A. Dale Jenkins
Chief Executive Officer
I am pleased to report that we had strong financial results in 2015 that have continued into 2016, reinforcing our confidence and optimism about the years ahead. It is important to acknowledge the efforts and excellent leadership of our management team. They have set clear strategic priorities for the company, and have attained them – increasing our annual earnings and generating substantial value for our members. Hiring talented employees is a high priority. We are fortunate to have individuals on our teams in Raleigh, Philadelphia, and Harrisburg who have a clear sense of purpose in all that they do and who are thought leaders in their respective disciplines.
In our first full year as a holding company, Medical Mutual found more ways to facilitate growth and return value to our members. With more than $1 billion in assets, we continue to look for innovative ways to minimize our members' risk and protect their bottom line.
We made significant strides in 2015 to better align the Medical Mutual investment strategy with our overarching business strategy. Early in 2015, Medical Mutual commenced a fundamental shift from a historically defensive posture to one focused more on capital appreciation. With an increased emphasis on equity exposure, both public and private, we also realigned our approach to managing our equity exposure. While we shifted the domestic large cap exposure to in-house, passive management, we employed more active, third-party management to the small-cap, mid-cap, and international exposures. We continued to deploy capital into commercial real estate with a focus on commercial office and other property classes that offer more favorable valuations in this market.
We believe this portfolio maintains an abundance of short-duration, investment-grade fixed-income exposure and cash to meet our insurance and other near term obligations, but also puts our surplus capital to a higher, better use in support of the Medical Mutual strategy.
In the second half of 2015, we selectively liquidated a sizable portion of both the fixed-income and our large-cap stock portfolios, with proceeds reallocated to a diverse and carefully selected portfolio of four passive and six actively managed equity strategies. Due to market conditions, a considerable portion of the proceeds was held in cash as of December 31, 2015. As expected, a timely market correction in early 2016 provided an opportunity to deploy this capital into our revised corporate strategy at very favorable entry points.
In 2016, we expect additional reductions to our fixed-income exposure due to natural maturities, which will be reallocated into asset classes that offer greater opportunity for capital appreciation.
Real estate investments continue to be a significant and successful component of our overall investment portfolio. Demographics, economics, and fundamentals within the Southeast real estate market continue to support this strategy. All exposure continues to be achieved by way of direct, private-placement investments.
Here are just a few of the highlights from 2015:
Looking forward, Medical Mutual will take advantage of the newly created SharpVue Capital to satisfy the bulk of our commercial real estate investment. We believe this fund will allow us to most effectively implement our real estate investment strategy by leveraging the fund’s robust underwriting capabilities and a broader suite of asset types while continuing to diversify the portfolio, both geographically and across property types. SharpVue will help us navigate the challenging investment environment.
With our pursuit of robust capital appreciation, Medical Mutual continues to selectively place meaningful investments in the most promising private equity venture funds and companies. Products range from innovate biotechnology and pharma to manufacturing companies and clean energy. In 2015, we placed over $9 million into private equity investments, with commitments to follow on investments of more than $6 million. This portion of our portfolio, if methodically constructed, will be a strong contributor to our overall investment objectives.
Medical Mutual has earned an “A” rating from A.M. Best for 12 consecutive years.
Medical Mutual realizes that health care is evolving and that the programs, tools, and resources that we offer must evolve to meet the needs of our customers. Learn more about our philosophy on solutions-based offerings.
Recognizing the challenges of balancing education, and the ever-more-complex world of health care, we are continuing to build out the repository of online, educational webinars.
In 2015, five new and unique webinars were added to the website, bringing the total to nearly 30 webinars available to members. Webinars continue to be a part of the Premium Rewards Program (PRP), with a record 3,370 webinars viewed and submitted for PRP points.
The new webinars available online and via mobile include:
Meaningful Use Audits
Medical Record Documentation
Medical Practice Contracting Strategies
The Emerging World of Telehealth
Releasing Medical Records
Mini webinars (or webinettes) lasting less than 10 minutes provide quick overviews on hot topics. In 2015, we added five new Lunch Bytes focusing on medical record release, scope of practice, managing patient complaints, electronic communication, and emergency management.
Medical Mutual gives back to the community by donating time, energy, and resources. We are fortunate to have a strong partnership with Alliance Medical Ministry, a non-profit medical clinic providing affordable primary care to working, uninsured adults in Wake County, North Carolina.
Alliance patients receive primary care from a staff physician, specialty care from volunteers (ENT services, gynecology, physical therapy, orthopedics, cardiology), select screenings (cardiac, mammograms, dental), and off-site medical referrals. Wellness Programs provide patients with foods harvested from their on-site community garden, yoga classes, walking programs, nutrition classes, diabetes education, and gardening opportunities. After establishing care at Alliance, patients make fewer trips to the emergency department, seek routine care at Alliance, miss fewer days of work, and improve their health outcomes.
Megg Rader - Alliance Medical Ministry Executive Director
Medical Mutual’s acquisition of Health Providers Insurance Exchange (HPIX) allowed us to expand our footprint in four Mid-Atlantic states while diversifying our insurance base and bringing in additional talent and revenue. This acquisition is a transformational event for Medical Mutual with high potential for growth.
A new, additional benefit to members is the launch of SharpVue Capital, a new wealth management firm. In 2015, we laid the groundwork to launch SharpVue and help our members grow their private wealth.
We recognize that physicians and medical practices face enormous pressures in today’s health care environment and we are committed to working alongside our members to build a strategy that allows practices to be as successful as possible for the long term.
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