Message to Policyholders

 Steve Linkous on Front Lawn

2018 Annual Statement (Interactive Web page)

Full of optimism and nostalgia from our 175th anniversary in 2017 and six consecutive years of profitability and growth, our storied company stood poised to take on 2018 with the same momentum and success.  The severe and catastrophic weather that befell our policyholders in the first six months of the year, however, would impede our plans and prevent us from reaching our desired profitability objectives.

Losses incurred during January’s regional ice and freezing temperatures, the coldest start to any year in Maryland in at least 146 years according to the National Weather Service, and the windstorms in March proved to be insurmountable as the year moved forward.  Even with the second half of 2018 outperforming profitability targets, the early and sizable losses from the first two quarters led to a very disappointing net combined ratio of 115.0.  Heavily impacting the ultimate results was the write-down of our IT legacy system replacement project, contributing 8.7 points to the combined.  As statutory accounting considers IT systems as a non-admitted asset, this write-down had no impact on the policyholders’ surplus.  As 2018 came to a close, it reached out with one final “financial punch” as trade and political wars wreaked havoc on investment markets and drove major unrealized losses.  While we must close the books on 2018 “as-is,” it is worth noting that markets rebounded in early-2019 to offset the losses by mid-February.

But if our long history has taught us anything, it is that the anomalies that are inherent in this industry and for a regional carrier do not define us and will not deter us from our long-term view of protecting our policyholders through strength.  In expanding our regional footprint and market position, we achieved success through strong premium retention, robust new business revenue, and growth that exceeded our projections by 24%, coming in at 5.7% against a plan of 4.6%.  Our five-year growth at 18% and our 10-year at 82% has outperformed the industry, allowing us to expand our team, products, and services.

Our mutual success can be attributed to the execution of key operational plans and our ability to serve new territories and grow our current partnerships through our segmentation efforts, writing everything from small retail to multi-building habitation.  We expanded into South Carolina and Georgia, with these two states adding $1.5 million in new direct written premium.  Signaling our commitment to profitable growth and to our agency partners and policyholders in our Southern Territory, we opened and celebrated our new office in Fort Mill, South Carolina on March 21, 2019.

Burgeoning relationships with our Flagship agents like L & W Insurance and the addition of two new Flagship agencies as we entered 2019, S.T. Good Insurance, Inc. and Maury, Donnelly, & Parr, Inc., are also part of this proven recipe.  These critical and meaningful connections and partnerships with our independent agencies demonstrate our mutual philosophy and ensure increased opportunities for all.

Our company’s consistent and significant growth for the last eight years has us surpassing our goal of $240M by 2024 well ahead of plan.  Buoyed by that accomplishment, our leadership has embarked on an aggressive strategic vision that will have us fortifying our infrastructure for the next three years in preparation of our subsequent five-year plan for substantial profitable growth.  We are spending significant time and energy examining our team resources, adding personnel to specific departments to increase depth of skill and improve service.  We enhanced our claims service with the creation of a Special Investigative Unit (SIU) and bolstered management with deep casualty and automobile experience.  As the company continues to grow and scale for the future, we have expanded the General Counsel office to support legal and compliance operations and initiatives.  We realigned our Loss Control Department to improve our value-added benefits and provide more comprehensive and efficient servicing of accounts.  Most importantly, we are utilizing the full scope of our Human Resources Department to ensure we have the benefits, culture, engagement, innovation, environment, and opportunities that today’s and tomorrow’s workforce depend on for success.  We are relying on industry experts to keep our benefits package and compensation structure fair and competitive.  Through professional, leadership, and career development strategies, we are empowering our most enthusiastic employees to help establish aggressive training and retention objectives.

And we are listening.  Listening to our employees’ desire to be part of a vibrant workplace and make Harford Mutual the last place they work.  Listening to their request for flexibility and remote work options.  Listening to what motivates them to increase their industry knowledge with more education and designations.

Evidence of our professional staff is the appointment of Geneau M. Thames, Esq., our General Counsel and Director of Compliance, to the Maryland State Ethics Commission by Governor Hogan, and Frank P. Kellner, Vice President of Claims and Corporate Secretary, to the inaugural advisory board for the new Risk Management Program at the University of Baltimore.  The insert included with this statement highlights other employees’ achievements in 2018 and showcases their commitment to our community and to Harford Mutual in support of our Corporate Social Responsibility mission.  It is a mere snapshot of what I firmly believe is the foundation of our company and its accomplishments—an engaged employee.

In 2018, we acknowledged the 65th Anniversary of our Bel Air headquarters and completed the last piece of our 175th anniversary with the ceremonial sealing of our time capsule.  A group of team members volunteered to sift through mountains of historical artifacts and collectibles, talk to coworkers, research recent statistics that would timestamp their inclusion, and collect pertinent items to provide a realistic picture of life at Harford Mutual in 2017/2018.  It was a fitting and responsible act of preservation to leave behind some legacy items for a future generation to ponder and reflect upon when the next company milestone anniversary is celebrated.

While 2018 did not produce the financial performance we had planned, we achieved and can be proud of the numerous accomplishments mentioned.  Tough years like this are part of the insurance business as a growing regional mutual carrier.  Most importantly, we can take pride in fulfilling our mission to protect the financial wellbeing of those we serve, making our claim-impacted policyholders whole and allowing them to continue serving their own customers and employees.  As 2018 came to a close, I had the opportunity to reflect on this challenging year while reading the memoir of legendary country music star Charlie Daniels.

Walk onstage with a positive attitude.  Your troubles are your own and not included in the ticket price.  Some nights you have more to give than others, but put it all out there, every show.  You’re concerned with the people who showed up, not the ones who didn’t.  So, give them a show, and… never look at the empty seats.”

Our longstanding commitment and position of strength renews us as we walk onstage in 2019 with an enthusiastic attitude to continue delivering on our mission of insuring opportunity through a commitment of mutual success.  With a clear strategic vision and an engaged team guided by our leadership and experienced board of directors, we remain focused, and… never worry about the “empty seats.”


Steven D. Linkous
President and Chief Executive Officer

2018 Annual Statement (Interactive Web Page)

2018 Annual Statement (PDF Format)

2018 Community & Employee Engagement Year in Review (PDF Format)