loss adjustment expenses of $121.4 million increased $22.2 million from $99.2 million in 2010.
- Policy acquisition and other underwriting expenses increased $5.1 million to $62.5 million from $57.4 million in 2010. The Company’s expense ratio was 34.4 percent compared to 35.2 percent in the prior year.
- Net investment income grew $0.3 million to $13.8 million from $13.5 million in 2010.
- Net commissions and fees increased $0.8 million to $7.9 million from $7.1 million in the prior year. The change was driven primarily by increased net commission revenue generated by the company’s Michigan agencies.
- General corporate expenses decreased $2.0 million from a $1.3 million expense in 2010 to a benefit of $0.7 million in 2011.
First Six Months
- Net operating income for the six-months ended June 30, 2011 compared to $29.4 million in the prior year.
- The accident year-to-date combined ratio improved to 99.0 percent in 2011 compared to 99.5 percent in 2010. The improved accident year-to-date combined ratio reflects underwriting and pricing actions taken in the prior 12 months.
- Gross written premium increased $40.6 million, to $437.6 million from $397.0 million in the prior year. The increase reflects the maturation of programs initiated in recent years, rate increases that were achieved during the year and the conversion of an existing fee-based program into an insured program where the company now assumes risk.
- Net losses and loss adjustment expenses of $226.7 million increased $40.0 million from $186.7 million in 2010.
- Policy acquisition and other underwriting expenses increased $10.7 million to $119.9 million from $109.2 million in 2010. The company’s expense ratio was 34.0 percent compared to 34.8 percent in the prior year.
- Net investment income grew $0.8 million to $27.3 million from $26.5 million in 2010.
- Net commissions and fees decreased $0.7 million to $16.3 million from $17.0 million in the prior year. The decrease was primarily driven by the conversion of fee-business into an insured program. Excluding the conversion, net commissions and fees were up slightly in 2011 compared to 2010.
- General corporate expenses decreased $2.6 million to $0.6 million compared to $3.2 million in 2010.
Meadowbrook Insurance Group Inc.