ANNUAL REPORT - Western Reserve Group

PREsidENT’s mEssAgE
At Western Reserve Group (Group) our mission has been to meet and exceed the expectations of our policyholders and
customers in their time of need. For over 106 years the Group has provided the highest quality property/casualty insurance
products. This, combined with sound financial decisions and embracing change by adapting our processes to ever-changing
technology, enhances our policyholders’ and customers’ experiences.
2012 was a year of milestones, challenges, successes and achievements. In early 2012 a significant milestone occurred as John Murphy, the Group’s
long-time President and CEO, announced his retirement. John successfully served as President and CEO since 1985. Over that time, the Group
increased its gross written premiums from $42 million to $188 million, increased its policyholders’ surplus from $38 million to $229 million and ended
with record assets of $402 million. Led by John’s passion and vision, the Group expanded its geographic footprint into Indiana and solidified its
commitment to independent agents through investment in technology. John will continue to provide valuable guidance and counsel as a member of the
Group’s Board of Directors.
A challenge that again appeared in 2012 was the continuation of severe weather events. Ohio experienced one of the worst weather loss years in
its history. The June 2012 “Derecho” was one of the most destructive and fast-moving severe thunderstorm complexes in North American history, and
approximately two-thirds of Ohio experienced widespread power outages. In Indiana significant wind and tornado events in March 2012 tore apart
towns and caused widespread damage and destruction. These and other weather events throughout 2012 impacted the Group, resulting in posting
record net weather losses and the second highest combined ratio in the Group’s history.
However, despite record weather losses, the Group achieved financial success in several areas. The financial condition and capital adequacy
continued to outperform the industry as evidenced by a superior premium to surplus ratio. Policyholders’ surplus ended the year at $229.0 million, a
decrease of only $0.2 million or 0.1%, despite record underwriting losses. Additionally, strong stock market returns resulted in total assets finishing
2012 at a record $402.3 million. Though the core insurance business was challenging in 2012, the security and safety you depend upon from the
Group remained strong.
In addition to the Group’s capital strength resilience, direct written premium reached a record high of $188.3 million, a 7.7% rate of growth. Over
the last five years, policy count has grown 9.0%, including commercial lines at 14.7%, farm at 10.8% and personal lines at 8.0%. We have
now experienced 17 straight quarters of premium growth, and this success could not have been achieved without the strong relationships with our
independent agents.
Our team is proud of our long-term history of financial strength and stability. As we enter 2013 with an optimistic outlook for our future, I want to thank
our agents and associates for their loyalty and trust in the Group.
2