Economic crisis doesn't stop N.J. Manufacturers dividend
By KEVIN POST
Business Editor, 609-272-7250
Published: Wednesday, November 12, 2008
A day after the U.S. had to increase to $153 billion the bailout of its largest insurance company, New Jersey's largest insurer of autos and workers' compensation was sound enough to pay substantial dividends to its customers.New Jersey Manufacturers will send checks averaging $149 to 405,000 auto policyholders, including 10,000 in Atlantic County, 2,200 in Cape May County, 5,200 in Cumberland County and 39,000 in Ocean County.Bailout-hungry AIG has been the rabbit to NJM's tortoise. While AIG aggressively sought maximum returns by investing in mortgage-backed securities, NJM prudently stuck with lower-paying, high-quality bonds.When the real estate bubble was inflating, it might have looked like AIG was the winner.Now, with the financial world in turmoil around it and AIG on federal life support, NJM is returning $61 million to auto policyholders and increasing its dividend to workers' compensation client companies to 20 percent of their premium.
Even among conservative insurers, NJM stands out for its prudence.Spokesman Patrick Breslin said Tuesday that NJM's financial rating of A++ is shared by just 1.5 percent of U.S. property and casualty insurers.Those A++-rated companies on average invest 25 percent of their assets in stocks, while NJM has less than 8 percent in volatile equities, he said. The company hasn't completely escaped the effects of the slumping financial markets. For the first time since the recession of 1991-92, it has had to tap its reserves to pay the dividend, Breslin said. But while this year's average payment to auto policyholders is substantially below last year's $327, that's because last year the company returned dividends for two years - the 2006 dividend, plus an extra dividend from the 2004 policy year, he said. The previous such double-payment year was 1994. NJM's unique charter holding it in trust for the benefit of policyholders drives the dividend payments.The board of directors at NJM looks at the performance of its investments and the claims experience to determine how much can be returned to policyholders as dividends, Breslin said.This year's average payment of $149 is slightly lower than the 15-year average of $166 for such payments. Even before subtracting the dividend, NJM's average premium per vehicle insured of $953 is below the statewide industry average of $1,080 per vehicle, the company said.NJM is available to workers and their spouses at the 22,000 member companies of the N.J. Business & Industry Association and employees of state government.E-mail Kevin Post:KPost@pressofac.com
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