A Message from the CEO and Chairman of the Board:
Dear Fellow Shareholders
It’s no industry secret that in the last 22 years, BancInsure has risen from an unknown start-up to the most recognized and recommended insurance company for financial institutions in the US. We proudly serve over 25% of the nation’s banking community with an array of insurance and risk management offerings..
Remaining True to Our Mission
Founded during the depths of the banking crisis of the 1980s, BancInsure is no stranger to Turbulent financial markets. We remain committed to our original mission, in good times or bad ,of being the provider of choice for community banks. While our competition exits or consolidates their ‘bank divisions’, we will rise to the moment and offer the industry consistency and market leadership: We were made for times like these.
The financial markets experienced dramatic change during 2007.
Even banks that adhered to sound lending practices found themselves
caught up in the general decline of the financial sector. Today’s credit
crisis, sagging economy, and the likelihood of sweeping regulatory
change all serve to remind us of how and why BancInsure was
created. BancInsure and its staff of experienced professionals remain
solidly committed to the local banks that are at the core of our mission.
As shareholders, we measure success through financial metrics.
As an organization, we measure ourselves by both financial returns
and a deep interest in the success and well-being of the community
banks that we insure – and the agents and brokers with whom
we partner. This blend of financial discipline and earnest commitment
to our partners differentiates our company from others.
Though the insurance industry may react to the current economic
uncertainties by withdrawing from the financial institution sector or
under-pricing risks in an attempt to capture market share, we shall
remain diligent in our pricing and disciplined in our underwriting.
In doing so, BancInsure brings stability and leadership to the marketplace.
These are opportune times for those with experience, confidence,
and agility: BancInsure is uniquely equipped for this challenge.
The difference between success and failure in uncertain times
comes down to recognizing the requirements of the new
environment, having the necessary talent and skills to excel, possessing
the courage to exploit the opportunity, and being able to
quickly adapt to new competitors, markets, and regulations.
The year 2007 convincingly demonstrated that we are well
positioned for success.
Financial Highlights
BancInsure’s strong niche-market focus once again
returned solid financial results in 2007.Despite continued
downward pricing pressures from a softening insurance
market, BancInsure generated Net Income of $3,088,982.
Although down from 2006 earnings of $5,056,413, it
represents the third best Company earnings since the
change in ownership.
The Statutory Combined Ratio of 101.3% deteriorated
slightly from 2006, but was stronger than 2005’s combined ratio of 103.3%. Despite tremendous market
pressures in 2007, our Net Written Premium grew by 4.5%,
ending the year at $47,384,467. These are respectable results
that reflect our continued emphasis on responsible pricing,
and the careful underwriting of our entire line of products
and services.
BancInsure’s total Gross Written Premium at year-end
2007 grew by 3.7% to $62,400,336. Statutory Capital and
Surplus grew by 8.8% in 2007 to $45.1 million, reflecting
a key component of BancInsure’s financial strength. Our
conservative Premium-to-Surplus Ratio of 1.051 demonstrates
superior loss absorption ability, which, combined with a solid
7% Return on Equity, positions the company for profitable
future growth.
BancInsure’s investment portfolio showed marked
improvement in 2007, with Unrealized Investment Gains,
Net of Taxes at 12/31/07 increasing to $1,291,758 from
$323,872 at the same time in the year before. These
impressive returns were achieved while avoiding sub-prime
mortgage losses, and without any fixed maturity investments
below investment grade.
Other key financial highlights achieved during 2007 include:
• Shareholder’s Equity increased by 9.3%
• Cash Flows from Operations in 2007 increased by 54.7% to
$6,342,274, from $4,099,402 in 2006
• The Company’s balance sheet is highly liquid, with 72.1%
of its assets in Cash and Marketable Securities
Looking Ahead
Despite continuing industry turmoil, we remain steadfast in
our mission to offer superior products, professional claims
service, and tailored risk management solutions to financial
institutions. Building upon past successes, we will embark on
several strategies to grow the Company during 2008:
Profitable Organic Growth of Core Lines Business
We’ve continued to solidify strong business ties by renewing
exclusive endorsement agreements with 14 state banking
associations, bringing to 18 the total number of state organizations
committed to the BancInsure portfolio of products. Fundamental
business decisions are made at BancInsure based on insights
from our partnerships with these leading banking professional
organizations.
Of particular note is the company’s aggressive plan to expand our
distribution model by adding new independent agency partners for
core line sales. We’ve long recognized that a significant share of the
community bank market is served by local independent agents and
brokers. Our Matterhorn unit serves over 800 financial institutions
through a network of 150 independent agents, and we expect to
see further revenue growth as the number of new independent
agency partners increases.
Another growth initiative involves the restructuring of our sales
force to focus on developing relationships with independent agents.
As a result, new opportunities with over 1,000 banks have been
identified. Workflows and auditing processes in our nationwide
system of service centers have been improved, with each center
strategically located to maximize the service experience for our
network of independent agents and customers.
Complementing the restructuring of our distribution system is a
new sales compensation program, which, along with accountability
systems and performance measurement tools strengthen the
company’s business posture. A formal “Academy of Excellence”
program is serving to identify key company contributors, and
challenge them to lead organizational change.
Product and Program Development
An Oklahoma Homebuilders’ program called ‘BuildersEdge’, that
includes Loss Control resources, was recently developed and
launched to diversify revenues during soft financial service
market cycles.
We are partnering with the industry’s leading flood specialist,
The Flood Insurance Agency, to launch a comprehensive Flood
program. Our brand awareness has been enhanced by association
with this high-profile organization, and our policyholders and
independent agents benefit from assistance on compliance issues
related to these products and services.
We continue to demonstrate our product superiority by
developing a tailor-made solution for the D&O, Professional Liability
and e-Commerce exposures of our community banks. Plans are
underway for additional product development solutions in 2008.
By making significant investments in IT resources, BancInsure
continues to demonstrate its support of aggressive product and
program development efforts. This investment in tools, techniques
and technologies simplifies, standardizes and automates our
operations to improve our long-term efficiencies and costs.
Establish Merger and Acquisition Strategy
Mergers and acquisitions are now a targeted area for growth. In
2007 the Company completed the purchase of an Illinois-based
agency that specializes in financial institutions. This acquisition has
added many relationships and financial institutional expertise to
the Company. We continue to seek opportunities to acquire new
books of business or independent companies where we can achieve
efficiencies and economies of scale.
No matter what the future holds, BancInsure has what it takes
to succeed. We’ve weathered challenging times before. We take
the time to understand our customers’ businesses and exposures.
With our deep industry knowledge and experience, along
with specialized expertise, BancInsure stands ready to help our
policyholders persevere in the face of challenges stemming from
the current financial downturn. And this equates to long-term
financial performance for our shareholders.
We have the talent and tools in place to thrive in the post-subprime
economy, regardless of the form it ultimately takes.
Change is Coming
We are ready.
Galen Pate
Chairman of the Board |
Rodney N. Sargent
CEO and President of the Companies |