President's Report 2006
2006 has been a very successful year for PEI Mutual to the
extent that the Board of Directors has been able to declare a
Special Mutual Rebate in the amount of $1.3 million. This
refund has been distributed to our 29,000 policyholders by way
of cheque and is this is in addition to the 10% Mutual Rebate
that will be repeated again in 2007 at time of policy
renewals.
On a less positive note is the cost of continuing oil spill
losses, which amounted to $1.5 million during the past year.
This in spite of past efforts by the Company and policyholders
to lessen the risk by equipment upgrades and increased
diligence. Outside oil tanks continue to be a large
contributor to the problem and this must be addressed. To PEI
Mutual’s credit, our remedial cleanup procedure is stellar
and endorsed by our Reinsurers but also very expensive. This
has resulted in an unusual number of claims against our
reinsurance coverage and as policyholders we realize this
cannot continue without the consequence of higher reinsurance
premiums in the future. While oil spill losses occur across
the nation, Prince Edward Island is unique in that we have the
highest population density per square kilometer and are among
the largest users of home heating oil. The risks are great and
in the end policyholders will have to be a big part of the
solution.
Board governance is a major issue of review for organizations
with public involvement and consumes a lot of time in this
post Enron era. PEI Mutual is not immune to this fact and has
felt the sting of change from other organizations with which
we have dealings. The Board of Directors and our Management
team have completed our own governance review that spanned
approximately eighteen months and took a huge effort in
gathering information and determining its relevance to our
Company. In the process, both old and new governance systems
were examined, some being very similar to ours and others
vastly different. On occasion external expertise and advice
was necessary to move the review along.
While change for the Maritime Mutual system of governance is
likely inevitable, it seems inadvisable for our Company to
venture into major overhaul in advance of proposals under
consideration by the Maritime governments. It is evident from
our review that a lot of our past application of governance
principles are quite acceptable and even recommended in modern
governance models. In the end, our consultant’s advice was
to fine tune our procedures, make some minor changes and stay
the course for the time being.
Since the last annual meeting Blair Wood has tendered his
resignation from the Board. I wish to acknowledge Blair’s
many years of service and thank him for his valued
contribution to the governance process.
Further, I am pleased to advise that Brian Annear of Lower
Montague has been nominated to fill the vacancy in Zone 9.
Brian brings youth and business talent to the board table and
will be a valued addition to the Board of Directors.
A successful year at PEI mutual is not by accident. Everyone
plays an important part. I wish to express appreciation to our
valued policyholders and acknowledge the diligent work of our
office Staff, Agent force, Management team and fellow
Directors. Thank you!
Percy Affleck,
President
|
 |
|
