Corporate & Financial Information

Energy Insurance Mutual Limited ("EIM") recorded a gain on surplus of $31.5 million for the nine months ended September 30, 2018 compared to $110.7 million for the same period in 2017.  During the first nine months, EIM recorded income from underwriting of $12.5 million in 2018 compared to $59.2 million in 2017.  Current year losses and expenses were favorable resulting in a combined ratio of 89.3% compared to 42.9% in 2017.  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, realized gains on alternative investments and sales of traditional investments was $64.2 million and $46.7 million for the nine months ended September 30, 2018 and 2017, respectively.  Certain investment classes comprised mainly of taxable and tax-exempt bonds experienced volatility in the first nine months resulting in mark-to-market decreases in the value of EIM’s portfolio.  This resulted in an other comprehensive loss of $20.4 million comprised of net unrealized losses on securities of $2.7 million less reclassification adjustment for net gains realized in net income of $17.7 million, net of tax for the first nine months of 2018.

Highlights from the first nine months include:

• Distribution of $40.0 million (an increase of $15.0 million from the prior year) paid to policyholders of record at December 31, 2017.  Additional distribution of $25.0 million declared for policyholders of record at September 30, 2018 to be paid in November.
• Policyholders’ Surplus grew to $1.20 billion, an increase of $31.5 million for the year.
• Gross written premiums totaled $165.4 million and $159.0 million for the nine months ended September 30, 2018 and 2017, respectively.
• Membership retention of 95% was achieved in the first nine months of 2018.
• Total assets exceeded $2.0 billion as of September 30, 2018.

EIM’s return on investments of 2.33% compared to a benchmark return of 1.97%.  The return is primarily a result of gains on US equities of 11.75% and alternative investments of 5.47% offset by losses on non-US equities of -1.33%, tax-exempt bonds of -0.51% and taxable bonds of -0.29%.