Annual Report brochure (PDF) - Texas Mutual Insurance Company

Board of
Directors
Martin H. Young Jr.
Chair, Houston
George Wesch Jr.
Vice Chair, San Antonio
Richard A. Cooper
Secretary, Lubbock
Marion Luna Brem
Corpus Christi
Judy Broussard
Levelland
Jose Cuevas Jr.
Midland
Sandra Kuprion-Thomas
Dallas
James D. Ross
Midland
Charles H. Whiteside
Kilgore
Texas Mutual
Insurance
Company
Austin Corporate Office
221 West 6th Street, Suite 300
Austin, Texas 78701-3403
(512) 322-3800
(800) 859-5995
Austin Regional Office
(512) 505-6000
Dallas Regional Office
(214) 689-8400
Houston Regional Office
(713) 316-2100
Lubbock Regional Office
(806) 798-4700
How to reach us
(800) 859-5995
www.texasmutual.com
email: information@texasmutual.com
Executive
Officers
Russell R. Oliver
President
Ron Wright
Chief Operating Officer
Terry Frakes
Senior Vice President
Public Affairs
Rudy Garcia
Senior Vice President
Claim and Insurance Services
Randy Johnson
Senior Vice President
Investments
Vince Kasch
Senior Vice President
Financial Services
Bill McLellan
Senior Vice President
Information Technology
Karen Meriwether
Senior Vice President and
General Auditor, Internal Audit
Mary Nichols
Senior Vice President and General Counsel
Ken Lauber
Vice President
Marketing and Field Operations
Tami Schroeder
Vice President
Human Resources
Ernest Stokey
Vice President
Premium Audit and Recovery
Joe Yurkovich
Vice President
Underwriting
Corporate
Mission
To provide a stable, competitive source
of workers’ compensation insurance for
Texas employers, act as insurer of last
resort, and help to prevent on-the-job
injuries and illnesses and minimize their
consequences.
Committed to Texas
and Texans
Texas Mutual
Insurance Company
2003 Annual Report
Letter from the
Chairman
Today’s market conditions underscore why the
Legislature created Texas Mutual Insurance Company
and why, now more than ever, this company must
stand prepared to meet all possible market
conditions. Fortunately for Texas employers, today’s
hard market is a little easier to bear than previous
hard markets, thanks in part to Texas Mutual
Insurance Company and its dedicated management
and employees.
We had a record $674 million in premiums
written to cover over 40,000 Texas businesses, an
11 percent increase over 2002 in policies written.
Those policies provided coverage for over 659,000
employees.
Even while achieving these milestones, we
continued to make significant investments in
technology to improve our operations and better
serve our customers. Examples of the results are
improved online submission capabilities for agents
and new online payroll and premium reporting for
policyholders who report monthly or quarterly.
We remain committed to our mission, and we
will pursue continuous improvement in our customer
service areas to continue to earn our customers’
Letter from the
President
Texas’ industries are as diverse as its landscapes,
and Texas Mutual Insurance Company serves that diversity
by offering competitive workers’ compensation
coverage for all types of Texas businesses.
2003 was a record year in terms of our written
premium; however, our financial success, while
important, is not what drives our company. You have
only to look at our mission statement to remember
that Texas Mutual Insurance Company stands for much
more than dollars and cents.
We provide Texas employers and their employees
with competitively priced, effective workers’
compensation coverage. Our company vision is to
be the model provider of these services.
Even in the face of record business volume this
year, we made great strides toward that goal. We have
managed to maintain our time and quality standards
while maintaining high customer service levels.
As in the past, we will stay committed to Texas
businesses. We will continue to serve as a competitive
force in the marketplace, delivering both competitive
prices and high quality to our customers.
Russell R. Oliver
Corporate Vision
business.
We will be the model provider of
workers’ compensation insurance through
innovative, responsive partnerships with
our customers and each other.
Martin H. Young Jr.
President
Chairman
Texas MutualSM is a service mark of
Texas Mutual Insurance Company
Insurance Company SM
President
Russell R. Oliver (left)
and Chairman
Martin H. Young Jr.
©2004 Texas Mutual Insurance Company
51000-321-0402

Committed to Texas
and Texans
Texas Mutual Insurance Company has established
a proven track record as a stable workers’ compensation
insurance provider for all types of Texas businesses. 2003
may prove to be the year that most clearly demonstrated
that all Texas employers have benefited, to some extent,
from our stabilizing influence on the workers’ compensation
market.
Controlled growth
At a September 24, 2003 symposium, Texas Insurance
Commissioner José Montemayor noted that Texas Mutual
Insurance Company’s market share had increased as a result
of gaining customers that other carriers had abandoned.
In short, Texas Mutual Insurance Company is working
exactly as envisioned. We have filled the void created by
the carriers that deserted the state, and we have ensured
that Texas employers have a viable, competitively priced
option for workers’ comp coverage.
By maintaining a strong surplus and practicing a
conservative underwriting approach, we have avoided
many of the peaks and valleys that other carriers have
experienced during market fluctuations.
Dividends and
purchasing groups
In 2003, we paid approximately $25 million in
dividends to over 22,000 qualifying policyholders.
Along with our dividends for individual policyholders,
we distributed another $1.3 million in dividends to
qualifying purchasing groups.
We assign each group a loss prevention expert
in the group’s common operations. We also partner
with each group to provide its members with a safety
plan tailored to the group’s specific safety needs.
Workplace safety
Behavior-based safety is the foundation of our
TexaSafeSM program, which encourages employers to adopt a
“total safety culture.” Our online safety resource catalog
offers nine TexaSafeSM modules with easy-to-follow examples
of ways to control the work environment, assign safety
accountability, and reduce at-risk behaviors.
With a little guidance from our loss prevention
consultants, policyholders can make safety second nature
in their organizations.
Managing claim costs
We recognize that claim management is very important
to our policyholders because today’s claim costs can affect
next year’s premium. We carefully review medical bills, work
with other interested parties to try to find ways to reduce
high medical costs, and teach employers and health care
providers the importance of solid return-to-work programs.
We believe that returning injured employees to
productive work is one of the most important aspects of
claim management. We emphasize return-to-work programs
in many of our educational efforts, and we dedicate a
section of our website to return-to-work tools.
Online services
Texas MutualSM online services allow our customers
to report injuries, review their claim history, look for
accident trends, monitor their loss ratios, report their
payrolls, and make online premium payments.
In 2003, we saw a 237 percent increase in
logons to our website, a 189 percent increase in
online loss run reports, and a 140 percent
increase in accessed online claim detail.
We regularly receive over one-third of our
policyholders’ workplace injury reports
online, and 16 percent of individuals
reporting suspected fraud do so online.
Fighting fraud
At Texas Mutual Insurance Company,
we don’t just talk about fighting fraud;
we do it. In 2003, our investigations
identified $3,405,737 in premium fraud,
$2,021,719 in health care provider fraud,
and $332,026 in claimant fraud.
In total, our investigations have led
to $49,953 returned by way of courtordered
claimant restitution and saved
an estimated $2,966,060 in future
income benefit costs in 2003.
Regional workshops
Over the years, we have presented various seminars
and workshops promoting the workers’ compensation system
to Texas employers. Our 2003 workshops attracted 737
employers, 461 insurance agents or insurance customer
service representatives, and 990 health care provider staff.
Texas Mutual Insurance Company has always been an
enthusiastic supporter of a healthy workers’ compensation
system. We firmly believe in the importance of educating
employers about the value of workplace safety.
Scholarship program
We strive to help reduce the number of work-related
injuries and illnesses in Texas, and we also work to
minimize their consequences. In extreme cases, such as
a compensable workplace fatality or an injury or illness
severe enough to qualify for lifetime income benefits, we
hope our scholarship program will help the employee’s
family by assisting with education expenses.
In December, we increased our scholarship program
to pay up to $4,000 for tuition and fees and up to $500
for course-related books and supplies per semester. For the
2003-2004 academic year, we awarded six scholarships
totaling over $12,500.
Being here for you, Texas
Our motto, “We’re here for you, Texas,” says a lot
about our commitment to our state and its employers.
Our corporate vision to be the model provider of workers’
compensation speaks to our desire to be the best. We will
continue to pursue our mission and help make Texas a
safer and more productive place in which to work and
do business.
Financial Highlights
For the year ended
December 31, 2003
(in thousands)
Gross premiums written $674,417
Gross premiums earned $667,665
Net premiums earned $658,504
Net investment income $100,482
Claim benefits paid and incurred $467,384
Dividends to policyholders $26,289
Underwriting expense and
policy acquisition costs $95,270
Provision for uncollectible premiums $3,964
Operating expenses $44,663
Cumulative effect of change in
accounting principle ($73,070)
Net income $48,346
At December 31, 2003
(in thousands, except number of policyholders and employees covered)
Assets $2,329,538
Liabilities $1,375,670
Policyholders’ surplus $953,868
Number of policies in force 40,729
Number of employees covered on
policies in force 659,482
Key indicators,
year ended December 31, 2003
Incurred loss ratio* 70.0%
Combined ratio* 96.9%
Premiums written to surplus ratio 0.71:1
*Ratios calculated as a percentage of gross premiums earned
Gross Premiums Written, Number of Employees Covered,
and Number of Policies in Force
1992 - 2003
$203,223
209,915
7,307
$403,844
432,261
19,690
$623,433
821,963
59,084
$519,923
708,556
58,521
$381,468
503,219
45,898
$234,920
378,847
37,221
$233,495
382,092
34,798
Premiums written (in thousands)
Covered Employees
Policies in Force
$242,417
402,166
32,851
$309,636
396,864
31,027
$425,315
399,123
31,177
$614,701
575,542
36,087
$674,417
659,482
40,729
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003