H a r d W o r k Edition

Transcription

1 Annual Report Highest in Customer Satisfaction with the Auto Insurance Claims Experience, Five Years in a Row -- J.D. Power and Associates H a r d W o r k Edition Auto-Owners Insurance ranks highest among auto insurance providers in the J.D. Power and Associates Auto Claims Studies SM study based on 12,508 total responses, ranking 26 insurance providers. Excludes those with claims only for glass/windshield, theft/stolen, roadside assistance or bodily injury claims. Proprietary results based on experiences and perceptions of consumers surveyed November 2011-September Your experiences may vary. Visit jdpower.com.

2 COMMENTS FROM J. F. Harrold, Chairman & CEO, AUTO-OWNERS INSURANCE GROUP As far as years go, 2012 was a welcome one for our company from many aspects. Though we had one of our highest claim totals in the last 10 years, we still had plenty of opportunity to follow our mission and assist in the restoration of lives and property. And as we did so, we generated our first underwriting profit since In all divisions of the company we continued our focus on a Relentless Pursuit of Excellence. We know we have to improve daily. Some of this focus brought challenges both internally and to our customers, who recognized the need for such changes and have verbalized their support. We appreciate it. Premium growth was once again positive, increasing by 4.9% or $226 million. Total property and casualty premium now stands at almost $4.9 billion. The Life Company had a strong year, generating income exceeding $250 million. When combined, the group premium exceeds $5 billion and continues to grow. At year-end, we are proud to be partnering with almost 6,200 dedicated, community-centered independent insurance agencies. I also thank the 4,000-plus dedicated men and women of AutoOwners who, through their constant commitment and support, help us achieve recognition such as that received from J.D. Power and Associates in its 2012 Auto Claims Satisfaction Study. For the fifth consecutive year we were ranked as Highest in Customer Satisfaction with the Auto Insurance Claims Experience. Recognition such as this only occurs with a great team effort. Our people make us who we are! A.M. Best, the leading source for insurance company ratings, has once again given us its highest rating, A++ (Superior), recognizing our strong financial stability and performance. This is the 20th consecutive year they have awarded this rating (A++) among the industry, and our 20th consecutive year to receive it. We were also ranked among the Fortune 500 in 2012 for the 10th consecutive year at 429. We are proud to be ranked among this elite group of businesses. Finally, I wish to acknowledge the continued support and dedication of the independent agents we serve across our operating area. They are the true providers of professional services and guidance to millions of customers in the selection of coverages, the servicing of accounts and at time of loss. Our goal is to be the best provider of products and services through the independent agency system. You have our commitment we will work diligently toward that goal. Jeffrey F. Harrold, Chairman & CEO

3 FINANCIAL REPORT NET WRITTEN PREMIUM (SALES) $5,247,805, ASSETS Life Company Bonds Stocks Mortgages Real Estate Owned Premiums Receivable Other Assets Total Assets $2,715,998, ,299, ,636, ,664,026 38,067, ,469,441 $3,297,135,135 Property & Casualty Consolidated $9,729,765,524 2,300,145,133 57,894, ,815, ,843, ,853,424 $13,720,317, $1,807,207,873 $1,280,279, $1,038,615,257 $16,739,024, ,648,108, ,552,193 3,350,787,937 2,313,129,203 1,465,047,096 CAPITAL Funds for the protection of policyholders Total Liabilities and Capital $3,429,404, COMBINED ASSETS LIABILITIES Claim and Policy Reserves Unearned Premiums Other Liabilities $4,527,366, ,474,483 $3,297,135,135 6,591,353,660 $13,720,317,896 $13,667,502, $8,175,172,768 $5,530,653,177 $3,342,851, $1,951,648,723

4 SUMMARY OF COMBINED ASSETS Auto-Owners is unwavering in its commitment to maintaining a high-quality investment portfolio. We remain loyal to the proven investment principles that have guided us along a steady path throughout the years. Depicted is a breakdown of the combined assets of the Auto-Owners Insurance Group as of December 31, The combination of U.S. Government bonds and investment-grade bonds represents 80.52% of assets. Non-investment-grade bonds represent only 0.28% of assets. We know full well the challenges that can arise when unfavorable and unforeseen events arise. Our goal is to smooth these challenges out as we complete our mission of putting lives and property back together after such an event. Our Safe. Sound. Secure. investment philosophy will assure you that we have the f inancial capacity to be there when you need us most. Comments from J. F. Harrold, Chairman & CEO, Auto-Owners Insurance Group Combined Assets as of December 31, 2012 Cash & Short-Term Investments U.S. Government Bonds Non-Investment-Grade Bonds Stocks Real Estate Owned & Mortgages % Investment-Grade Bonds Miscellaneous Assets 100 % 1.35 %.64 % %.28 % % 3.29 %

5 PROFIT & LOSS STATEMENT REVENUE Life Company Property & Casualty Group Net Premiums Earned 250,093,200 4,890,095,195 Net Investment Income 124,518, ,431,475 Total Income Earned $ 374,612,042 $ 5,339,526,670 EXPENSES Claims- and Policy-Related Expenses 298,997,879 3,406,983,271 Service and Administrative Expenses 36,761,760 1,404,521,784 Total Expenses $ 335,759,639 $ 4,811,505,055 Net Income Before Income Taxes 38,852, ,021,615 Income Tax Expense 12,625, ,622,578 NET INCOME $ 26,226,650 $ 409,399,037

6 YEAR IN REVIEW Auto-Owners Companies Earn A.M. Best Superior Ratings Auto-Owners property and casualty companies are rated A++ (Superior) by A.M. Best Company, a nationally recognized independent insurance company rating organization. Auto-Owners Life Insurance Company is rated A+ (Superior) by A.M. Best. According to A.M. Best Company, the rating is based on Auto-Owners Insurance Group s superior capitalization, historical trend of solid operating income, experienced management team, blend of personal and commercial product offerings and long-standing agency relationships. In addition, the group has strong risk management techniques and a well-established market position. A.M. Best also praised the Life Company: The ratings of Auto-Owners Life recognize its steady growth of capital and surplus, strong risk-adjusted capitalization, strong regional market presence and strategic value to the group. In A.M. Best s opinion, companies in the A++ and A+ classifications their highest classifications have a superior ability to meet ongoing obligations to policyholders. Auto-Owners Group has been rated A++ since 1992, and the Life Company has been rated A+ since Auto-Owners Companies Earn Top Ratings from Weiss Ratings Auto-Owners Insurance Company, Auto-Owners Life Insurance Company, Owners Insurance Company and Property-Owners Insurance Company were all rated A Excellent by Weiss Ratings, Inc. Home-Owners Insurance Company and Southern-Owners Insurance Company were both rated A- Excellent. According to Weiss, companies in these categories offer excellent financial security. Auto-Owners Insurance Company and Owners Insurance Company both earned A ratings and ranked among the top nine companies in the nation for auto insurance, and among the top four in the nation for business insurance. Auto-Owners Insurance Company also earned an A rating and ranked among the top eight companies in the nation for homeowners insurance. Home-Owners Insurance Company earned A- ratings in auto, business and homeowners insurance. Auto-Owners Life Insurance Company was ranked in the top 15 in the country for life, annuity and health insurance. Auto-Owners Insurance s Property & Casualty Group Companies Earn Top Marks from Demotech, Inc. Auto-Owners Insurance Company, Owners Insurance Company, Property-Owners Insurance Company, Home- Owners Insurance Company and Southern-Owners Insurance Company all earned Demotech s Financial Stability Rating A (Unsurpassed) for The A rating recognizes unsurpassed financial stability, achieved by only the top companies evaluated. Demotech, Inc. is a financial analysis firm and has a proven track record of predicting financial stability in the insurance industry. Ward Financial Group Ranks Auto-Owners Life Insurance Company Among Its Top 50 Auto-Owners Life Insurance Company was named to the 2012 Ward s 50 Benchmark Group for achieving outstanding financial results over the past five years ( ). This marks the 11 th straight year Auto-Owners Life Insurance Company has been ranked among Ward s top life and health companies. The objectives of the analysis are to recognize the 50 companies that have excelled at balancing safety, consistency and performance over five years, and to then benchmark their performance with the industry overall. Ward Financial Group is a Cincinnati-based management consulting and investment banking firm specializing in the insurance industry, and is recognized by Fortune magazine, The New York Times, Reuters news service and others as an authoritative source for insurance industry financial analysis. Auto-Owners Life Insurance Company Partners With Software Company Auto-Owners Life Insurance Company selected a third-party vendor s software as its end-to-end system for life policy issuance, administration, billing, claims and reinsurance. This will help increase speed to market, allowing implementation of new products and enhancements faster, without conventional programming. This new platform will also help boost automation and process efficiencies to enhance responsiveness for clients. New Facilities Completed in 2012 New Offices Auto-Owners Insurance Group opened three new branch offices in 2012: a claims-only branch in Southeast Ohio (New Albany); and workers compensation claims branches in Charlotte, North Carolina, and Marion, Indiana. The latter two branches were added to both the existing Charlotte and Marion regional offices. New Construction Completed Two new offices were completed in 2012, both replacing existing branch offices: Tallahassee, Florida, and Lansing, Michigan. The Tallahassee office is 18,608 square feet. In Lansing, renovation was completed on a 143,758-square-foot building, known as the South Campus (pictured) due to its proximity to Auto-Owners Insurance Company s headquarters. The South Campus is home to the Eastern and Western Michigan regional operations and the Michigan PIP claims branches. Construction also began on updating the home office façade.

7 COMPANIES REPORTS Auto-Owners Insurance Group enjoyed impressive premium growth in 2012 and continues to be recognized for exceptional financial strength and stability among the nation s largest insurers. Comprising five property and casualty companies and one life/health/annuity insurer, the Group had combined assets of $16,739,024,430 at year-end Net written premiums totaled $5,247,805,792, up by $75 million from the previous year. Almost 4.8 million personal and commercial insurance policies were in force at year-end. One hundred and seventeen underwriting, claims and marketing offices serve customers in the Group s 26-state marketing territories. Auto-Owners Insurance Company (established 1916) is represented by approximately 37,000 agents in more than 6,000 agencies and is the Group s largest insurer. This mutual insurance company ranks among the leading property and casualty insurers in the United States with recorded net written premiums of $2,230,265,979 at the end of 2012, an increase of 2.6% over the previous year. Auto-Owners Life Insurance Company (established 1966) experienced another great year; applications received exceeded 42,000. The Company recorded $30,257,152,488 of life insurance in force at year-end, an increase of 5.1% over the previous year. In addition, assets were up 6.1% to $3,297,135,135, keeping this stock Company among the top 100 life insurers in the United States. Owners Insurance Company (established 1975) recorded another strong year with written premiums of $1,518,658,601 at year-end 2012, an increase of 6.9% over the previous year. This stock company is the second-largest property and casualty insurer in the Auto-Owners Insurance Group and operates in 25 of the 26 states that make up the Auto-Owners regional market. Home-Owners Insurance Company (established 1973) recorded written premiums of $980,900,614 at year-end 2012, an increase of 6.4% over the previous year. This property and casualty stock company writes business primarily in Michigan and Ohio. Property-Owners Insurance Company (established 1976) recorded written premiums of $63,522,763 in 2012, an increase of 0.4% over the previous year. This stock insurer writes property and casualty products in Indiana and Michigan. Southern-Owners Insurance Company (established 1995) recorded written premiums of $204,364,636 at year-end, an increase of 9.6% over the previous year. This stock insurer writes property and casualty products in Florida.

8 AUTO-OWNERS HOME-OWNERS AUTO-OWNERS LIFE INSURANCE COMPANY INSURANCE COMPANY INSURANCE COMPANY Lansing, Michigan Lansing, Michigan Lansing, Michigan PROPERTY-OWNERS OWNERS SOUTHERN-OWNERS INSURANCE COMPANY INSURANCE COMPANY INSURANCE COMPANY Marion, Indiana Lima, Ohio Lansing, Michigan Administrative offices of all companies are located at 6101 Anacapri Blvd., Lansing, MI (02-13)