Loudoun Mutual's 170th Year of Service to Our Policyholders

To Our Policyholders and Friends:

The year 2019 marked Loudoun Mutual’s 170th year of service to the policyholders of Virginia. Despite the continued increase in storms, we’re thankful to report after three years of record storm activity, 2019 claims returned to more manageable levels. The ongoing storm activity required Loudoun Mutual to adjust rates, particularly for our homeowners’ policyholders. We did not take this action in haste, but needed to do so to help maintain the Company’s financial security. As a result of the rate adjustments and moderation in storm activity during 2019, these actions led the Company to a modest underwriting profit. An underwriting profit is earned when the premiums taken in exceed the losses and expenses paid for the year. The underwriting profit coupled with the good performance of the Company’s investment portfolio allowed Loudoun Mutual to strengthen policyholder surplus and the Company’s overall financial security in 2019.

Despite the moderation in claims activity, operationally, 2019 was another very busy year for Loudoun Mutual. During the year we successfully completed the implementation of a new policy administration system. The new system allows us to better and more efficiently serve the policyholders and agents. As part of this project, we encourage our policyholders to go to www.loudounmutual.com, click on the “My Policy” tab to check out and sign up for the Company’s updated policyholder customer service portal.

Another significant operational initiative in 2019 was the implementation of a lockbox for premium payments. Policyholders will note that premium payments are now processed in Pittsburgh, PA. We chose to go to the lockbox system to streamline premium processing, enhance security and to help plan for future growth.

In many ways, 2019 was a year which focused on strengthening the foundation for Loudoun Mutual’s ongoing commitment to our policyholders. Building on the strong foundation from 2019 and looking forward to 2020, we pledge to maintain our tradition of service and financial security. Loudoun Mutual is a mutual insurance company; we are owned by and operated for the benefit of our policyholders. This means we give back to the communities we serve and focus on long-term stability and security. 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 look forward to continuing 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 long-term value, stability and security of placing your insurance with a mutual company that exists to serve you.

Thank you for allowing us to serve your insurance needs.

Christopher G. Shipe, AIT, CPCU, President

Loudoun Mutual 170th Annual Report

For the Year Ended December 31, 2019

ADMITTED ASSETS
2019
2018
Bonds
$ 53,721,884
$ 52,750,714
Common/Pref. Stocks/Mutual Funds
29,798,825
23,889,096
Cash/Cash Equivalents
6,683,694
4,422,933
Premiums Receivable
7,807,068
7,199,596
Reinsurance Recoverable
453,725
1,468,451
Accrued Interest and Dividends
348,677
365,285
Deferred Tax Asset/Income Tax Ref.
1,547,901
2,629,331
Virginia Guaranty Assoc. Pre-Paid
269
404
Land, Buildings, Equipment, Misc.
$ 1,601,208
$ 1,408,022
Total Admitted Assets
$ 101,963,251
$ 94,133,832

LIABILITIES AND POLICY SURPLUS HOLDERS

Unearned Premiums
$ 33,644,618
$ 31,048,322
Unpaid Losses and Adjust. Expense
7,028,805
8,900,520
Reinsurance Payable
507,143
298,896
Commissions Payable
3,074,045
2,799,678
Premiums Paid in Advance
1,706,795
1,713,393
Other Liabilities/Expenses Payable
3,296,661
2,528,150
Taxes Payable
334,163
397,128
Total Liabilities
$ 49,591,930
$ 47,686,087
Policyholder Surplus Account
$ 52,371,321
$ 46,447,745
Total Liabilities and Policyholder Surplus
$ 101,963,251
$ 94,133,832

UNDERWRITING INCOME

Net Premiums Earned
$ 54,615,041
$ 50,955,042
Losses Incurred
30,070,664
33,181,276
Loss Adjustment Expense
4,613,635
4,311,750
Underwriting Expense
19,819,168
18,390,345
Underwriting Profit (loss)
$ 111,574
$ (4,928,329)

OTHER INCOME

Net Investment Income/Realized Gains
$ 2,599,821
$ 3,133,746
Other Income
34,270
126,352
Federal Income (Tax)/Credit
(79,361)
(892,322)
Net Income (loss)
$ 2,825,026
$ (775,909)

2018 SUMMARY

Direct Premium Written
$ 67,618,923
Total Admitted Assets
$ 101,963,251
Policyholder's Surplus
$ 52,371,321

2018 OPERATING RATIOS

Loss Ratio
63.5%
Expense Ratio
34.6%
Combined Ratio
Rated A Excellent, By AM Best        
98.1%

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

Officers

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