Meadowbrook Insurance Group Inc., headquartered in Southfield, Mich., reported an 11.6 percent increase in revenue for the full year 2011 and a GAAP combined ratio of 99.7 percent compared to 95.0 percent in 2010.
Net income for the year was $43.6 million, or $0.83 per diluted share, compared to $59.7 million, or $1.10 per diluted share in 2010.
The 2011 accident year combined ratio, a non-GAAP measure that excludes the impact of any unfavorable or favorable development on prior year losses, improved to 98.7 percent from 99.7 percent in 2010.
The 2011 accident year includes storm losses of $26.3 million which was $9.0 million, or 1.2 percentage points, higher than an expected or “normal level” of storm activity. This higher than expected level of storm losses was partially offset by improved underwriting results as rate increases and underwriting actions begin to take effect.
The improvement also reflects the conversion of an existing fee-based program into an insured program where the company now assumes what is a profitable underwriting risk. Additionally, the current accident year combined ratio benefited from a reduction in performance based variable compensation in the current year as compared to 2010.
Higher than expected losses on isolated prior accident years in automobile liability, excess lines and workers’ compensation were partially offset by favorable development in other lines, particularly medical professional liability and general liability, although at lower levels than in prior quarters, the company said.
Full year 2011 gross written premium increased $102.1 million, or 12.7 percent, to $904.0 million, compared to $801.9 million in 2010.
Net commission and fee revenue for 2011 declined $2.1 million to $32.1 million from $34.2 million in the prior year. This decrease was primarily driven by the conversion of an existing fee-based program into an insured program where the company earns premium revenue as opposed to net commission and fee revenue. Excluding the conversion, net commission and fee revenue was up slightly in 2011.
In fourth quarter 2011, net operating income was $8.4 million, or $0.16 per diluted share, for the fourth quarter of 2011, compared to $14.2 million, or $0.26 per diluted share, in the fourth quarter of 2010.
Net income for the quarter was $8.8 million, or $0.17 per diluted share, compared to $15.4 million, or $0.29 per diluted share in the prior year quarter.
The GAAP combined ratio for the fourth quarter was 101.4 percent during 2011, compared to 95.4 percent in 2010; 2011 quarterly results include 3.8 percentage points of unfavorable development while 2010 quarterly results include 4.2 percentage points of favorable development.
The accident year combined ratio improved to 97.6 percent, compared to 99.6 percent in the fourth quarter of 2010.
Source: Meadowbrook Insurance Group