The past year has seen the world change in many significant ways. The financial shocks of last fall put the American economy in its worst crisis in a generation, which in turn triggered a worldwide recession and impacted a wide range of financial services and insurance companies on an unprecedented scale.
Due to these prevailing economic and market conditions, CAMICO has had the unusual occurrence of an underwriting loss that was not covered by investment income. Unrealized investment losses collided with adverse loss development in the reinsurance layers for the year 2005 as well as escalated claims linked to the economic downturn for the years 2007 and 2008.
Despite these challenges, CAMICO's financials have passed their "stress test" and remain sound. The Board of Directors has taken a conservative approach and strengthened the company's loss reserves in response to the developments. This action, when combined with unrealized investment losses, has reduced our surplus by 30 percent, which leaves the company with more than sufficient surplus and reserves to meet its claims obligations.
These developments have prompted A.M. Best Company to issue a financial strength rating of B++ (Good) to CAMICO, with a rating outlook of "Stable." This keeps the company in the upper echelon of Secure insurers. In A.M. Best's words, a "Good" rating is "assigned to companies that have, in our opinion, a good ability to meet their ongoing insurance obligations."
It is important to note that A.M. Best's outlook of "Stable" for CAMICO will assure our policyholders that our commitment to them and delivery of service will be in no way impacted.
A priority for CAMICO's Board of Directors and management is to ensure a stable program that provides claims protection for our policyholders. Because of our long-term perspective, we are taking action to ensure that our rates, reinsurance, underwriting, risk management, and operational processes continue to support our policyholders. CAMICO is currently supported by some of the strongest global reinsurance companies that will continue to partner with CAMICO for your protection into the future.
CAMICO also continues to do the right things for you in assisting with your day-to-day practice needs. We are staying closely in step with the impacts of the economic downturn while providing our personal service approach to quickly take care of your problems in the best manner possible-as also known as "the CAMICO experience."
In 2008, we launched our customer service unit to provide personal service to member-owners calling CAMICO. At the same time, we have increased our online capabilities for those member-owners who wish to access us electronically. To enhance the delivery of service to our member-owners, beginning with the 2010 renewal, certain member-owners will be able to review and renew their CAMICO insurance policy online with greater ease and efficiency.
We have continued to develop our online resource centers, adding an ID Theft/Data Security Resource Center to the Engagement Letter Resource Center already in place. New resource centers on Fraud and the Economic Downturn are in development. CAMICO has also a prepared a comprehensive selection of materials and webcasts to help you with the risks associated with the recession.
To enhance our broad form policy, we have added endorsements which clarify coverage in important areas for today's practice. The four endorsements cover Privacy and Client Network Damage; Computer Consulting; Financial Services; and Registered Representative. For a full account of coverages provided, please review the endorsements online by going to www.camico.com and clicking on the ‘Products' tab and then the ‘New Endorsements' link.
Our member-owners recognize and appreciate CAMICO's service orientation and CPA focus, renewing their CAMICO policies at a rate of 95 percent for the past 11 years, with many of the non-renewals being a result of retirement or firm mergers. Also, 689 CPA firms joined the company as new policyholders in 2008. We are continuing to increase our CPA market share.
As CAMICO meets the challenges from economic conditions, we remain committed to our mission of protecting, advising and solving problems for CPAs-regardless of the volatility of the market. We have a unique and exceptional value proposition in the insurance world, and the best place for CPAs to be insured is with CAMICO.
CAMICO's audited financials will be sent to you, as we do every year, in mid-May, together with a recap of our 2008 financials. In the meantime, if you have any questions, please call CAMICO at 1-800-652-1772 or contact your agent.
Lou Barbich, CPA