Bernie Kennedy has asked that I pass along some great news to you before we issue the formal release. At his request, the Board appointed a special committee last summer to recommend a successor as Chairman when he steps down at the end of this year. We are pleased to report that the committee recommended and the Board unanimously elected Wes von Schack, Chairman and CEO of Energy East and chairman of our A&F committee. He will take office January 1, 2007. As you might already know, Wes became Chairman of the Audit and Finance Committee in 2003, and Bernie and I have been working together with him a great deal these past few years, so the transition should be a seamless one.
As everyone knows, Bernie is one of the founders of AEGIS and its predecessor company and has been a director since the beginning and Chairman since July 31, 1993. As he said when requesting the Board create the special committee, “we just survived two years of record hurricanes, Sarbox, Enron, etc. and we’ve emerged a stronger company than ever before. It’s time to pass the baton.”
All of us at AEGIS are extremely grateful to Bernie for his leadership and guidance throughout the years. His efforts with the Board to ensure a smooth transition with such a highly qualified successor as Wes is just another example.
We plan to have our final audited financial results approved by our Board of Directors in early March; but we wanted to share some preliminary, unaudited, bottom-line results with you at this time. In sum, the test presented by the 2005 hurricane season has reaffirmed AEGIS’s financial strength. Although we incurred $120 million in hurricane losses after expected reinsurance recoveries, the growth and diversity of our current business activity enabled AEGIS to absorb them with only a modest $21 million decline in policyholders’ surplus. With $950 million in surplus at year-end, AEGIS is well positioned to continue to fulfill its mission for the membership in 2006.
We are delighted with the industry’s continuing strong support of AEGIS, resulting in membership increasing by five in 2005 to 474 overall. Total premium growth was greater than we expected, increasing over 10% in 2005 to $1.14 billion in total revenues. The upturn in the investment markets at year-end helped us to achieve a 4.1% return for the year. We were able to again declare a 5% continuity credit, the 18th year in a row we have been able to declare these policyholders' dividends. With our strong financial fundamentals, we were pleased to have had our A rating from Best’s and our A+ rating from Fitch reaffirmed with stable outlooks this past fall.
In April, we’ll publish our annual report and give you all the details with our final audited financials.
We are pleased to announce additions to the AEGIS Board of Directors, the Risk Management Advisory Committee (RMAC), the Claims Task Force, and the Loss Control Task Force.
Robert W. Best has been elected to the AEGIS Board of Directors. Since 1997, Bob has been the Chairman, President & CEO of Dallas-based Atmos Energy Corporation, the country’s largest natural-gas-only-distributor, which serves 3.1 million gas customers in 12 U.S. states. In addition to his responsibilities at Atmos, he is the past chairman of the American Gas Association and 2005 chairman of the AGA’s financial committee.
Joe Del Vecchio, Deputy General Counsel at National Fuel Gas, has joined the RMAC. Joe manages NFG’s insurance program in addition to his responsibilities in the legal department.
Tim Flaherty, Director-Business Risk & Insurance at Equitable Resources, is our newest member on the Claims Task Force.
Will Persyn, Risk & Insurance Management and Public Safety Manager, Arizona Public Service Company, has joined the Loss Control Task Force.
We are grateful that they are willing to contribute their time and talents to guiding AEGIS and we look forward to working with them.
As many of you know, the Terrorism Risk Insurance Act of 2002 was recently extended, with minor changes, through December 2007 by the Terrorism Risk Insurance Extension Act of 2005. Other than increasing deductibles for insurers, the primary change was the exclusion of commercial auto, professional liability (other than D&O), surety and some other lines of business from the federal program. With respect to AEGIS policies, the terrorism coverage will remain essentially unchanged.
The new online application for excess liability is now posted on the password-protected side of the website for use by AEGIS members as well as their designated staff and brokers. The easy-to-use PDF format will save time because it’s pre-populated with current policy information and, because the form is dynamic, it presents only those questions that are relevant to the member company operations and exposures. The new online application for D&O will be available later this year.
If you have any questions, please refer to the FAQs for the online application or contact your AEGIS underwriter.
Please mark your calendars now for the 2006 AEGIS Policyholders’ Conference, which is scheduled for Monday, July 17 through Thursday, July 20 at the Hyatt Regency Grand Cypress in Orlando, Florida.
Our annual conference is an important opportunity to share your needs, concerns and suggestions with us. More information will be posted on the website as it becomes available and complete conference registration materials will be sent in May.
Conference registration is complimentary and attendees are invited to bring guests. AEGIS will reimburse one representative from each member company with a current AEGIS policy written through Jersey City for the cost of three nights lodging at the Hyatt Regency Grand Cypress. Brokers must be connected with a current AEGIS member policy written through Jersey City in order to attend.
If you have any questions about the conference, please contact Carrie White by e-mail or by phone at 201.521.4524.
The first in the series of 2006 AEGIS Claims Roundtables, “Transferring Risk to Third Parties,” will be held in Jersey City on February 23 and in Miami on March 9. Our panel of claims professionals and counsel will discuss the practical applications and benefits of contractual indemnity and additional insured provisions. The effect of recent tort reform legislation regarding electric and gas utilities will also be considered to the extent it affects contractual risk transfer.
As always, you're welcome to attend AEGIS Claims Roundtables in person or by videoconference, and Continuing Legal Education (CLE) credits are offered. For more information or to register online, please visit the AEGIS News & Events section of our website. For more information about the AEGIS Roundtable program, please contact Jeff Schupack by e-mail or by phone at 201.521.4627.
We’ve also added a topic to our 2006 Claims Roundtables schedule, “Information Security and Electronic Document Management/Retention,” which will be presented on April 6 at the offices of LeBoeuf, Lamb, Greene & MacRae in New York.
The information security portion of the program will focus on current legal, regulatory and industry technology environments, including corporate risks related to identity theft (both customer and employee), cyber-threats, the new requirements of the Energy Policy Act of 2005 and information technology issues related to Sarbanes-Oxley compliance. The session also will examine the opportunities and need to transfer risk in this area to third party information technology vendors, outsourcers, and service providers.
The electronic document management portion of the program will review the need for establishing corporate policies, the benefits and methods of reducing the number of documents retained, the risks related to litigation hold orders, and the debate on possible electronic solutions to these issues.
To read recently published, related articles about information security and records management please visit the AEGIS Publications & Guides section of the website.
To register online for this new roundtable event, please visit the AEGIS News & Events section of our website.
You may attend in person or by videoconference and Continuing Legal Education (CLE) credits are offered. Please refer to the 2006 Claims Roundtable brochure for details.
AEGIS Loss Control has developed a new training program for electric utility personnel, “Investigating Electrical Incidents.”
The day-and-a-half training workshop will provide AEGIS members with information needed to properly investigate incidents involving inadvertent or intentional contact with an electric utility’s system equipment, power lines and supporting structures. Attendees will learn about the objectives of investigations, determining the causes of incidents, conducting witness interviews, National Electrical Safety Code clearance rules, and the importance of properly collecting, documenting and retaining evidence.
The first workshop is scheduled for April 4 and 5 at the PSE&G Edison Training and Development Center in Edison, NJ. For more information, and to register online, please visit the AEGIS website.
AEGIS member company personnel from operations, claims, engineering and safety are encouraged to attend. The workshops, breakfast and lunch are complimentary; however attendees will be responsible for their own travel and accommodations.
Additional workshops will be scheduled later this year at other locations around the country. If you’re interested in attending a future workshop, please contact Lucille Jackowski by e-mail or phone at 201.521.4644. For more information about this new program, contact Frank Del Vecchio by e-mail or phone at 201.521.4551.