We plan to have the final audited financial results approved by our Board of Directors shortly, but wanted to share some preliminary, unaudited results with you now.
We are pleased to report that AEGIS had a successful 2006. Policyholder surplus – the bottom line measure of our financial strength – increased by $75 million and topped $1 billion for the first time at $1.025 billion.
As you continued to support your mutual, total premiums grew to $1.23 billion, an increase of 7.7% over $1.14 billion in 2005. Although incurred losses were $123 million higher than planned because of some necessary strengthening of hurricane loss reserves and a somewhat unexpected increase in excess liability losses, AEGIS benefited from stronger than anticipated investment returns. Our well-diversified portfolio earned 7.1%, which was 280 basis points higher than we had planned for the year. And as you know, our continued strong financial condition enabled us to return more than $51 million to you in member credits during the year.
At year-end, the membership count stood at 450, a net decrease of 24. Departing member companies consisted largely of those involved in acquisitions or consolidations and non-core members that chose alternatives in the commercial market. We were particularly pleased that all core Excess Liability and D&O members renewed their AEGIS programs despite the more competitive marketplace that developed last year.
In short, your mutual is in very good financial shape. AEGIS is well capitalized to support our current products and pursue the new initiatives that you've asked us to undertake. We'll publish our annual report in April to give you all the details together with our final audited financials.
AM Best recently affirmed a rating of "A (Excellent)" and an issuer credit rating (ICR) of "a" for AEGIS Energy Syndicate 1225. The outlook for both ratings is stable. The report cited the financial strength of the Lloyd's market and the benefits derived from the syndicate's association with AEGIS as factors in the positive ratings.
We are pleased to announce three additions to the Risk Management Advisory Committee (RMAC):
Joe Bramer, Manager of Insurance Risk at TransCanada PipeLines.
Tim Flaherty, Director-Business Risk & Insurance at Equitable Resources, who has been serving on our Claims Task Force.
Will Persyn, Risk & Insurance Management and Public Safety Manager, Arizona Public Service Company, who joined our Loss Control Task Force last year.
Both Tim and Will plan to continue their Task Force duties for the next few months. We are grateful to Joe, Tim and Will for their willingness to contribute their time and talents to the RMAC and we look forward to working with them.
The Risk and Insurance Management Society Annual Conference will be held in New Orleans at the Ernest N. Morial Convention Center from April 29 to May 3. Once again, we will set up a small booth on the exhibit floor and maintain a hospitality suite at the one of the main conference hotels where members and brokers can meet with the AEGIS staff who'll be available during the conference. Please let us know if you're planning to attend RIMS this year by contacting Gil Gould via e-mail and we'll contact you with all the details.
We were pleased to welcome a near-record number of attendees to the first Claims Roundtable seminar to be held in our East Rutherford offices a few weeks ago. The second topic in the 2007 series, Employment Practices Liability, will be presented May 3 in East Rutherford and again on May 17 in St. Louis. You may register now online.
Our panel of claims professionals and counsel will discuss the steps that can be taken to avoid or mitigate this exposure, strategies to successfully defend employment practices liability litigation, and the appropriate uses of alternative dispute resolution (ADR).
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 about the AEGIS Roundtable program, please contact Jeff Schupack by e-mail or by phone at 201.508.2658.
Our complete schedule of 2007 Claims Roundtables, including the "Employment Practices Liability" seminar and the "Preventing and Defending Asbestos Litigation" seminar, is posted on our website.
Please join us for our new workshop for natural gas member companies – Investigating Natural Gas Incidents – which will be held on May 1 in Columbus, OH.
The one-day training workshop will focus on the proper investigation of natural gas-related incidents. Participants will learn about the objectives of a detailed investigation, the evidence to look for and document, sample collection methods, instrumentation and the actions to take upon arriving at the scene.
AEGIS member company staff from operations, compliance, claims, safety, engineering, and those who may be involved in field investigations are welcome. The workshop, continental breakfast and lunch are complimentary, however attendees will be responsible for their own travel and accommodations.
You may register online or, for more information, contact Lucille Jackowski by e-mail or phone at 201.508.2736.
In an effort to better understand the issues leading to recent failures of the General Electric Heavy Frame 7/9 FA combustion turbine, our loss control and underwriting staff recently met with General Electric to discuss their efforts to mitigate future failures. Our loss control group and GE's Product Service Engineering General Manager agreed that it would be mutually beneficial to have weekly discussions on this subject to promote the sharing of information that may be useful to AEGIS member companies. For more information, please contact Jim Mintel in AEGIS Loss Control via e-mail or phone at is 201.508.2741.