2nd Quarter 2017 Financial Commentary
Energy Insurance Mutual Limited ("EIM") recorded a gain on surplus of $72.3 million for the six months ended June 30, 2017 compared to $39.1 million for the same period 2016. During the first six months, EIM recorded income from underwriting of $34.0 million in 2017 compared to $3.7 million in 2016. Current year losses and expenses were favorable resulting in a combined ratio of 50.9% compared to 94.7% in 2006. The positive combined ratio is a result of favorable development on prior year claims in the general liability and directors and officers lines of business.
Income from dividends, interest and realized gains on alternative investments and sales of traditional investments was $36.5 million and $30.9 million for the six months ended June 30, 2017 and 2016, respectively. Reported investment performance experienced favorability in the first six months due to mark-to-market increases in the value of EIM’s portfolio. This resulted in other comprehensive income of $23.0 million comprised of net unrealized gains on securities of $32.1 million less reclassification adjustment for net gains realized in net income of $9.1 million, net of tax for the first six months of 2017.
Highlights from the first six months include:
Distribution of $25.0 million (an increase of $5.0 million from the prior year) paid to policyholders of record at December 31, 2016.
Policyholders’ Surplus grew to $1.1 billion, an increase of $72.3 million for the year.
Gross written premiums totaled $96.6 million and $86.6 million for the six months ended June 30, 2017 and 2016, respectively.
Total return on EIM’s investment portfolio was 4.7% for the first six months of 2017 compared to 3.6% for the same period 2016.
Membership retention of 99% was achieved in the first six months of 2017.
EIM’s return on investments of 4.7% compared to a benchmark return of 4.1%. The return is primarily a result of gains on US equities of 9.7%, Non-US equities of 13.5%, tax-exempt bonds of 2.9%, taxable bonds of 1.8% and alternative investments of 2.3%. EIM’s investment portfolio was in line with the overall benchmark for the six months ended June 30, 2017.