Second Quarter Results & Initiative Update:

A Message From Stu Henderson, President & CEO

It’s been a busy year so far at Western National (and with no signs of slowing down!) as we’ve worked to provide a first-rate customer experience to our agents and policyholders. While we wouldn’t have minded a less-severe storm season, the first half of the year has given our Claims staff ample opportunity to demonstrate the unique value of a Western National policy. These claim-handling efforts, along with work to enhance our systems and roll out new products, have kept us plenty busy — almost enough that, if you blinked, you might’ve missed a couple of our recent successes on the financial performance front.

I’m pleased to report that A.M. Best has upgraded Western National to an A+ (Superior) financial strength rating in recognition of our Group’s “excellent level of risk-adjusted capitalization, strong operating performance for an extended period, and sound business profile.” In addition, Ward Group Inc. recently announced that Western National has once again been named to the Ward’s Top 50 Benchmark Group of Property-and-Casualty Companies — our 12th time in the past 13 years. These recognitions wouldn’t be possible without the hard work of agency partners like you, in addition to the hard work of our employees and the execution of a solid business plan. We look forward to the ways these recognitions, along with our continued focus on the customer experience, can help make it even easier for you to place quality business with Western National going forward.

On the systems side, we continue to update our AgentsOnline system to make it easier to use and more functional for you. You may have noticed a new look-and-feel in the “Access Policy Information” area of our system, where we recently launched our updated Policy Inquiry tool with improved search and navigation. You can read more about the update in the “In Case You Missed It” section of this newsletter. We’ll be making additional enhancements to AgentsOnline in the months ahead. Stay tuned!

We’re also preparing for the upcoming move of our Minnesota office (just a mile down the road from our current location), which will help us accommodate recent growth and better prepare for additional growth in the future. We’ll keep you updated this fall as the move date gets closer.

Now, let’s take a quick look at the numbers (not including affiliate Michigan Millers) for the first half of 2017: Through June 30, written premium was at $326.4 million — still behind goal, but starting to make up some ground on our year-end target. Our Group’s loss ratio was at 57.5% (vs. goal of 54.9%), with about 4.5 points of that due to weather catastrophes. Our loss adjustment expense ratio was at 10.3% (vs. goal of 10.0% — extra also due in large part to catastrophe handling expense), and our underwriting expense ratio was at 26.9% (vs. goal of 27.5%) — adding up to a combined ratio of 94.7%. There’s still plenty we can do in the remaining months of 2017 to achieve our goals, and I appreciate your support as we continue to work together towards mutually profitable growth.

Thank you, as always, for your service to our policyholders. I look forward to delivering more positive news later this year.

~ Stu Henderson