Corporate & Financial Information

1st Quarter 2020 Financial Commentary

Energy Insurance Mutual Limited ("EIM") recorded a loss on surplus of ($79.7) million for the three months ended March 31, 2020 compared to a gain of $58.0 million for the same period in 2019. EIM recorded a loss from underwriting of ($1.0) million compared to ($11.2) million in the prior year. Current year underwriting results were impacted by unfavorable loss development on prior year claims in the general liability and director and officers lines of business.

Investment loss of ($100.6) million for the first quarter of 2020 compared to income of $83.8 million for the same period in 2019. Current year investment results were impacted by market volatility related to the COVID-19 pandemic driven unrealized losses on investments. Mark-to-market decreases were partially offset by income from interest and dividends of $10.2 million.

Highlights from 2020 include:

• Distribution of $50.0 million paid to members of record at December 31, 2019.
• Policyholders’ Surplus of $1.1billion, a decrease of $79.7 million or -6.9% for the year.
• Combined ratio of 102.0% for the first quarter 2020 as compared to 131.6% for the same period prior year.
• Membership retention of 100% was achieved in the first three months of 2020.

EIM’s return on investments of -6.12% compared to a benchmark return of -5.54%.  The return is a result of losses on US equities of -20.37%, international equities of -23.93%, alternative investment securities of -4.53% and a gain on fixed income securities of 0.10%.

Overall, EIM remains in a strong position both operationally and financially, despite the economic impact of the COVID-19 pandemic.  Operationally, EIM has experienced very little disruption from all business units.  Financially, EIM is well within the parameters set out in its current risk tolerance statement of being able to withstand a 1/200 catastrophic event and maintain an A rating by AM Best.