Loudoun Mutual's 166th Year of Service to Our Policyholders

To Our Policyholders and Friends:

2015 was Loudoun Mutual's 166th year of honorable business growth, made possible by policyholder confidence and good will. The phrase "honorable business growth, made possible by policyholder confidence and goodwill" was used by former Board Chair, Mr. Wilbur Hall over 60 years ago to begin his report to the policyholders. And with the retirement of John Clemens in 2015 the company's direct link to Wilbur Hall was broken. John started his insurance career with Loudoun Mutual in 1959. He served as the President/CEO of Loudoun Mutual from 1994 till 2004. Most recently he was a director of the company. We are thankful for John's dedicated service to the policyholders and grateful that during his tenure with the company he nurtured Loudoun Mutual's guiding principle of doing business honorably to maintain policyholders' confidence and goodwill.

We are a mutual insurance company, owned by and operated for the benefit of our policyholders. We are focused on earning and maintaining our policyholders' confidence and goodwill over the long term rather than worrying about meeting quarterly earnings targets. Loudoun Mutual exists to pay policyholders' claims rather than return profits to stockholders. Despite another year of very heavy claims activity due to freezing and fires, in 2015 Loudoun Mutual was still able to strengthen policyholder financial security. Our 2015 financial results build on a 10 year trend of increasing company and policyholder financial security over the long term. Because of Loudoun Mutual's consistently good results the company was recognized by Conning and Company as one of the top 20 personal lines insurance carriers in the United States for growth and profitability. As a result of Loudoun Mutual's continued strong financial performance and because we are owned and operated for the benefit of our policyholders, in 2016 we will be returning over $1,000,000 to our policyholders in the form of loyal policyholder discounts.

As I say every year at the end of my report - to our existing policyholders - THANK YOU! We sincerely appreciate your past business and we pledge to continue to work to honorably earn your confidence and goodwill. We encourage you to contact your Loudoun Mutual agent to have your policy reviewed. It is important to remember to have your insurance policy checked on a regular basis, to make sure your coverages are meeting your needs and you are getting the best value for your premium dollar.

If you are a new policyholder to Loudoun Mutual - WELCOME! We hope to win your long term confidence and goodwill by honorably meeting your insurance needs and demonstrating the long term value and security of placing your insurance with a mutual company.

Just as a reminder, if you are a policyholder of Loudoun Mutual, you are more than just a business client. You are a member of the company! Thank you for trusting us with your insurance needs.

Christopher G. Shipe
President

Loudoun Mutual 166th Annual Report

ADMITTED ASSETS
2013
2014
2015
Bonds
$ 36,823,103
$ 44,655,460
$ 44,867,725
Common Stocks/Mutual Funds
16,611,647
17,638,134
17,794,853
Cash/Cash Equivalents
5,467,874
4,607,980
8,403,816
Premiums Receivable
4,415,346
5,199,733
5,853,644
Reinsurance Recoverable
288,069
170,355
84,814
Accrued Interest and Dividends
306,093
314,231
329,543
Deferred Tax Asset/Income Tax Refund
170,033
500,935
1,662,084
Virginia Guaranty Association Pre-Paid
16,316
3,098
1,372
Land, Buildings, Equipment, Misc.
$ 891,436
$ 909,895
$ 809,154
Total Admitted Assets
$ 64,989,917
$ 73,999,821
$ 79,807,005

LIABILITIES AND POLICY SURPLUS HOLDERS

Unearned Premiums
$ 19,073,321
$ 22,224,168
$ 24,879,278
Unpaid Losses and Adjustment Expense
2,844,275
4,334,450
4,061,077
Reinsurance Payable
368,717
423,891
730,495
Commissions Payable
1,472,031
1,750,160
2,067,394
Premiums Paid in Advance
1,230,865
1,368.838
1,470,770
Other Liabilities
708,719
564,824
690,110
Federal Income Tax Payable
500,000
250,000
593,717
Total Liabilities
$ 26,197,928
$ 30,916,331
$ 34,492,841
Policyholder Security Account
$ 38,791,989
$ 43,083,490
$ 45,314,164
Total Liabilities and Policyholder Surplus
$ 64,989,917
$ 73,999,821
$ 79,807,005

UNDERWRITING INCOME

Net Premiums Earned
$ 30,433,616
$ 35,496,032
$ 40,102,989
Losses Incurred
10,748,927
15,218,222
17,740,131
Loss Adjustment Expense
2,691,869
2,906,066
2,933,465
Underwriting Expense
11,664,056
13,111,191
15,029,979
Underwriting Profit (loss)
$ 5,328,764
$ 4,260,553
$ 4,399,414

OTHER INCOME

Net Investment Income/Realized Gains
$ 521,933
$ 609,000
$ 485,967
Other Income
213,381
350,500
171,110
Federal Income (Tax)/Credit
(2,003,682)
(1,953,647)
(1,240,000)
Net Income (loss)
$ 4,060,396
$ 3,266,408
$ 3,816,491

2015 SUMMARY

Direct Premium Written
$ 49,843,207
Total Assets
$ 79,807,005
Policyholder's Surplus
$ 45,314,164

OPERATING RATIOS

Loss Ratio
51.6%
Expense Ratio
34.8%
Combined Ratio
86.4%

Directors

Richard C. Shickle, Winchester, VA
Marilyn M. Adams, Purcellville, VA
M. Byrd Inskeep, Culpeper, VA
Robert W. Smalley Jr., Berryville, VA
Donald A. Butler, Stephenson, VA
Brian S. Montgomery, Warrenton, VA
John T. Clemens, Round Hill, VA
C. William Orndoff, Jr, Clearbrook, VA
Christopher G. Shipe, Berryville, VA
Mary M. Finnell, Mauertown, VA
Samuel B. Welsh, Leesburg, VA

Officers

Richard C. Shickle, CPA, Chairman of the Board
Robert W. Smalley, Jr., Vice Chairman of the Board
Christopher G. Shipe, AIT, CPCU, President/CEO
Dorothea C. Rohde, Corporate Secretary
April Bridgeman, AIC, Vice President - Claims
Kimberly A. Fry, CPA, Treasurer
J. David King, CIC, Vice President - Marketing
Timothy J. Koppenhaver, ARM, PFMM, Vice President - Underwriting
Todd E. Robertson, AIT, AIAF Vice President - Chief Information Officer