June 30th marked the end of the first half of 2012, an appropriate time for us to reflect on where ALPS stands now, how we got here, and why we are so confident about our future. With the addition of new President and Chief Operating Officer David Bell, ALPS significantly strengthened its management team with a seasoned insurance industry veteran. David comes to us with fresh ideas and new perspectives on how to strengthen ALPS and better serve you, our policyholders. Important initiatives are underway that will reinforce our commitment to stability, and ultimately improve all disciplines within our insurance operations.
As many of you know, ALPS incurred a spike in claims in recent years which affected our overall underwriting performance, particularly in 2011. This claims spike, however, was not unexpected based on the downturn in the U.S. economy and the resulting targeting of trusted advisors like attorneys for deals gone bad. Despite this industry-wide trend, our philosophical approach to the handling of claims, including properly evaluating those claims in a timely manner and to the ultimate risk to the company, has remained intact.
We performed our biennial, independent rate review in late 2011. That rate review has resulted in a fair premium assignment based on the risks presented by each policyholder class. Thus far, our insured attorneys have responded positively, as reflected in our historically high retention levels on both a lawyer and policy count base – at over 92%.
One of our greatest strengths is the manner in which we handle claims for our policyholders in their greatest time of need. We ensure strong claims defense, but are prudent in the manner in which we work with our defense panel. Through June, defense costs have been more strongly contained without sacrificing the experience and service you have come to expect from ALPS. These efforts, in tandem with our ongoing responsibility to price premium to meet risk, are yielding positive results.
These initiatives, combined with additional cost containment measures, have resulted in a significant strengthening in ALPS’ financial performance. We’re confident it will continue to strengthen in the second half of the year as well. As a testament to our current position, the financial stability of ALPS was recently reaffirmed A- (Excellent) by A.M. Best, an independent rating agency.
Within its analysis, A.M. Best cited ALPS’ “good risk-adjust capital position, high policyholder retention, established relationships with various State Bar Associations and its geographic spread of risk” as reasons for maintaining the A- (Excellent) rating. They also recognized “ALPS’ re-focused operation strategies, aggressive claims handling and customer driving management philosophy.” We are proud of these accomplishments as they adhere to our overall company mission, and plan on offering additional value-added services in the near future.
All of this said, we continue to measure the satisfaction of you, our insured attorneys, as our true standard of success. We are committed to continually improving our product offerings and the ease of doing business with us to best serve you with the stability and professionalism that you’ve come to expect from ALPS.