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American Family Insurance strengthens policyholder equity, achieves milestones for customer satisfaction and loyalty

Madison, Wis. (March 5, 2013) – The American Family Insurance Group's policyholder equity level reached a record $6.1 billion in 2012, the company announced today, due in large part to strong investment returns and improved operating results.

Policyholder equity, which serves as financial protection for policyholders in the event of unusual catastrophic events or unexpected losses, has increased nearly $2 billion since a sharp dip associated with the 2008 global financial crisis.

American Family Insurance also established new high marks for customer satisfaction and customer loyalty.

The year also included the American Family Insurance Group's first two acquisitions in its 85-year history: Permanent General Holdings Corp. and its subsidiaries, and Lumbermens Casualty Insurance Company.

Operating, investment results fuel policyholder equity

American Family has steadily rebuilt policyholder equity since 2008. The company added $579.1 million to policyholder equity in 2012.

"Policyholder equity is one of the most important lines in our financial statement," said Chairman and Chief Executive Officer Jack Salzwedel. "Strong policyholder equity gives our customers a firm reassurance that we will be able to help them when they need us most."

Property and casualty (P/C) investment income along with after tax realized and unrealized capital gains of $303.2 million were major contributors to the 2012 policyholder equity gain.

American Family's P/C underwriting loss of $177.2 million in 2012 was due primarily to catastrophes, an improvement from the $322.2 million underwriting loss in 2011. Net premium written increased 5.2 percent from 2011, reaching $5.4 billion in 2012.

After adding realized capital gains and tax expenses (or benefits) to the operating gain, the company's net income was $360.5 million for 2012, up 22.1 percent from the $295.2 million net income in 2011.

Company assets rose to $17.9 billion, an increase of 4.6 percent. Life insurance in force rose to $88.3 billion from $87.0 billion.

Storms and wildfires rage in first half of 2012

Spring catastrophes struck American Family Insurance customers in several states, including massive hailstorms in the St. Louis metro area in April and devastating wildfires and hailstorms in Colorado in June. In all, American Family's anticipated P/C insurance catastrophe claim payments from the first half of the year totaled nearly $700 million, a pace that would have challenged the company's record catastrophe year of nearly $1.2 billion in 2011.

Catastrophic events in American Family's 19 operating states dropped off dramatically in the second half of the year, with the final 2012 tally leveling off at $840.6 million. American Family does not operate in the states that in October were directly in the path of Superstorm Sandy, which resulted in anticipated insurance industry payments of an estimated $25 billion.

"Our job is to provide outstanding claim service and support to our customers, wherever and whenever they need us," said President and Chief Operating Officer Dan Schultz. "It's something we take pride in and do well, whether it's an everyday sort of event or something as horrific and widespread as a wildfire or tornado."

For more information on how American Family Insurance protects its customers' changing dreams, read the 2012 American Family Insurance Annual Report.

Building upon record-setting customer satisfaction

American Family measures customer satisfaction with respect to the company and with respect to the customer's agent. Both measures reached record levels in 2011 and increased further in 2012. Customer loyalty, measured by the percentage of customers who renew their policies, also hit a record high for the company.

"I credit our agents and employees for making tremendous progress last year," said Salzwedel. "American Family is carefully managing our resources by closely considering whether and how expenditures translate into value for our customers.

"We're starting to see results not only in customer satisfaction and loyalty, but also in increased sales of new policies. Our goals are even higher for 2013, and I'm confident our people have the dedication to make it happen."

Combined ratio improved in second half of year

The combined ratio, which compares claims payments and general expenses to premium, is a key measure in the insurance industry. American Family finished 2012 with a combined ratio of 103.3 for its core business of P/C insurance, which means the company paid out $1.03 in claims and general expenses in 2012 for every dollar of earned premium.

Extraordinary catastrophe activity in the first half of the year pushed American Family's combined ratio considerably higher than the final measure, but the ratio decreased as storm activity lessened in the latter half of the year. Conversely, insurers who operate in the states pummeled by Superstorm Sandy experienced increasing combined ratios toward the end of the year.

First two acquisitions in company history

American Family Insurance acquired Nashville, Tenn.-based Permanent General Companies and other subsidiaries of the PGC Holdings Corp. effective Dec. 31. Permanent General will continue to operate as a separate entity and will remain a completely separate brand – using its widely known brand, The General®.

Permanent General is highly successful at reaching a customer segment not served by American Family, operates in some states American Family does not currently serve, and also has extensive experience in direct distribution.

In a separate transaction, American Family purchased Lumbermens Casualty Insurance Company (LCIC), a subsidiary of Illinois-based Lumbermens Mutual Casualty Company.

The purchase gives American Family the flexibility to expand into other states in the future. LCIC stopped selling and renewing insurance policies in 2003, and has P/C licenses (auto, homeowners and umbrella) in approximately 41 states.

Here are the consolidated highlights of the group's 2012 GAAP financial report (in thousands, except for individual life insurance in force):

























Life insurance in force

$88.3 billion

$87.0 billion

$86.5 billion

$85.4 billion

$84.0 billion


Steve Witmer
Media Relations
(608) 242-4100, ext. 32121

Ken Muth
Media Relations
(608) 242-4100, ext. 30680

Based in Madison, Wis., American Family Insurance offers auto insurance, homeowners insurance, life insurance, health insurance, business and farm/ranch insurance in 19 states. American Family insurance is the nation's third-largest mutual property/casualty insurance company. Web:; Facebook:; Twitter: