We are grateful to the members of the New Jersey Business & Industry Association (NJBIA) and their employees who continue to trust NJM for Workers' Compensation, Commercial Auto, Personal Auto, and Homeowners insurance. NJM's insurance contracts have been renewed each year for decades, demonstrating that many policyholders historically rely on NJM throughout their personal or business lives as economic circumstances ebb and flow.

The national economy began showing modest signs of recovery in 2009. Stocks led the budding resurgence, with the Standard & Poor’s 500 Index up 26.5% for the year, but the housing and credit markets continued to struggle, and unemployment remained high.

NJM navigated through the economic turmoil of recent years by maintaining its traditional fiscal safety and stability for policyholders. The wisdom of this philosophy was reinforced in December, when A.M. Best reaffirmed NJM’s rating of A++ (Superior) for financial strength. Only 1.7% of rated companies in the United States receive this designation.

More information about NJM’s financial performance in 2009 is found in the "Insurance Operations" section of this report, but ratios, premiums and accounting charts tell only part of the story. When an insurance company must fulfill its promises to policyholders, judgment and satisfaction are based on the quality of service received.

NJM closely monitors third-party evaluations of customer care. In 2009, NJM was included for the first time in the J.D. Power and Associates' National Auto Insurance StudySM, which surveyed current Personal Auto policyholders of insurance companies nationwide. NJM achieved the second-highest score in the study’s overall Customer Satisfaction Index (CSI). However, NJM was not officially included in the rankings because of our membership requirements.

While we welcome these findings, we know that unsolicited remarks directly from policyholders are the truest verdict of the value of our service. We deeply appreciate our customers’ kind sentiments found throughout this report.

Our policyholders entrust us to pay covered claims when losses occur. Careful stewardship of their premium dollars has enabled us to honor our commitments and also return dividends to policyholders – not stockholders – in each of the last 91 years for a total of $4.9 billion. Dividends result from conservative underwriting, attentive loss-control methods, and a prudent investment philosophy.

Taking close care of policyholder resources dovetails neatly with providing valuable service for the benefit of customers.

Steady growth helps support existing policyholders. NJM has increased its focused outreach to NJBIA members and their employees with mailings and personalized visits. Recent messages explained that on average, NJM policyholders save 24% on Personal Auto insurance, paying just $803 per vehicle in 2008 after dividends, while other New Jersey drivers paid $1,060.

NJM Bank, which celebrated its 10th anniversary in 2009, complements the insurance services provided by NJM. Like the parent Company, the Bank continued to provide safety and stability from the maelstrom faced by the entire financial sector. NJM Bank's prudent business practices shielded it from sub-prime mortgage and complex derivative exposures.

NJM's Board of Directors is comprised of respected individuals from various business sectors committed to the same principles of service as NJM. Its members effectively represent the interests of policyholders. Joining NJM's Board in 2009 was Lee J. Bellarmino, Senior Vice President of NJM Insurance Group and President and CEO of NJM Bank. His extensive experience in banking and organizational management is most welcome.

Having "the service gene" is truly a prerequisite for working at NJM, and our staff of 2,486 full-time employees plus 52 more at NJM Bank is dedicated to the exclusive needs of policyholders and bank customers. We look forward to nurturing this service relationship with customers not just as the economy recovers but for generations to come.

April 2010

Anthony M. Stonis
Chairman of the Board

Bernard M. Flynn
President and Chief Executive Officer