MMIC Financial Highlights

Bill McDonough, President and CEO, Constellation

MMIC, the largest medical professional insurance organization in the Midwest continues to post strong performance.  We ended 2015 in a solid financial position, allowing us to continue to help physicians and all those who devote their lives to health care attain their dream – to help and to heal. Industry rating agency A.M. Best again affirmed our financial stability with an “A” (Excellent”) rating after reviewing our 2015 results. 

Policyholders’ surplus, a key indicator of financial strength and stability, ended the year at $327.1 million, up 5 percent over 2014 and 40 percent since 2011.  These funds are available to cover any future obligations to our policyholders and to invest in opportunities that will provide them with added value. Growth in our policyholders’ surplus was fueled by an increase in net income.

Extraordinary customer loyalty and retention

The extraordinary customer loyalty and retention we enjoyed in 2015 also affirmed our stability. Over the course of the year, 98 percent of our clients chose to continue their policies with MMIC instead of switching to a competitor.  We are deeply honored by the trust our clients place in us and are privileged to serve them.  MMIC paid $2 million in dividends to policyholders in 2015 and has paid nearly $117 million in policyholder dividends since inception.

MMIC recorded a combined ratio including dividends of 100 percent, up slightly from the previous year due to a higher loss ratio reflecting increased loss adjustment costs and a slightly higher expense ratio due to investments in our people, processes and technologies.

Higher profitability despite slight revenue decline

Profitability rose even though revenues slightly declined.  Direct written premium was $118.8 million, down 2 percent from 2014.  This small decline reflected increased pricing pressure resulting from consolidation in the health care market and a strong industry surplus position that, at least for now, enables competitors to aggressively price their products.  Despite topline pressure, we finished the year profitably, with net income up 11 percent, to $36.9 million, supported by higher investment income and capital gains.

Income was also enhanced by a $15 million dividend paid by UMIA, a fellow member of the Constellation family, the mutual insurance holding company in which MMIC became the founding member five years ago.  UMIA’s recent outstanding financial performance enabled the higher dividend payment.  Excluding the dividend, income from our invested assets, which are primarily invested in bonds, was up slightly at 1 percent.

The addition of Arkansas Mutual Insurance Company on July 31 along with additional goodwill recognized on the UMIA purchase from contingent consideration increased the assets of MMIC to $718.1 million. Invested assets, however, declined slightly due to funding the annual installment payment made to former UMIA subscribers under terms set in 2013 at the time of UMIA’s acquisition.

Investment in new solutions for policyholders

Our strong profitability allows us to continue to invest in solutions for you, our policyholders. These include services that help you improve patient care, protect your professional reputation, and reduce your overall costs. We have expanded our focus on identifying underlying causes of patient dissatisfaction and physician stress and burnout as well as corresponding tools to reduce these risks. Many of our policyholders in 2015 benefited from our HIPAA consulting, EHR optimization, and perspective on the continuum of risks, including those associated with electronic record systems.

Joining with other strong brands under the Constellation umbrella is fundamental to our long-term strategy to continue our growth, increase operational efficiencies and develop unique solutions.  Ultimately, this strategy will enable us to achieve our mission of supporting physicians and our vision to have a transformative impact on helping deliver better patient care. We look forward to 2016, our 36th year of service to our valued physician clients and the broader health care community.