Iowa Mutual remains strong despite weather losses, financial market woes
The Chinese have a saying, "May you live in interesting times." Some say it's more of a curse than a blessing, and that may be true when you consider the current turmoil in the stock market and the relentless storm losses incurred by the insurance industry this year.
But unlike some banks and other financial institutions, we are blessed that Iowa Mutual and the other companies in The Motorists Insurance Group remain financially secure and fully prepared to meet their obligations.
Our group of companies is fortunate to have developed an excellent financial foundation. It has enabled us to respond to significant weather-related losses; incur moderate investment losses resulting from stock market turbulence; and remain fully prepared to meet our financial commitments to policyholders.
At the end of September, our group of companies had capital and surplus of $637.7 million. Underwriting losses, primarily the result of weather-related events, and the decrease in the value of our investments have lowered capital and surplus by 9.1 percent.
Nevertheless, our premium written to surplus ratio remains very conservative and extremely strong at only 1.01 to 1, which is much more than adequate to support our underwriting commitments.
The net losses in Motorists Mutual’s (the lead company in The Motorists Insurance Group) operating area during September from Hurricane Ike are limited by reinsurance retention of $11 million plus 5 percent of any loss in excess of that amount. The total net loss from Ike's "dry hurricane" damage is currently at $12.3 million, and any additional development from this storm is 95 percent reinsured.
The upheaval in the stock market has had only a moderate impact on The Motorists Insurance Group’s investment portfolio. Just 13 percent of invested assets are in equities, which by industry standards is considered a modest exposure. The bond portfolio is diversified and very high quality. Any bond portfolio loss has not been material, and we do not expect this to change.
We have had and will continue to have reasonable controls in place to responsibly manage investment and underwriting risks. While 2008 will not be our best year, you can reassure your current and future clients that Iowa Mutual and the other companies of The Motorists Insurance Group are conservatively managed and remain financially secure with no credible threat to its ability to meet its obligations.
Your confidence in Iowa Mutual during this difficult period in our economy is appreciated.