The year 2009 was a year filled with many challenges starting with the melt-down and turmoil of the financial markets. Federated, like many organizations, felt the impact of this brutal investment market; however, Federated’s financial status remains secure. As of December 31, 2009:

• Total assets have increased $27.3 million to $351.7 million. The increase from December 31, 2008 is primarily due to the continued positive cash flows experienced over the past several years, highlighted by $23.2 million from operating activities.
• Surplus at December 31, 2009 is $109.9 million. This is an $11.4 million (11.5 percent) increase from December 31, 2008, and is net of the $5.3 million in member distributions that were made during the year.
• Direct written premiums for 2009 remained flat and amounted to $139.8 million. We ended the year with a retention ratio of 99.5 percent of our core electric renewal book.
• Federated’s combined ratio as of December 31, 2009 is 100.9 percent. The 2009 loss year generally trended higher in the property line of business, but lower in auto, general liability and workers’ compensation. Due to the nominal adverse development that we experienced in 2009, our current rate structure remains adequate. 
• Overhead expenses amounted to 15.2 percent and net margins earned amounted to $12.5 million. The increase in margins was primarily driven by a positive change in our investment portfolio.

So what are the challenges for Federated as we enter into our 51st year of operations? When planning for the future, Federated’s Board of Directors and management team find it helpful to revisit the past. By doing so we gain a better understanding of what contributed to the success of the Company and the positive operating environment we enjoy today. The one area of the Company’s strategic vision, the one we believe is most important: our unwavering commitment to safety and loss prevention. We encourage you to take a few moments to view Federated’s Financial Statements for the years ended December 31, 2009 and 2008 that are provided below.

2009 Financial Statements