The Choice for Workers Compensation 1 3

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1 2 0 The Choice for Workers Compensation 1 3 Annual Report

2 Table of Contents President s Message Our History Mission & Vision 2012 Company Highlights 2012 Financial Summary Looking Ahead Board and Executive Team Contact Us Market Strength A.M. Best A- (Excellent), FSC VIII rating A+ reinsurance protection 100% dividend payout since the company s inception Competitive products

3 President s Message A Turning Point FFVA Mutual is positioned for continued success as the leading workers compensation carrier of choice in the Southeast. Over the past several years, our company has reinforced its business fundamentals by cultivating underwriting talent and investing in innovative underwriting resources. For the second consecutive year, we ve demonstrated a consistent underwriting appetite. As recent years rate increases continue to be earned, we plan to accelerate and continue the improvement that has been established by preserving a strong underwriting culture, culling unprofitable accounts, enhancing business management and continuing perceptive risk and pricing discipline. During the latter part of 2011 and through 2012, we observed encouraging changes in our workers compensation book of business that impacted our premium levels. First, we noted an increase in reported payrolls. For policies written in prior years, policy premium audits revealed that actual payrolls were generally higher than projected by policyholders at policy inceptions. This had a positive impact on our company, increasing both net written and earned premium. Second, loss cost and rating bureau rate filings have turned from predominately decreases to increases, reversing an industry trend. Finally, because of significant underwriting losses over the past years, insurance carriers implemented steps in 2012 to improve underwriting performance by pursuing general price increases on renewals. The above actions represent a turning point in the underwriting cycle, which should result in an improvement in the operating environment for workers compensation. We expect market conditions to show steady growth consistent with Along with intense competition for new business, rates should continue to increase as the industry reacts to years of price decreases. Looking to the future, we are confident about the strength and direction of FFVA Mutual as we build upon the positive momentum gained from Our dynamic business model positions us to produce successful results that will outperform the industry. We remain committed to expanding our competitive edge through the ongoing commitment and integrity of our employees, and a combination of underwriting and financial restraint, customer focus and operational excellence. We would like to thank our board of directors for its support this past year and our agencies, agents and policyholders for your business and continued confidence. Sincerely, Craig Menzl, President & CEO

4 The Florida Fruit & Vegetable Association (FFVA) was organized in 1941 from the vegetable committee of Florida Farm Bureau. Initially known as the Florida Vegetable Committee, the organization s primary focus was to represent vegetable growers during wartime regulation of production quotas, rationing, labor availability and transportation. Our History Incorporated in 1943 as a statewide association, FFVA s mission is to enhance the business and competitive environment for producing and marketing fruits, vegetables and other crops. Today, the association is recognized as the leading political and educational voice of agriculture in Florida. In 1956, the agriculture industry experienced difficulty obtaining workers compensation coverage in Florida. Subsequently, the FFVA Self Insurers Fund was chartered to write workers compensation exclusively for agricultural risks. In 1996, the Self Insurers Fund evolved into the present day FFVA Mutual Insurance Company, and in 1998 the decision was made to expand writings to all business segments. Today, FFVA Mutual is an A.M. Best A- (Excellent), FSC VIII rated insurance company providing coverage to focused business segments, including manufacturing, retail/wholesale, construction, agriculture, and other service industries throughout the Southeast.

5 Mission & Vision Mission To be an industry leader in the workers compensation market and to be the insurance agent s carrier of choice by offering competitive products and superior service to our agents and insureds. Core Values Our insureds are a valued asset, which is reflected by our responsive service. Our staff individually and collectively gives us a competitive advantage because of their attitude, competence, and commitment. Solutions are the product we produce. We solve problems related to the cost of doing business, understanding risk, and implementing decisions that achieve favorable results. Business Principles Concentrate on markets where our company can maintain a leadership position. Continue to use sound underwriting principles, effective loss control services, and proactive claims management. Control premium growth to maintain a superior level of service to our insureds. Protect operating profits through diligent expense control. Constant evaluation and refinement of the company to promote profitability and accountability. Vision FFVA Mutual has a clear vision of strategies for continued success. We uphold strong agency relationships, marketing focus, and solid capitalization that allow us to sustain market share and pricing integrity regardless of market conditions.

6 2012 Company Highlights Distributed $7.3 million in policyholder dividends. Identified a predictive analytics and modeling initiative platform for underwriting. Achieved 62% savings on every dollar billed to FFVA Mutual by medical providers in all licensed states. Maintained diligent claims supervisor reviews on all files for adequate reserves. Continued aggressive investigations by in-house Special Investigative Unit (SIU) in pursuing potential fraud. Expanded loss control services criteria to policyholders with annual premiums of $25,000 and above. Provided OSHA Compliance training to 341 attendees with 78 companies (a 26% increase from 2011). Conducted General Safety training for 3,404 employees with 429 companies (a 107% increase from 2011). Expanded service accounts for the Environmental, Occupational Health and Safety Services revenue-based training program. Increased Management Safety Training course offerings. Developed and presented new safety webinars: Effective Accident Investigations, OSHA Recordkeeping, and Health and Safety for Supervisors. Launched the redesigned FFVA Mutual website with enhanced agent and policyholder sections including online claims reporting and a safety webinar library.

7 2012 Financial Summary Admitted Assets $269.1 million Net Investment Gain $9.3 million Policyholder Surplus $101.8 million Written Premium $98.6 million Operating Ratio 107.4% FFVA Mutual posted an underwriting profit for the previous 11 consecutive years prior to the 2011 net underwriting loss. Dividend Payout $7.3 million The FFVA Mutual Board of Directors has approved the distribution of 100% of policyholder dividends calculated under the terms of various FFVA Mutual dividend plans since the company s inception.

8 Looking Ahead As FFVA Mutual looks to 2014, our continued strategies for success are: Focusing on markets that offer opportunities to produce long-term profit. Exercising underwriting discipline that produces profitable growth. Establishing standards coupled with strategies that continually produce operating margins that exceed industry performance. Promoting corporate and individual accountability to maximize employee communication and cooperation. Embracing an established business model that continues to outperform the industry standard. Focusing on investment strategies that produce long-term growth. Implementing software systems to maintain technological superiority.

9 Board and Executive Team Board of Directors Frank C. Johns, Chairman Robert C. Barrett Les W. Dunson, III Peter S. Harllee, Jr. Charles T. Ranson Morgan H. Roe Glenn R. Rogers Craig Menzl, President & CEO Michael Stuart, FFVA President Executive Team Craig Menzl President & Chief Executive Officer Alan Hair Secretary/Treasurer & Chief Financial Officer Bill Aries Vice President, Business Projects Donna Grier Vice President, Underwriting Operations Jose Ramos Vice President, Loss Control Services Sandra Riding Vice President, Claim Services

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11 Contact us SERVING THE SOUTHEAST SINCE 1956 KY Corporate Office P.O. Box Maitland, Florida MS TN AL GA SC NC Phone: Toll-free: Fax: Toll-free: FL Branch Offices Grayson, Georgia Hickory, North Carolina Burns, Tennessee

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