![THEN
Herman Born & Sons, a commercial truck
repair company, has been in business for 163
years. It was originally established in downtown
Baltimore in 1852 as a blacksmith shop and wagon
manufacturer. The company has been a valued
Chesapeake policyholder for 60 years.
When the horse and wagon became
obsolete at the turn of the century, the company
modernized to keep up with the industrial
revolution and began building truck bodies.
NOW
Herman Born & Sons now performs a wide
variety of truck body repair services for commercial
truck fleets in the greater Baltimore and
Washington, D.C. area. The company specializes in
truck body and cab repair and refinishing.
Herman Born & Sons is still family-owned and
spans six generations. It is represented by Graham
and Eric Kastendike, of the Kastendike Insurance
Group of Maury Donnelly & Parr. Regarding
its long-term relationship with Chesapeake
Employers, Graham Kastendike had this to say:
“Longevity and partnership come to mind when
I think about our relationship with Chesapeake
Employers’Insurance. We have shopped the
marketplace and are yet to find a better program
from a pricing, coverage and loss control
standpoint. Chesapeake has been and will
continue to be a part of Herman Born & Sons’risk
management program being led by the Kastendike
Team at Maury, Donnelly & Parr.”
When it comes to workplace safety, company
President Rick Born has a particular message for
his 25 employees:“[We tell] our employees it is
their responsibility, first, to do the job safely and,
second, to do the job right. The foundation of
our great safety record is low employee turnover.
Quality employees are as valuable to us as good
customers.”
Herman Born & Sons
Safety,
Service,
& Specialization
NEXT
This safety- and service-conscious truck repair
specialist plans to continue to meet its customers’
needs. “Over the past 163 years, we have
manufactured and repaired commercial vehicles.
We believe if we do what is in our customers’best
interest, our business will take care of itself,”said
Rick Born.
Above, Herman Born & Sons
craftsmen performing their
jobs safely. At left a delivery
truck repaired and repainted
by Herman Born & Sons, circa
1950s.
100Anniversary
ANNUAL REPORT
2014
th
2014 Chesapeake Employers’ Annual Report 7](https://image.slidesharecdn.com/ffd9586c-7a13-4785-8bc0-ec04dd7f69ac-160727202212/85/Chesapeake-Employers-2014-Annual-Report-9-320.jpg)
Chesapeake Employers 2014 Annual Report
- 2. Our Vision: Be the best workers’compensation insurance carrier in Maryland. Our Mission: To provide Maryland businesses with a readily available source for workers’compensation insurance that features high quality products and services at a fair price; and to protect workers and employers by championing workplace safety.
- 3. Balance Sheet Statutory - Basis As of December 31 2014 2013 Admitted Assets Bonds ................................................................ $ 1,444,409,039 $ 1,389,641,842 Preferred stock.................................................... 12,178,184 11,258,881 Common stock.................................................. 134,140,632 145,844,369 Real estate, occupied by Chesapeake................... 9,180,183 9,417,305 Cash, cash equivalents and short-term investments 75,135,453 54,717,411 Other invested assets.......................................... 77,514,197 31,875,585 Total cash and invested assets...................... 1,752,557,688 1,642,755,393 Accrued interest on investments......................... 11,105,669 11,249,904 Premiums receivable........................................... 78,025,388 78,908,205 Securities lending reinvested collateral assets....... 127,527,930 109,389,158 Receivables under reinsurance contracts............. 1,111,130 1,366,389 Other assets........................................................ 27,907,176 25,230,545 Total admitted assets.......................................... $ 1,998,234,981 $ 1,868,899,594 Liabilities and Surplus Liabilities: Reserves for losses and loss adjustment expenses. $ 1,353,320,000 $ 1,291,320,000 Accounts payable and accrued expenses.............. 15,084,582 14,457,519 Unearned premiums........................................... 104,804,708 105,650,464 Payable for securities lending.............................. 127,527,930 109,389,158 Other liabilities.................................................. 5,405,786 7,353,268 Total liabilities.................................................... 1,606,143,006 1,528,170,409 Total surplus....................................................... 392,091,975 340,729,185 Total liabilities and surplus................................. $ 1,998,234,981 $ 1,868,899,594 2014 Chesapeake Employers’ Annual Report 1
- 4. Tom Phelan President, Chief Executive Officer 2 2014 Chesapeake Employers’ Annual Report 100 I am so very proud to be leading this great company and team of dedicated associates as we celebrate our Centennial anniversary. This report will highlight a few significant events from our first 100 years and some important next steps as we continue our evolution. THEN (1914) The State legislature established the Maryland State Accident Fund, a governmental entity, with a mission to provide a guaranteed source of workers’ compensation insurance, and we still hold this mission today. Since our inception, we have grown and flourished along with the businesses in this state, however, it has not always been without some turbulent times. We have witnessed world wars, economic growth and collapse, men landing on the moon and many other significant events. NOW (2014)We are the workers’compensation insurance market leader in the State. We understand Maryland businesses. We recognize that safety protects an employers’ greatest asset, their employees. When an injury happens we coordinate outstanding care for injured workers. We recognize that market leadership is accomplished by our independent agents and policyholders placing their business with us. We are committed to providing quality services to our valued partners. Over the years we have built a very strong financial company. We secured, in 2013, an A-(Excellent) financial strength rating from the A.M. Best Co, the credit rating agency with a unique focus on the insurance industry. The rating was re-affirmed this year. Our financial strength also reflects a sophisticated Enterprise Risk Management (ERM) process. Through modeling and forecasting, we are able to effectively identify, measure, monitor, and mitigate risks across the company. The company’s passion is our concern for Maryland’s businesses and their workers. For our 100th year anniversary, we celebrated our historic milestone with a special initiative to give back to the communities that have supported us. This year we gave more than $100,000 to 23 charitable non-profit organizations throughout the state to support and enhance the employability of their clients. This program reflects our belief in the inherent benefits of work and the economic vitality it generates for communities. Additionally, we encouraged greater volunteerism among our employees, particularly for 16 charitable organizations with a longstanding relationship with our company. President’s Message
- 5. Chesapeake Employers’ Board Members Rocky V. Gonzalez Secretary Charles Dankmeyer Vice Chairman Maria Tildon Board Member Leonard (Bud)Schuler, Jr. Board Member Joseph Coale Treasurer Paul V. Gill, Sr. Board Member Lewis C. Powell Chairman Wayne Gioioso, Sr. Board Member Ivory Tucker Board Member 2014 Chesapeake Employers’ Annual Report 3 Chesapeake Employers is led by a Board of Directors that is dedicated to effective governance of the company. Our corporate initiatives could not be possible without the support of our board. This year, we welcomed Maria Harris Tildon, Esq., who brings years of healthcare insurance expertise to the board. We look forward to her contributions and guidance. Also in 2014, the term of Kenneth Nwafor, CPA, expired and we thank him for his years of service and leadership. NEXT Ourfuturewillbeasexcitingandchallengingasthepast.Governor Hogan signed legislation on April 14, 2015 that will make significant changes to our operations over the next seven years. The law requires Chesapeake Employers’ Insurance Company to join the National Council on Compensation Insurance (NCCI), gradually adopt its rating system, and file our rates with the Maryland Insurance Administration Commissioner. The law allows Chesapeake Employers, or a subsidiary of the company, to write workers’ compensation insurance in other states, while continuing to be the guaranteed market in the State of Maryland. Also, the law alters the company’s Board of Directors beginning in 2020 so that seven of the nine Board members will be elected by you, our policyholders. The most significant point for our policyholders is that a great deal of work will be going on behind the scenes. Yet, as we transition to NCCI membership over the next seven years, Chesapeake will work diligently to minimize the impact to you. On behalf of the Board of Directors and my fellow Chesapeake Employers’ associates, we truly thank you for your business and look forward to strengthening our relationship as your workers’ compensation insurance specialist for the next 100 years! Best regards, Thomas Phelan, CPA, President and CEO
- 6. L-R: “Chip”Peterson, Jr. , Police Chief George P.W. Coudon, CIC, Crothers Insurance Tina Thomas Lyght, Senior Underwriter, Chesapeake Employers Calvin Bonenberger, Jr., Town Administrator Travis Marion, Mayor THEN
- 7. Town of Rising Sun Since 1917, Chesapeake’s Oldest Policyholder The THEN The Town of Rising Sun, in Cecil County, Maryland, is Chesapeake Employers’oldest policyholder. In 1720, Henry Reynolds established a stone tavern and a stagecoach stop. According to local lore, a sign over the tavern’s entrance depicted the rays of the sun at dawn along with the words “The Rising Sun.”By the time the town’s first post office was established in 1815, Rising Sun was chosen as the official name. NOW Today Chesapeake Employers covers all the town’s employees, including the mayor and town administrators, the police department and public works. “In addition to good rates, it’s the fast, excellent and committed service that Chesapeake provides which contributes to the town’s long-time partnership with Chesapeake Employers,”says George P.W. Coudon, CIC, of Crothers Insurance. “Continuity, consistency and reliability of timely service and response,”are some of the reasons the town has stayed with Chesapeake over the years, according to Town Administrator Calvin Bonenberger, Jr. He adds:“We have a very strong relationship with our local agent, Crothers Insurance. We are like one big family. We run into each other at local events and serve as partners in numerous community events for the betterment of the town.” The recently elected Mayor Travis Marion has injected new energy and vitality into this historic town. Mayor Marion received special recognition from the Maryland House of Delegates for his leadership in reshaping the town’s image. “The Town of Rising Sun is a community of neighbors and families who love living here,”says Mayor Marion.“Rising Sun has some of the best schools in the state. It is a safe town where people meet at the mailbox to talk or gather at one of our parks to play.” NEXT “There is a new energy in the air and excitement in what lies ahead for our great town,” said Bonenberger. The town has applied for a sustainable community designation with the State of Maryland and is currently soliciting bids to perform a comprehensive Economic Development and Community Revitalization Study. The goal is to develop a 10-year strategy that builds on the town’s master plan. L-R: Rising Sun Employees Marsha Spencer, Town Manager and Police Chief“Chip”Peterson L: The Town of Rising Sun, circa 1940’s 100Anniversary ANNUAL REPORT 2014 th 2014 Chesapeake Employers’ Annual Report 5
- 8. L-R: Bill Cress, Underwriting Supervisor Chesapeake Employers Richard Born, Herman Born & Sons Rick Born, President, Herman Born & Sons Debra Anders, Secretary Treasurer, Herman Born & Sons Eric Kastendike, Maury, Donnelly & Parr Graham Kastendike, Maury, Donnelly & Parr NOW
- 9. THEN Herman Born & Sons, a commercial truck repair company, has been in business for 163 years. It was originally established in downtown Baltimore in 1852 as a blacksmith shop and wagon manufacturer. The company has been a valued Chesapeake policyholder for 60 years. When the horse and wagon became obsolete at the turn of the century, the company modernized to keep up with the industrial revolution and began building truck bodies. NOW Herman Born & Sons now performs a wide variety of truck body repair services for commercial truck fleets in the greater Baltimore and Washington, D.C. area. The company specializes in truck body and cab repair and refinishing. Herman Born & Sons is still family-owned and spans six generations. It is represented by Graham and Eric Kastendike, of the Kastendike Insurance Group of Maury Donnelly & Parr. Regarding its long-term relationship with Chesapeake Employers, Graham Kastendike had this to say: “Longevity and partnership come to mind when I think about our relationship with Chesapeake Employers’Insurance. We have shopped the marketplace and are yet to find a better program from a pricing, coverage and loss control standpoint. Chesapeake has been and will continue to be a part of Herman Born & Sons’risk management program being led by the Kastendike Team at Maury, Donnelly & Parr.” When it comes to workplace safety, company President Rick Born has a particular message for his 25 employees:“[We tell] our employees it is their responsibility, first, to do the job safely and, second, to do the job right. The foundation of our great safety record is low employee turnover. Quality employees are as valuable to us as good customers.” Herman Born & Sons Safety, Service, & Specialization NEXT This safety- and service-conscious truck repair specialist plans to continue to meet its customers’ needs. “Over the past 163 years, we have manufactured and repaired commercial vehicles. We believe if we do what is in our customers’best interest, our business will take care of itself,”said Rick Born. Above, Herman Born & Sons craftsmen performing their jobs safely. At left a delivery truck repaired and repainted by Herman Born & Sons, circa 1950s. 100Anniversary ANNUAL REPORT 2014 th 2014 Chesapeake Employers’ Annual Report 7
- 10. NEXTNEXT L-R: Robert Black, President, Catoctin Mountain Orchard Bobby Phelan, Insurance Brokers of Maryland Kylie Robertson, granddaughter, standing Patricia Black, Co-owner, Catoctin Mountain Orchard Wyatt Black, grandson, standing Eaves Black, grandson“sitting on shoulders” Nathan Black, grandson Katlyn Robertson, granddaughter George Johnson, Territorial Account Executive Chesapeake Employers Insurance
- 11. THEN Thurmont’s Catoctin Mountain Orchard has been in the Black family for four generations and a Chesapeake policyholder since 2013. It began as a small fruit and vegetable stand in 1948. Current owner Robert Black’s parents assumed the property in 1961. In 1983, the family moved the retail farm market indoors and built a parking lot for customers. Robert and his sister, Patricia, took over the family business in 2001. They continued to sell fruit, preserves, maple syrup and more. Word of mouth spread, and Catoctin Mountain Orchard began attracting customers from all over. NOW Today, the farm encompasses more than 100 acres. The farm employs 25 people. Two of the Blacks’five grandchildren also work on the farm. The family sells their fruits and vegetables locally and to markets in Maryland and Washington, DC. Catoctin Mountain Orchard also supplies the Frederick County Public School system with apples each week for its school lunch program. Black likes to say he is“developing better eating habits for children by providing them with apples in schools. It’s fresh fruit for better health.” “I’ve known the Black family for many years.” adds Bobby Phelan, agent, Insurance Brokers of Maryland.“They are a hard working family that I am honored to call clients and friends. I was pleased to recommend Chesapeake Employers to Catoctin Mountain Orchard for their workers’comp coverage. With all the clients we are fortunate to work with, we take great pride in finding the best workers’comp coverage, service and pricing to protect their businesses and their employees.” Despite the fact that, in Maryland, children may work on a family farm without having any formal safety training, Black insists all his grandchildren learn about safety from a very young age. At 14, they must participate in the National Safe Tractor and Machinery Operations certification training program offered by the University of Maryland Extension service and Frederick County 4-H Youth Development. NEXT “The future of the business is the grand- children,”says Robert Black. Katlyn, 18, will attend Frederick Community College in the fall, but will continue working at the family orchard as well. She is already in charge of the new Pick Your Own apple program.“It means she can’t take off any weekends in September and October,” explained Black. He said Katlyn understands that it’s all part of the responsibility of running a seasonal family business that has plenty of room to grow. Our Future is Growing Catoctin Mountain Orchard Catoctin Mountain Orchard has an apple variety,“Autumn Gala,”named in memory of Robert Black’s father, Harry Black. At left Catoctin Mountain Orchard’s produce store and bakery is open May 1st to January 1st. 100Anniversary ANNUAL REPORT 2014 th 2014 Chesapeake Employers’ Annual Report 9
- 12. 1914-1920s u In 1943, the Fund proposed the creation of its first workplace safety department. u In 1945, Richard K. Coggins became the Superintendent for the Fund. Dick Coggins’ career as Superintendent, and later as a board member, spanned 50 years. u The Fund insured 3,600 businesses in 1949. The average annual premium was $234. 1930s-1940s u A coal miner from Allegany County turned Maryland State Senator, David J. Lewis, sponsored the first workers’ compensation legislation in Maryland. u This led to the creation of the Maryland State Accident Fund in 1914, the predecessor to Chesapeake Employers’ Insurance Company. u In its first year, the Maryland State Accident Fund insured 842 businesses. OurStory 10 2014 Chesapeake Employers’ Annual Report 100Anniversary ANNUAL REPORT 2014 th
- 13. u In 1951, the Fund wrote $1 million in annual premium. u The Fund promoted a new slogan to its policyholders, “Security, Service, Savings and Cooperation in Accident Prevention.” u In 1964, the Fund celebrated its 50th anniversary. 100Anniversary ANNUAL REPORT 2014 th 2014 Chesapeake Employers’ Annual Report 11 1950s-1960s
- 14. u The Fund insured 9,400 policyholders in 1983. u In 1987, the Fund wrote $100 million in annual premium. u In 1972, the national workplace injury rate was 10.9 incidents per 100 workers. By 2013, the workplace injury rate for private sector industries continued to show a positive decline with 3.1 incidents per 100 workers. 1970s-1980s 12 2014 Chesapeake Employers’ Annual Report 100Anniversary ANNUAL REPORT 2014 th
- 15. u In 1990, the State Accident Fund changed its name to the Injured Workers’ Insurance Fund (IWIF). u In 1996, IWIF began partnering with Maryland’s insurance agent community. u In 2013, IWIF became Chesapeake Employers’ Insurance Co., a private nonprofit insurance company. u In November 2013, Chesapeake Employers received an A-(Excellent) financial rating from A.M. Best. Co. u In 2014, Chesapeake Employers continued to be the largest writer of workers’ compensation insurance in Maryland. u We insured 21,000 Maryland employers and provided care and benefits for more than 23,000 injured workers. u On April 16, 2014, we celebrated 100 years in business. 1990s&NOW 100Anniversary ANNUAL REPORT 2014 th 2014 Chesapeake Employers’ Annual Report 13
- 16. 14 2014 Chesapeake Employers’ Annual Report Our Operations Highlights100Anniversary ANNUAL REPORT 2014 th 201320122011 Assets InMillions 2014 $1.98 Billion$2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 0 201320122011 Reserves InMillions 2014 $1.35 Billion $1,400 $1,200 $1,000 $800 $600 $400 $200 0 $75 $60 $45 $30 $15 0 201320122011 Net Investment Income InMillions 2014 $49 Assets Reserves Net Investment Income covered workers With approximately 11,963policyholders qualified for their own beneficial experience modifier or loss-free credit in 2014 First reports of injuries declined in 2014 to 92% Our claims department received a overall customer satisfaction rating
- 17. 100Anniversary ANNUAL REPORT 2014 th A cornerstone of our 100th anniversary celebration included the launch of our VolunCheer Program. The initiative encouraged employees to volunteer and“cheer on”deserving nonprofit organizations. As a result, in 2014 our employees VolunCheered 2,104 hours in the community! Visit our social media pages for highlights. 2014 Chesapeake Employers’ Annual Report 15 Arc of Baltimore Arc of Carroll County Baltimore Outreach Service, Inc. Caroline Center Catholic Charities Central Scholarship Civic Works Cristo Rey Jesuit High School Goodwill Industries of the Chesapeake, Inc. Greater Homewood Community Group Human Services Programs – Opportunity Works Kent County Learning Center Living Classrooms Maryland Food Bank Maryland Volunteer Lawyers Service Moveable Feast Red Wiggler Community Farm Samaritan Women Susquehanna Workforce Network Training Source Walden Y of Central Maryland Youth as Resources Please visit our microsite to learn more about the stories and missions of these incredible organizations, www.chesapeakebridgegrants.com. A second component of our year-long 100th anniver- sary included the creation of our Bridge to the Future Grants Program. The grants program was created to support Maryland-based, charitable organizations that provide human services and develop the em- ployability skills of their clients. The grants application program was announced in the summer and from the dozens of applications received, these 23 deserving nonprofits were selected. Our Celebrations!
- 18. Chesapeake Employers’Insurance Company Financial Highlights at a Glance Years Ended December 31 2014 2013 The 2014 condensed financial statements, including the balance sheet on page 1, have been derived from complete statutory-basis financial statements which were audited by Johnson Lambert LLP. Statement of Operations, Statutory - Basis Years Ended December 31 2014 2013 A.M. Best Co. has reaffirmed a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” for Chesapeake Employers’ Insurance Company as of December 9, 2014. The outlook assigned by A.M. Best to both ratings is stable. A complete Statement of Actuarial Opinion prepared by Deloitte Consulting, LLP may be obtained upon request from the Chief Financial Officer of Chesapeake Employers’ Insurance Company. 16 2014 Chesapeake Employers’ Annual Report Premiums earned.................................... $ 228,711,230 $ 216,827,277 Net investment income .......................... $ 49,083,420 $ 48,569,880 Loss & loss adjustment expenses incurred $ 191,677,996 $ 193,685,757 Underwriting loss................................... $ (20,167,425) $ (29,615,742) Dividends paid to policyholders ............. $ (187,438) $ Total assets ............................................. $ 1,998,234,981 $ 1,868,899,594 Total surplus........................................... $ 392,091,975 $ 340,729,185 Loss/LAE ratio ....................................... 83.8% 89.3% Expense ratio.......................................... 24.9% 23.0% Combined ratio...................................... 108.7% 112.4% Underwriting income: Net premiums earned............................. $ 228,711,230 $ 216,827,277 Losses incurred....................................... 160,640,093 167,848,926 Loss adjustment expenses incurred ......... 31,037,903 25,836,831 Commissions.......................................... 22,587,867 21,909,516 Other underwriting expenses, net........... 33,478,658 29,696,546 Provision for bad debt ............................ 1,134,134 1,151,200 Underwriting loss................................... (20,167,425) (29,615,742) Net investment income .......................... 49,083,420 48,569,880 Net realized gain (loss) on investments ... 38,176,621 16,055,740 Net investment gain ............................... 87,260,041 64,625,620 Other income......................................... (16,990,302) (15,633,429) Dividends to policyholders..................... (187,438) Net income .......................................... $ 49,914,876 $ 19,376,449
- 19. Published by the Chesapeake Employers’ Insurance Company Communications Department Photo credits: Mark Swisher, pgs. 4-9 Cecil County Historical Society, , pg. 5 Herman Born & Sons, pg. 7 Photo collection of Maxine Beachy Broadwater, pg. 10 A. Aubrey Bodine, pgs. 10 & 11 Middleton Evans, pg. 12 I. Henry Phillips, pg. 11 Getty Images, pgs. 11, 12 & 13 iStock, pg. 13 Chesapeake Employers Insurance, pg. 15
- 20. PRSRT STD U.S. POSTAGE PAID Permit No. 1962 Baltimore, MD 8722 Loch Raven Blvd. Towson, MD 21286 www.ceiwc.com 2014 Annual Report