Despite significant storm activity in the 3rd quarter, we were able to maintain our surplus on the backs of strong investment returns. An estimated surplus of $102M will be reported as of September 30, 2019 with a YTD combined ratio of approximately 99. With diminished storm activity in the 4th quarter, we expect that combined ratio to drop and the equity portion of our balance sheet to grow thereby strengthening our financial position and ensuring a Financial Size Category VIII for the foreseeable future.

Our new Financial Size affords us the opportunity to pursue new avenues of growth. Our nation's tort system puts a heavy economic burden on business owners and litigious trends are worsening. As such, risk managers are continually assessing the financial capacity of their risk transfer. More and more, contractors and other business owners are signing contracts that require insurance with companies that meet certain financial requirements such as Financial Size Category. As the bar is raised, MFM has positioned itself to be a market of choice for these commercial customers by providing financial stability with a more regional touch. Our strong capital position also provides additional piece of mind for high net worth customers that opt for our First Class Portfolio (FCP) product. The FCP provides enhanced coverages to insure homes, autos, boats, jewelry, and other assets. Optional flood, earthquake and other endorsements allow us to tailor additional coverage to our customers' needs. For these reasons, it's no wonder that Independent Agents have been recommending MFM to their customers since 1891.

I'm hopeful that a Financial Size Category VIII (Size 8) will be perceived by our Independent Agents as just another reason to recommend MFM to their valuable customers. A special thank you to all of our Agents and Policyholders for their continued contributions to our success. Your continued support along with the hard work of our MFM employees is a primary contributing reason for this Financial Size upgrade. In addition, our recognition by Ward's as a Top 50 carrier in the category of Top Performing Property & Casualty Insurance Companies Practicing in the US is directly tied to our strong Independent Agency relationships.

Midwest Family Mutual is rated A- (Excellent) by AM Best, a rating it has held since 1994.

Aaron W. Boyd, MBA, CPCU, CIC
Executive VP & COO