A Message from President and CEO Bill Montgomery

Paving the way for profitable growth.

Midwest storms created a difficult first six months of 2024 for Celina Insurance Group, but as storm activity calmed and our rate and product changes began to take hold, the second half of the year became a period of recovery.

Throughout the year, we continued implementing insurance-to-value increases, property and physical damage rate increases, and numerous product changes that mitigated the impact of weather on results. While the challenges of 2024 impeded Celina's profitability goals, we were buoyed by the results of the second half of the year and are confident the Company is positioned for profitable growth in the future.

March and May each had catastrophic weather events exceeding $10 million, contributing to a mid-year net combined ratio after fee income of 114.6%. Ongoing efforts to maneuver a difficult market started to shine through in the results of the second half of the year, and we posted a combined ratio of 84.4% for that period. This outstanding result led the Company to achieve a year-end combined ratio after fee income of 98.8%. Although we did not reach our goal of underwriting profit, we did meet the strategic objective of operating profit, posting net income of $5.4 million. After ending 2023 down 7.6% in surplus at $138.0 million, Celina ended 2024 with a solid increase of 7.3% to $148.1 million.

“We were buoyed by the results of the second half of the year and are confident the Company is positioned for profitable growth in the future.”

The financial results and premium growth during 2023 and the first half of 2024 prompted the Company to intentionally slow down premium growth. Mid-year, we shut down our Miami Auto product and discontinued writing new dwelling fire business and a number of other commercial classes of business. Even with these steps, aggressive rate increases drove direct written premium to rise by 12.3% to $212.3 million, an increase of $23.3 million. One of the Company's strategic objectives is to grow farm and commercial lines faster than personal lines, but the plan targets growth in all three. We accomplished this in 2024, although rate increases in all three lines of business made it challenging. Commercial lines written premium for the year grew by 16%, farm by 14% and personal lines by 9% over the prior year. As rate increases went into effect, average premiums continued to climb, and Celina achieved a significant milestone of a $5,000 average premium per commercial policy. Policy count was down by 4% due to first-quarter Iowa nonrenewals (we decided to exit the state in 2022 and completed the process in 2024) and the aforementioned actions that were taken to slow growth. While having fewer policies in force is not a long-term objective, it was forecasted for 2024 and was necessary during these trying times.

The Company continued making product changes in 2024 that will lessen the impact of weather on results, and that work will continue this year. A new general ledger accounting package was implemented, and work continued to develop a new personal auto product and a much-needed commercial auto product revision. We also launched a streamlined rating platform for our BOP Trade Contractors Program in all commercial writing states and have begun work on a new claims system to be implemented in 2025, replacing a legacy system originally developed in 1997.

The difficulties impacting the insurance industry during the last few years have been considerable, but we're confident we've taken the right steps to maintain our track record as an insurance organization that withstands trying times and comes out stronger on the other side.

With unwavering determination, our pledge to policyholders and agency partners is to restore consistent operational profitability and prepare the Company for future growth.

William W. Montgomery

Chairman, President and Chief Executive Officer