A Message from Our President and CEO

 A Message From Our President and CEO                                                                                                                                                                 MATT LUPINO FOR EDITING


To Our Agents and Customers;

As I began to craft this 2016 annual report on our operations, I felt that the theme of “navigating stormy seas” was not only appropriate to summarize the challenges that FHM Insurance faced throughout 2016, but I also felt the theme was appropriate to describe my expectation for the foreseeable future.

When I wrote to you last year, I described a number of challenges that FHM would face during 2016 including the uncertainty and additional costs arising from the Florida Supreme Court ruling in the Castellanos case as well as the impacts of an aging workforce, the opioid abuse crisis, and uncertainty about the future of the health care system. As predicted, each of these issues still weighs heavily on our workers compensation system. Despite all the challenges and uncertainty we faced, I am pleased to report the initiatives implemented by the FHM team bore fruit in the 2016 year in the form of improved financial results.

First and foremost, in May of 2017, A.M. Best once again affirmed our B++ rating. A rating of B++ is considered a secure rating by A.M. Best and in the words of our analyst, the B++ rating continues to “reflect FHM Insurance Company’s highly favorable risk-adjusted capitalization”. FHM is well-capitalized to meet FHM’s obligations to its policyholders. In addition to the strength of our capital position, our analysts also noted that “there appears to be evidence…that management’s efforts are having a positive effect” on our operations. All of FHM’s employees continue to be focused on improving our operational results by focusing on better underwriting profit and sales outcomes. As a result of these efforts, during 2016 we added more than 7% or $2.8M to our policyholders’ surplus and thereby strengthening our already solid capital position. We continue to make the adjustments to our strategies that are needed to produce profitable results in an increasingly competitive and complex workers compensation market.

With respect to our efforts to improve our sales outcomes, FHM continues to seek out strategic partnerships with our independent agents. During 2016 we added a significant number of new agency partners and made great efforts to re-ignite existing relationships. These efforts resulted in a 16% increase in the amount of new business written in 2016 versus 2015. We also achieved increases in our hit (success) ratios which measures the number of polices and/or amount of premium written as a percentage of the number or amount quoted. These numbers indicate that our agencies are supportive of our efforts to grow our mutual business. I am also pleased to report that through the first six months of 2017 we are on pace to show further improvement in our new business premium writings and hit ratios.

Certainly, 2016 was a very good year for FHM by many measures and I am pleased to be able to share these improved results with you. But in keeping with the theme, the seas are by no means calm and we will have plenty of rough waters to navigate in the coming years.

There remains great uncertainty as to the state of health care in our country and we believe there will be changes forthcoming that will impact our industry. These impacts may take the form of cost shifting from health insurance to workers compensation, increases in the medical and pharmaceutical costs associated with workers compensation claims and potential shortages in medical provider availability. We also believe there will be continued challenges to the workers compensation system and how it functions. These challenges may result in increased attorney fees, increased benefits and even challenges to the “grand bargain” that created the workers compensation system as a means to secure wage and medical benefits for injured employees without the need for litigation. We understand these issues and are working diligently to best position our ship in order to secure safe passage for all of our stakeholders through these murky waters.

We continue to appreciate our agency partners and our insured customers that have put their faith in FHM Insurance to handle their workers compensation needs. We remain committed to our “Policy To Do More” and we look forward to serving your needs effectively and efficiently as we have done consistently since 1954.


Matthew J. Lupino, CPCU
President and Chief Executive Officer

Jacksonville 904-854-2777
Orlando 407-373-6247
Mobile 904-463-3234



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