Lightbox Example


To access this document you will need to log-in with your Username and Password.

Continuity credits for 2010-2011

Our continuity and premium credit programs, even at reduced levels, play an important role in helping us provide you with a secure and stable market while ensuring the lowest overall long-term cost of risk. Since 1987, we've returned $915 million in continuity credits to our members – and $182 million has been returned in just the last five years. At the end of April, we reviewed all of our credit programs with the Board of Directors, who approved a number of credit declarations.

In 2009, as you have read in our e-mails and the annual report we published recently, the Company had a good, restorative year following the financial crisis and the catastrophic losses suffered across the membership. Thanks to your support, we have made significant progress in terms of rebuilding surplus and strengthening our collective risk profile. However, we are still managing the substantial excess liability losses suffered in recent years and, as you may know, we had to increase our prior year excess liability loss estimates by over $100 million due largely to the wildfire, E&P and propane losses that are working their way through the claims process. In light of this situation, and after careful consideration, the Board agreed that it would not be prudent to resume paying a continuity credit for excess liability for the 2010-2011 year.

The underwriting results for our other major lines – D+O, property and London – performed at or better than expectations last year so the Board believes it is appropriate to maintain credits at current levels. The Board approved a continuity credit at 2.5% for D+O members, whose loss experience continued to be favorable over the most recent five years. These D+O credits total $15.7 million. The details regarding this year's D+O credits will be sent in the coming weeks to eligible members along with materials that describe how they can be applied to future premiums.

The Board has also approved $3.5 million in premium credits for members who renew coverages placed through our domestic property program. Now in its eighth year, the property premium credit program allows eligible policyholders to share in positive underwriting results.

Additionally, the Board has approved $1.0 million in premium credits for members who renew coverages placed through AEGIS London, reflecting the Syndicate's strong 2009 results. Now in its sixth year, the AEGIS London premium credit program allows eligible members utilizing our syndicate to share in the positive underwriting results of the operation.

As we continue to rebuild surplus, we appreciate your understanding the need to manage the level of credits to our mutual advantage. We know these credit programs are important to you and we would like to restore and/or improve them as soon as we can reasonably do so.