As the dust settles on 2025, it becomes easier to reflect on the year’s results—the good, the bad, and everything in between. In many ways, 2025 was a year of transition for both Midwest Family Mutual and the insurance industry as a whole.
A hard market driven by risk aversion gradually gave way to softening conditions. As we enter 2026, the market environment is beginning to normalize. While that outlook is encouraging, it’s worth stepping back for a multi-year perspective to understand how we arrived here.
Only three years ago, our industry was grappling with severe economic inflation. While headline CPI figures peaked above 9%, construction material costs rose at an even faster pace. The result was widespread disruption. Suddenly, the cost of providing insurance coverage exceeded the premiums being collected across the industry. Given the nature of our business, this imbalance cannot be corrected overnight. It requires rate filings, followed by a full year to roll those rates onto annual policies, and another year to earn the premium over the policy term.
The resulting hard market created friction with policyholders and agents alike. For Midwest Family Mutual, however, it also represented a brief but critical opportunity to address several long-standing issues—namely inadequate rates and limits, less disciplined underwriting prior to 2022, and a coverage structure that over-exposed the company to severe convective storm risk.
In hindsight, 2025 truly was a transitional year. While we may not have fully recognized it at the time, many of the industry’s challenges were being addressed through difficult—but necessary—underwriting decisions. The lag between action and results is inherent in our business due to one-year policy terms. We agree to a premium to indemnify risk, and when the cost of that indemnification rises, we cannot adjust pricing mid-term. As a result, underwriting actions taken in 2022 and 2023 ultimately influenced the financial results realized in 2024 and 2025.
Over time, those results have become clearer. Following a 108.9 combined ratio in 2023, Midwest Family Mutual improved to a 98.3 combined ratio in 2024, followed by a 98.8 combined ratio in 2025. While these are not “knock-it-out-of-the-park” numbers, they do represent modest underwriting profits—an appropriate return for the risk we assume and a meaningful departure from the red ink experienced from 2021 through 2023.
Investment income has also played an important role. Higher bond yields and a strong equity market have contributed to returns, helping drive a 10–11% return on equity in each of the past two years.
Growth in 2025 was somewhat muted, in part by design. Our focus was on strengthening the balance sheet while profit margins were still uncertain, and market conditions were evolving. We ended the year with $283 million in written premium, compared to $281 million in 2024. Entering 2025, Midwest Family Mutual maintained a hard-market posture even as conditions began to soften. Through the first four months of the year, written premium declined by $6 million. Over the final eight months, however, we rebounded with $8 million in growth.
As investment yields continue to recover, claims reserves strengthen, and underwriting profitability becomes more durable, we have appropriately adjusted our underwriting posture. Entering the first quarter of 2026, our approach is now better aligned with softer market conditions. You can expect a renewed focus on retention, paired with an increased emphasis on new business growth in the year ahead. We are within reach of the $300 million premium threshold, and we fully intend to surpass it.
With this new outlook comes a strategic adjustment. Growth will not be driven solely by increased underwriting flexibility that is line with our more adequate rates. We will also begin rolling out new products, explore additional state expansion—albeit at a more measured pace than the rapid state expansion seen from 2012 to 2020—and work intentionally to strengthen alignment with our Agents and Policyholders. We expect elevated growth in the coming years, and we want the vast majority of that growth to come from our existing agency partnerships. Our mission is to serve our agents first to serve policyholders best. One of the best ways we can serve our agents is to grow their respective books.
If the years from 2022 through 2024 were defined by de-risking and discipline, we expect 2026 and 2027 to be expansionary in nature - marked by collaboration, opportunity, and alignment between MFM and its agents. It’s time to return to what we do best: finding creative ways to grow our agents’ books and cost-effective ways to defend and indemnify our policyholders. The lessons of the recent hard market will not be forgotten, but will be carried forward with a greater emphasis on growing market share.
We are entering the more favorable phase of the insurance cycle once again. This is the fun phase and we look forward to it. The team here at Midwest Family Mutual is built for this next chapter.
Thank you for your continued partnership and trust.
Sincerely,
Aaron W. Boyd, MBA, CPCU, CIC
President & CEO
Midwest Family Mutual