Terra Records Its 95th Record-High Book Value per Share!

According to Terra CEO David L. Coduto, the company’s book value increased 2.8 percent since its December 31, 2011 year-end close, and an impressive 9 percent – a $24.76/share boost – on a year-over-year basis

Corte Madera, CA – What would you call a customer-owned company that has generated positive earnings for 96 consecutive calendar quarters and new-record-high book-value  per-share (BVPS) for 95 of 96 consecutive calendar quarters? You’d call it Terra Insurance Company, a professional-liability insurer founded in 1968 and reformed 20 years later as a risk-retention group owned by its insureds. The original owner/insured investors – almost all of which are still owner/insureds – paid $10 per share for their stake in 1988. As of March 31, 2012, the value of each share had risen to $311.51, an
increase of more than 3,000 percent. According to Terra CEO David L. Coduto, the company’s book value increased 2.8
percent since its December 31, 2011 year-end close, and an impressive 9 percent – a $24.76/share boost – on a year-over-year basis. While some of this gain may erode during the second quarter of 2012, given the current market downturn, “Terra’s performance is not a one-time thing, not when you generate the kind of results Terra’s had for 24 years; great performance in good times and bad. And it’s all the more amazing when you consider that Terra focuses on geoprofessionals – geotechnical engineers, civil engineers, environmental professionals, and construction-materials engineering and testing consultants – some of which other insurers won’t cover because they’re considered too high a risk.”

When asked about the secret of Terra’s success, Mr. Coduto was blunt: “We adhere to durable tenets we’ve maintained for decades. I wouldn’t call them secrets, but I will admit that any number of other insurers don't seem to know much about them.
“First, we understand the insurance business as well as the economy and its relationship to insurance-industry realities. It’s that understanding that leads me to predict that, given today’s zero-interest investment climate, other carriers will soon be facing a wall of profitability problems. All too many insurers seem to think they are in the investment business. When times are good, they can use generous investment returns to offset poor underwriting decisions. Failing to earn good returns on inadequate premium levels creates the proverbial ‘double whammy,’ and that time is rapidly approaching. That’s why I believe it’s important for the purchasers of PL insurance to stick with insurers, like Terra, that understand the bigger economic picture. Make no mistake: The hard insurance cycle is on its way. My bet is that PL prices will skyrocket in the next few years. Terra’s pricing is actuarially sound, so you won’t see big swings in Terra’s pricing models. We are built for the long term and we are stable.“Second, we invest in our insureds to help them continually improve the quality of their service. In fact, Terra invests more per capita in its insureds’ professional development than any other professional-liability insurer I'm aware of. We help pay for meetings, seminars, courses, consultants, peer review, and more, because professional development results in better performance, and better performance results in fewer and smaller claims. We believe that, by investing in our insureds’ professional education and loss-prevention
and risk-management pursuits today, we will drive down the costs of claims tomorrow. We also support the profession by providing to great organizations like ASFE/The Geoprofessional Business Association unrestricted financial grants that have amounted to
millions of dollars over the years.”

“Third, while we do invest in financial securities, like any other carrier, we invest very conservatively, and the net results of that approach are quite good. We don’t experience the fluctuations in earnings that some of our competitors have to deal with. ‘Slow and steady wins the race’ works for us.” Terra provides a variety of professional-liability insurance products to firms whose gross
revenues range from $300,000 to more than $100 million annually. A.M. Best Company – the internationally recognized insurance-company rating organization – has for several years lauded Terra as “one of the highest-rated risk-retention groups in the United States.” (Application of A.M. Best’s “Capital Adequacy Ratio Tests” results in an “A++, Superior” rating for Terra, the highest rating that Best issues.) More information about Terra and the products it offers, as well as free risk-management
publications and videos, can be found at www.terrarrg.com, or by contacting Terra
Insurance Company, 2 Fifer Avenue/Suite 100, Corte Madera, CA 94925; tel. 1/800-
872-0077 (in CA, 415/927-2901); e-mail [email protected].