R. Austin Wallace, MD
Chairman, President and CEO

Letter from the ChairmanOctober 2019

"Your Mutual"

There continue to be some unscrupulous insurance agents and a few very misinformed physician colleagues in our state that are telling people that the Mutual is somehow experiencing financial difficulties. Apparently, this is occurring because of our decision to no longer seek a rating from the A. M. Best company. The statistics below convincingly demonstrate that this allegation is absolutely and completely false. In reality, the West Virginia Mutual Insurance Company had one of the strongest financial performance years of any medical liability insurance company in the US in 2019 by all measures.

In April 2018, WVMIC decided to withdraw from the A. M. Best rating process because of their lack of understanding of our company’s goals that did not fit their cookie-cutter metrics. Their misguided approach to their rating process is convincingly demonstrated by the following: At the time we were assigned an “A-“rating in 2011, we were significantly more highly leveraged with significantly less policyholder surplus than today, as is shown in the following:

  2011  2017  2018 
Policyholder Surplus  $80m  $90m  $95m 
Reserve to Surplus Ratio  0.90  0.59  0.48 
Premium to Surplus Ratio  0.44  0.18  0.18 

It should be pointed out that the lower the leverage measures (i.e. the reserve to surplus and premium to surplus ratios), the better, and that when we started our company, a ratio of 1:1 with premium matching surplus was considered truly excellent. Now, we have more than 5 times the surplus compared to our current premium level. As you can see, WVMIC is clearly even more financially sound today than it was in 2011. Best changed their rating methodology stating that the new methodology would allow more objective consideration, but it appears that the process has become even more subjective, thereby allowing their analysts to make their determination based on considerations other than financial strength.

By Best’s proprietary Capital Adequacy Ratio (BCAR), WVMIC qualifies as an “A+” rated company, but Best’s rating scheme penalizes companies like WVMIC for being a single-line, single-state mutual insurance company. This is very unfair, in our opinion, as these characteristics are precisely what we all agree make our company the best option for our region’s healthcare providers. Incredibly, one of the senior Best analysts with which we met last year had the temerity to tell me, a physician, that it was his opinion that we take too many lawsuits to court because all physicians want to settle lawsuits and avoid having to go through a trial. I respectfully but firmly informed him that nothing could be further from the truth, and that if a physician has provided excellent care and gets sued despite this, our company’s philosophy is to defend him or her vigorously all the way to trial, if necessary.

The WVMIC Board plotted a course for the Mutual in which we have been able to give back unneeded surplus to our physician owners through the use of dividends and stable premiums while maintaining the level of surplus that resulted in the achievement of our original “A-“rating. Unfortunately, A.M. Best does not appreciate this honorable mission of placing policyholder interests above the interests of outsider profits, which is the case with most of our competitors. We simply will not allow an outside agency such as Best to interfere with our company’s business plan for no good reason. Therefore, it is obvious that the new rating scheme devised by the A. M. Best people, some of which is significantly ill-informed, in my opinion, obviously does not value our company’s profile and mission and that their narrow opinion and new rating methodology do not in any way discredit our excellent financial position. We intend to continue serving you, our physician owners, by placing your interests first. We remain Physicians Insuring Physicians.

Sincerely,
R. Austin Wallace, M.D.