|
Terra Assets, Stock Value Do It Again: Company Achieves 62nd Consecutive Quarterly Records
Corte Madera, CA - Terra Insurance Company has achieved something few other professional liability insurance companies can claim: its 63rd consecutive record-high quarterly book value per share ($168.28). Terra's assets also reached a new record high ($39 million) for the 63rd consecutive quarter, as did stockholders' equity (more than $19 million). Terra's insureds do far more than share in the rewards of Terra's strong performance. Because Terra is a risk retention group, the insureds own the company; the rewards belong to them.
Terra's long-time CEO, David L. J. Coduto, attributes the company's success to its operating philosophy. He said, "While Terra has a solid investment portfolio, our principal source of profit is our underwriting. We price our insurance products realistically and, by actively encouraging our owner/insureds to apply effective loss prevention and risk management practices, we keep our claims frequency and severity comparatively low, boosting profit still more. Our insureds are happy to go along with that arrangement, because, as owners of the firm, the firm's profit is their profit. I'm confident that a number of our competitors thought this was a foolish approach during the 'go-go' years of the 1990s, when cash flow was king. Today, a number of those competitors no longer exist."
The grave difficulties facing casualty insurers today were fully anticipated by Terra executives. Almost four years ago, at a March 2000 Terra Board of Directors meeting, and then in a June 2000 letter to policyholders, Mr. Coduto predicted "troubling times ahead for the insurance industry for the period 2003-2006. Today's inadequate pricing, increased limits, and failed underwriting will lead to a hard cycle where capacity dries up and insurance prices skyrocket. It will be the result of the predictable short-sightedness of the insurance industry and the booming economy's negative effects of on the construction sector."
Mr. Coduto said that Terra has flourished in the most improbable of times largely because of its owner/insureds' approach to risk management. He explained that, while risk management comprises "an array of diverse activities, all share a common thread: They reflect the company's and its owner/insureds' devotion to quality. No one is perfect, of course; mistakes will be made. However, by dedicating themselves to quality in virtually every aspect of everything they do, our owner/insureds have far fewer claims than others in their field, and that gives strong support to Terra's bottom line."
As for Terra's approach to business, Mr. Coduto said, "We are committed to the principle that Terra must continue to exist in order to be a safe harbor for our insureds; a company that will always be available to them. We will not gamble with our future. How many of us have heard about the tortoise and the hare, how 'slow and steady wins the race'? Look around. It's true. The casualty side of the insurance industry looks more like a moonscape than a landscape. We can only guess at the number of firms and individuals that wished they had followed our lead."
Terra's success is all the more remarkable given that many of its owner/insureds offer geoprofessional and environmental services, which, historically, many other companies have regarded as "too risky" to underwrite. Terra owner/insureds also include civil engineering firms and firms that offer a variety of other "earth engineering" services, as well as construction materials engineering and testing, brownfields revitalization, and infrastructure security.
Terra's accomplishments are recognized by A. M. Best Company, the insurance company evaluation organization, which rates Terra A ("Excellent"). Terra comprises 90 owner/insureds whose gross fees ranges from less than $500,000 to more than $150 million per year.
More information about Terra and the products it offers, as well as free risk management materials and a copy of the Terra "QuickApp,"can be found at www.terrarrg.com, or by contacting Terra Insurance Company, 2 Fifer Avenue/Suite 100, Corte Madera, CA 94925; tel.1/800-872-0077 (in CA, 415/927-2901); e-mail terra@terrarrg.com
|
back to listing