Loudoun Mutual's 168th Year of Service to Our Policyholders

To Our Policyholders and Friends:

During 2017 Loudoun Mutual’s celebrated its 168th year of operation. As a result of multiple storms the Company had numerous opportunities to serve our policyholders. 2017 was one of the worst years on record for the insurance industry. Although Loudoun Mutual was not affected by the major hurricanes, the Company did incur claims from multiple wind and hail storms. The heavy storm activity in 2017 resulted in the Company paying out more in claims than it collected in premiums. This is known as an underwriting loss. The last time the Company had an underwriting loss was in 2012. It was also a result of a storm event, the heavy winds known as the derecho. Despite a year of record storm activity, through prudent investing, the Company was able to strengthen the Company’s financial security and generate sufficient investment income to cover the underwriting loss.

Why should you insure your property with Loudoun Mutual? For over 168 years, Loudoun Mutual has had a tradition of serving our policyholders and maintaining our financial security even during record breaking storm years. As a mutual insurance company, owned by and operated for the benefit of the policyholders, we focus on long term stability and security rather than worrying about meeting a quarterly earning target. At Loudoun Mutual we exist to pay policyholders’ claims rather than return profits to stockholders.

To our existing policyholders – THANK YOU! We sincerely appreciate your business and we pledge to continue our tradition of service to you. We encourage you to contact your Loudoun Mutual agent to have your policy reviewed. Regular review of your insurance policy ensures we are doing everything we can to properly serve you and you are receiving the best value for your premium dollar.

If you are a new policyholder to Loudoun Mutual - WELCOME! We hope to establish a tradition of service with you, demonstrating the longterm value, stability and security of placing your insurance with a mutual company.

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 allowing us to serve your insurance needs.

Christopher G. Shipe, AIT, CPCU
President

Loudoun Mutual 168th Annual Report

ADMITTED ASSETS
2015
2016
2017
Bonds
$ 44,867,725
$ 46,387,026
$ 51,058,401
Common/Pref. Stocks/Mutual Funds
17,794,853
26,011,188
28,286,908
Cash/Cash Equivalents
8,403,816
3,621,435
6,050,306
Premiums Receivable
5,853,644
6,250,266
6,650,158
Reinsurance Recoverable
84,814
1,297,236
387,317
Accrued Interest and Dividends
329,543
323,490
341,395
Deferred Tax Asset/Income Tax Ref.
1,662,084
2,051,818
1,649,660
Virginia Guaranty Assoc. Pre-Paid
1,372
955
539
Land, Buildings, Equipment, Misc.
$ 809,154
$ 798,722
$ 932,742
Total Admitted Assets
$ 79,807,005
$ 86,742,136
$ 95,357,426

LIABILITIES AND POLICY SURPLUS HOLDERS

Unearned Premiums
$ 24,879,278
$ 26,802,190
$ 28,840,151
Unpaid Losses and Adjust. Expense
4,061,077
4,432,650
7,814,488
Reinsurance Payable
730,495
583,953
201,636
Commissions Payable
2,067,394
3,121,759
3,100,855
Premiums Paid in Advance
1,470,770
1,386,197
1,288,497
Other Liabilities/Expenses Payable
690,110
2,587,490
3,713,560
Taxes Payable
593,717
671,001
355,714
Total Liabilities
$ 34,492,841
$ 39,585,240
$ 45,314,901
Policyholder Surplus Account
$ 45,314,164
$ 47,156,896
$ 50,042,525
Total Liabilities and Policyholder Surplus
$ 79,807,005
$ 86,742,136
$ 95,357,426

UNDERWRITING INCOME

Net Premiums Earned
$ 40,102,989
$ 44,667,530
$ 48,190,950
Losses Incurred
17,740,131
23,425,873
27,839,688
Loss Adjustment Expense
2,933,465
3,085,527
3,793,819
Underwriting Expense
15,029,979
16,250,307
17,985,270
Underwriting Profit (loss)
$ 4,399,414
$ 1,905,823
$ (1,427,827)

OTHER INCOME

Net Investment Income/Realized Gains
$ 485,967
$ 1,750,176
$ 3,112,417
Other Income
171,110
172,446
167,328
Federal Income (Tax)/Credit
(1,240,000)
(681,472)
424,117
Net Income (loss)
$ 3,816,491
$ 3,146,973
$ 2,276,035

2017 SUMMARY

Direct Premium Written
$ 58,241,295
Total Admitted Assets
$ 95,357,426
Policyholder's Surplus
$ 50,042,525

OPERATING RATIOS

Loss Ratio
65.6%
Expense Ratio
35.5%
Combined Ratio
101.1%

Directors

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

Officers

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