Physicians Working for Physicians - TMLT

Physicians Working for Physicians - TMLT


Annual Report



Physicians working for Physicians



he Governing Board and Staff of Texas Medical Liability Trust are pleased to present the 2009 annual

report to policyholders. Along with information outlining the financial strength of the Trust, we

Texas Medical Liability Trust

901 MoPac Expressway South

Building V, Suite 500

Austin, Texas 78746-5942

Mailing Address

Texas Medical Liability Trust

P.O. Box 160140

Austin, Texas 78716-0140




(f) 512-328-5637


Web address

submit for your review the executive narratives from each department highlighting the important

accomplishments of the departmental teams in service to TMLT policyholders. Additionally, the article

on page 10 chronicles the steps to protect Texas tort reform undertaken by the Trust executive leadership

and their representatives at the national level. Our mission at TMLT is to be on the leading edge

of industry change to provide a standard for coverage and service to our policyholders by which all

others are compared. We embrace this mission wholeheartedly and look forward to serving you

in years to come.


Chairman’s Message 2

President’s Message 4

Claim Operations 6

TMLT is the only health care liability

claim trust created and endorsed by

the Texas Medical Association

Risk Management 8

Endorsed by:

Bexar County Medical Society

The Trust and Health Care Legislation 10

Underwriting Services 12

Dallas County Medical Society

Harris County Medical Society

Lubbock-Crosby-Garza County Medical Society

Tarrant County Medical Society

The Texas Academy of Family Physicians

The Texas Orthopaedic Association

Travis County Medical Society

TMLT is a Gold Corporate Affiliate of the

Texas Medical Group Management Association

Sales and Marketing 14

Support Services 16

Message from the CFO 18

Financials 19

2009 | TMLT Annual Report 1

Dave W. Kittrell, MD


Chairman’s Message

TMLT 2009 Board of Governors

Dave W. Kittrell, MD

Board position: Chairman

Specialty: Obstetrician-gynecologist

Practice location: San Antonio

Medical school: The University of Texas Medical Branch at

Galveston, 1975

Internship and residency: Scott and White - Temple, 1975-79

Policyholder since: 1979

Donald R. Butts, MD

Specialty: Colorectal Surgery

Practice location: Houston

Medical school: The University of Texas Medical Branch at

Galveston, 1962

Internship and residency: Hermann Hospital Houston, 1962-63;

1965-69; 1969-70

Policyholder since: 1979

W hen I was first elected to the TMLT Governing Board

in 1989, I could not foresee that my journey on the board

would total 18 years of service. Only those physicians

who have been privileged to serve on TMLT’s governing

boards over the past 30 years understand the commitment

and dedication—and time—required to advance

and protect the best interests of Texas physicians in the

medical liability arena.

During my years on the governing board, I have worked

alongside many knowledgeable physician board

members to seek solutions to medical liability problems

that, in our estimation, would be beneficial for Texas

physicians. I have served on special committees both at

TMLT and at TMA. I have worked closely with the TMLT

staff on a variety of projects and have developed an

appreciation for the complexities of the Texas legislative

process. These collaborations have not always been

easy. These experiences have at times been surprising,

frustrating and full of struggle, as well as very gratifying.

Through it all, the leadership of the board and management

teams at TMLT has been effective at keeping the

Trust successfully working for Texas doctors for more

than 30 years.

Your 2009 governing board was active in a number

of important areas. We voted to approve a 24% dividend

for 2010 policyholders accompanied by a 1% rate

reduction for TMLT-insured physicians practicing in all

specialties across the state. Significantly, this decision

demonstrates our commitment as a not-for-profit organization

to declare dividends and lower rates when it is

financially prudent to do so. In reviewing TMLT’s policy

language, the board voted to improve the benefits of the

Medefense endorsement as well as the premises liability

endorsement. Details of these changes were mailed to

all policyholders and highlighted in the newsletter,

TMLT at Work. Important changes to our payment

options were implemented in the fourth quarter to

provide policyholders with greater convenience and

choice. Additionally, the board made changes to TMLT’s

Memorial Scholarship Program which increased student

participation in the program from 33 to 112 applicants.

When we became concerned that proposed federal

health care legislation could impact our hard won state

tort reforms, we approved hiring a Washington lobby

team to give Texas physicians another voice in the

conversation. The center spread article in this publication

details our efforts in this area.

Meeting of the TMLT Board of Governors

The TMLT governing boards I have served with over the

years have comprised intelligent, caring, courageous

men and women. I am honored that TMLT policyholders

have continued to place their faith in me by electing me

to the board. I firmly believe that the decisions we have

made have been good for Texas physicians and have

fulfilled the purpose of the Trust. 2010 will be my final

year of service to TMLT before I retire from the governing

board. I am proud to have had a long, positive association

with TMLT and to have had the opportunity to serve

the physicians of Texas during a very interesting time in

the history of medicine.

Dave W. Kittrell, MD


Robert I. Parks, Jr., MD

Board position: Vice Chairman

Specialty: Anesthesiologist

Practice location: Dallas

Medical school: The University of Texas Southwestern

Medical School, 1972

Internship: Baylor University Medical Center-Dallas, 1972;

Parkland Memorial Hospital, 1973

Residency: Parkland Memorial Hospital, 1973-75

Policyholder since: 1993

Stuart D. McDonald, MD

Board position: Secretary-Treasurer

Specialty: Pulmonary & Critical Care

Practice location: Fort Worth

Medical school: The University of Texas Southwestern

Medical School, 1987

Residency and fellowship: University of Alabama at

Birmingham, 1993

Policyholder since: 1993

Alan C. Baum, MD

Specialty: Ophthalmology

Practice location: Houston

Medical school: The University of Texas Medical Branch at

Galveston, 1968

Internship and residency: The University of Texas Medical

School Houston Hermann Eye Center, 1972

Policyholder since: 1984

Cristie Columbus, MD

Specialty: Infectious Diseases

Practice location: Dallas

Medical school: The University of Texas Southwestern Medical

School, 1988

Internship, residency, and fellowship: Baylor University Medical

Center - Dallas, 1988-1991; 1991-1993

Policyholder since: 2000

Arthur F. Evans, MD

Specialty: Neurosurgery

Practice location: Lindale

Medical school: Baylor College of Medicine, 1969

Internship and residency: Ben Taub/VA Hospital Houston, 1969;

Baylor Hospital Houston, 1976

Policyholder since: 1979

David G. Joseph, MD

Specialty: Family Practice

Practice location: Austin

Medical school: The University of Texas Health

Science Center at San Antonio, 1987

Internship and residency: Brackenridge Hospital - Austin,


Policyholder since: 1997

Jimmy L. Strong, MD

Specialty: Pediatrics

Practice location: Abilene

Medical school: Baylor College of Medicine, 1981

Internship and residency: Baylor Affiliated Hospitals Houston, 1984

Policyholder since: 1990

2 TMLT Annual Report | 2009 2009 | TMLT Annual Report 3

Bob R. Fields

President & CEO

President’s Message


009 was another year of major challenges and accomplishments

for TMLT. We began the year working with

the Texas Medical Association (TMA) and the Texas

Alliance for Patient Access (TAPA) to protect the hard

won tort reforms and damage caps of 2003. Although

our adversaries in the Texas Trial Lawyers Association

made many attempts to attack Texas tort reforms,

we were ultimately successful in protecting all of the

reforms that have dropped the cost of medical liability

insurance by 50% since 2003 for TMLT insured policyholders.

Great credit for this success also goes to the

members of our TMLT lobby team who worked long

hours conveying the successes of these important

reforms and secured the support of many key legislators.

Included among this group is Governor Rick Perry,

who has proven to be a staunch ally and friend of the

medical community.

TMLT departments were productive during the year.

Claim operations was successful in defending 22 of 27

cases taken to trial. Total trial losses incurred by TMLT

amounted to less than $1 million, one of the lowest

trial loss years ever recorded. Our underwriters made

many personal renewal visits to numerous large groups

in the state leading to our outstanding 93.5% retention

of policyholders. Risk management representatives

conducted 1,895 practice reviews for physicians and

15,351 physicians participated in at least one of the 107

medical education opportunities TMLT offered throughout

the year. In addition, TMLT conducted two separate

data studies showing that TMLT policyholders are less

likely to have claims filed against them after undergoing

our risk management education.

The Trust was created to provide the highest quality

service at the lowest possible cost to TMA members.

In 2009, rates were again reduced by an average of

4.7% and another large dividend of 22.5% was applied

to policies renewing during the year. In spite of reducing

the cost of medical

liability insurance

in 2009, we were

successful in increasing

policyholder surplus

to over $300 million,

making TMLT one of the

most financially stable

insurers in the market.

We will continue to do

everything possible to

keep the cost of liability

insurance as low as

possible for TMLT policyholders

in the future.

TMLT has always

believed in supporting

and working with

members of organized

medicine, such as the

TMA, county medical

societies, and specialty

TMLT’s 30th anniversary celebration

medical societies. We provide financial support for

physicians’ education, legislative activities, and disaster

relief. More than any other medical liability carrier selling

insurance in Texas, TMLT is far and away the greatest

supporter of organized medicine benefiting all physicians

in the state.

During the last half of 2009, TMLT hired federal

lobbyists and worked with our friends at the

TMA and TAPA to educate members of the Texas

delegation in Washington, DC about the benefits

of the medical liability reforms achieved in 2003.

We formed a coalition with California carriers and

drafted language for amendments to the federal

health care reform bill. We asked US representatives

from Texas to include this language in the

federal legislation. Regrettably, most of the key

legislators needed to protect these reforms for

doctors voted for passage of the landmark bill

without any language preventing expansion of

liability against doctors, a danger which we feel

exists in the new legislation. However, the battle

to protect doctors in the ensuing establishment

of federal medical standards and use of those

standards in trials against doctors has just begun.

Our efforts will not cease until we have achieved

protections for physicians in this federal legislation.

TMLT is not just about selling insurance to

doctors, we are about protecting and defending

doctors at all levels and in all venues.

As we reflect back on 2009, I am exceedingly

proud of our TMLT team—including staff, board

members, lobbyists, consultants, and defense

attorneys. We accomplished many important

goals that benefited policyholders and continued

improving access to medical care for their patients.

We look forward to having even more success in

2010 and we thank all of our policyholders for their

business and support.

2009 Executive Team (L-R): Dana Leidig, Vice President, Communications & Advertising; John Alexander, Sr. Vice President, Underwriting

Services; Jill McLain, Sr. Vice President, Claim Operations; Bob R. Fields, President and CEO; Don Chow, Sr. Vice

President, Sales & Marketing; Jane Holeman, Vice President, Risk Management; Treg Russell, Vice President,

Management Information Systems; Ray Demel, Sr. Vice President, Chief Financial Officer; Gail Nichols,

Vice President, Human Resources & Administrative Services

4 TMLT Annual Report | 2009 2009 | TMLT Annual Report 5

Bob R. Fields

President & CEO

Jill McLain

Sr. Vice President, Claim Operations

Claim Operations


ith the inception of debate on national health care issues, TMLT

faced new challenges to our continuing efforts to protect 2003 Texas Tort

Reform. The importance of maintaining these reforms intact is proven

by the continued positive effects which emanated from that legislation.

Claims intake is approximately half of the amount we experienced in

the years prior to tort reform. In fact, claim intake numbers remain low

despite a steady increase over the years in our policyholder base. In

the years before tort reform, between 22 and 26 physicians out of 100

were sued each year for medical malpractice, not counting mass litigation.

In the last 2 years, frequency has stabilized at a rate of 8.4% or

less. The huge reduction in the number of nonmeritorious cases being

filed has resulted in substantial savings of defense costs, which have

been passed along to physicians by reducing medical liability insurance

premiums to manageable levels. This has encouraged physicians

to stay in practice in Texas, attracted new physicians into the state, and

motivated physicians to stay in practice longer, instead of opting for

early retirement.

Because the law now clearly defines the elements of damages, all

parties have the ability to more accurately evaluate cases, enabling

easier resolution of disputes. TMLT has not changed its philosophy

of defending physicians who have met the standard of care in treating

their patients; however, current law often allows us to reasonably

resolve meritorious cases earlier, for fair value. Plaintiffs still have

the ability to recover all of their economic damages, as well as up to

$750,000 in noneconomic damages in multi-party cases. Physicians

can feel greater confidence in their ability to seek justice in the

courts without having to face the fear of limitless and unpredictable

damage awards.

Since cases can more readily be evaluated and disputes resolved

earlier, it is less often necessary to go through the expensive and

time-consuming process of a jury trial. In the 4 years prior to tort

reform, TMLT tried an average of 80 cases per year on behalf of our

policyholders with a win ratio of 85%. In the last two years, we have

averaged 25 cases taken to trial with a win ratio of 86%.

TMLT continues to honor its commitment to defend doctors who practice

good medicine. In 2009, we closed 84 out of 100 cases without any

indemnity payment. It is always our goal to preserve the good records

of deserving physicians. Additionally, we do not want to provide any

incentive to attorneys to file cases without having evidence that the

physician failed to meet the standard of care. By resisting paying

nonmeritorious claims, we accomplish both goals. While our closedwithout-indemnity

percentage is slightly less than in some previous

years, this can be attributed to vastly reduced claim filings.

Physician participation in decision-making is an integral part of the

Trust’s philosophy. The claim staff meets three times a year with

our Claim Review Committee (CRC), which is composed of the nine

members of the governing board and approximately twenty other

physicians from varying specialties. The purpose of these meetings is

to discuss the medical issues in some of our most serious and complex

cases. The information shared in these sessions is very helpful in

furthering our staff’s medical understanding of the cases reviewed.

Jill McLain and Chair of the TMLT Claim Review Committee Dr. David Joseph

confer about a case.

With fewer cases to manage, TMLT claim staff have been able to

provide even greater personal customer service to our policyholders.

Working closely with our insureds and defense teams, we concentrate

not only on implementing effective defense strategies and techniques,

but also on making sure that important information is timely communicated

to all involved. Because policyholder satisfaction is of prime

importance to us, claim satisfaction surveys are sent out on every

closed file. In 2009, the claim department achieved a 99% satisfaction

rate on the questionnaires returned.

Clearly, it is one of TMLT’s top priorities to make sure the gains achieved

by effective tort reform are not diminished, and we work continuously

toward that goal. This year, having become aware of possible threats

to state reforms which could be a backlash of the proposed health

care reforms being discussed in Washington, DC, I worked closely with

CEO Bob Fields, Governmental and Regulatory Affairs Liaison Theo Van

Eeten, defense counsel experienced in legislative matters, and retained

Claim Review Committee (CRC) meeting

lobbyists to propose and fight for language in the various bills which

would make it clear that nothing in those bills was intended to create

new causes of action against physicians or to preempt state reforms.

That battle is ongoing, and we will continue to fight it. In addition,

we are working with state legislators, keeping them informed of the

benefits tort reform has provided not only to physicians, but to all the

citizens of Texas in the form of improved access to health care.

Investigations by the Texas Medical Board (TMB) are continuing to

trend upward. We encourage our insured physicians to retain counsel

early when faced with a TMB complaint, and to take advantage of the

Medefense Endorsement on their policy to help them with the legal

costs of defending themselves in these actions. In 2009, our Medefense

claim intake was over five times greater than it was in 2004, and that

trend continues. The Medefense benefit takes some of the financial

burden off of physicians as they work through the stressful investigation

process. In addition to providing financial assistance, we can help

physicians choose an attorney who is knowledgeable in

defending physicians before the TMB. With RAC audits

looming, TMLT modified the Medefense Endorsement

language to clarify coverage for those as well as EMTA-

LA, HIPAA, and Stark actions. In addition, as an added

benefit, TMLT has agreed to waive the Medefense coinsurance

clause for physicians who choose an attorney

from TMLT’s approved panel.

We certainly face challenges in the future. Health

care reform legislation could dramatically impact our

physicians in many ways. We will stay active and on the

forefront of both national and state politics in an effort

to protect the interests of our policyholders, keeping a

watchful eye on developing trends. It is more important

than ever to make sure our government officials and

the public know the inestimable value tort reform has

brought to the citizens of Texas. We will continue in our

mission to be the leader in the medical liability industry

in Texas.

6 TMLT Annual Report | 2009 2009 | TMLT Annual Report 7

Jane Holeman

Vice President, Risk Management

Risk Management


MLT not only defends claims but also assists physicians in preventing

them by providing industry-leading risk management services.

Recognizing the challenges facing our policyholders in managing

medical practices, we continued to improve and enhance opportunities

in 2009 to assist in mitigating liability risks and promoting a safe

environment for patients. Our philosophy has remained unchanged in

the 30 years of TMLT history. We believe participation in risk management

programs has a positive impact on both physicians and patients.

Integrating risk management techniques enhances patient safety, helps

minimize risks and promotes defensibility in claims and lawsuits.


Completion of the reaccreditation process for the Accreditation Council

for Continuing Medical Education (ACCME) was an exciting accomplishment

for the Risk Management Department in 2009. The lengthy,

arduous process began in late 2008 with compilation of required

documentation. The ACCME decision was based on review of the selfstudy

report, evidence of performance-in-practice, and the accreditation

interview in June. In December, we received notification that Accreditation

with Commendation was awarded for 6 years as a provider of

continuing medical education (CME) for physicians. TMLT is the first

professional medical liability carrier in Texas to achieve commendation

status, and one of only 10% of all providers surveyed under the new

criteria to be recognized in this way. Dr. Murray Kopelow, Chief Executive

of ACCME, stated in his letter:

“The ACCME congratulates you and commends your organization for

not only meeting ACCME’s accreditation requirements, but for demonstrating

that yours is a learning organization and a change agent for

the physicians you serve. You have demonstrated an engagement with

your environment in support of physician learning and change that is a

part of a system for quality improvement.”

This ongoing accreditation provides TMLT the flexibility to develop and

present courses of interest on a variety of risk management topics to

policyholders. Attendance at the 2009 fall seminar series far surpassed

that of previous years with 1,072 physicians attending Legal Update

2009: Facing Risks in Your Practice. This represents the largest

attendance at a fall seminar series to date.

Electronic learning options continue to be popular with policyholders.

In an effort to offer new opportunities, two new online courses

were added in 2009. In June, 10 Things That Get Physicians Sued was

added and Physician CME Collection, a new compilation of three 1-hour

Reporter articles, was available in December. There were 1,276 online

CME course completions in 2009. Additionally, changes to the online

CME testing process were implemented to monitor and improve test

scores. Physicians now have access to course content while completing

the test, question randomization was eliminated, and test question

placement was edited to correspond with content.

The risk management staff consults daily with policyholders on a

variety of situations occurring in their practices where the potential

for risk exposure exists. The most common question identified in 2008

related to termination of the physician-patient relationship. In response,

a new one-hour CME course, Complexities in Beginning and Ending the

Physician-Patient Relationship: When to Call It Quits, was developed.

Jane Holemen addresses the Risk Management Committee comprising RMC

Chairman Dr. Jimmy Strong, Dr. Don Butts, and Dr. Cristie Columbus.

This newly-developed course was presented to 6 groups in 2009 with

very positive feedback received.

Continuing the outcomes measurement project initiated in 2008,

the Risk Management Department analyzed data to determine the

relationship between physicians participating in CME courses with

claims experience. The results were favorable indicating physicians

who participate in CME courses have fewer claims following course

completions. As defined by the parameters of the study, during the

period January 1, 2004 through January 1, 2008, there was a 14%

decrease in claim activity.

Practice Reviews

The practice review is a comprehensive service, designed to assist

physicians and their staff in determining risk exposures. The professional

risk management staff completed practice reviews for 1,895

physicians, approximately 12% of policyholders in 2009. This number

comprised 172 group practice reviews for a total of 1,432 physicians

and 463 physicians in individual practices. Risk management representatives

met one-on-one with physicians summarizing the outcome of

the review. The dialogue and exchange of ideas, coupled with improved

internal workflow and electronic transmission of information, resulted

in a 99% response rate to review recommendations.

Customer service has been enhanced by offering policyholders the

opportunity to contact risk management staff via the TMLT website to

request practice reviews, initiate a consultation with a risk management

representative, and inquire about CME courses.

Providing timely notification to policyholders regarding pertinent health

care issues, the risk management staff drafted risk alerts regarding

Cordarone and TNF Inhibitors, and legislation impacting regulation

of laser hair removal facilities. These were published in the Reporter

newsletter and posted on the TMLT website. Additionally, Risk Management

Guide, Health Information Release Booklet and Informed Consent:

Physician’s Guide were revised and are currently available to physicians

on the TMLT website.

With the rapidly changing and evolving nature of health care, risk

management staff took an active role in identifying bills passed in

the 2009 legislative session impacting the delivery of health care for

our policyholders. Bills were passed affecting the certification and

regulation of pain management clinics, emergency care facilities,

and laser hair removal facilities. Knowledge of these bills and the

associated regulatory issues provides a sound basis for our risk

management professionals to recognize situations in which a physician

may be in violation of Texas laws and regulations, and to assist

in mitigating their risks.

Recognizing the value of the risk management practice review, a

general surgeon from Dallas commented, “Extremely helpful. Provides

insight into how to potentially avoid problems before they may occur.

Even if changes do not need to be made, the review is an excellent

source of information to continue to improve patient care and my

practice. Barbara Rose is a wonderful reviewer and teacher!”

Risk management seminar registration

8 TMLT Annual Report | 2009 2009 | TMLT Annual Report 9


The Trust and Health Care

n June 2009, TMLT received calls from federal legislators

regarding disturbing proposed legislation in Washington,

DC. We were informed that certain groups might

use this legislation to undermine existing tort reforms

and caps in various states, especially those in Texas and

California that have helped stabilize medical liability

premiums and quelled the numbers of nonmeritorious

lawsuits in those states.

Over the next few weeks, a review of proposed House

Bill 3200 showed that this federal legislation could

preempt existing state laws and caps. Passage of this

legislation would establish new standards of care and

could increase liability exposure for physicians in over

two dozen different sections of the bill, with possibly

more to come as the 1,990-page original proposal

was amended.

The TMLT Governing Board immediately recognized

the dangers of this proposed legislation and authorized

TMLT President and CEO Bob Fields and his staff to

engage in this debate with the goal of protecting the

Texas reforms. Since 2003, these hard won reforms have

been effective in attracting more physicians to the state,

in reducing and stabilizing medical liability rates, in

reducing the numbers of nonmeritorious lawsuits, and

in increasing patients’ access to health care.

In late July, Mr. Fields met with the president of the

American Medical Association, a practicing physician

from Texas who has benefited from the 2003 Texas tort

reform measures. Mr. Fields approached him to express

TMLT’s concerns over House Bill 3200; however, he was

advised that the AMA had essentially already endorsed

the proposed federal legislation without securing any

amendments to protect state laws and caps. Without

AMA’s strong participation, it would be difficult for

TMLT and others to join the debate at the national level.

Texas is a Republican-governed state and Washington,

DC is in Democratic hands. Democratic Congressman

Henry Waxman was the original author of the House Bill.

However, the TMLT team was determined to find a way

to be heard on these issues considered to be vital to

Texas physicians.

TMLT takes action

To gain a better understanding of how to advance our

issue in Washington, TMLT retained Jim Turner and

David Pore, lobbyists on the federal level. Mr. Turner is a

former four-term US Congressman from Texas. Securing

additional like-minded organizations to work with TMLT

at the national level was key. A coalition of California

medical professional organizations, who themselves had

an interest in protecting California’s MICRA reforms, was

contacted to solicit their participation, as was the Texas

Alliance for Patient Access (TAPA). TAPA helps protect

Texas patients’ access to health care. The Texas Medical

Association also offered their strong support.

A team of TMLT defense and appellate attorneys, including

Mike Wallach from Fort Worth and Brent Cooper

from Dallas, reviewed the language of the legislation

and drafted alternative language. This team spent a

great deal of time and effort contacting influential

legislators and medical liability carriers in other states

to seek their support.

Mr. Fields traveled to Washington, DC with physicians

Dr. Bill Green of Houston, Dr. Sheldon Gross from San

Antonio, and Dr. Don Risinger from Waco. This group,

together with the federal lobbyists, visited various Texas

congressmen and presented them with draft language to

be included in any proposed federal health care legislation.

One of those legislators was Congressman Henry

Cuellar, a Democrat from Texas, and a long-time friend

of the medical community.


The debate raged as opposition mounted and eventually

resulted in language that protected physicians in

only five areas of the 1,990-page bill. Later, when the

Senate produced its 2,074-page version of the federal

health care bill, plus a subsequent 42-page amendment,

the Senate proposed that the US Government Accountability

Office (GAO) only study 14 areas of the legislation

to see if it indeed created new causes of action against

physicians. Neither the House nor the Senate legislative

proposals provided adequate protection for physicians.

The danger that state tort reforms and liability caps

could be preempted and physician liability expanded

through legislative, judicial, or regulatory means was left

in place. It appeared that the only solution to the problem

was the global amendment that TMLT had offered

and supported all along. Such an amendment would

contain language protecting physicians from new causes

of action, would prevent preempting of state reforms

and liability caps, and would apply globally to the entire

bill, not just a few selected portions.

In early November 2009, Mr. Fields, TMLT board

members Dr. Arthur Evans and Dr. Don Butts, and TAPA

chairman Dr. Howard Marcus, made a presentation in

Houston to the AMA House of Delegates. They wanted

to again alert the AMA of the threats to existing state

tort reforms and liability caps posed by pending federal

health care legislation. By mid-January, six months after

the initial requests, the AMA finally agreed, in writing, to

TMLT’s position and stated their support for our requested


Could the impending dangers be halted?

The proposed legislation appeared to be headed for

passage. The physicians of Texas needed to protect the

reforms that have brought thousands of new doctors to

the state significantly increasing access to health care

for thousands of Texas patients. TMLT representatives

talked to Democratic US Representative Henry Cuellar

again, as he had been a key supporter of health care

when he was a Texas state legislator earlier in his public

career. He drafted a revised global amendment stating

that nothing in the federal health care proposal could

“modify or impair state law governing legal standards

or procedures used in medical malpractice cases,

including the authority of a state to make or implement

such law.” The amendment gained support from fellow

Texas Democrats Gene Green and Charles Gonzalez.

TMLT favored more effective language, but was advised

that it would be too difficult to convince House leadership

to incorporate any stronger changes. However,

there was reason to believe that the amendment would

be incorporated before the bill was passed. Then there

were unexpected developments, which would result

in the health care bill being passed without any of the

proposed global amendments.

The change in the political landscape occurred when the

voters in Massachusetts elected Republican Scott Brown

to former Democratic Senator Ted Kennedy’s seat resulting

in the Senate losing its Democratic 60-seat super

majority. This gave the Republicans in the Senate a

crucial 41st vote, which would allow them to temporarily

change the direction of the proposed health care legislation.

In essence, if the House altered any of the federal

health care bill, as passed by the Senate, the changed

bill would have to go back to the Senate for their approval.

That approval would virtually be impossible to attain,

as the Senate no longer had the required 60 votes after

Senator Brown’s election. If the Democrats were to pass

health care reform, the only option remaining was for

the House to pass the exact same language bill as had

already been passed by the Senate. If both houses of

Congress passed the bill, it would become law.

For a while it appeared that the proposed health care

legislation was at a dead end, as a number of Representatives

had issues with various aspects of the Senate

bill. However, a promise was made that any passed

legislation would be amended and improved by

subsequent legislation. As a result of this promise, on

March 23, 2010 the House voted 219 to 212 to pass the

Senate version of the bill, which became law upon the

President’s signature.

All twenty Republican US Representatives from

Texas voted against the bill, joined by one Democrat,

Congressman Chet Edwards (District 17). The remaining

11 Democrats voted in favor of the bill, including

Congressmen Cuellar, Green, and Gonzalez, who, at

TMLT’s request, had urged the Democratic leadership

to include language protecting doctors in the final bill.

TMLT was greatly disappointed in the passage of this bill

without protective language, given the potential dangers

of this legislation for the Texas medical community.

The promise to amend the passed health care bill was

kept to some extent. A “reconciliation” bill was drafted

for this purpose. A reconciliation bill can only contain

items that supposedly have a budgetary impact. This

method was employed as such a bill could be passed

with a simple majority of 51 Senate votes. However,

items not related to the budget were excluded from the

amendment and, therefore, none of the badly needed

protections for physicians and other health care providers

were included. There are no protections in the bill to

prevent introduction into evidence against a physician of

any violations of future bureaucratically created medical

standards. TMLT believes there should be clear language

in the bill to prevent the Department of Health and

Human Services (HHS) from enacting rules applying to

future federal health care payments that could preempt

state tort reforms and caps—caps that have proven so

valuable to health care providers and patients alike.

Is the battle over?

TMLT and its allies will continue fighting to protect

doctors and to protect against potential expanded liability

and preemption of state reforms and caps. There is

no known timeframe for the federal “cleanup bill” which

was previously promised by congressional leadership.

That bill may be difficult to pass now that Democrats no

longer have a filibuster proof majority in the Senate. It

has been made public that a well-known lawyer hostile

to the insurance industry has already been named a

leader in the area of insurance oversight in the Department

of Health and Human Services. Regardless, TMLT

will be looking for any opportunity to incorporate

language into the law to protect our health care providers

from increased exposure and liability. It may still be

possible to gain some protections during the creation of

new rules and regulations by the HHS. Fortunately, we

have been advised by Congressman Cuellar that he will

work tirelessly to pass the needed legislation. The hopes

and livelihood of thousands of Texas doctors depend on

his success.

On the state level, TMLT is gearing up again for a state

legislative session which will begin in January 2011. As

in the past, trial attorneys and other opponents of tort

reform can be expected to introduce legislation to weaken

or abolish important parts of the 2003 state legislation.

TMLT will work with TAPA, the TMA, and a host of

other entities in an attempt to prevent the undermining

of tort reforms and to continue to protect physicians

from nonmeritorious claims.

Texas Medical Liability Trust is more than just an insurance

carrier. The Trust has devoted more effort and

resources to tort reform in Texas than all other carriers

combined. TMLT has also done more on the federal level

than any other Texas based carrier. These efforts have

been made in order to protect the medical community—

and especially TMLT policyholders—from unwarranted

nonmeritorious litigation. At TMLT, we believe that our

responsibility goes beyond just providing you with

insurance coverage. We believe that Texas physicians

and health care providers deserve a stable, predictable,

and fair legal climate. The TMLT Board of Governors and

staff are committed to taking this responsibility seriously

and are pledged to protect your best interests.

10 TMLT Annual Report | 2009 2009 | TMLT Annual Report 11

John Alexander

Sr. Vice President, Underwriting Services

Underwriting Services


MLT’s underwriting operation had another remarkable year in 2009

highlighted by expanded coverages, responsible premiums, and

personalized customer service. TMLT’s official year-end policy count

reached 15,386, reflecting a net increase of 400 or 2.7%. We retained

93.5% of existing policies.

Premium rates at TMLT trended lower by an overall average of 4.7% in

2009. This followed a reduction in 2008 of 6.5%. For 2010, rates will be

reduced by 1%. Taken together, rates have decreased 12% in the most

recent three years. Policies renewing with TMLT receive the added

bonus of a dividend, applicable as a credit to the following year’s

premium invoice. The dividend was 22% in 2008, 22.5% in 2009 and

for 2010, the dividend on renewals will be 24% of the prior year’s

policy premium. The lasting effects of the 2003 Texas tort reform

measures have produced genuine stability in the frequency and

severity of claims and have made these extraordinary reductions in

premium possible.

Physicians with TMLT choose policy limits of $500,000 or less over

80% of the time. In addition, most policyholders are on a claims-made

coverage form, with only 11% on an occurrence form. Discount

opportunities available to TMLT insureds are numerous. The most

commonly earned discounts include those for favorable loss experience,

practice review, and risk management CME courses, many of

which are developed by TMLT’s risk management staff. In 2009,

these three types of discounts alone amounted to more than $26

million in savings.

Within TMLT’s underwriting department, there are eleven licensed

underwriters responsible for the selection of new, insured members

and setting renewal terms for existing policyholders. These professionals

are supported by a highly responsive and enthusiastic team

of service specialists and underwriting technicians who assist the underwriters

in delivering consistent, dependable, and accurate service.

A large component of this service includes timeliness in the issuance

of new and renewal policies. In 2009, 98% of new business policies

were issued within 15 days of the receipt of all application materials

and 96% of the renewal policies were issued 30 days prior to the

renewal date.

Through the efforts of the customer service team and TMLT’s newly

implemented call center, customers were quickly and easily connected

to representatives knowledgeable in answering billing and policy

questions. More than 26,000 telephone calls were efficiently handled

by the underwriting department during the year. In addition, account

service representatives and underwriters made scheduled visits to 368

groups consisting of more than 4,600 insured physicians.

TMLT’s governing board of physicians is active in the underwriting

operation through the Underwriting Review Committee (URC).

Composed of five of the nine board members and chaired by

Dr. Robert Parks, this committee evaluates and approves proposed

underwriting actions on policies with claim and underwriting concerns.

The medical knowledge and first hand clinical experience

of this committee help uphold TMLT’s underwriting standards.

Today’s highly competitive medical liability market has significantly

impacted the pricing, terms, and conditions of coverage. Physicians

should be cautious when considering offers to switch their professional

liability coverage to another carrier. TMLT’s underwriting department

has noticed an increase in physicians joining hospital insurance

programs, sometimes referred to as 501(a)’s. We recommend the

details of the coverage provided by these plans be carefully examined

and compared to the TMLT policy. For example, does the new policy

contain a “consent to settle” clause? If so, does the coverage include

the right to limit such consent to a certain dollar amount? In the event

of a lawsuit, will the physician’s defense be controlled by the hospital?

Finally, a physician should be familiar with the provisions and requirements

applicable at the time of separation from the hospital’s plan.

Will a reporting endorsement (tail coverage) with an additional set of

limits be made available to the physician?

For 2010, the underwriting department plans to implement a simpler

method for processing hospital verification and credentialing requests.

Policyholders will be invited to “opt in” to the new program

and permit TMLT to release policy and claim history information

directly to the requesting party. This will expedite the re-credentialing

process, eliminate numerous duplicate requests, and cut down on the

use of paper and postage.

Also effective in 2010 is an enhancement to the TMLT Medefense

coverage endorsement. The form includes a 10% co-insurance clause

per insured event, but this clause can now be waived if an attorney is

selected from a panel provided by TMLT. Furthermore, the definition of

a disciplinary proceeding has been expanded to include proceedings

against the Named Insured alleging violations of the EMTALA, HIPAA,

and Stark laws. Coverage for proceedings instituted by the US Department

of Health and Human Services is clarified to include the Centers

for Medicare and Medicaid Services alleging the Named Insured has

performed medical services in violation of guidelines (Recovery Audit

Contractor program).

More Texas physicians choose TMLT to defend their professional

reputations and protect their financial assets than any other medical

liability provider. The staff of the underwriting department takes great

pride in this fact and we stand ready to meet the needs of our policyholders

with service beyond compare. We appreciate your business

and look forward to another successful year in 2010.

John Alexander and URC Chairman Robert I. Parks, Jr., MD

Underwriting Review Committee (URC) at work

12 TMLT Annual Report | 2009 2009 | TMLT Annual Report 13

Don Chow

Sr. Vice President, Sales and Marketing

Sales and Marketing


n 2009, a significant contributing factor to TMLT’s net growth was

new business. For the year, over 1,300 policies were written generating

an annualized premium base of $7.3 million. Further analysis

illustrates much of the new business emanated from physicians in

solo practice as well as those joining existing groups. Combined,

the two categories represented nearly 87% of new policy issues.

The numbers of physicians joining existing groups continues to

increase, accounting for 40% of total new production during the year.

This is consistent with the migration of physicians to Texas to practice

medicine. That figure exceeds 14,000 since the passage of tort reform.

There continues to be a strong focus toward developing new

business involving physicians in group practice; however, competitive

pressures have caused the number of opportunities to decrease.

Compared to 2008, that figure is down 27% and 55% since 2005. The

corresponding impact on results has been significant, accounting for

13% of new issues in 2009 compared to 24% a few years ago. Medical

professional liability carriers continue to be aggressive in their efforts

to retain this business, employing pricing strategies to assure that

outcome. Tort reform has taken away much of the pain and anxiety

of the hard market years. Consequently, prospective buyers are not

experiencing the need to explore alternatives in the market. Those

that do are not seriously considering a change. However, one of our

primary objectives is to cultivate relationships with those prospective

opportunities. Eventually, when the market hardens, we will be well

positioned to respond.

The soft market has now completed its third year of impacting the

medical professional liability industry in Texas. The dramatic increase

in the number of carriers and corresponding drop in rates during this

period has served to perpetuate the current environment. Carriers

that did not exist prior to 2004 have maintained an aggressive posture

while seeking to increase market share often at the expense of established


TMLT has managed to compete successfully and has been fortunate

to continue its path of steady and profitable growth. Since 2004, our

policy base has increased over 25%, albeit moderating during the past

three years. For those physicians seeking a carrier offering more than

just a “low rate,” TMLT has continued to demonstrate its commitment

to the physicians of Texas. For over thirty years, TMLT has offered a

high quality product backed by a promise to fulfill our obligations on

a consistent basis while exceeding expectations. Our value added

TexMed 2009

proposition and strategic partnerships with organized medicine and

selected agents have been instrumental in our success.

We value the exclusive endorsements we have worked so hard to

earn each and every day. Our shared objectives with the Texas Medical

Association and county medical societies allow us to work in harmony

to find solutions to emerging problems and opportunities. We rely on

each other for information, to analyze data, and to develop solutions

that will facilitate a strong and loyal constituency.

The dynamics of a changing health care environment and the challenges

posed to physicians seeking to practice medicine efficiently

and effectively are creating potential new threats. Economic forces are

clearly influencing how physicians will decide to practice medicine.

Non-profit health corporations (NPHCs) – formerly known as 501(a)

organizations – are emerging as potential threats since it could impact

TMA’s ability to attract and sustain membership; similarly, TMLT may

be preempted from opportunities to insure physicians choosing this

route. The same dynamics apply to larger group practices as they seek

economies of scale through acquisition of smaller practices. Efforts are

under way to collaborate and find solutions.

On a more local basis, TMLT sales staff are working closely with many

of the county medical societies to identify opportunities for membership

and policyholder growth. By combining resources, we seek to

enhance opportunities for success. TMLT also supports a number of

county and specialty societies through participation in many programs

and events for member physicians. Our sponsorship is important for

the societies to generate non-dues revenues that help fund the many

programs offered to member physicians. The financial investment

complements and reinforces the relationships that have been cultivated

for many years. Every effort is made to leverage those relationships

and corresponding endorsements when developing new business.

Our strategic partnerships with selected agents have positioned TMLT

to increase its penetration of potential policyholders in the state.

Currently, agents represent approximately 18% of total premium

volume and are significant contributors in the development of new

business. Over the past five years, their contribution to new business

revenues has exceeded 31%. Although results for 2009 did not meet

expectations, we remain optimistic on a longer term perspective. We

feel the relationships developed over the past twelve years have been

productive and have helped to solidify TMLT’s position as a primary

carrier of choice.

The challenge of operating in a soft market is to be patient and recognize

that the opportunities to develop new business will not be easy

to find. The appetite for new business remains strong and we make

every effort to differentiate TMLT from the rest of the pack. It may not

resonate with every opportunity, but we remain vigilant in our efforts

to attract physicians who understand the value proposition offered

by TMLT.

2009 TMLT medical conference exhibit

14 TMLT Annual Report | 2009 2009 | TMLT Annual Report 15

Support Services


Gail Nichols

Vice President,

Human Resources &

Administrative Services

he Human Resources & Administrative Services

Department includes a staff of nine individuals dedicated

to providing a quality working environment, outstanding

employee benefits, and support services that assist

TMLT in attracting and retaining employees of the highest

caliber. Job satisfaction at TMLT was reflected in an

excellent overall employee retention rate in 2009 of 97%.

During 2009, the Human Resources team focused a

great amount of time on researching, negotiating, and

converting to a new web-based payroll processing

system, as well as a benefits tracking application. This

new system will allow us to manage current and historical

HR data, as well as benefits information, at the speed

of the Internet and we will have much more functionality

than before. As we become more adept at using these

new systems, HR will be able to develop customized

reports, allow all employees to view and update their

personal information and make benefit changes via

web-based self-service rather than paper-based

transactions, as well as provide management staff direct

on-line access to pertinent information regarding their

staff members.

To further improve efficiency and take advantage of new

web-based technology, HR also began implementing

an electronic time-keeping solution to replace paper

timesheets and manual data entry of vacation, sick, and

other types of leave. A small test group representing

each department was asked to participate in a pilot

project during the last part of the year. While continuing

to complete paper timesheets, this pilot group also

learned how to report their leave and overtime on-line,

and their supervisors began learning to approve and

submit the data to HR. Plans are to implement this

new system in 2010.

Another major initiative undertaken in 2009 was the

selection of a new broker and an administrator for

our employee retirement plans. The ability to provide

education in the areas of investing, retirement planning,

estate planning, and other financial topics was one of

the criteria in the interviewing process. A selection was

made and efforts began in earnest to convert the plan

documents and educate the staff as to the benefits of

participation and the importance of saving for the future.

The year also brought several honors which recognized

TMLT’s benefits programs and wellness efforts.

In May, the Austin Business Journal awarded us 7th

place among the top 20 medium-sized entrants in their

Best Places to Work in Central Texas contest. At our

all employee Town Hall meeting in June, the United

HealthCare Central Texas Medical Director presented

TMLT with an APEX award in recognition of exceptionally

innovative health care benefit strategies, and an

article appeared late in the year in UHC’s hub magazine,

distributed nationwide. One of our proudest moments of

TMLT receives the APEX award

the year was watching our Senior HR Generalist, Angela

Bitzer, receive recognition at the Austin Business Journal’s

Healthcare Heroes awards presentation in August

for her achievements in building a quality wellness

program at TMLT.

TMLT’s reception, mailroom, and purchasing staff

worked diligently in 2009 to provide a quality level of

service to all internal customers as well as to all policyholders.

Our reception team is committed to appropriately

and efficiently directing each policyholder to the

correct department. Administrative Services staff posted

over 150,000 pieces of outgoing mail in 2009, maintained

sufficient quantities of office supplies for staff

while always seeking out cost-savings, ensured that our

office equipment was functioning properly, and coordinated

with the building’s property manager to update,

distribute, and provide training on emergency evacuation



Dana Leidig

Vice President,

Communications &


t TMLT, our governing board and executive management

support excellence in communication throughout

the organization. The Communications & Advertising

Department was successful in achieving its 2009

communication objectives within the approved budget.

Our communication staff collaborated with teams from

each department to help design the most effective

communication plans for key strategies. These included

a redesigned web site,; the award-winning

internal web site, iTMLT; the print and electronic advertising

campaigns; the Reporter and other newsletters;

marketing collaterals and exhibit materials; and special

projects such as the scholarship program, the Team

of the Year employee recognition program, and the

community service program.

We collaborated with the governing board on the TMLT

Memorial Scholarship Program which completed its

fifth year of conferring medical student scholarships in

2009. To increase the number of scholarship applicants,

this program was modified. Four $10,000 scholarships

were offered to students at any of the nine Texas medical

schools. The candidate field was broadened to include

second, third, and fourth year students. As a result,

applicant numbers increased from 33 in 2008 to 112 in

2009. Awards were based on assessing financial need,

academic performance, and an original patient safety

essay based on a closed claim. Four scholarships were

awarded. Information about 2009 recipients and the

scholarship program is available at

The 2009 work of TMLT’s small team of professional

communicators was recognized in several communication

evaluation programs this year. The American

Medical Writers Association recognized Laura Brockway

with the Eric W. Martin Award in the professional

audience category for the Reporter article, “The diversion

dilemma.” This same article earned a Bronze Quill

award from the International Association of Business

Communicators (IABC) in the technical/science writing

category. Additionally, the Reporter article, “You’ve

been criticized online” by William Malamon received

an International Technical Publication Award from the

Society of Technical Communication as well as an Award

of Merit from the Society of Technical Communication

– Lone Star Chapter. TMLT’s messages on hold recordings

are written and produced internally with voicing

by TMLT employees. These recordings also received a

2009 IABC Bronze Quill award. In graphic design, the

TMIC dental campaign designed by Karen Ow received

the Communicator Award of Distinction and the Apex

Award of Excellence. We continue to be committed to

timely, effective communication with our policyholders,

organized medicine, the legislature, and other business



Treg Russell

Vice President,


Information Systems

ome of our major areas of focus during 2009 were

to control information technology expenditures, reduce

the number of outstanding work requests to our department,

and make it easier for our physicians to do business

with TMLT. Substantial impact was made in each of

these areas over the course of the year.

By carefully managing our workload with Ebix, the

vendor of our Infinity insurance processing system,

we saved $100,000 over the expenses planned for the

year. We also capitalized on last year’s effort to develop

in-house expertise in this system. As a result of that

emphasis, we were able to complete 30% of the Infinity

system work requests internally. This equated to 69

projects that did not have to be outsourced and resulted

in an estimated $230,000 in savings to TMLT.

We made substantial progress towards reducing the

backlog of projects during 2009. The year began with 165

active requests to enhance our insurance processing

system alone. Nearly that number of new requests came

in during the year. We completed 232 projects in this

area reducing the year-end backlog to 90! In addition,

we completed all outstanding and subsequent requests

related to our imaging and workflow systems.

Perhaps more noteworthy this year is the work done to

make it easier for our policyholders to do business with

us. One of the most popular new conveniences was the

expansion of our credit card payments options. Whether

you choose to pay online or sign up for recurring

payments, we now support the use of American Express,

Visa, and MasterCard to meet your payment needs.

We worked closely with our Communications & Advertising

Department to redesign our website to make it

easier to use. This team expanded the functionality of

the Members Only section as we continued our effort

to make this new area available to all policyholders.

Some features you can expect to see in the near future

are the ability to fill out your renewal application online

and the ability for a group administrator to answer your

insurance questions by accessing appropriate information

on your behalf.

We also provided an electronic voting option to policyholders

for the election of the 2010 board members. The

board asked us to look for ways to increase policyholder

participation and reduce ballot confusion. As a result of

reviewing the election process and selecting a vendor to

conduct the electronic voting for us, we were able to see

30% of the voting completed via the Internet.

As we look forward to the coming year, we will continue

the efforts to be cost efficient and make conducting

business with us a simple and positive experience.

We will also be working to provide additional payment

options to you, apply technology to optimize internal

workflow where valuable, and continue our ongoing

effort to keep our systems current to support TMLT and

policyholder needs well into the future.

16 TMLT Annual Report | 2009 2009 | TMLT Annual Report 17

Ray Demel

Message from the CFO

Sr. Vice President, Chief Financial Officer

Condensed Consolidated Financial Information

(Unaudited, In Thousands)

December 31

2009 2008

$683,632 $666,974

243,125 267,044

159,886 168,851

313,949 275,075


MLT had a very successful 2009 with another year of

strong profitability. Our financial condition continues

to improve as reflected in the accompanying summary

financial data for 2009 and 2008. Our 2009 results are

especially pleasing because we did not panic from the

turmoil in the financial markets that started in 2008

and carried over to the first quarter of 2009. As a result,

we did not incur substantial realized capital losses

during 2009. Total assets and surplus continue to grow

to all time highs. Surplus grew to $314 million at the

end of 2009 and net income for 2009 was $23 million

compared to $31 million for 2008. Our financial strength

has afforded us the flexibility to distribute a $36 million

dividend to our policyholders as they renew – this is the

fifth consecutive year that we have given a policyholder

dividend. We also lowered our rates in 2009 for the sixth

consecutive year.

TMLT’s investment in fixed maturity securities, common

stocks, and cash total $496 million and represent 73%

of our total assets. Our overall investment strategy is to

focus on maximizing current income from our investment

portfolio while maintaining safety, duration targets

and portfolio diversification. Our investment portfolio

continues to be composed primarily of high quality

investment grade fixed maturity securities. At December

31, 2009 we held fixed maturity securities with pretax

net unrealized gains of $12.7 million as compared to

pretax net unrealized losses of $2.7 million at December

31, 2008. The improvement is primarily due to a

reduction of credit spreads, offset somewhat by the

impact of slightly higher market interest rates. Also at

December 31, 2009 our investment in common stocks

had an unrealized gain of $3.8 million as compared to

an unrealized loss of $6.8 million at December 31, 2008.

This total swing in unrealized gain added $26 million

of pretax surplus to our 2009 balance sheet. The Trust

did incur realized capital losses of $5.5 million in 2009

mainly from the sale of a portion of our common stock

investments in the first quarter. We did not have any

material write-downs of our investments in 2009 as we

did in 2008. By remaining calm and not over-reacting

to the negative conditions of the financial markets, the

market values of our investments were able to recover

as the financial markets improved after the first quarter

of 2009.

The decline in direct written premiums in 2009 was

primarily the result of decreases in average policy

premiums, which are partially offset by our strong

retention of 93.5%. Net premiums written and earned

decreased substantially in 2009 primarily due to the fact

that we did not commute a portion of our reinsurance

coverage as we did in 2008, which reduced reinsurance

expense for 2008. We anticipate that the medical professional

liability pricing environment will remain highly

competitive in 2010 and competitors will continue to

lower rates.

Improvements in loss trends have allowed us to reduce

rates in recent years and to provide policyholder dividends.

This improves policyholder retention but decreases

our average premiums. While we reflect changes in

loss cost trends in our pricing, we have chosen not to

aggressively compete on price alone. Thus, we have lost

some current and potential insureds due to aggressive,

price-based competition mostly from insurers that are

willing to write coverage at rates that we believe will not

be sustainable.

Loss and loss adjustment expenses were $25 million in

2009 compared to $61 million in 2008. Throughout 2009

we continued to experience better than expected loss

trends; as a result, we recognized $50 million of favorable

loss reserve development in 2009. Also in 2008,

because overall interest rates were lower, we lowered

the reserve discount rate which increased overall

reserves by $8 million. We are currently operating under

soft market conditions, with significant competition

and premium rates continuing to moderate downward

following several years of overall favorable claim trends.

While we currently expect claim frequency to remain

below levels seen in 2003 and prior years, an upward

trend is possible. There is a great deal of uncertainty

inherent in the estimation of medical professional liability

loss reserves and we remain committed to careful

reserving practices.

We believe that TMLT is the premier provider of medical

professional liability insurance in Texas. We believe

an emerging competitive threat to the medical liability

market is alternative risk transfer structures such as

risk retention groups, captive insurers and other selfinsurance

vehicles. Larger physician groups and other

health care providers may consider these alternative risk

structures in the future as their organizations grow both

in size and in the insurance premiums they pay.

Our policyholders value TMLT’s financial strength, our

commitment to the physicians of Texas, our history of

prudent underwriting, and excellent customer service. In

these areas, we believe we outperform our competitors.

We are committed to protect the financial strength and

integrity of TMLT. Our intent is to always be there for our


Board members Dr. Alan Baum and Dr. Arthur Evans

Financial Highlights

Total Assets

Reserve for Losses

Direct Premiums Written

Policyholders’ Surplus

Balance Sheets


Fixed Maturity Securities

Equity Securities

Cash and Short-Term Investments

Premiums Receivable

Reinsurance Receivable

Other Assets

Total Assets


Reserve For Losses

Unearned Premiums

Policyholder Dividends Payable

Other Liabilities

Total Liabilities

Policyholders’ Surplus

Total Liabilities and Policyholders’ Surplus

Income Statements

Net Premiums Earned

Net Investment Income

Realized Gain (Loss) on Investments

Other Revenue (Expense)

Total Revenues

Losses and Loss Adjustment Expenses

Policyholder Dividends

Other Operating Expenses

Total Expenses

Income Before Income Tax

Income Tax Expense

Net Income

$438,580 $398,702

28,034 29,443

29,956 43,487

50,730 50,536

74,153 61,200

62,179 83,606

$683,632 $666,974

$243,125 $267,044

76,632 78,706

34,503 32,949

15,423 13,200

369,683 391,899

313,949 275,075

$683,632 $666,974

Year Ended December 31

2009 2008

$115,089 $162,609

17,567 19,549

(5,539) (9,529)

(407) 1,665

126,710 174,294

24,972 60,955

35,563 34,118

33,891 34,848

94,426 129,921

32,284 44,373

9,266 13,316

$23,018 $31,057

The foregoing unaudited condensed consolidated

financial information has been derived from the

audited consolidated financial statements. These

statements are available upon request.

18 TMLT Annual Report | 2009 2009 | TMLT Annual Report 19


TMLT is the most respected and preferred provider of medical professional liability coverage and related products in Texas.

Through the efforts of our team of qualified professionals and physician insureds, we sustain TMLT’s premier position in

quality of coverage, service, market share, and financial integrity.


Our purpose is to make a positive impact on the quality of health care for Texans by educating, protecting, and defending

physicians. We provide peace of mind to our policyholders and a supportive work environment for our team members.


Our mission is to be on the leading edge of industry change to provide a standard of coverage and service to our

policyholders by which all others are compared.

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