President’s Commentary

Earlier this year, I shared that we had started the year off robustly from a profitability viewpoint with production moving along nicely. I also reported fairly concerning investment results. In my commentary later in the summer, I noted that we had a financially poor month in April and hinted that May was not looking much better. In fact, by the end of the second quarter we had erased the very positive start to the year and replaced it with a substantial underwriting loss, while the same time watching both our equity and fixed income investments dramatically erode.

That is the nature of PLM’s business. Our ability to succeed financially is all very dependent on shock losses (large claims). In any given period, we either make a lot of money or we lose a lot. There usually is no middle ground. July’s results were positive, and while we have not yet finalized August’s results, it appears to also be a very positive month for our underwriting results, but our investment results continue to be poor. We still have an underwriting loss and a small operating loss (after investment income) causing our policyholder surplus to be down accordingly. It looks very much like we will be playing catch up as we proceed into the end of the third quarter into the fourth quarter. Further, we are entering the heart of hurricane season, with wildfires still burning, and many areas of the country facing unique weather-related catastrophes. In the auto and general liability arena, inflation is beginning to push up settlements and claim values while juries continue to hand out record verdicts (aka nuclear verdicts).

That is why we are so focused on managing the risk associated with our company from both an underwriting and investment viewpoint. Our conservative strategy allows us to be successful both in good times and in the more difficult times, thus providing you with the peace of mind to operate your business comfortably knowing that the coverage you pay for will be ready when you need it!

Recently, we held our third insured webinar and are pleased to note that our webinars are being positively received by those making time to attend them. Our plan is to run these on a quarterly basis and will momentarily be announcing a fourth-quarter topic and date. The next one is scheduled to be held on September 27th at 3 pm and focuses on preventive maintenance, an area where we are seeing some loss activity.

We are entering the busy tradeshow season. It’s been great to be out and about visiting so many insureds and prospects on a face-to-face basis. I personally have been spending more time traveling to meet up with many of you, more than ever before.

There is a great article included in this issue by John Kennealy, our Vice President of Claims, that talks about social inflation and its potential impact on claims settlements which will eventually find their way into premiums. Please take some time to review his article paying particular attention to his comments surrounding litigation funding. He also discusses the impact inflation is having on settlement values. What he does not discuss is the impact that inflation is having on property valuations. Take some time to consider the property limits you are purchasing from PLM. Building, equipment, stock, and contents values are soaring. Please don’t overlook the amount of business interruption coverage that you’re buying and make sure that you consider adjusting that limit to reflect current business conditions. The time you want to find out that you have a deficiency in coverage is now, not after a loss has occurred.

We continue to underscore with our staff the cyber issue and are pleased that they are embracing the quarterly training that we are all required to take. Part of cyber security program includes the utilization of an outside vendor to test our safeguards. You’d be amazed at some of the efforts they put forth in their attempts to breach our systems and firewalls. While this may sound over-the-top to some, it is necessary in our business (and yours?) to ensure system availability that supports our ability to handle your business at the same time protecting the privacy of the data that we routinely collect.

In closing, I would like to take a moment to encourage you to get more actively involved in your risk management program. Invite our loss control and/or business development team to work with you to enhance your risk management efforts in your operations. Talk to us about changes you want to make to your business, any contracts you are thinking about signing, and ask about what impact that will have on your business. If you have cyber questions, call us. Both the cyber and employee practices liability programs we provide have “toolboxes” that are available to you to assist you in understanding and developing your management in these areas.

It’s not about “paying your insurance premium, and then receiving a policy”, it’s all about the value that we provide you in return for your premium dollars! I look forward to the next time our paths may cross. If you have questions or comments, please reach out to me at jsmith@plmins.com. I also still use the phone, so if you want to call, please do so at 267-825-9246.