Meadowbrook Insurance Group Inc
Meadowbrook Insurance — Q2 2014 Earnings Presentation
21 slides from Meadowbrook Insurance's earnings presentation, Aug 28, 2014
Slide 1: Investor Presentation Second Quarter 2014 Update
Investor PresentationSecond Quarter 2014 Update
Slide 2: Forward-Looking Statements & Non-GAAP Financial Measures
* Forward-Looking Statements & Non-GAAP Financial Measures The Company’s investor presentation may include certain statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 193
Slide 3: Meadowbrook Overview
Specialty niche focused commercial insurance underwriter and insurance administration services companyHeadquartered in Southfield, MI with 25 locations throughout the U.S. and ~925 employeesFounded in 1955, organized as a holding company in 1985, IPO and listed on the NYSE (MIG) in 1995 Shareholders
Slide 4: Balanced business model allows the Company to adapt to changing market conditions
Balanced business model allows the Company to adapt to changing market conditionsProduct, program and geographic diversificationAdmitted market capabilities contribute to stability and higher renewal retentionE&S platform with industry leading technology capabilities enable opportunistic response in
Slide 5: Meadowbrook Overview (continued) Key Statistics
* Meadowbrook Overview(continued) Key StatisticsMarket Capitalization at 8/13/2014: $304.6MBook Value at 6/30/2014: $446.5MTangible Book Value at 6/30/2014: : $418.4MBook Value per Share at 6/30/2014: $8.91Tangible Book Value per Share: $8.35Book Value per Share, excluding unrealized gains / losses
Slide 6: Target Markets and Business Mix TTM 6/30/14
Food service industrySmall workers’ compensationAgriculture Target Markets TTM 6/30/14 Business Mix TTM 6/30/14 GWP: $823 million Excess workers’ compensationEnvironmentalMarineMedical malpracticeAviation Specialty Market ProductsTTM 6/30/14 GWP: $180 Admitted Specialty Programs &Standard Market Pro
Slide 7: Geographic Overview
TTM 6/30/14 GWP Geographic Breakdown Top 5 States GWP Breakdown TTM 6/30/14 GWP: $823 million * Geographic Overview Geographically diverse premium base with strong local relationships
Slide 8: YTD 6/30/14 Net Operating Income
* YTD 6/30/14 Net Operating Income Business positioned for an improved and profitable 2014 ($ in millions, except for per share amounts)
Slide 9: 2014 Guidance
* 2014 Guidance Business positioned for an improved and profitable 2014 ($ in millions, except for per share amounts) Improved 2H 2014 results reflect the following expectations:The continued positive impact of earned rate increases in excess of loss cost trendsAbsence of restructuring costs ($1.5M
Slide 10: Reduced exposure to underperforming business, improved accident year results
Reduced exposure to underperforming business, resulting in improved accident year resultsIncludes public entity excess, long-haul transportation, auto repossessors, workers’ compensation for isolated CA territory and other select underwriting decisions (see pages 16-19 for additional discussion)Cumu
Slide 11: Favorable reserve development
Favorable development of $0.8 million, or 0.2 combined ratio percentage pointsGrowth in recent years from rate increases and increase in the average program maturityMore certainty in estimating loss ultimates for mature businessAs programs and books of business mature, underlying claims patterns beg
Slide 12: Statutory Surplus
* Statutory Surplus Since September 30, 2012, we have improved our premium to surplus leverage ratios through strengthening our capital position and terminating non-performing business Cumulative statutory net income of $74M since September 30, 2012Premium reduction through termination of non-perfor
Slide 13: Ongoing Business Remains Profitable
AY Loss & ALAE Ratio* & Terminated BusinessNet Earned Premium** *Statutory accident year loss & ALAE ratios evaluated at 6/30/14 and excludes the impact of the Swiss Re quota share.**Net earned premium presented above is on a statutory basis and excludes the impact of the Swiss Re quota share. * Ong
Slide 14: On-going Business Remains Profitable
* On-going Business Remains Profitable 2010 2011 2012 ^ The Re-Evaluated AY combined ratio reflects reserve adjustments made following the accident year, for example, the 102.6% Re-Evaluated 2009 AY combined ratio reflects new loss development information gathered over the 4 1/2 years from 12/31/200
Slide 15: Achieved Rate Increases
Achieved Rate Increases Rate increases in excess of loss ratio trends have been achieved across the book of business * Between January 1, 2010 and June 30, 2014 cumulative written rate increases across the entire book of business have been in excess of 30%, more than 20 percentage points in excess o
Slide 16: Achieved Rate Increases
Achieved Rate Increases ANNUALAchieved Written Rate Increases & Loss Ratio Trend CUMULATIVEAchieved Written Rate Increases & Loss Ratio Trend Significant rate increases have been achieved across the book of business * * Full-year estimate assuming YTD written increase achieved throughout the year.
Slide 17: Expense Ratio Analysis
Expense Ratio Analysis * ($ in millions)
Slide 18: Accident Year Bridge
* Accident Year Bridge 2013 Accident Year Loss & ALAE Ratio Bridge from December 31, 2013 to 2014 Accident Year Loss & ALAE Ratio at June 30, 2014 (a) Increase in 2014 accident year relative to 2013 reflects a more conservative expected loss ratio within the standard actuarial methods and considerat
Slide 19: Net Commission & Fee Business
* Net Commission & Fee Business
Slide 20: TTM 6/30/14 Net Commission and Fee Revenue by Source
TTM 6/30/14 Net Commission and Fee Revenue by Source TTM 6/30/14 Net Commission & Fee Revenue: $43 million (business generated from unaffiliated sources) Net Commission & Fee Revenue and Profit Agency Commissions Managed Claims Managed Fees * Net Commission & Fee Revenue and Profit $43 million of TT
Slide 21: Agency Operations Overview
Overview Provides insurance brokerage and risk management servicesFounded in 1955 in Southfield, MIGrown to a staff of 100+ across locations in 3 states and 6 citiesConsists of 6 distinct entities servicing specific segmentsComm’l, personal, group / life and surplus linesProduced over $200 million i
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