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These are scans of some of the 1970s MSI Annual Reports. The decade would end with MSI in the new Arden Hills building.
The whole annual is wrapped around a story about the hospital in Grantsburg, Wisconsin, which MSI helped finance. They were still taking some high ground in selecting investments.
Mutual Service Insurance helped make the Grantsburg Hospital a reality by providing funds to finance its construction. The Mutual Service investment in the Grantsburg Hospital is one measure of its commitment "to invest the Companies' funds in the best interest of policyowners . . ." Since 1934, Mutual Service has been the partner of communities like Grantsburg, Wisconsin. Its investment funds have improved the quality of life for the people it serves.
There was some leadership turnover. Chairman Bergeron died early in 1970. President Felix Rondeau (after whom the 5th floor library was named in the Arden Hills building) chose to retire. A Senior Vice President, W.L. Sanford, took over in July but then died in November. Roman Eller then became President.
A great year, with record levels of earnings, assets and surplus. The Dow Jones Industrials went through 1,000, a big milestone.
During 1972 our principal objectives were: first, to maintain a reasonable underwriting gain on our casualty-property business; second, to accelerate growth in our life business; and third, to respond meaningfully to social causes.
I'm pleased to report to you, the policyowners of Mutual Service Insurance Companies, that those objectives were realized. Simply, but accurately stated, 1972 was a great year for your Companies. Assets, surplus, premium and investment income reached record highs in all the three Companies while casualty expenses were at an all-time low.
It's interesting to see the causes which MSI was investing in:
Our improved financial position also led to broader corporate participation in meaningful social activity. In 1972, we made a grant to the Metropolitan Medical Center, specifically designated to provide heart surgery for Vietnamese children . . . we established a scholarship at the University of Minnesota in the field of preventive cardiology . . . we made available start-up funds for several prospective community Health Maintenance Organizations . . . and, we afforded financial and technical assistance for cooperative housing.
There's a great photo of a guy in the computer room, with a stack of punch cards in the foreground, a Univac 9400 computer in the middle distance and a bank of tape readers in the background. This computer has about the same processing power as my clothes dryer; my iPad would have inconceivable capabilities.
This annual also had position letters on several topics of interest. Some things are timeless:
Today the nation faces a crisis in its healthcare delivery system. Costs have increased more rapidly than in any other area of service. Recent studies indicate that medical expenses can be expected to rise 50% in the first half of this decade, to more than $100 billion.
Also: We further believe that healthcare should ultimately be delivered on a nonprofit basis.
Suddenly, things were not quite as good. The first oil crisis had hit, and the drip-drip of Watergate revelations was ongoing.
On the casualty side, the curtailment of gasoline should cause less driving and less congestion on the highways. It will also restrict the market of insurable automobiles. The shift to smaller cars, more passengers per car, and continued inflation will increase claim costs. Inflation will have a depressing effect on premium volume and put a further strain on operating expenses. Changes and adjustments in our operations and rate structures will be made as warranted by the actual experience of 1974. We pledge that there will be no "fuel crisis gain" at Mutual Service.
President Eller hadn't caught on to the current carnivorous capitalist model yet:
We pledge to translate our social commitments and responsibilities into action. The insurance business is very closely linked with the dreams and hopes of people. The evaluation of our performance must be judged by the contributions we may make to a better society.
He must not have read Ayn Rand.
Now I kind of regret I didn't get a 1975 annual:
The turn around from our 1975 casualty results calls for special mention. You may recall that 1975 was the worst operating year for casualty insurance companies in history, and the experience of Mutual Service Casualty was no exception.
There must have been some real challenges for this to make the President's letter:
This record growth of 1976, however, was not without trial. It caused many processing problems and strained to the utmost our service to policyowners. Fortunately, by year's end, we had coped successfully with the heavy volume of work, and we are again approaching normal service standards. We appreciate your understanding and confidence during a very difficult period.
There's more delicious tech stuff highlighted, including a roomful of coders, the impressive microfiche machines and the clearing station, all paper-based, where auto policy changes go. The companies are now licensed in 23 states, up from 11 six years ago, and have 500 agents under exclusive license.
Mutual Service Casualty had doubled in size in just three years. In part, this was due to the high-inflation period but some of it was also legitimate growth. In those halycon days, there was other good news:
Once again all three Mutual Service Insurance Companies were awarded the highest rating of A+ Excellent by Best & Company, a nationally recognized insurance rating organization.
The MSI Cooperative was up to 543 member co-ops. Serving some of these larger co-ops required a more varied geographic presence, and MSI was up to 28 states and the District of Columbia. The employee force was up over 800 people by year-end room was getting tight. So,...
Given the record company growth within the past several years, our employee force exceeds 800, necessitating larger office headquarters. The new home office facility in Arden Hills. Minnesota, a northern St. Paul suburb, will not only meet our current space needs, but the 240,000 square foot facility is being constructed toward future requirements, and is compatible with today's emphasis on energysaving. Two of the building's five stories will be underground, taking advantage of the earth's constant temperature. A "heat regain" system will utilize heat from computers, lights and people, resulting in reduced energy consumption. Construction began in November of 1977 and we expect to move in this summer.
Energy efficiency was a big topic in those days and the Arden Hills building was pretty forward-looking for the day. There were also a couple of pages all about co-operative insurance (and the improved CoPac product for co-ops) and a note about the largest policy is MSI's history, a $50 million umbrella policy for Midland Cooperative.
A big year. The new building is featured on the front cover, with the company having moved in mid-summer. This was also the year when the firm started selling as "MSI Insurance". It's up over 900 employees, licensed in 31 states and the District of Columbia and still trumpeting the co-operative angle. The company celebrated by printing the annual with a loathsome white-text-on-black background look relieved only by some cheesy, uninformative but colorful 3D graphics.
During 1979, we also adopted a new market identifier, "MSI Insurance". Our studies and research indicated that a change in identification was necessary to increase corporate visibility. Even though we are becoming known as MSI Insurance the legal corporate names remain the same.
It was apparently a tough year:
Late in 1978, Mutual Service Casualty, not unlike the industry, witnessed the beginning of very unfavorable underwriting results, especially in the automobile lines. This adverse trend continued into 1979, and the first quarter of the year produced a substantial underwriting loss. Corrective programs that were undertaken in late 1978 were accelerated. About mid-year improvement occurred and this favorable trend continued during the remainder of the year. In fact, the second half of 1979 produced an overall underwriting gain. However, automobile insurance ended the year heavily in the red and requires further attention. During 1979, there was an increase in property/casualty premium income over the previous year of 8% in spite of deterrents resulting from substantial rate increases and a curtailed auto market.
Despite this, the Companies maintained their "Excellent" A.M. Best rating.
Once again Best & Company, the leading national insurance rating organization, awarded all three of our companies a rating of "Excellent." Your insurance companies continue to grow while maintaining their traditional strong financial base.
Unspoken here is that this might be a downgrade. Last year the annual rightfully trumpeted the A+ ratings; this year it just says "Excellent", which could be A or A-.
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