2022 Annual Report
President’s Annual Message to the Members:
I am happy to report that 2021 was a remarkable year for the Society and its members. Losses decreased year over year, our net profit for the year was $5.8 million, and our Policyholder Surplus at year-end reached a new high of $355.6 million. Following is a brief overview of our 2021 financial and operational highlights.
Admitted assets on December 31, 2021, were $417.7 million, representing an increase of $62.4 million or 17.6% over 2020. An increase in our equity portfolio drove this increase. On a total-return basis, the Society’s domestic investment portfolio returned 20.9% during 2021. Our domestic equity portfolio, comprising 98% of our total equity portfolio, increased 28.5% during 2021 compared to the S&P 500 return of 28.7% and the Lipper Large Cap Core Equity Index return of 26.5%. Since January 1, 2000, our domestic equity portfolio has had a cumulative return of 347.5%, vs. the S&P 500 cumulative return of 328.3% and the referenced Lipper index cumulative return of 216.2%. The 2% of our equity portfolio allocated to international stocks, through two Vanguard index funds, returned 4.8% on a weighted average basis during the year. The fixed income portfolio returned 1.8% for the year compared to the Bloomberg Intermediate Government/Corporate Index return of negative 1.5% and the Bloomberg Intermediate Treasury Index return of negative 1.7%. Since January 1, 2000, our fixed income portfolio has had a cumulative fixed income return of 243.0%, compared to the cumulative return of the referenced Bloomberg indexes of 150.2% and 126.6%, respectively.
Gross premiums increased by 6.2% to $55.6 million. Our base annual assessment rate remained at 22% for 2021. An additional assessment of 22% was applicable to secondary residences, and an additional assessment of 10% was applicable to coastal properties located in designated territories. The Society had an after-tax net profit of $5.8 million. Realized capital gains for 2021, net of taxes, amounted to $7.8 million. The Society has been assigned a Financial Strength Rating of A (Excellent) from A.M. Best Company. It has been given a Financial Stability Rating of A from Kroll Bond Rating Agency.
Residential construction costs increased steadily during 2021. This increase was primarily driven by continued increases in material and labor costs. Based on E2Value’s residential construction cost indexes for Virginia, our insured property values are increasing by 7.4% on a state-wide basis for 2022. If you feel your coverage needs to be adjusted, either upward or downward, we are always willing to re-inspect your property and re-evaluate the amount of coverage you need.
Net losses incurred decreased by $5.3 million or 38% from 2020. Losses incurred for 2021 were categorized as follows: 48% from water damage from plumbing, heating, and air conditioning systems, 9% from windstorm or hail, 19% from fire, and 24% from all other causes. The frequency and severity of water damage losses continue to rise and represent one of the most disruptive types of loss our members face. We strongly recommend that our members not leave their homes while clothes washers, toilets, or dishwashers are running. When such appliances fail or malfunction while no one is at home to remedy the situation, the nature and scope of damage to homes and the personal inconvenience to families can be enormous.
Water Damage continues to be the Society’s largest cause of loss. To help our members to control these types of losses, the Society has partnered with Beagle Services, LLC. Beagle Services provides our members with access to plumbing services, including water safety inspections and the installation of leak detection and prevention devices such as the Flo By Moen Smart Leak Detection System. We aim to significantly decrease losses in this category through this innovative collaboration. Please visit https://www.mutual-assurance.com/resources to learn more.
Annually, we also remind you of the optional property coverage endorsements available for purchase from the Society. These optional coverages include Equipment Breakdown Coverage, Service Line, Water Damage-Sewers, Drains and Sumps-Increased Limits, Earthquake Coverage, Unscheduled Personal Property-Increased Special Limits, and Scheduled Property. Call your agent or company representative if you wish to discuss adding any of these optional coverages to your policy.
Lastly, please remember that you can make payments, review policy documents and opt into paperless billing from the Member Login section of our website www.mutual-assurance.com. Making these features available online saves the cost of printing, handling, and postage when communicating with you. It also contributes to the preservation of our natural resources and the protection of our environment. Of course, you always have the right to obtain a paper copy of your policy forms and endorsements upon request and without charge.
As always, we appreciate the cooperation and support of the members of the Society and welcome any questions you may have about the Society or this Annual Report.
Jeffrey S. Wrobel, Sr., CPCU, A.U., AIT
April 1, 2022