We hope you have received the annual report we just published and have had a chance to read about the solid financial year AEGIS had in 2011. If you would like additional copies of the annual report, please contact us and we will be happy to mail them to you. The annual report is also available in PDF format on our website.
Continuing on from 2011, we are pleased to report favorable financial results for the first quarter of 2012. The following are unaudited figures for the quarter ending March 31, 2012: Total surplus grew $6 million to $1.056 billion, which was slightly better than expected. Gross written premiums totaled $195 million for the first quarter which was about $20 million higher than last year and a good result for the first quarter which is traditionally a quiet time for renewals. Our total investment return for the quarter was 1.3%, which was well ahead of the plan of 1%, as investment markets remained relatively positive. Losses were just slightly above expectations. We appreciate your support and we look forward to reviewing our first half results with you in detail at our Policyholders' Conference in July.
We are also pleased to report that the AEGIS Board of Directors approved the issuance of continuity credits and other premium credits at the same levels as last year to eligible members who participated in our general liability, directors and officers, property and AEGIS London programs.
Based on the positive 2011 financial results, and recognizing that the credit programs provide long-term benefits to our members, the Board declared the following for the 2012-2013 year:
A continuity credit of 2.5% of the applicable surplus for excess liability members, noting that this is enabled in part by the membership’s continued willingness to support adequate premium levels and the line’s somewhat better loss experience in recent years.
A continuity credit of 4% for D&O members, which reflects the ongoing favorable loss experience in the line.
A premium credit of $3.5 million which will be available for members who use our domestic property capacity, which is consistent with the line’s relatively favorable loss experience over the long term.
A premium credit of $1.0 million which will be available for members who have placements with AEGIS London, which allows them to participate in the overall positive results there.
These credit programs set AEGIS apart from the commercial market because they allow you to share in the positive financial results of the company. We have, in fact, declared more than $1.05 billion in continuity and premium credits to eligible policyholders since the inception of these programs, and they have helped our policyholders enjoy the lowest cost of risk over the long term.
The specific details that describe the individual credit amounts and how they can be applied to future policy renewals will be mailed to 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 later this summer.
We recently introduced a new railroad protective liability policy which we developed in response to numerous requests from AEGIS members. Working with the RMAC’s Railroad Protective Liability Task Force and our alliance partner, Liberty Mutual, we have created a new program that uses the standard ISO railroad form on admitted paper and provides appropriate limits at a competitive price. This new policy satisfies the coverage needs of the railroads and thus eliminates the need to purchase the additional and often costly coverage offered by the standard markets or the railroads themselves. AEGIS will bear this risk via reinsurance of Liberty Mutual.
For more information, please contact George Keefe at AEGIS by e-mail or at 201.508.2797 or James Doucet at Liberty Mutual by e-mail or at 617.654.4102.
As many of you know from our discussions since the Policyholders' Conference, we have developed a new D&O policy form that provides the same broad coverage you've always enjoyed without the large number of endorsements. The new language has been favorably reviewed by the RMAC's Directors & Officers Liability Task Force, the full RMAC and a number of our key D&O brokers. The new form, along with a highlight summary and a red-lined version of the old form that shows all the changes, is posted in the password-protected section of our website.
You are welcome to review the new language, share it with your general counsel and discuss it at any time with your AEGIS D&O underwriter who will be happy to explain the changes to you. After reviewing the new form, if you still prefer to use the old form and endorsements, you may do that as well. Otherwise, we have been using this new policy form for all D&O renewals occurring on or after March 1, 2012.
Many of you will recall the limits survey we conducted during 2008-2009 in cooperation with The Edison Electric Institute (EEI). In addition to polling AEGIS member companies with electric operations, we conducted the survey across the entire membership to include members with natural gas, water and other types of operations. The response to the survey was strong and many members found the results useful in terms of setting appropriate limits and benchmarking their programs versus peer companies. The aggregated survey results for all electric and gas company respondents are still posted in the password-protected area of our website. The aggregated results for other company operation types are available upon request.
Several member companies have asked us to conduct the survey again, this time including additional questions on topics such as cyber risk coverage, construction coverage and ERM. We are finalizing the survey questions now and expect to conduct the survey within the next few weeks. Please watch your e-mail for further details and a link to the online survey. We plan to discuss the aggregated results in detail at the AEGIS Policyholders' Conference in July.
Please save the date for the AEGIS Policyholders' Conference which will be held Monday, July 16 to Thursday, July 19 at the Seattle Westin in Seattle, WA. Our annual conference is an important opportunity to share your thoughts with us, network with your peers, and learn about new developments in the industry and at AEGIS. More information will be posted on our website as it becomes available and registration will open before the end of May.
We also hope you will join us for the 2012 AEGIS Claims Seminar which will be held Monday, October 15 to Wednesday, October 17 at the Encore Las Vegas in Las Vegas, NV.
The AEGIS Claims Seminar in 2010 drew an audience of more than 150 claims and litigation professionals from around the country who gathered to learn and share their experiences. Once again, we will focus on the important issues facing AEGIS members in the defense of their claims, including electric and gas case studies as well as other topics of interest to claims professionals and litigators for the utility industry. The seminar will be eligible for Continuing Legal Education (CLE) Credits.
Please do not contact the hotel to make room reservations. We are holding a block of rooms for all seminar attendees and they can be reserved as part of the seminar registration process that will begin in early August.
For more information, please contact Brian Ekdahl by e-mail or by phone at 201.508.2643.
What risk manager would not like to point to a savings of $6 million or more? The average cost of either a transmission and distribution liability claim or a power generation property claim is approaching $6 million – so the potential benefits of effective loss control programs to individual member companies and the membership as a whole are significant.
We want to thank all the members who have taken advantage of the risk mitigation expertise, products and services we provide through AEGIS Loss Control. Last year, 130 member companies worked with us to:
Complete 116 risk assessments at 90 member companies with natural gas, electric or water operations and 459 Property and Boiler Machinery risk assessments at 30 member companies.
Conduct 28 Focused Services engagements to address specific issues identified during risk assessments.
Train 1,428 employees at 21 member companies with natural gas operations.
Conduct four Investigating Electrical Incident Workshops and six Investigating Natural Gas Incident Workshops at member company locations.
Broadcast four webinars on a variety of utility operations topics and conduct three one-day seminars on the topic of media relations at utility incident scenes.
Publish the Review of Major Liability Losses claims summaries and a variety of Loss Control articles on the AEGIS website.
Each of these services, educational events and publications are designed to help member companies maintain safe and effective operating systems while reducing their overall long-term cost of risk.
With the rising costs of settling many property and casualty claims, we encourage all member companies to take advantage of these cost-saving programs from AEGIS Loss Control. Start by reading more about the new Review of Major Liability Losses summaries below. Share the valuable password-protected information, training programs and videos on our website with your company’s engineering, operating and safety staff by forwarding these easy access instructions. Or set up a meeting with Bill Powell, former Manager – Risk Management & Environmental Services at Salt River Project, and now Vice President – Member Relations at AEGIS, who can tell you about his experiences using AEGIS Loss Control services at Salt River Project and how they can enhance the loss control programs at your company. You can reach Bill any time by e-mail or at 201.508.2702.
AEGIS Loss Control recently added twenty new Review of Major Liability Losses (RMLL) claims summaries to our website. These summaries provide valuable information regarding the nature and significance of large losses associated with electric and natural gas utility operations. They are intended to help member companies raise the level of safety awareness among their operating personnel by highlighting the information or events that contributed to major incidents. A "Lessons To Be Learned" section in each claim summary contains suggestions to prevent a recurrence.
Each summary is based on a loss associated with a claim that closed in or prior to calendar year 2011. They are organized on the website by operation type – Major Electric Claims Summaries (1983 to 2011) and Major Natural Gas Claims Summaries (1983 to 2011). For more information, please contact Scot Macomber by e-mail or at 201.508.2739.