KNOWLEDGE IN MOTION A N N U A L R E P O R T

Transcription

1 KNOWLEDGE IN MOTION ANNUAL REPORT 2013

2 A LETTER FROM THE CEO 2013 Management Team Senior Management Gregory A. Burton, President & CEO T.J. Obrokta, Jr., COO & General Counsel J. Christopher Howat, Senior Vice President & CFO Jeff Benintendi, Senior Vice President, Strategic Business Group Tony Laska, Senior Vice President & CIO Martin Skip Langlois, Director of Internal Audit Board of Directors Thomas V. Flaherty, Chairman W. Marston Becker Governor W. Gaston Caperton, III David Rader Stephen Roberts Steven F. White Gregory A. Burton T.J. Obrokta, Jr.

3 Gregory A. Burton President and CEO In 2006, BrickStreet Mutual Insurance was borne from challenges that had developed over many years of a failing workers compensation system. BrickStreet s leading team of experts had a vision to find a solution that would alleviate challenges, overcome adversity, and provide workers compensation programs and services that made good business sense for our policyholders. I m proud to say that with the support of our board, sound business decisions by our executive management team, and hard work and dedication of our staff have led to another successful year of business. BrickStreet reached many accomplishments in The company exceeded its financial goals and received an excellent rating by A.M. Best in terms of financial stability and creditworthiness, among other criteria. BrickStreet and its newly formed subsidiary company, NorthStone, were reaffirmed with an A- (Excellent) rating. This rating is evidence of BrickStreet s strength and viability as a long-term insurance provider and positions us competitively in an ever-growing marketplace. BrickStreet also expanded its business footprint by adding companies to the BrickStreet Insurance Group, SummitPoint and PinnaclePoint. These subsidiary companies will allow for a more flexible, tiered pricing structure, which leverages BrickStreet as a continued leading provider of workers compensation insurance. We are currently licensing SummitPoint and PinnaclePoint, and look forward to a successful year for all entities. In addition to exceeding our financial goals, we were honored to appoint former West Virginia Governor Gaston Caperton to BrickStreet s Board of Directors. His leadership and extensive experience in the banking, finance and insurance industries made him a perfect fit for BrickStreet s board. We also enhanced our superior service by stabilizing and improving our technology, including our PowerSuite application and an upgrade to Filenet. We also received a rate lift for our book of business. These accomplishments would not have been possible without the collaborative efforts and hard work of our employees, agency partners and policyholders. BrickStreet s ongoing expansion and growth will continue in We work to ensure our infrastructure is in place to manage the company s progressive growth, enabling our company to remain competitive and profitable. Our senior management team has set great expectations and goals, both within our corporate headquarters and beyond. We will continue our system and production support, placing a strong emphasis on pricing flexibility, and pursue additional states where we can write new business within the BrickStreet 360 business model. Overall, we remain focused on our core business philosophy and successful business model to assist us in expanding the BrickStreet footprint. We will continue working to ensure we are competitive and profitable throughout 2014 and for years to come. 1

4 BRICKSTREET S VISION Iowa Projected to accept submissions staggered over 2015 and 2016 Missouri Projected to accept submissions staggered over 2015 and 2016 Georgia Kansas Projected to accept submissions staggered over 2015 and

5 Company Acquisitions Part of the Vision for CONTINUED GROWTH In 2013, BrickStreet Insurance added two newly formed subsidiary companies under the BrickStreet Insurance Group. SummitPoint and PinnaclePoint insurance companies, along with NorthStone Insurance Company, which was acquired by BrickStreet in late 2012, will enable BrickStreet to better serve its policyholders and be more attractive to prospective customers. Each of the new BrickStreet Insurance Group companies provides more pricing flexibility that complements the workers compensation insurance services that BrickStreet currently offers as part of our 360 business model, said Greg Burton, BrickStreet s president and CEO. PinnaclePoint and SummitPoint insurance companies, which are currently in the licensing process, were formed and capitalized in early 2013, specifically as part of BrickStreet s development plan to help increase rate flexibility overall. PinnaclePoint will offer coverage under the non-standard rate tier. SummitPoint will offer the preferred rate tier. Both of these companies will help BrickStreet remain competitive in the insurance sector of the business marketplace. NorthStone Insurance, formerly PennCommonwealth Casualty of America Corporation, offers the standard-plus tier rate, which will help leverage BrickStreet as a viable option for workers compensation insurance. The Pennsylvania-based company continues to provide insurance coverage in Pennsylvania, but has since expanded into West Virginia and Virginia as a part of the BrickStreet Insurance Group. The future looks bright for BrickStreet Insurance; we are confident that these companies will help stabilize BrickStreet s financial outlook for years to come. - Greg Burton, President & CEO 3

6 A- A.M. BEST RATING A- (Excellent) Once again, BrickStreet received great news in late The company and its subsidiary NorthStone Insurance Company were reaffirmed with an A- (Excellent) rating by A.M. Best, a fullservice credit rating organization that serves the financial services industry and particularly the insurance sector. Newly formed subsidiaries SummitPoint Insurance Company and PinnaclePoint Insurance Company also were assigned A- (Excellent) ratings. All four of the BrickStreet Insurance Group companies were given a stable outlook. We are honored to have such an excellent rating and positive outlook on the future of our company. We strive to continue this trend as we move forward. 4

7 This is the third consecutive year BrickStreet has received this rating; the second year for NorthStone Insurance, which was acquired in 2012; and the first for SummitPoint and PinnaclePoint insurance companies, both of which were formed in The strong rating from A.M. Best, as well as the addition of the company s new subsidiaries, further allows BrickStreet to continue to better serve our customers needs, Greg Burton, president and CEO, said. We are honored to have such an excellent rating and positive outlook on the future of our company. We strive to continue this trend as we move forward. Ratings by A.M. Best are based on several criteria including risk-adjusted capitalization, underwriting and operating performances. Policyholders and shareholders value A.M. Best s ratings and analyses to help access financial strength and creditworthiness of risk-bearing entities and investment vehicles. Burton said the ratings demonstrate BrickStreet s favorable loss reserve development and competitive rate flexibility afforded by tiers in multiple states. The support and flexibility the new subsidiaries received from BrickStreet also positively contributed to the newly assigned ratings. The A.M. Best rating BrickStreet received continues to place the company among the most financially secure insurance providers in the United States and helps demonstrate the company s ability to meet ongoing insurance needs. This recognition, once again, is evidence of our strength and viability as a long-term workers compensation insurance provider. I am proud of this achievement and excited for the future in 2014 and beyond. The hard work and dedication of all our employees, agent partners, vendors and policyholders are what allow us to continue to grow and be successful. I thank them for their continued support, Burton said. 5

8 360 FOCUS Putting Principles Before Products Since launching BrickStreet 360 several years ago, we have continued to refine our comprehensive team services and superior customer service. This business philosophy is unique; it distinguishes us from our competition and positions us to successfully compete with some of the top names in the insurance industry. In 2013 we reviewed the BrickStreet 360 concept; we wanted to verify that the focus of this philosophy continues to align well with the goals and objectives of the company. What we found only confirmed our beliefs that our hands-on approach to creating individualized solutions continues to drive down our policyholders total cost of risk. To better explain the services we offer, we have added to our BrickStreet 360 message by outlining the four ways we remain true to our strategic vision: impact, alignment, commitment and insight. 6

9 IMPACT Through our premier team structure, services and technology, we focus on keeping your employees safe by fundamentally improving your business culture. We work with your team to eliminate injuries and mitigate risk to positively impact your bottom line. ALIGNMENT We have aligned the goals of our organization with the outcomes that will lower your total cost of risk. We provide a team of specialists with extensive expertise based on your industry and geographical location in order to provide unique solutions tailored specifically to meet your business needs. INSIGHT BrickStreet 360 revolutionizes workers compensation insurance by creating proactive, customized solutions that achieve results. Planning is critical in order to drive change, keep your business moving and reduce costs. COMMITMENT Your BrickStreet team of experts is committed to your business and your employees. This team is dedicated to establishing a zero-accident culture for your business, providing you with one-on-one relationships and a single point of contact. 7

10 PROVEN RESULTS We are continuously updating our technology and resources, and with these advancements we now have a better ability to track outcomes. This further demonstrates our commitment to providing policyholders with quality workers compensation insurance services through our proven 360 business approach. We d like to share some of these results with you. 8 76% 87% 97% Our aggressive and hands-on pharmaceutical management program helps control cost, monitor utilization and prevent addiction. As a result, BrickStreet s pharmacy cost is only 4.2 percent of our total medical cost, which is 76 percent lower than the industry average. 87 percent of our policyholders choose to renew their policies with BrickStreet. We close 97 percent of all claims within 18 months.

11 25% 15% Our policyholders have seen the frequency of their lost time claims drop by 25 percent over the last three years. Our policyholders have seen a 15 percent drop in the number of days injured workers receive temporary total disability payments over the last three years. 9

12 EXPANDING THE FOOTPRINT Charlotte, North Carolina Naperville, Illinois 10

13 Charleston, West Virginia The BrickStreet 360 business model is our innovative and distinctive approach to workers compensation insurance. Our integrated business teams set us apart in the industry and offer our agents and policyholders excellent service and customized solutions. We take strides every day to strengthen our approach and enhance our unrivaled dedication to service excellence. As our successes build, so will those of our policyholders due to our quality insurance services that help minimize risk and keep workplaces and workforces safer. Core values including impact, insight, alignment and commitment, help to build the foundation of the company s continued successes. BrickStreet continues to remain true to the strategic vision of becoming a regional workers compensation carrier, while never forgetting its West Virginia roots. The continued success of the company is rooted in the BrickStreet 360 philosophy, which ensures exceptional customer service and solutions to policyholders. At year-end 2013, BrickStreet is now licensed and writing workers compensation insurance in seven states West Virginia, Illinois, Virginia, Pennsylvania, Kentucky, Indiana and North Carolina. The company is working to add several states to its business footprint and is projecting to accept insurance submissions from Tennessee and South Carolina in Future expansion includes Maryland and Missouri, as well as Washington, D.C. 11

14 ADMITTED ASSETS, LIABILITIES & SURPLUS (For all BrickStreet companies, amounts in millions) Cash and invested assets $1,673.7 $1,559.4 $1,459.8 $1,375.4 $1,298.5 Other assets Total assets $1,859.0 $1,725.5 $1,575.1 $1,499.3 $1,448.4 Loss and LAE reserves 1, Unearned premiums Other liabilities Total liabilites 1, , , , ,053.8 Surplus note Surplus note adjustments Gross paid in & contributed surplus Other surplus Total policyholders surplus Total liabilities and surplus $ 1,859.0 $1,725.5 $1,575.1 $1,499.3 $1,

15 STATEMENT OF OPERATIONS (For all BrickStreet companies, amounts in millions) Net written premium $326.5 $295.0 $253.1 $244.3 $315.8 Earned premium Loss and LAE expense Underwriting expense Underwriting gain (loss) (10.6) Investment & other income Net income before taxes Income taxes Net income Loss and LAE ratio 75.1% 64.8% 73.9% 77.7% 82.2% Underwriting ratio 22.2% 31.8% 25.0% 22.5% 22.4% Combined Ratio 97.3% 96.6% 99.0% 100.2% 104.6% The above information is a summary of the annual statements filed with the West Virginia Office of the Insurance Commissioner. A copy of the complete annual statements and/or audited statements for the past two years can be downloaded from the BrickStreet website: 13

16 400 Quarrier Street, Charleston, West Virginia // // //