Numbers prove insurance company is providing value, chairman says
Madison, Wis. (March 4, 2003) — Bolstered by an all-time high in customer retention, the American Family Insurance Group of companies increased its policy count by 8.4 percent last year, the Madison-based insurer announced today.
The increase in growth - which reflects selling new policies and retaining current customers - was one of several achievements reported at American Family's annual policyholder meeting. But the company, like other businesses and individuals, was also hurt by continued volatility in the stock market.
"The good news is results from our insurance business operations - group revenues compared to total costs - improved substantially to a $169.5 million gain compared to a $301.2 million loss the previous year," said David R. Anderson, president and chief operating officer.
The improvement was due to multiple factors. "We made good improvement in the profitability of our auto and homeowners lines, and continued to maintain an excellent expense ratio compared to our peer companies, which indicates we are operating efficiently," Anderson said.
In addition, American Family's storm and other catastrophe losses were in line with projections, with payments of $309.3 million. That compares to catastrophe losses of $834.9 million in 2001, which was easily a company record.
Group revenue for the year exceeded $5.3 billion, a jump of 12.6 percent from 2001. The company's assets rose to $10.8 billion, an increase of 5.5 percent. Life insurance in force rose to $61.3 billion from $56.9 billion.
Net income for American Family reached nearly $58.2 million last year, which is down from $100.4 million in 2001. The decrease is primarily due to a reduction in realized gains/losses on American Family's stock portfolio from a $395 million gain in 2001 to a $162.4 million loss in 2002. The vast majority of the company's investments for operations are in bonds, real estate and other non-equity investments.
The significant improvement in the gain from operations was more than offset by the realized and unrealized losses on the stock portfolio. The net result was a $158 million decrease in policyholder equity.
"Our organization remains in very strong and stable financial shape, with policyholder equity of more than $3.1 billion," said Harvey R. Pierce, chairman and chief executive officer.
"We're particularly proud of our significant improvement in customer retention," said Pierce, noting it now stands at its highest level since year-end 1994. "It's a reliable indication that we are providing value for our policyholders. And it's a direct reflection of all the excellent work by our agents and employees in providing the high-level of service that our policyholders expect.
"When you look at 2002, we set the stage for better results in the next two years. Our very strong growth in new policies and our good customer retention form a solid base for the future. We opened new markets in Idaho and Utah and we have more on the drawing board."
Here are the consolidated highlights of the group's 2002 GAAP financial report (in thousands, except for individual life insurance in force):
|Life Insurance in Force||$61.3 billion||$56.9 billion||$53.1 billion|
American Family offers auto, homeowners, life, health, commercial and farm/ranch insurance, investment products and consumer loans in 17 states. The company employs 7,748 people and sells its products through 3,912 independent contractor exclusive agents.
American Family was founded in 1927 and is the nation's 4th largest mutual property/casualty insurance company and 19th largest insurance company group.