President’s Letter

With the start of a new year, I thought it would be appropriate to provide an update on our 2021 financial results and talk about some of the opportunities and challenges we see before us in 2022.

PLM enjoyed a record-breaking year from a premium production standpoint. We stretched our initial target of $295 million to $302 million, and produced more than $304 million in premiums. It is an impressive result that was driven by excellent renewal retention and outstanding new business flow. We believe our long-term commitment to providing a superior team to service our customers and create enhanced value for their premium dollars has been apparent this past year.

When all is said and done, 2021 should produce not only a net operating profit for PLM, but record-breaking policyholder surplus growth.

What is particularly significant about this accomplishment is that we came out on top despite suffering one of the worst years on record from a catastrophic loss viewpoint – a year that included last winter’s deep-freeze and Hurricane Ida. That said, we were spared the typical large fire losses that are usually associated with the niche. These poor results on the property side were coupled with continuing problems (although not to the same extent as in 2020) from a commercial auto perspective. These losses were partially offset by improvement in the general liability line of business.

Challenges within the Reinsurance Market

On the subject of reinsurance, we have placed our 2022 reinsurance programs. Unfortunately, the tightening reinsurance marketplace and the losses of 2021 contributed to rising costs. The reinsurance marketplace was found to be much more expensive this renewal cycle than we’ve seen in many years. Reinsurance costs were up across the board for not only PLM, but for almost all insurance companies.

Reinsurers were hammered by large property losses inside the wood niche (although PLM did not contribute to these losses), including horrible weather-related losses throughout the country including those caused by wildfire, tornadoes, winter freezes, hurricanes, straight-line wind, and just about every other type of natural weather-related disaster imaginable. What’s particularly troublesome about these events is that they are occurring outside their historic venues, making them even more difficult to predict. Reinsurers were also forced to deal with “social inflation,” which has been driving auto general liability and umbrella verdicts upward along with other claims-related inflation (medical, auto parts, building materials, etc.)

Investing in Our Team

While we have continued to manage our expenses aggressively, I’m pleased to say we did invest quite a bit in employee development and ongoing system-related enhancements.

We, like many of you, are dealing with the Great Resignation. We are viewing it as an opportunity to enhance the quality of our already very capable staff. We continue to invest heavily in our employees’ professional and business skills, as well as their technical knowledge. This year, we enjoyed tremendous success in enhancing the capabilities and quality of our team. Like any team, you are only as good as the team members that execute your strategy every day. From that perspective, the PLM team today is without question leading when it comes to providing solutions and service to businesses operating in the wood niche.

We look very optimistically into 2022. We will not rest on our laurels. We will work hard to continually improve our capabilities to assist you and your clients in enhancing risk management in their business, and, just as importantly, to confirm the wisdom of their decision to entrust PLM with some of or all their property casualty insurance needs and your decision to partner with us.

What’s Next?

We expect to introduce a new billing invoice momentarily. We are starting to issue payments via ACH and that effort will be broadened. We hope to roll out a product focused more squarely on the hardware aspect of our niche. We will revamp Anytime Risk Management (ARM) to enhance its utilization, while increasing the frequency of webinars to assist you and your clients in managing the risk associated with their business. Furthermore, our net promoter score program will be rolled out to the employee level in 2022 giving you the opportunity to evaluate the quality of any PLM team members working with you while giving PLM leadership critical feedback on our performance.

Our agency, ABM will come into its own as we continue to strive to provide workers’ compensation solutions to our insureds while we also investigate how we can further broaden our risk appetite.

Finally, expect to see us at more shows than ever before to carry on those relationships that we have created over the years.

Premium-wise, we expect to continue to grow our book of business in 2022, and with that we expect enhanced profitability and policyholder surplus.

Twenty plus years ago, we used the tagline, “wood it’s all we do!”. Two decades have come and gone (along with a lot of competitors who thought they could do it better) since we made that commitment. Today, I would underscore that tagline and add the phrase and “it is all we are going to do!”

It’s nice to be back out on the road. I look forward to the next time our paths may cross. In the meantime, if you have any thoughts or comments, please reach out to me accordingly, at either jsmith@plmins.com or at 267-825-9246.