The long summer is over here in Pennsylvania (or for me, New Jersey, since I am working from home). While we are all still dealing with COVID-19, we at PLM have also been contending with the western wildfires and two hurricanes that made landfall in the U.S., as well as a surge of interest from many wood businesses throughout the country. I want to take a moment to share on these topics and how we are doing financially.
First, with regards to COVID-19, our people continue to work remotely. While I have not personally seen the much ballyhooed increase in productivity that remote work is supposed to generate, we have not seen any real slippage in productivity that I am aware of! Phones are being answered, accounts renewed, claims handled, and a considerable amount of new business is being quoted, bound and issued. Loss control risk management visits are occurring (although there is still an occasional push back regarding visits from our Business Development and Loss Control Representatives, but even that is starting to diminish). We have instructed all of our people to practice social distancing and to wear masks on these visits in an effort to help keep everyone safe. We, like many of you, are becoming comfortable with video call services (in our case, Microsoft Teams). While we are concerned with long-term remote work, at the moment it is the order of the day. If you are experiencing any difficulty communicating with PLM, please let me know immediately at the number or email outlined below.
With the devastating wildfires in the West, we have been fortunate. Other than two or three losses (one major), for the most part our customers have been safe. We continue to work closely with those insureds that are located in wildfire areas to assist them in mitigating the risk around these events, in a fashion similar to those insureds in coastal areas. Each requires a different approach to risk management that we are well versed in. Hurricanes Laura and Sally made landfall, hitting some of our insureds. However, our internal losses will be capped at $2.5M each because both events will qualify for our catastrophe reinsurance program. About 18 insureds experienced losses during the first event (Hurricane Laura) and about nine had losses in the second storm (Hurricane Sally).
Today in America, there are very few geographic areas where we do not confront, with our insureds, natural catastrophes. If it’s not wildfires, or hurricanes, then it’s tornadoes, hail or straight-line wind events (derechos)! Of course, in the northern areas, it’s unusual snow events. In other areas, it’s floods. It’s the business we are in and we work hard with our insureds to help them avoid or minimize the impact of these events on their businesses. When losses do occur, we respond in a timely and appropriate manner.
What is surprising to us is the recent surge in interest regarding PLM from potential insureds and brokers. Submission activity has been steadily climbing, as has our “hit ratio” when we quote new business. We are on track to write more than $25M of new business this year, well above our target. Current insureds have demonstrated their loyalty to PLM by renewing their coverage with us in record numbers, with more than 90 percent of them continuing to place their faith and confidence in PLM and our team! We are truly appreciative of these continued relationships.
Financially, 2020 has been both up and down. Prior to the two recent storm events, things were looking positive for us. After the storms and some casualty-related loss settlements that ended above our anticipated settlement values (social inflation?) things are a bit more unclear regarding our ability to achieve underwriting profitability this year. Our combined ratio, a measure of an insurance company’s profitability, at the end of eight months was below 100 percent. I expect it will rise by the time you read this and when we publish our nine-month results. I continue to forecast that we will produce net income after investment returns in 2021. With our surplus, we continue to try to recover the first quarter losses that hit the equity markets as a result of COVID-19. At the end of August, we were about 3.5 percent off last year’s all-time surplus high for PLM. I suspect our surplus will drop a bit due to the current investment marketplace when we close in September.
One of the big changes that we have endured — yes, endured — is the drop-off in the number of trade shows that we have been able to participate in this year. Over 150 shows have been postponed or canceled since March. To be honest, we miss seeing you and gaining the insight that you provide us regarding your business, the health of the economy from your perspective and how we are doing in support of your business. We are hoping that as the new year turns, we will see a commitment by various trade organizations to begin hosting shows again. If you would like to chat, please do not hesitate to reach out to me at 267-825-9246 or email@example.com.