A POLICY TO DO MORE WORKERS 54 19COMP SINCE FHM 2005 annual report INSURANCE COMPANY
letter from the administration Dear Policyholder: 2005 was FHM s most successful year since 1996, the year we converted to a non-assessable mutual insurance company. Year-end results show FHM recognized Net Income of $7,185,456. In addition, on December 31, 2005 FHM s Surplus stood at $41,672,727, an increase of $7,360,932 over 2004. These outstanding results can be attributed to three factors continued benefits from the 2003 workers compensation legislative reforms and the ongoing favorable claim outcome experience. A favorable claim outcome experience means our policyholders and agents are managing claims better and being more proactive to reduce claim frequency and severity. While our profitability received a strong positive boost from these external benefits, the third and equally important factor came from within FHM. Without a doubt, FHM s highly skilled and dedicated staff in all areas of operation marketing, underwriting, policy services, loss control, claims management, financial reporting and information systems support was a major contributor to the strong 2005 results. Featured in this Annual Report are pictures of a few of the many staff who work to reach new levels of effectiveness and efficiency and continue to find better ways to serve policyholders and agents. It s all part of A Policy To Do More our promise to those we serve to provide the highest quality, most cost-effective workers compensation insurance program at the lowest possible price. That promise is at the core of FHM, and it means we work harder and smarter to ensure our workers compensation program is better than any other program available. 2005 was a good year for FHM. Continuing benefits from legislative reforms, proactive policyholders and agents and outstanding performance from the staff came together in just the right balance. As we look forward to 2006, we want to thank you and your agent for your continuing trust and confidence. We take our responsibility to you very seriously and work hard every day to make certain you know "A Policy To Do More" is not a slogan...it s the way we do business. Sincerely, Bill Bond, Jr. James E. Brock Jack Lemine President Chairman Chief Operating Officer
condensed statutory statements S TAT U T O RY B A L A N C E S H E E T S A D M I T T E D A S S E T S Cash and Invested Assets $ 115,091,048 111,729,321 Other Assets 17,998,933 22,270,721 Total Admitted Assets $ 133,089,981 134,000,042 L I A B I L I T I E S A N D S U R P L U S Loss and Loss Adjustment Expense Reserves $ 72,732,112 79,914,044 Other Liabilities 18,685,142 19,774,203 Total Liabilities 91,417,254 99,688,247 Surplus 41,672,727 34,311,795 Total Liabilities and Surplus $ 133,089,981 134,000,042 S TAT U T O RY S TAT E M E N T S O F I N C O M E R E V E N U E S Direct Premiums Earned $ 46,595,026 39,367,225 Ceded Premiums Earned (2,313,689) (2,790,510) Net Premiums Earned 44,281,337 36,576,715 Net Investment Income 4,380,694 4,762,711 Net Revenues 48,662,031 41,339,426 E X P E N S E S Net Loss and Loss Adjustment Expenses 24,694,978 25,608,502 Underwriting, Operating and Other Expenses 14,200,644 9,952,422 Net Expenses 38,895,622 35,560,924 Net Income Before Income Taxes and Policyholder Dividends 9,766,409 5,778,502 Policyholder Dividends 420,000 790,000 Net Income Before Income Taxes 9,346,409 4,988,502 Income Taxes 2,160,953 1,502,457 Net Income $ 7,185,456 3,486,045
condensed statutory statements S TAT U T O RY S TAT E M E N T S O F C A S H F L O W Net Cash From Operations $ 1,415,827 2,792,678 Total Cash Provided From Investments and Other Sources 55,946,320 56,709,446 Total Cash Applied (primarily for purchase of investments) (74,496,679) (55,272,459) Net Change in Cash and Short-Term Investments (17,134,532) 4,229,665 Cash and Short-Term Investments, Beginning of Year 20,908,986 16,679,321 Cash and Short-Term Investments, End of Year $ 3,774,454 20,908,986 S TAT U T O RY S TAT E M E N T S O F S U R P L U S Surplus, Beginning of Year $ 34,311,795 28,610,135 Net Income 7,185,456 3,486,045 Other Changes in Surplus, Net 175,476 2,215,615 Surplus, End of Year $ 41,672,727 34,311,795 S U R P L U S AT 1 2 / 3 1 / 0 0, 1 2 / 3 1 / 0 1, 1 2 / 3 1 / 0 2, 1 2 / 3 1 / 0 3, 1 2 / 3 1 / 0 4 A N D 1 2 / 3 1 / 0 5 C A S H & I N V E S T E D A S S E T S AT 1 2 / 3 1 / 0 0, 1 2 / 3 1 / 0 1, 1 2 / 3 1 / 0 2, 1 2 / 3 1 / 0 3, 1 2 / 3 1 / 0 4 A N D 1 2 / 3 1 / 0 5 $45 $120 $40 $41,672,727 $110 $109,656,844 $111,729,321 $115,091,048 $35 $30 $25 $27,345,147 $28,610,135 $34,311,795 M I L L I O N S $100 $90 $80 $86,858,716 $90,533,106 $99,446,149 M I L L I O N S $20 $15 $22,526,864 $23,970,423 $70 $60 $10 $50 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 $5 $0 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005
FHM Insurance Company Corporate Office: 9485 Regency Square Blvd. Suite 415 Jacksonville, Florida 32225 904-724-9890 www.fhmic.com Service Office: P.O. Box 616648 Orlando, Florida 32861 888-346-3461 2006 FHM Insurance Company, Inc. All rights reserved. A Policy To Do More is a registered trademark of FHM Insurance Company, Inc.