Corporate & Financial Information

Energy Insurance Mutual Limited ("EIM") recorded a gain on surplus of $67.8 million for the six months ended June 30, 2019 compared to $14.5 million for the same period in 2018. During the first six months, EIM recorded a loss from underwriting of ($42.7) million in 2019 compared to income of $10.7 million in 2018. 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.

Income from dividends, interest, realized gains on equities, alternative investments and sales of traditional investments totaled $93.2 million and $32.8 million for the six months ended June 30, 2019 and 2018, respectively.

Equity investments performed well in the first six months of 2019, contributing $44.6 million to investment income due to mark-to-market increases. EIM adopted certain accounting principles during the year requiring mark-to-market changes in value on equities to now be recognized through the income statement.  In prior periods, mark-to-market valuations were recorded as a component of other comprehensive income, net of tax.  For comparative purposes, equities contributed ($7.5) million in gross mark-to-market decreases in value for the same period in 2018.

Fixed income securities also benefited from favorable market conditions that resulted in other comprehensive income of $26.5 million comprised of net unrealized gains of $27.4 million less reclassification adjustment for net gains realized in net income of $0.9 million, net of tax for the first six months of 2019.

Highlights from the first six months include:

• Distribution of $50.0 million (an increase of $10.0 million from the prior year) paid to policyholders of record at December 31, 2018.
• Policyholders’ Surplus grew to $1.2 billion, an increase of $67.8 million for the year.
• Gross written premiums totaled $113.4 million and $91.1 million for the six months ended June 30, 2019 and 2018, respectively.
• Membership retention of 100% was achieved in the first six months of 2019.

EIM’s return on investments of 7.95% compared to a benchmark return of 7.88%.  The favorable returns on core fixed income securities contributed to the returns in excess of benchmark.  The return is a result of gains on US equities of 18.83%, international equities of 12.82%, alternative investments of 3.86%, tax-exempt bonds of 4.87% and taxable bonds of 5.04%.