Value
The AEGIS mutual model delivered on its promise in 2018 to provide members with the best long-term value for insuring their assets and operations.
Letter to our Membership
We are pleased to report another very good year for your mutual. The AEGIS mutual model delivered on its promise in 2018 to provide members with the best long-term value for insuring their assets and operations. The AEGIS model is a unique alternative to the commercial insurance market because it’s structured with the sole objective of managing your premium and losses to deliver the lowest long-term cost of risk.
Despite several significant member losses and lower investment returns, our financial strength reached record levels, claims were paid quickly and efficiently, and we expanded our underwriting product offerings, policy limits and member credit programs.
Our gross premiums written were $1.57 billion – up 17% from the previous year. Member support of new and existing coverages and growth in several diverse classes of business in London contributed to this strong growth. We were pleased to pay more than $723 million in claims to policyholders in 2018, which brought the total amount of claims paid since AEGIS was founded in 1975 to more than $17.1 billion.
At the same time, we increased our policy limits for Excess Liability, D&O, Property and Cyber; formed an alliance with a leading renewable energy partner providing up to $400 million in wind and solar energy property limits; launched a new Generation Outage product; and enhanced virtually every component of our premium credit program – including a new member loyalty credit – which increased the pool of member credits by 34% for the 2018-2019 credit year.
Also in 2018, the AEGIS Loss Control team completed 192 member service visits, conducted more than 1,000 risk assessments, hosted 11 energy industry-specific webinars, and trained more than 1,700 utility employees at member companies. These efforts underscore our commitment to safety and training, and they support the day-to-day operations at member companies. The aggregation and sharing of loss control information provides important data and operational detail that is used by the membership to help operate safe and reliable systems.
The industry knowledge and expertise of our members, brokers, Board of Directors, Risk Management Advisory Committee (RMAC) and AEGIS employees in North America and London drive the AEGIS model, and for that we are most grateful. Together, we created tremendous value in 2018, and we look forward to building on this success in the year ahead.
Wesley W. von Schack
Chairman of the Board
William P. Cullen
President & CEO
2018 Results
The value produced by the AEGIS model reached new levels in 2018.
Gross Premiums Written Mutual and Syndicate
($ millions)
Policyholder Surplus
($ millions)
Member Credits Declared
($ millions)
Gross Premium by Line of Business
Mutual and Syndicate (Nominal)
Gross premiums written: $1.57 billion
Policyholder surplus reached record: $1.64 billion
Combined ratio: 88%
Claims paid to policyholders: $723 million
Member credits declared: increased 34%
Gross investment return: $53 million
Member retention ratio: 99%
A.M. Best rating: “A” Stable
Results
Transitions
With more than 60 member company representatives serving on our Board of Directors, RMAC and Task Forces, it’s inevitable that some will move on to begin new chapters in their professional and personal lives. Fortunately for AEGIS, there are always plenty of members willing to step in and support their mutual.
Three members of the AEGIS Board of Directors chose not to stand for re-election in 2018. Christopher Johns, President and Vice Chairman (retired) – Pacific Gas & Electric, Ronald Litzinger, President (retired) – Edison Energy Group, and William Timmerman, Chairman & CEO (retired) – SCANA Corporation, resigned from the Board and were elected to the position of Director Emeritus. We thank them for their many valuable contributions to AEGIS and wish them all the best in the future.
On the AEGIS London Board of Directors, W.R.P. Dalton stepped down as Chairman upon his retirement. Prior to serving as Chairman, Bill was a member of the AEGIS and AEGIS London Boards for many years, beginning in 2004, and he held senior leadership positions at HSBC. We thank Bill for his guidance during a period characterized by significant challenges and tremendous growth, and wish him all the best in the future. Thomas G.S. Busher, previously head of the London Board’s Risk Committee and a member of the AEGIS Board since 2016, has succeeded Bill. Tom is the former Chief Operating Officer, Director and Deputy Chairman at Montpelier Re. We welcome Tom to his new role, and we are grateful for his ongoing contributions to AEGIS.
The AEGIS Risk Management Advisory Committee (RMAC) welcomed four new members: Tim Bucci, Director, Risk Management & Insurance – The Williams Companies; Gregg Crenshaw, Director, Corporate Risk Management – Dominion Energy; Lisa Groff, Vice President and Chief Risk Officer – American Electric Power; and Julie Yount, Insurance Program Manager – Puget Sound Energy. We are grateful to these AEGIS members for their willingness to contribute their time and expertise to the RMAC, and we look forward to their contributions.
On the RMAC’s Enterprise Risk Management (ERM) Task Force, Steve Haynes stepped down when he accepted a new role at American Electric Power (AEP) as Senior Vice President – Strategy & Innovation. Keith Bone stepped down from the Claims Task Force upon his retirement from Duke Power, where he was the Director of Insurance & Claims. We thank them both for their many valuable contributions to the Task Forces and wish them all the best in the future.
Two members joined the Loss Control Task Force in 2018: Randy Murdaugh, Senior Risk Manager at Associated Electric Cooperative, and David Heller, Vice President of Risk Management and Chief Audit Executive at Edison International. We look forward to their contributions
Five-Year Financial Highlights
Scroll the table to see additional data.
2014 | 2015 | 2016 | 2017 | 2018 | |
---|---|---|---|---|---|
Revenue: | |||||
Gross premiums written | $1,348,493 | $1,250,510 | $1,236,475 | $1,344,705 | $1,567,145 |
Net premiums written | 943,102 | 860,121 | 821,955 | 880,647 | 1,028,021 |
Net premiums earned | 897,966 | 892,685 | 838,455 | 852,131 | 961,028 |
Net investment income (loss) | 83,037 | (16,791) | 117,725 | 147,935 | 58,073 |
Change in fair value of insurance and reinsurance contracts | (42,587) | 28,642 | (22,333) | (31,284) | (1,630) |
Total revenue | 938,416 | 904,536 | 933,847 | 968,782 | 1,017,471 |
Expenses: | |||||
Losses and loss expenses incurred | 566,668 | 518,745 | 556,630 | 567,905 | 594,727 |
Commission expenses | 110,272 | 97,077 | 82,589 | 98,172 | 122,340 |
Other underwriting expenses | 131,231 | 111,434 | 99771 | 105,091 | 129,389 |
Total expenses | 808,171 | 727,256 | 738,990 | 771,168 | 846,456 |
Income before continuity and other premium credits and income taxes | 130,245 | 177,280 | 194,857 | 197,614 | 171,015 |
Continuity and other premium credits | 20,796 | 19,964 | 29,275 | 37,837 | 44,709 |
Income before income taxes | 109,449 | 157,316 | 165,582 | 159,777 | 126,306 |
Income tax provision | 42,581 | 70,162 | 53,467 | 27,050 | 26,199 |
Net income | $66,868 | $87,154 | $112,115 | $132,727 | $100,107 |
Other comprehensive (loss) income, net income tax (benefit) expense | (1,504) | (18,596) | 26,478 | (4,160) | (21,244) |
Total surplus, beginning of year | $1,156,183 | $1,221,547 | $1,290,105 | $1,428,698 | $1,557,265 |
Total surplus, end of year | $1,221,547 | $1,290,105 | $1,428,698 | $1,557,265 | $1,636,128 |
Total assets | $6,037,151 | $5,718,282 | $6,087,210 | $6,512,136 | $7,073,674 |
Reserve for losses and loss expenses | $3,165,788 | $2,879,855 | $3,068,261 | $3,306,617 | $3,659,832 |
The Company has reclassified certain prior year amounts to conform to the current year's presentation.
For details on our 2018 financial results, please visit aegislink.com.
Leadership
Our mutual efforts are guided by these experienced executives and professionals drawn primarily from the member companies we serve. They generously contribute their time and expertise, and they are essential to our success.
Board of Directors
Gregory E. Abel
Vice Chairman – Non-Insurance
Business Operations
Berkshire Hathaway Inc.
Chairman
Berkshire Hathaway Energy Company
Robert W. Best
Director & Former Chairman
Atmos Energy Corporation
Thomas G.S. Busher
Chairman
AEGIS London
Former Chief Operating Officer and Deputy
Chairman
Montpelier Re
Christopher M. Crane
President & CEO
Exelon Corporation
William P. Cullen
President & CEO
AEGIS Insurance Services, Inc.
Thomas F. Farrell, II
Chairman, President & CEO
Dominion Energy, Inc.
Walter M. Higgins
Chairman
South Jersey Industries
James J. Jura
CEO & General Manager, Retired
Associated Electric Cooperative, Inc.
Constance H. Lau
President & CEO
Hawaiian Electric Industries, Inc.
Charles A. Schrock
Chairman & CEO, Retired
Integrys Energy Group, Inc.
Wesley W. von Schack
Chairman
Associated Electric & Gas Insurance
Services Limited
Officers
Wesley W. von Schack
Chairman of the Board
Gregory E. Abel
Vice Chairman
William P. Cullen
President & CEO
William L. Hillman
Assistant Vice President &
Chief Underwriting Officer
Michael S. Johnson
Controller
Simon J. Day
Actuary
Rip Reeves
Treasurer
Patricia L. McKenna
Assistant Treasurer
Mark A. Walsh
Secretary
Elda B. Feldman
Assistant Secretary
AEGIS London Board of Directors
Thomas G.S. Busher
Chairman
David Croom-Johnson
Managing Director
Gregory E. Abel
John Chambers
Christopher M. Crane
Thomas F. Farrell, II
Christopher Forbes
Jonathan Gray
Michael Onslow
Alex Powell
Hermien Smeets-Flier
Graeme Tennyson
Wesley W. von Schack
Matthew C. Yeldham
Risk Management Advisory Committee (RMAC)
Wesley W. von Schack
Associated Electric & Gas Insurance Services Limited
Johan G. Bramer
TransCanada Corporation
Timothy R. Bucci
The Williams Companies, Inc.
Denise M. Cosentino
Eversource Energy
Gregg Crenshaw
Dominion Energy, Inc.
John Frank
Basin Electric Power Cooperative
Deborah S. Gaffney
Southern Company
Lisa R. Groff
American Electric Power Company, Inc.
David A. Layne
Algonquin Power & Utilities Corp.
Janaize Markland
Pacific Gas & Electric Company
Joseph T. Meaney, Jr.
The AES Corporation
Michael A. Mee
Exelon Corporation
Robert L. Miller
Xcel Energy Inc.
Peter M. Nadel
FirstEnergy Corp.
H. Wayne Soza
El Paso Electric Company
James M. Vacek
CenterPoint Energy, Inc.
Julie A. Yount
Puget Sound Energy, Inc.
Enterprise Risk Management (ERM) Task Force
Denise M. Cosentino
Eversource Energy
Christopher Eaton
Enbridge Inc.
Janaize Markland
Pacific Gas & Electric Company
H. Wayne Soza
El Paso Electric Company
Evolving Utility Industry Risk Task Force
J.P. Agnesse
Portland General Electric Company
Lisa R. Groff
American Electric Power Company, Inc.
Kirk A. Kelley
Tennessee Valley Authority
George W. Marget III, Esq.
Dominion Energy, Inc.
Ronald D. Rispoli
Entergy Services, Inc.
Richard Sayette
Exelon Corporation
Frank Stanbrough
Southwest Gas Corporation
Claims Task Force
David P. Abernathy, Esq.
Spire Inc.
Derek W. Boyd
Atmos Energy Corporation
Kirk A. Cresto
NiSource Corporate Services
C. Larry Davis, Esq.
San Diego Gas & Electric Company
Bryony Hodges, Esq.
Dominion Energy, Inc.
Judy Y. Liu, Esq.
CenterPoint Energy Service
Company, LLC
George W. Marget III, Esq.
Dominion Energy, Inc.
Douglas J. McKay, Esq.
Consolidated Edison Company of
New York
Timothy J. Saviano, Esq.
WEC Energy Group
Mark J. Sweeney, Esq.
Pacific Gas & Electric Company
Loss Control Task Force
Mark Boone
Dominion Energy, Inc.
Robert Brandkamp
Avista Corporation
Mariya Coleman
Berkshire Hathaway Energy Company
Robert A. Green
PSEG Services Corporation
David Heller
Edison International
Lisa Hough
Omaha Public Power District
John Mellette
Dominion Energy, Inc.
Sandy Meyers
City Utilities of Springfield
Randy W. Murdaugh
Associated Electric Cooperative, Inc.
John C. Norman
AVANGRID
Ronald D. Rispoli
Entergy Services, Inc.
Scott Wibbenmeyer
Ameren Services Company
Associated Electric & Gas
Insurance Services Limited
The Maxwell Roberts Building
Fourth Floor
One Church Street
Hamilton, Bermuda HM11
Telephone: 441.296.2131
1 Meadowlands Plaza
East Rutherford, NJ 07073
Telephone: 201.508.2600
Fax: 201.896.6638
Claims fax: 201.508.1451
Website: aegislink.com
E-mail: inquiry@aegislimited.com
AEGIS Managing Agency Limited
33 Gracechurch Street
London EC3V 0BT England
Telephone: 44.207.265.2100
Fax: 44.207.265.2101
Website: aegislondon.co.uk
E-mail: enquiries@aegislondon.co.uk
The Annual General Meeting of Members of the Company will be held on October 24, 2019. Notice of the Meeting and the form of proxy will be issued to each voting Member not less than ten days before the meeting convenes, stating the date, place, time and nature of the business to be considered.
The annual AEGIS Policyholders’ Conference will be held July 15 to 18, 2019, in Boston, MA. Registration information will be e-mailed and posted on our website.
AEGIS will also host a series of regional member meetings, Claims Roundtable seminars, and a number of underwriting, claims and loss control seminars and webinars throughout 2019. Please visit aegislink.com for details.
Associated Electric & Gas Insurance Services Limited (“AEGIS”) was incorporated in Bermuda in 1971 and commenced underwriting activities in 1975. AEGIS is a Class 3 Insurer in Bermuda.
AEGIS is a Class 3 Insurer in Bermuda. AEGIS is an eligible surplus lines insurer in all jurisdictions of the United States. It is subject to United States federal income taxes, files the required tax returns, and maintains a United States trust fund in excess of $250,000,000. AEGIS is also a licensed foreign insurance company in all provinces and territories of Canada and is listed on the general register of foreign reinsurers in Mexico.
AEGIS’ operations are conducted through a wholly-owned subsidiary, AEGIS Insurance Services, Inc. (“AEGIS Services”), which provides AEGIS and its affiliates with professional staff and services.
AEGIS London (the AEGIS Syndicate at Lloyd’s of London, number 1225) commenced operations in 1999. AEGIS London’s operations are supported by AEGIS Managing Agency Limited (“AMAL”), which provides professional staff and services for AEGIS London. AEGIS Electric & Gas International Services Limited (“AEGIS International”) is a corporate member of Lloyd’s and the principal capital provider of AEGIS London. Both AMAL and AEGIS International are indirect subsidiaries of AEGIS.
In the U.S., AEGIS; AEGIS & Design; the AEGIS Logo (any reference to “Logo” or “Design” are references to the AEGIS Diamonds Design); AEGISLINK; HOW SAFE; PEOPLE DON’T KNOW WHAT THEY DON’T KNOW; LESSONS LEARNED; AEGIS LONDON; and AEGIS LONDON & Design are registered trademarks of AEGIS.
In the U.K., AEGIS; AEGIS LONDON; and AEGIS LONDON & Design are registered trademarks of AEGIS.
In the E.U., AEGIS; AEGIS & Design; the AEGIS Logo; AEGISLINK; AEGIS LONDON; and AEGIS LONDON & Design are registered Community trademarks of AEGIS.
In Bermuda, AEGIS; and the AEGIS Logo are registered trademarks of AEGIS.
In New Zealand, AEGIS is a registered trademark of AEGIS.
In Canada, AEGIS; AEGIS & Design; AEGIS CANADA; the AEGIS Logo; AEGIS LONDON; and AEGIS LONDON & Design are registered trademarks of AEGIS.
©2019 Associated Electric & Gas Insurance Services Limited and AEGIS Insurance Services, Inc.
All rights reserved.