American Family Increases Policyholder Equity By $606M

NU Online News Service, March 3, 1:23 p.m. EST

American Family Insurance Group said storm and catastrophe losses in 2010 were $270 million higher than expected but the mutual company managed to increase policyholder equity $605.6 million during the year.

David Anderson, chairman and chief executive officer, said in a statement that adding to the policyholder equity fund was the company’s “highest-level accomplishment” during the difficult business environment in 2010.

American Family’s property and casualty net premium written dropped 2.5 percent to $5.3 billion compared with 2009 due to the company’s ceding of its long-term care business as well as sluggish sales of automobiles and homes.

However, the company was able to increase policyholder equity—protection for policyholders in case of unusual events of unexpected losses—by more than $600 million for the second straight year.

“Given the recent turbulence in the financial services field, it’s more important than ever for customers to know we have the financial strength to protect them from the unexpected,” said Jack Salzwedel, president and chief operating officer, in a statement. Mr. Salzwedel is slated to become the company’s chairman and chief executive later this year.

Investment income and realized capital gains contributed $522.2 million to policyholder equity.

Madison, Wisc.-based American Family posted $866.2 million in storm and catastrophe losses in 2010 due to tornadoes, hail and strong winds in Wisconsin, Minnesota, Missouri and Kansas during the year.  Plus, there was a significant hail storm in Arizona in October and wildfires in Boulder, Colo.