At our January board meeting, we announced exciting news to our Board of Directors that we’d like to share with you, as well. In 2016, PLM achieved strong underwriting performance, turning a profit for the first time in a number of years as economic conditions have worked against us.
When combined with strong investment income, this fueled a surge in our policyholder surplus, which increased by over 9% to approximately $135 million. Our total admitted assets finished the year comfortably north of $500 million. Perhaps just as importantly, our independent actuaries verified that we continue to maintain a comfortable claims reserve position. We ended 2016 with a loss ratio of approximately 64% and an expense ratio of around 32%, giving us a combined ratio just over 96%.
Our investment income was solid in spite of PLM reducing investment risk early in 2016. We made the decision to change the balance of our investment portfolio to a more conservative approach by increasing the mix of fixed income instruments and reducing our marked-to-market holding while rebalancing our Master Limited Partnership portfolio to a more long-term view. This was the right decision because we were unsure of where the US economy, the presidential election and our underwriting result might end up. We also took steps to slow our ever-shortening bond portfolio by buying longer term bonds. These actions reduced the overall risk of our investment portfolio.
Policyholder “retention” in the retail/wholesale and light manufacturing classes approached 90% while heavy manufacturing was below 80%. Yet even with the slide in production for this class, we continue to be one of the largest underwriters of sawmill, pallet and other heavy wood manufacturing accounts in the United States today! New business surged in the final quarter of the year as we wrote over 550 new accounts that generated over $18 million in new business.
With that said about last year, let’s now look toward the future. We renewed our reinsurance program this past January 1, and are pleased that we continue to have a strong set of reinsurers standing behind our promise to our policyholders. January was a strong production month for PLM and we fully expect to be over target for February as well.
We are off and running at trade shows and busy visiting current and potential clients in an effort to support our desire to grow the organization this coming year. We look forward to seeing many of you at agent & broker shows. We have seen an increase in submission activity in the heavy manufacturing segment (sawmills, pallets, et al.) as some of the companies that jumped into the marketplace are repricing business or getting out. The new claims system we implemented on November 1 is running well. Over time this system will assist us in providing more detailed loss information for both our underwriting and loss control teams.
In addition, we are putting the final touches on a data breach coverage that we hope to roll out by the second quarter. At the same time, we are finalizing a number of changes to improve our ability to track loss control recommendations. We signed a deal to put the last piece of our systems overhaul in place.
All of this means we have another busy year ahead in our ongoing effort to make PLM the company of choice for insureds that operate in the wood and building material niche, as well as their brokers.
I continue to seek your feedback, as you are valuable partners to us, so if you have comments please either give me a call at 267-825-9246 or email me at jsmith@plmilm.com.