First Quarter Results & Initiative Update:

A Message from Stu Henderson, President & CEO

It’s been a busy and productive year so far for Western National — and a quick-moving one, too, as we’re already well into spring and the start of the catastrophe storm season. While weather forecasts are far from an exact science, various data models have predicted a more severe storm season this year. The good news is we’re prepared with our experienced Claims team and a solid reinsurance program in case these models turn out to be right. In the meantime, we’ll continue our work and enjoy the warmer weather!

As was the case in recent years, we’re continuing to focus on profitable growth and the customer experience this year. To support our growth goals, we’ve rolled out a new awareness-building TV advertising campaign (in Minnesota and Wisconsin — on summer hiatus but re-starting during the Olympics) and a radio campaign in Alaska. We also launched Cyber Liability Coverage for commercial policies, which provides comprehensive data security and privacy insurance solutions that address both first party insured events and third party claims. Additionally, we’re continuing enhancements to our systems to improve the user experience. We rolled out an updated claims information system in AgentsOnline, which includes easy-to-navigate screens and new access to adjuster notes on select, recent claims. Looking ahead, we’re further developing our analytics system and making enhancements to Personal Lines rating — but not discontinuing our ability to do our valued individual risk underwriting when needed. We’ll keep you updated on these initiatives as the year progresses — stay tuned!

Now let’s take a look at the numbers: as of March 31, written premium for the Group is at $150.5 million, which is close to where we aimed to be after the first few months of the year. Meanwhile, our Group’s loss ratio is a little high at 56.1% (vs. goal of 55.9%), as is our loss adjustment expense ratio of 10.4% (vs. goal of 9.9%). Our underwriting expense ratio is under budget at 25.0% (vs. goal of 26.2%) — but it’s early in the year and some expenditures just have not yet been made. All of this adds up to a combined ratio of 91.5%, which is a good place to be through the first three months of the year. It’ll take continued hard work, quality underwriting, and good fortune on the weather front to maintain this level of profitability.

As always, thank you for your partnership in the service of our mutual policyholders. I look forward to delivering more positive news later in 2016.

~ Stu Henderson