We are publishing our 2017 annual report this week, but want to share our top line financial results with you. The key measure of our financial strength is policyholder surplus and by year-end it grew to $1.56 billion, which is a new high for the mutual. Strong underwriting results in North America and London, combined with solid returns on our consolidated investment portfolio, made this growth possible. Gross premiums written totaled $1.35 billion, which was 9% higher than 2016, and net investment returns were significantly above our plan. The overall combined ratio for the Group, which includes our operations in North America and London, was a very favorable 91%. The new tax laws had minimal effect on our 2017 results, but we expect some benefit from them in 2018.
The AEGIS Board of Directors approved the issuance of continuity credits and other premium credits to eligible members who participated in our Excess Liability, Directors & Officers, Property and AEGIS London programs, and for the first time, expanded the premium credit program to include Excess Workers’ Compensation and Cyber Liability.
Based on the positive 2017 financial results, and recognizing that the credit programs contribute to the lowest long-term cost of risk for our members, the Board declared the following credit program pools for the 2018 – 2019 year:
Excess Liability − $17.0 million, up from $12.5 million last year
Directors & Officers − $30.3 million, maintaining the same level as last year
Property − $4.0 million, up from $2.0 million last year
Excess Workers’ Compensation − $1 million, new this year
Cyber Liability − $1 million, new this year
AEGIS London− $1 million, maintaining the same level as last year
In total, more than $54 million in continuity and other premium credits are available to eligible members for the 2018 – 2019 year, up from $46 million last year. With the addition of our new Member Loyalty Credit, depending on the level of member participation, the total credit program pool for the year could rise to as much as $65 million.
These credit programs set AEGIS apart from the commercial market because they allow members to share in the positive financial results of the company. We have, in fact, declared $1.27 billion in continuity and premium credits to eligible policyholders since the inception of these programs.
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, Property, AEGIS London, Excess Workers’ Compensation and Cyber Liability policyholders within the next few weeks. For more information, please contact George Keefe, Senior Vice President – Member Relations by e-mail or phone at 201 508 2797.
At the recent meeting of the AEGIS Board of Directors, the Board approved a new member credit program which we call the Member Loyalty Credit. Under this program, members who purchase four of these six AEGIS coverages in a given year – Excess Liability, D&O, Property, Cyber, Workers Compensation or Generation Outage – will be eligible for a Member Loyalty Credit equal to 20% of the sum of all products’ continuity and premium credits. Unlike the existing member credit programs, the Member Loyalty Credit will be paid in the form of a check, not a credit against future premiums, after the 2018 – 2019 credit period.
Loyalty is the cornerstone of our mutual relationship and we are pleased to recognize and reward our members’ loyalty with this new program. For more information, please contact George Keefe, Senior Vice President – Member Relations by e-mail or phone at 201 508 2797.
In response to member interest in having higher per loss/aggregate limits on their AEGIS policies, we are pleased to now offer the following:
Excess Liability and Directors & Officers Liability – We have increased limits to $50 million per occurrence/$100 million aggregate. We will consider $70 million per occurrence/$140 million aggregate for Excess Liability, subject to the same account-specific considerations we always factor into our underwriting process.
Property – We have increased the limits for property coverage to $250 million, or up to $450 million for certain risks through the AEGIS property consortium program, effective May 1.
Cyber Liability – Limits remain at $75 million.
These expanded limits allow AEGIS to deliver a more responsive, larger stretch of limit per occurrence and expanded aggregate limit above industry levels at an efficient price for the member that still provides improved underwriting results for AEGIS.
For more information, and to access the new higher AEGIS limits, please contact your AEGIS excess liability, D&O, property or cyber underwriter, who will be happy to discuss options and provide a quote.
Our new Contingent Outage policy offers an aggregate limit of $30 million for members who experience unplanned events (outages or derates) and are forced to purchase power back at inflated prices during periods of high demand, or experience derates during price spikes in power markets.
Our new Capacity Performance policy offers an aggregate limit up to $50 million for members who participate in the PJM Capacity Performance auction and similar markets. The policy helps offset the increasingly steep non-performance charges that are levied against a member company when it is unable to meet its auction obligations due to an unplanned event during an Emergency Event declared by the relevant market.
Both products are specifically designed by our energy property experts to help members manage the potentially significant financial losses associated with the uncertainties of today’s power generation market. For more information on these two new generation outage products, please contact Bob Finelli, Vice President – Property by e-mail or phone at 201 508 2657.
AEGIS members who place 100% of their primary property program with AEGIS will now receive our loss control services as part of the policy. AEGIS Loss Control offers a wide range of products and services which support members in their efforts to improve the safety and reliability of their systems. Our Loss Control engineers made more than 800 visits to member facilities in 2017, and helped avoid several multi-million dollar losses, which is beneficial to individual members as well as helping lower the long-term cost of risk for the membership as a whole. To learn more, please contact your AEGIS property underwriter.