UMIA Financial Highlights
Bill McDonough, President and CEO, Constellation
UMIA, a leading medical professional liability organization in the Mountain States, completed 2016 in a solid financial position. For the year, we reported continued strong policyholder surplus, profitable operating results and outstanding customer retention. We are very pleased that our sustained financial success was recognized by A.M. Best with an upgrade in our rating to “A” (“Excellent”).
Our ongoing financial strength enables us to deliver superior service to our policyholders while continuing to invest in opportunities that will drive future growth. Ultimately, our solid financial position enables us to achieve our mission to help physicians and all those who devote their lives to health care attain their dream — to help, heal and serve.
Strong policyholder surplus
At year end, policyholder surplus, a key indicator of financial strength and stability, was $108.1 million. Although down 7.6 percent from 2015, our policyholder surplus is up 8.2 percent since 2012. These funds are available to cover future obligations to our policyholders and to invest in opportunities to provide them added value.
Profitable despite small revenue decline
UMIA reported 2016 net income of $11.3 million on direct written premiums of $40 million, which decreased 6 percent from 2015. This decline in premiums reflected increased pricing pressure as the health care market continued to consolidate and the medical liability insurance industry held a strong surplus position and aggressively priced premiums. Our invested assets continued to perform well for both income and total return, helping to support our operations and build our financial strength.
Underwriting gain and combined ratio
Despite pressure on revenue, UMIA’s underwriting gain was more than $3.0 million in 2016, resulting in a combined ratio of 92.7 percent. The combined ratio measures underwriting profitability as a percentage of premium. We recorded an improved expense ratio, a measure of efficiency, of 16 percent, down from 18.2 percent in 2015 due to cost savings.
Excellent customer retention
During 2016, 98.6 percent of our clients chose to continue their policies with UMIA rather than switch to a competitor. We take pride in the trust our clients place in us — and are committed to providing personalized service and innovative offerings that will continue to earn their trust and loyalty. In 2016, our former UMIA subscribers received a $30.8 million installment payment derived from their decision to partner with Constellation and MMIC in 2013.
Expanded offerings to support policyholders – and drive future growth
Our ongoing profitability allows us to continue to invest in solutions for our policyholders. These include services that support them in improving patient care, protecting their professional reputations and reducing overall costs of health care delivery.
For example, we are expanding our offerings to include programs that enable health care organizations to frequently assess patient satisfaction, identify areas of dissatisfaction and quicklytake action to address them. We are also piloting a program that helps to document adherence tobest medical practices and provides insights that can guide strategies to improve patient care andnegotiate reimbursement. In addition, we are expanding our data analytics capabilities to “mine”our extensive claims data. The goal is to gain a deeper understanding of factors contributing to medical liability risks and identify actions to address those factors.
Long term, our strategy is to join with other strong partners under the Constellation umbrella toachieve growth, increase operational efficiencies and develop innovative market-driven solutions. Working with strong partners will better enable us to help physicians and others who devote their lives to health care in delivering the best possible patient care. We look forward to 2017 and another year of service to our valued physician clients and the broader health care community.