Corporate & Financial Information

3rd Quarter 2020 Financial Commentary

Energy Insurance Mutual Limited ("EIM") recorded a gain on surplus of $22.4 million for the nine months ended September 30, 2020 compared to $40.1 million for the same period in 2019. EIM recorded a loss from underwriting of ($24.2) million compared to ($79.4) 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.

EIM had investment income of $40.9 million for the first nine months of 2020 compared to $152.9 million for the same period in 2019. Current year investment results were impacted by market volatility related to the impact of COVID-19 on the overall global economy.

Highlights from 2020 include:

• Distribution of $50.0 million paid in March 2020 to members of record at December 31, 2019.
• Policyholders’ Surplus of $1.2 billion, an increase of $22.4 million or 1.9% for the year.
• Combined ratio of 115.5% for the first nine months 2020 as compared to 165.3% for the same period prior year.
• Membership retention of 100% was achieved in the first nine months of 2020.

EIM’s return on investments of 2.90% compared to a benchmark return of 3.24%. The return is a result of gains on fixed income securities of 4.53%, US equities of 4.19%, alternative investment securities of 0.41% and losses on international equities of -7.89%. Differences between the benchmark and actual return were related to significant volatility resulting from the economic impact caused by the COVID-19 pandemic.

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 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.