|
|
President's Message
Terra Insurance Company is one of the United States’ strongest and most reliable insurers of design professionals’ environmental and professional liability exposures. Established in 1968 as a small Bermuda-based captive insurer, Terra reorganized in 1988 as a U.S.-based risk-retention group; i.e., an insurer that is owned exclusively by its policyholders. Today, A.M. Best Company (the nation's leading insurance-company rating agency) recognizes Terra as the highest-rated risk retention group in the United States, giving it a stated rating of "A, Excellent." But Terra's implied Best rating (based on a Best's Capital Adequacy Ratio (BCAR) analysis) is an astounding "A++, Superior." Less than 2% of all insurers operating in the United States are rated "A++, Superior."
Terra’s financial performance is also noteworthy. From its initial capitalization as a risk retention group, through December 31, 2008 (the last completed fiscal quarter as I write this), Terra has experienced earnings and stock-value growth in 81 consecutive calendar quarters. The value of the company’s stock – all owned by policyholders – has appreciated more than 2,300 percent, moving from $10 per share to about $243 per share.
While Terra continues to specialize in insuring the exposures of professional disciplines associated with the geosciences, about half the revenues reported to the Company – now amounting to almost one billion dollars per year – stem from other design disciplines, civil engineering in particular. With our unparalleled track record, we are in an excellent position to expand our writings for civil engineering exposures.
Terra’s culture is one that focuses on excellent products and top-notch services to support those products. As part of that culture, we actively encourage our insureds to pursue high-quality professional development, by reimbursing them for some or all of their costs associated with programs such as organizational peer review, and staff education in subjects such as business management, risk management, and loss prevention. In fact, these reimbursements constitute about 20% of Terra’s total underwriting expenses each year, but they pay a handsome dividend.
In 1968, Terra experienced about one claim for every $250,000 in revenue produced by its policyholders. By 1988, this ratio had improved to approximately one claim for every $2 million in revenue reported by its insureds. Today, Terra insureds are reporting roughly one claim for every $26 million in revenue they report to us.
Over the years, we have come to realize that Terra’s owner/insureds are some of the finest design professionals in the nation, and not just because of their technical merit. Our owner/insureds also demonstrate the utmost professionalism by seamlessly integrating the Critical Success Factor Theory into their everyday business operations, reducing both the frequency and severity of claims. This Theory focuses on developing a culture that emphasizes project, client, and employee selection (while assigning accountability for those selections), building a company’s financial strength, creating a nonautocratic work environment for its employees, and developing a “rapid-response protocol” to project-related problems through deployment of senior managers who understand the technical issues involved and are empowered to make financial decisions on the spot.
As you might have already guessed, I can spend hours addressing the merits and accomplishments of the Terra program. For decision-making purposes, however, the best sources of information are Terra’s owner/insureds. The following pages of testimonials from a small sample owner/insureds provide a clearer picture of what Terra’s is all about, while confirming that Terra is a genuinely special company.
If you have questions about Terra, visit our website (www.terrarrg.com) or give me a call directly. And if you want to look into coverage from Terra, get the ball rolling by submitting the “quick-app” included in this brochure and also available online.
Sincerely
David L. Coduto
President and CEO
|
|
