First-Half 2010 Results
A message from Stu Henderson, President & CEO

This year, it seems like severe weather has been as much of a Midwestern summer staple as mosquitoes or a trip to the lake.  Our Claims Team has been hard at work since early summer helping out storm-affected policyholders, which—although those storm losses have a significant effect on our loss ratio — continues to be one of the best chances we have to advertise Western National’s excellent customer service.  With 98% of our post-claim policyholders saying they would recommend us to family or friends, our efforts there have been very successful.  Thank you to everyone for the excellent work serving our policyholders in their time of need.

In terms of premium, we finished the first half of 2010 at a little over half of our annual goal ($136.8 million, or 52% of the year-end $255 million goal). However, because we tend to write more of our business during the first half of the year, we’re actually trailing our seasonal target by about $4.0 million, or 2.9%.  The prolonged challenges of the soft market and a decreased commercial exposure base mean we’ll be working even closer with you in the remaining months of 2010 to bring up our pace.  Personal Lines has been taking up some of that slack, but we still have work to do.

Taking a look at our first-half ratios: through June, our Loss Ratio is 56.4%, which is up from this time last year (52.3%) due to the much more active storm season.  So far, we have incurred gross losses from storms this year through 8/2 of over $12 million!  Our Loss Adjustment Expenses are also up (13.5%, compared to 12.0% for first-half 2009), but we have been able to bring our Underwriting Expenses down (26.2%, compared to 26.5% for first-half 2009), which has held our Combined Ratio to 96.1%.  After accounting for investment income and taxes, we come out with a year-to-date Net Income After Tax (NIAT) of $8.3 million (compared to $11.8 million from first-half 2009), which increases our Policyholder Surplus to $241.5 million.  If you recall our net income at the end of last month, you’ll see we lost ground, as it was 8.8 million then.

With a strong premium push, additional recognition (i.e., being recognized as a Ward’s Top 50 company for the fifth time in six years), some luck on the weather front, and good progress being made on a number of exciting projects (e.g., preparing for our upcoming Surety and BOP product launches, enhancing AgentsOnline, adding product lines in certain states), the remainder of 2010 looks decent; storms and some random other claim activity will stop us from being “great” financially.  I look forward to reporting on our progress in the months to come with fewer losses and more profitable premium!