Meadowbrook Insurance Group, Inc. Announces Results Of Fourth Quarter Annual Actuarial Analysis; Expects To Record After-Tax Expense Of Approximately $5 Million In Fourth Quarter 2011 To Strengthen Loss Reserves
SOUTHFIELD, Mich., Jan. 25, 2012 /PRNewswire/ -- Meadowbrook Insurance Group, Inc. (NYSE: MIG) announced today that it expects to record a pre-tax expense of $7.7 million in the fourth quarter of 2011 to strengthen loss reserves. This adjustment to overall reserves is less than 0.09% of the Company's $879 million of net loss reserves and the after-tax impact of this re-estimate is $5.0 million, or $0.10 per diluted share. The Company expects to report positive fourth quarter net operating income and full year 2011 net operating income of $0.77 per diluted share to $0.79 per diluted share. Meadowbrook President and Chief Executive Officer Robert S. Cubbin stated: "Consistent with our culture of responding quickly to adverse experience, we strengthened our reserves in select lines of business during the fourth quarter. Over the past twenty-four months we have taken significant rate and underwriting action and we will continue to seek additional rate and underwriting actions for lines of business that are not meeting our profitability targets. Overall we have been pleased with the rate increases achieved for the 2010 and 2011 policy years. We are also pleased with the performance of our California workers' compensation book of business as all indications are that rate increases are keeping up with the underlying loss trends and overall the business remains profitable." The loss reserve strengthening reflects higher than expected losses on isolated prior accident years in automobile liability, excess lines and workers compensation. This was partially offset by continued favorable development in other lines, particularly medical professional liability and general liability, although at lower levels of redundancy than in the recent past quarters. 2012 Guidance Revised in Response to Loss Trends As a result of the actuarial data analysis conducted at year end 2011, Meadowbrook has revised its guidance for 2012 earnings. For 2012, management now expects a GAAP combined ratio of 97.5% to 98.5%. Management continues to expect gross written premium of $890 million to $910 million. Net operating income is expected to be between $46 million and $51 million. This equates to net operating income per diluted share between $0.90 and $1.00. Commenting on the 2012 outlook, Mr. Cubbin stated: "While we are disappointed in the loss results for 2011, we are confident we can deliver better earnings in 2012. We have been actively monitoring our business by line, by state, and by class of business and have responded to a challenging market with appropriate underwriting and rating actions to help us return to a more acceptable level of underwriting profit. We remain optimistic about our future prospects and believe our balanced business model positions us well to deliver good results despite the low interest rate environment and competitive pricing conditions."