Loudoun Mutual's 169th Year of Service to Our Policyholders

To Our Policyholders and Friends:

Much like 2016 and 2017, because of the heavy storm activity, 2018 was another challenging year for both Loudoun Mutual and the insurance industry. During 2018, as a result of multiple serious storm events, Loudoun Mutual had the opportunity to help more than twice as many of our policyholders as we do in a normal year. Historically, 4% to 5% of Loudoun Mutual’s policyholders have a claim during the year. In 2018 over 9% of Loudoun Mutual’s policyholders incurred a loss. This is why Loudoun Mutual exists and this is our purpose as an organization – to pay our policyholders’ claims fairly and promptly. Looking back on 2018, Loudoun Mutual employees worked extremely hard to fulfill that purpose by putting in many long hours, including nights and weekends processing claims.

Despite the third consecutive year of record storm activity, Loudoun Mutual’s financial and operational position remains very strong. The Company continues to maintain a highly liquid and conservative balance sheet and the Company remains on target to implement and complete many of the major strategic initiatives outlined in its business plan. Financially, AM Best, one of the leading insurance industry rating firms, showed continued confidence in Loudoun Mutual by affirming the Company’s A rating in late 2018. Operationally, the Company made substantial progress in implementing a new policy administration system to better serve our policyholders and agents. As part of this project, we encourage our policyholders to go to www.loudounmutual.com to check out and sign up for the Company’s updated policyholder customer service portal.

Looking forward to 2019, the 170th anniversary of the founding of Loudoun Mutual, 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 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.

Thank you for allowing us to serve your insurance needs.

Christopher G. Shipe, AIT, CPCU
President

Loudoun Mutual 169th Annual Report

For the Year Ended December 31, 2018

ADMITTED ASSETS
2018
2017
Bonds
$ 52,750,714
$ 51,058,401
Common/Pref. Stocks/Mutual Funds
23,889,096
28,286,908
Cash/Cash Equivalents
4,422,933
6,050,306
Premiums Receivable
7,199,596
6,650,158
Reinsurance Recoverable
1,468,451
387,317
Accrued Interest and Dividends
365,285
341,395
Deferred Tax Asset/Income Tax Ref.
2,629,331
1,649,660
Virginia Guaranty Assoc. Pre-Paid
404
539
Land, Buildings, Equipment, Misc.
$ 1,408,022
$ 932,742
Total Admitted Assets
$ 94,133,832
$ 95,357,426

LIABILITIES AND POLICY SURPLUS HOLDERS

Unearned Premiums
$ 31,048,322
$ 28,840,151
Unpaid Losses and Adjust. Expense
8,900,520
7,814,488
Reinsurance Payable
298,896
201,636
Commissions Payable
2,799,678
3,100,855
Premiums Paid in Advance
1,713,393
1,288,497
Other Liabilities/Expenses Payable
2,528,150
3,713,560
Taxes Payable
397,128
355,714
Total Liabilities
$ 47,686,087
$ 45,314,901
Policyholder Surplus Account
$ 46,447,745
$ 50,042,525
Total Liabilities and Policyholder Surplus
$ 94,133,832
$ 95,357,426

UNDERWRITING INCOME

Net Premiums Earned
$ 50,955,042
$ 48,190,950
Losses Incurred
33,181,276
27,839,688
Loss Adjustment Expense
4,311,750
3,793,819
Underwriting Expense
18,390,345
17,985,270
Underwriting Profit (loss)
$ (4,928,329(
$ (1,427,827)

OTHER INCOME

Net Investment Income/Realized Gains
$ 3,133,746
$ 3,112,417
Other Income
126,352
167,328
Federal Income (Tax)/Credit
892,322
424,117
Net Income (loss)
$ (775,909)
$ 2,276,035

2018 SUMMARY

Direct Premium Written
$ 62,404,172
Total Admitted Assets
$ 94,133,832
Policyholder's Surplus
$ 46,447,745

2018 OPERATING RATIOS

Loss Ratio
73.6%
Expense Ratio
34.4%
Combined Ratio
Rated A Excellent, By AM Best        
108%

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
J. David King Senior Vice President
Timothy J. Koppenhaver, ARM, PFMM, Executive Vice President
Dorothea C. Rohde, Corporate Secretary
Kimberly A. Fry, CPA, Vice President, CFO-Treasurer
Todd E. Robertson, AIT, AIAF Vice President - Chief Information Officer