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MFM reports 2010 results and prospects for 2011 icon

Most of our year end accounting is coming to a close and I am glad to report that 2010 is over. This past year's financial results were the worst for MFM in at least 9 years. Our Combined Ratio was roughly 106. Storms in the upper Midwest were worse than any year that we can recall. These storms were numerous. We tracked 9 storm catastrophes in 2010 and severity was not enough to realize much if any reinsurance recoveries meaning MFM paid all of these losses "net" in 2010. There were more reported tornadoes in Minnesota in 2010 than in any State in the Union. Our Workers Compensation loss experience also deteriorated a little in contributing to the bad results. On the positive side, fires occurred with much less frequency and Commercial and Personal Auto lines continued to provide the Company good loss results. Investment income, particularly with the stock market recovery, will allow us to minimize a surplus loss to an estimate of less than 1 percent decrease---but final accounting is continuing. We are gratified to meet all of our claims payment obligations to Policyholders in 2010 and still produce a small surplus gain. Our Claims service, particularly with storm claim, was again excellent.

The Company managed to grow written premium by a little less than 2%. This small growth and continuing expense control allowed us to lower our 2010 Underwriting Expense Ratio to 26.2% down from 26.9% in 2009 and our 2010 Claims Expense Ratio to 12.3% down from 12.8% in 2009.

Our business plan calls for 7% written premium growth in 2011 and we are well on our way to achieving this objective with January premiums up by roughly 11%. We are already seeing significant activity in our new Ag Business program which was introduced near year end. All Marketing, Underwriting, and Agency Services employees are gearing up to respond to the traditional Spring ex-dates for Ag Business proposals and also the traditional busy season for Contractors business. Our Personal Lines Portfolio sales continue to shine with systems functionality of MFM Edge much improved over the past year. Our online training sessions are increasing comfort levels. Spring Agency Meetings are being planned and your Underwriting and Marketing people look forward to seeing you at a meeting site near you. These meetings are always a great opportunity for us to share the Company's thoughts and plans and to listen to you. Announcement of these meetings will follow shortly.

Prospects for continued financial health are good for 2011. Continuing expense control and written premium growth around our relatively fixed expenses will allow for further improvement in our expense ratios This expense control allows for a higher permissible loss ratio to achieve profit goals. Our reinsurors profited from our book of business in 2010. As a result of this good loss experience, we were able to realize roughly an 8% reduction in our Reinsurance costs for 2011. Some restructuring in our Catastrophe Reinsurance program will also respond with recoveries should the frequency of 2010 storms repeat in 2011. We expect the commercial marketplace to firm "slightly" in 2011. This evidence of firming is particularly true in Commercial Property where the Midwest has seen its share of storm losses in 2010. We will aggressively defend our good renewals and we need our Agents to work closely with their Marketing and Underwriting people throughout the renewal process. For the first month of 2011, persistency is VERY encouraging..

We are looking forward to a very successful 2011. We know this success is derived by staying very close to our customer!! Always know we appreciate your business.

Best regards,

Ron Boyd, CPCU
President and CEO


Posted on Monday, January 31 @ 14:36:15 -06:00
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