As you know from our e-mails and the 2010 annual report we just published, your mutual has now enjoyed two years of solid recovery since the financial meltdown of 2008 and the unusually high level of loss activity that occurred around the same time which included the wildfires in California. Thanks to your steadfast support and the various steps we had taken to improve our results, three-fourths of the surplus lost in 2008 has been recovered.
We also continue to recognize what an important long-term benefit continuity credits are to you, and as we have said before, we wanted to restore them as soon as practicable. Based on the year’s positive financial results, your Board of Directors has agreed that it is now appropriate to reinstate a continuity credit for the excess liability line of business to accompany the credits for D&O, property and AEGIS London. The following summarizes the credit declarations approved by the Board for the 2011-2012 year:
- A continuity credit of 2.5% of the applicable surplus for excess liability members has been declared, noting that this is enabled in part due to the membership’s willingness to support more adequate premium levels and better recent year loss experience.
- The continuity credit for D&O members will be 4%, an increase from the 2.5% surplus declared last year. This reflects the ongoing favorable loss experience in this line.
- A premium credit of $3.5 million will be available for members who use our domestic property capacity, which is the same as last year, and is consistent with the continuing relatively favorable loss experience.
- A premium credit of $1.0 million has been declared for those members who have placements with AEGIS London. This allows them to participate in the overall positive results there.
These credit programs set AEGIS apart from the commercial insurance industry because they allow you to share in the positive financial results of the Company. We have, in fact, returned $477 million to eligible policyholders over just the last 10 years.
The specific details that describe the individual credit amounts and how they can be applied to future policy renewals will be mailed to eligible excess liability, D&O and AEGIS London policyholders within the next few weeks. Policyholders who are eligible for the property credit will receive a letter with this same information this summer.