Pr e side nt’s Message — A Turni ng Poi nt FFVA Mutual is positioned for continued success as the leading workers’ compensation carrier of choice in the Southeast. Over the past several years, our company has reinforced its business fundamentals by cultivating underwriting talent and investing in innovative underwriting resources. For the second consecutive year, we’ve demonstrated a consistent underwriting appetite. As recent years’ rate increases continue to be earned, we plan to accelerate and continue the improvement that has been established by preserving a strong underwriting culture, culling unprofitable accounts, enhancing business management and continuing perceptive risk and pricing discipline. During the latter part of 2011 and through 2012, we observed encouraging changes in our workers’ compensation book of business that impacted our premium levels. First, we noted an increase in reported payrolls. For policies written in prior years, policy premium audits revealed that actual payrolls were generally higher than projected by policyholders at policy inceptions. This had a positive impact on our company, increasing both net written and earned premium. Second, loss cost and rating bureau rate filings have turned from predominately decreases to increases, reversing an industry trend. Finally, because of significant underwriting losses over the past years, insurance carriers implemented steps in 2012 to improve underwriting performance by pursuing general price increases on renewals.
The above actions represent a turning point in the underwriting cycle, which should result in an improvement in the operating environment for workers’ compensation. We expect market conditions to show steady growth consistent with 2012. Along with intense competition for new business, rates should continue to increase as the industry reacts to years of price decreases. Looking to the future, we are confident about the strength and direction of FFVA Mutual as we build upon the positive momentum gained from 2012. Our dynamic business model positions us to produce successful results that will outperform the industry. We remain committed to expanding our competitive edge through the ongoing commitment and integrity of our employees, and a combination of underwriting and financial restraint, customer focus and operational excellence. We would like to thank our board of directors for its support this past year and our agencies, agents and policyholders for your business and continued confidence.
Craig Menzl, President & CEO