NJM News

October 29, 2007

Contact: Patrick W. Breslin, 609-883-1300, ext. 7070

NJM Returns Record-Breaking $132 Million Special Dividend to Personal Auto Policyholders

Average check is about $327

Increases Regular Dividend
for Workers' Compensation to 15%

WEST TRENTON, N.J. — New Jersey Manufacturers Insurance Company (NJM), the largest insurer of personal autos in the state, will return a record-breaking Special Dividend of approximately $132 million to more than 405,000 policyholders. About 98% reside in New Jersey and 2% in Pennsylvania. This marks the 14th consecutive year that the Company is sending policyholders dividend checks, and it nearly doubles the Special Dividend issued at this time last year.

Indeed, this is the largest Special Dividend the Company has ever paid in its 94-year history. On average, policyholders will receive checks of about $327 each, which will be mailed from November 19 through December 12.

With this mailing, an average customer who has been insured with NJM for the past 15 years has received a total of $2,361 in Special Dividend checks. That is equivalent to nearly 1½ years worth of coverage premiums at NJM's already attractive rates.

Most customers insure two cars. In 2006, NJM's average annual premium per car was only $944 compared with the statewide average of all insurers of $1,099, as calculated by the New Jersey Department of Banking and Insurance (DOBI). But after receiving Special and Regular Dividends for that year, the net cost for an NJM policyholder was just $812 per car.

NJM is also pleased to announce that its Board of Directors has approved an increase in the Regular Dividend for workers' compensation policies from its previous level of 10% to 15% of each policyholder's premium. NJM is by far the largest workers' compensation insurer in New Jersey, covering about 6,800 businesses, or roughly 18.8% of the voluntary market in 2006. The new 15% Regular Dividend payment will be returned to policyholders after an audit of their accounts for contracts expiring in January through March 2008.

"NJM is truly unique," said President and CEO Anthony G. Dickson. "Our commitment to Stewardship, Integrity and Service has enabled us to return dividends to policyholders – not stockholders – in every year since 1918. By keeping costs low and focusing exclusively on policyholders, we are more of a service organization than an insurance company."

Consumers well know that auto insurers have been competing vigorously for customers in New Jersey since DOBI started implementing reforms enacted in 2003 designed to create a more reasonable regulatory environment. Under the leadership of DOBI Commissioner Steven M. Goldman, this momentum continues as the efficient administration of these market-based reforms serves all New Jersey drivers by providing them with unprecedented access to auto insurance.

NJM's Special Dividend checks include a percentage of each policyholder's premium paid for the 12-month policy that began in 2006 — 15% of premiums for Liability and 15% for Physical Damage coverage. This is in addition to a 5% Regular Dividend already provided as a credit to the same customers when their policies renewed in 2007.

For policyholders who were insured by NJM in 2004, the checks also include an extra Special Dividend of 7.5% of Liability and Physical Damage premiums paid that year, on top of previous significant dividends already distributed. NJM has declared this extra payment now because a reevaluation of claims from prior years, which is conducted on a regular basis, showed that claims experience for 2004 proved to be better than had been anticipated.

The Special Dividends calculation provides no return of policyholders' premiums for Personal Injury Protection (PIP), which is no-fault coverage for medical treatment after an accident. NJM has not paid dividends on PIP for four years because of double-digit medical inflation and the lack of an adequate PIP Medical Fee schedule during this time period to protect policyholders from unreasonable charges by surgical centers and other medical providers.

Along with dividends, NJM's reputation is based on providing outstanding service at a fair value. NJM retains an A.M. Best rating of A++ (Superior) for its financial strength — a distinction shared by only 1.5% of rated U.S. property-casualty insurance companies. As a direct writer, NJM's customer service and claims handling is provided by in-house salaried staff rather than agents who work on commission. This keeps costs low: NJM's underwriting expenses in 2006 were just 11.3% of premium, less than half the 26.3% average for the property-casualty insurance industry nationally.

As further evidence of NJM's value, DOBI has reported that NJM Insurance Group had zero valid auto insurance complaints during 2006 while covering 790,209 vehicles. Since the Department began compiling these records in 1987, NJM has consistently scored some of the lowest complaint ratios among major insurers.

NJM has not increased overall rates since 1996, and has reduced overall rates in 1997, 1999, 2004 and 2007 even in light of escalating medical costs and sometimes volatile market conditions.

Despite the current competitive market, NJM continues to grow and remains the top choice of good drivers. In order to be eligible to apply for coverage with NJM, an individual must be currently employed by a company that is a member of the New Jersey Business & Industry Association (NJBIA) or by the State of New Jersey. NJM is the only auto insurer in New Jersey to offer $1 million in PIP coverage compared to a maximum offer of $250,000 by most other carriers, and NJM policies run for a full year, instead of six months like many other insurers. (A six-month policy means the insurer has twice as many opportunities to "adjust" rates.)

Nor does NJM charge an additional premium for an accident-forgiveness option. "Forgiveness" is built in at NJM at the auto insurance underwriting stage, since NJM only insures safe risks from the beginning. NJM does not use tiers, credit scoring, occupation or education in setting prices, and policyholder money is not spent on company cars, luxury boxes, or expensive advertising campaigns.