140th Annual Report

2016 was a prosperous year for Pella Mutual. Total claims paid for the year came in at just under $500,000. Fire losses remain our highest category for claims paid, totaling nearly $264,000 across 11 claims. Solid fuel fire losses came in second at roughly $104,000, followed by wind damage claims at $86,000. The company continued the upward trend from 2014 with a net income of $70,492.

As in 2015, Pella Mutual again did not reach our reinsurance stop-loss for claims paid in 2016. Additionally, we reduced the amount recovered from Wisconsin Reinsurance by over $600,000 for the year. This shows a steady downward trend in overall claims incurred since 2014 and will positively impact our company’s future reinsurance premium rates.

The moratorium on new business was lifted as of January 1, 2016 and Pella began to accept limited new policy applications. By year end, the restriction to only writing homeowner and dwelling fire policy types was repealed and we began to accept applications for all lines of business.

In November of 2016, Pella Mutual held our third annual agents meeting where we discussed the company’s progress for the year, our presence in the community, and held an open forum discussion.

With the full capability to accept new applications for all lines of business, and another year with a solid addition to our company’s surplus behind us, we are confident that 2017 will be the start of a strong rebuilding period.

On behalf of the office staff and directors, we want to thank you for insuring with Pella Mutual Insurance Company and allowing us to service your insurance needs.

Board of Directors
Pella Mutual Insurance Company


PELLA MUTUAL INSURANCE COMPANY STATEMENTS OF OPERATIONS STATUTORY BASIS
Years Ended December 31, 2016 and 2015

2016 2015
UNDERWRITING INCOME
Net premiums written $2,298,126 $2,651,322
Unearned premium reserve adjustment 166,190 161,984
Reinsurance premiums (948,226) (1,068,994)
Net premiums earned 1,516,090 1,744,312
LOSSES INCURRED    
Losses incurred 481,497 1,299,495
Reinsurance recovered 112,666 (581,683)
Net losses incurred 594,163 717,812
NET LOSS ADJUSTMENT EXPENSES 260,141 234,234
OTHER UNDERWRITING EXPENSES 750,706 758,715
Total losses and expenses incurred 1,605,010 1,710,761
NET UNDERWRITING LOSS (88,920) 33,551
     
INVESTMENT AND OTHER INCOME    
Investment income earned 61,884 53,957
Investment expenses (50,984) (50,285)
Net realized capital gain (loss) (2,261) 1,797
Other income 150,773 176,373
Net investment and other income 159,412 181,842
     
PROVISION FOR INCOME TAXES - -
     
NET INCOME (LOSS) $70,492 $215,393

STATEMENTS OF ADMITTED ASSETS,LIABILITIES, AND POLICYHOLDERS’ SURPLUS STATUATORY BASIS
December 31 2016 and 2015

ADMITTED ASSETS 2015
2016 2015
Cash and invested cash $236,249 $287,173
Bonds 1,516,995 1,789,663
Stocks and mutual funds 1,021,433 634,872
Real estate, land, and home office building,
net of accumulated depreciation
78,838 84,099
Total cash and investments 2,853,515 2,795,807
Premiums receivable 269,590 300,841
Investment income due or accrued 13,451 16,445
Reinsurance recoverable on paid losses 11,247 1,017
Electronic data processing equipment and software,
net of accumulated depreciation
- 1,720
Furniture and fixtures, net of accumulated depreciation 10,084 15,976
Reinsurance Premiums Receivable 35,423 -
Fire dues recoverable 2,055 4,911
Subrogation recoverable - 14,200
Federal income taxes recoverable   4,911
Other Receivable 545 -
Reinsurance commission receivable 21,315 24,651
Total assets 3,217,225 3,175,568
Less non-admitted assets:    
Uncollected premiums 2,641 2,038
Furniture and fixtures 10,084 15,976
TOTAL ADMITTED ASSETS $3,204,500 $3,157,554

LIABILITY AND POLICYHOLDERS’ SURPLUS

LIABILITY AND POLICYHOLDERS’ SURPLUS
  2015 2014
Unpaid losses, net of reinsurance recoverable $102,104 $20,000
Unpaid loss adjustment expenses 6,000 6,000
Commissions payable 78,567 87,473
Payroll taxes payable 571 3,640
Unearned premiums 1,228,042 1,390,026
Premiums received in advance 28,079 37,840
Reinsurance premiums payable 7,102 109,980
Accrued expenses 29,976 18,976
Total liabilities 1,480,441 1,673,935
POLICYHOLDERS’ SURPLUS 1,677,113 1,409,832
TOTAL LIABILITIES AND
POLICYHOLDERS' SURPLUS
$3,157,554 $3,083,767

STATEMENTS OF POLICYHOLDER’S SURPLUS STATUATORY BASIS Years Ended December 31, 2015 and 2014

  2015 2014
BALANCE, BEGINNING OF YEAR $1,409,832 $1,196,507
     
Net income (loss) 215,393 50,496
Net change in non-admitted assets (1,731) 5,770
Unrealized gain (loss) on stocks, mutual funds,
and bonds
53,619 157,059
BALANCE, END OF YEAR $1,677,113 $1,409,832

STATEMENT OF CASH FLOW STATUATORY BASIS
Years Ended December 31, 2016 and 2015

  2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from premiums $2,324,686 $2,695,000
Cash received from reinsurance loss recoveries 35,351 1,146,175
Cash paid for losses (633,955) (1,541,478)
Cash paid for supplies and services (1,066,084) (1,034,615)
Reinsurance premiums paid (955,328) (1,171,872)
Investment income received 84,673 79,674
Policy, late payment, and re-write fees received 141,858 165,520
Other income 8,915 10,853
Net cash and invested cash provided by (used in)
operating activities
(59,884) 349,257
CASH FLOWS FROM INVESTING ACTIVITIES    
Cash paid for purchase of stocks, mutual funds, and bonds (1,156,633) (2,015,078)
Proceeds from disposal of stocks, mutual funds, and bonds 1,165,593 1,676,505
Purchase of property and equipment - (5,430)
Net cash and invested cash provided By (used in) investing activities 8,960 (344,003)
NET INCREASE (DECREASE) IN CASH AND INVESTED CASH (50,924) 5,254
CASH AND INVESTED CASH, BEGINNING OF YEAR 287,173 281,919
CASH AND INVESTED CASH, END OF YEAR $236,249 $287,173
NON-CASH ACTIVITY    
Liability losses paid directly by reinsurance company $2,316 $425,918