Second Quarter Results & Initiative Update:

A Message from Stu Henderson, President & CEO

We’re now over halfway through 2016 (nearly to Labor Day already!), and I’m pleased to report that it’s been a productive year so far for the Western National Insurance Group. Among our major mid-year accomplishments is the fact that we were recently recognized as a Ward’s Top 50 property-and-casualty insurance company for the eleventh time in the past twelve years (and our eighth consecutive year). We were also recently named a Top Workplace by the Star Tribune, and, thanks to the efforts of our employees and the quality internal and field underwriting by agency partners like you, we continue to grow profitability and reach major milestones.

Fifteen years ago, our surplus was at $63.9 million, our assets totaled $238 million, and we were rated B+ by A.M. Best. Continued hard work, a strong focus on our customers, and solid agency partnerships have helped us reach the milestones of $400 million in policyholder surplus and $1 billion in total assets in the second quarter of this year. (We’re also currently rated A by A.M. Best with a positive outlook – so we anticipate more good news on that front in the years ahead.) Results like these allow us to continue to build on our financial foundation, increasing the protection available to our mutual policyholders when they need it most.

Let’s take a look at the rest of the results through June 30 (not including affiliate Michigan Millers and newly acquired Nevada General): Written premium is at $298.2 million on an annual written premium goal of $566.6 million – slightly behind seasonal goals, and in need of continued strong production efforts, but moving in the right direction. Our Group’s loss ratio is at 55.1% (vs. goal of 55.9%), our loss adjustment expense ratio is at 10.0% (vs. goal of 9.9%), and our underwriting expense ratio is at 26.2% (equaling our goal of 26.2%) – adding up to a combined ratio of 91.3%. This is 7-8 points better than the estimated industry result, so congratulations to all. For being about halfway through the catastrophe storm season, this is a good place to be in terms of profitability.

As we continue to focus on profitable growth, we’ve been adding capacity and making a few changes to better serve the needs of our policyholders and agency partners. To start, we recently purchased a new home in Edina, Minnesota, required to house our future growth. Our corporate headquarters will be moving to the new building in the next 12 to 18 months. We’ll keep you informed of progress as we build it out. We also completed the purchase of Las Vegas-based Nevada General Insurance Company (a non-standard auto insurance company) on July 1. We look forward to expanding our presence in the Southwestern U.S.’s non-standard auto market and welcoming the company into our group.

It’s been a busy few months! With that being said, there’s still plenty of time left in 2016, and it will take continued hard work by our employees and agency partners to remain on track. 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