Financial Statement

During 2008, Partners Mutual Insurance increased its premium writings 4.8%. The inforce policy count increased 3.4%. Soft commercial lines pricing resulted in a reduced number of commercial lines policies and a 3.6% reduction in commercial premium. Personal lines premiums now make up 77.3% of total premiums written. When the year finished, we lost money selling insurance with a statutory combined loss and expense ratio of 105.8%. The sub-prime mortgage crisis, the frozen credit markets, and huge declines in the equity markets did not significantly affect the company’s investment portfolio. However, there was not enough investment income to completely offset the underwriting loss, resulting in a net operating loss of $461,031.

There were many claim opportunities to prove our motto, “. . . where better service matters”. By the time January 2008 began, winter was in full swing. The snow started falling on December 1, 2007 and continued almost weekly producing a record-breaking snowfall season in Madison, Wisconsin, including big snow storms on both Ash Wednesday and Good Friday. The resulting winter weather related property losses like ice damming, weight of ice and snow, water damage, and freezing, resulted in $918,752 of losses.

If the winter weather was not enough, the late spring atmospheric disturbance beginning June 7 and continuing until Lake Delton near Wisconsin Dells washed into the Wisconsin River resulted in $756,336 of weather related losses. Larger than the weather-related losses were the severe fires. The number of fires recorded in 2008 was down 21% from 2007 but the pure losses paid increased 96%.

The economic recession and record high gasoline prices of over $4.50 per gallon reduced the number of miles people drove resulting in fewer and less severe automobile losses for the year.
Between fires and storms, our focus was on improving service to our agents. The culmination of many months of development and testing was the introduction of Partners Agency Link (PAL) – Personal Lines. PAL is a package of secure internet-based self-service tools for agents. PAL – Personal Lines gives Partners Mutual’s agents the ability to quote Personal Automobile and Homeowners policies, complete the application, attach supporting documentation, make an electronic down payment, and submit all of this for issue digitally over the world-wide-web. All of this was introduced in the company’s first of many webinars. On the horizon is more PAL functionality with policy changes being the next introduction.

We weathered the storms and fires of 2008 making good on our promises to our insureds. We were able to navigate through the financial crises minimizing loss to our investment portfolio. And, with the introduction of PAL - Personal Lines to agents it is clear to see, Partners Mutual Insurance is the company, “. . . where better service matters”.

Sincerely,

Richard C. Ewert

PRESIDENT