First Quarter Results & Initiative Update:

A Message from Stu Henderson, President & CEO

It’s hard to believe this month marks twenty years since the infamous May 1998 storms across southern Minnesota. I’m sure many of our Midwestern agents recall the devastation and widespread damage across the state. The storms resulted in $56 million in claims for Western National, and while we delivered on our promise to our policyholders and paid all of those claims in full, in terms of surplus (less than $64 million), we were at a low point in our company’s history (which in turn  ultimately was a factor in our rating downgrade to B+ by A.M. Best). We’ve come a long way since then, and our policyholder surplus now exceeds $468 million. Thanks to a solid business plan and the hard work of our employees and agency partners, we’ve continued to grow profitably over the past twenty years as well, strengthening the protection for our policyholders. As of year-end 2017, we also had over $1.2 billion in assets, and we’ve continued to grow that number so far in 2018. Our financial strength has been noted by consistent recognition as a Ward’s Top 50 company and by an A+ (Superior) rating by A.M. Best—all of which is to say that financial security is especially important during periods of above-average storm activity. We’re anticipating another active storm season this year, but the good news is that we’re prepared with a solid reinsurance program, a strong business plan, and an experienced and hardworking Claims Team.

Now for a quick look at the Q1 numbers (not including affiliate Michigan Millers): As of March 31, written premium for the Group is at $165.5 million—putting us behind goal, but with plans in place and time to make up the difference. Our Group’s loss ratio was at 57.2% (vs. goal of 57.0%), our loss adjustment expense ratio was at 8.8% (vs. goal of 10.2%), and our underwriting expense ratio was at 27.6% (vs. goal of 27.8%)—adding up to a combined ratio of 93.6%. Overall, we’re trending in a positive direction for profitability, but we have some “catch up” to do on the premium growth side of the equation—so there’s still plenty to be done as we work through Q2 and beyond.

Looking beyond the financials, we continue to focus on improving the experience for our agents and customers—specifically with technology enhancements to help improve the ease of doing business with Western National. We recently launched our Commercial Lines Forms Library, cross-browser compatibility for AgentsOnline, an updated Personal Lines Billing Inquiry system, and an updated MyAccount system for easier document viewing and bill payment for policyholders. You’ll find more on these updates in our “In Case You Missed It” section.

Finally, I’d like to take a moment to once again congratulate our 2018 Circle of Excellence and individual Agency Award winners, which we announced in the first quarter. You can view a full list of this year’s recipients later in this issue.

As always, thank you for your partnership in the service of our mutual policyholders. I look forward to delivering more positive news later in 2018.

~ Stu Henderson