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2009 Financial Highlights

Annual Report (PDF)
At-A-Glance (PDF)
Operating Revenue – $794.4 million
Assets – $1.7 billion
Capital and Surplus – $499.2 million
Pretax Operating Gain (GAAP) – $72.6 million
Pretax Operating Gain (Reported) - $51.3 million
NAIC RBC Ratio – 1,171 percent

Financial Summary

The Trustmark Companies

97 years in business
6,200 employees
2+ million policies in force
300+ health and fitness management clients
$1.7 billion in assets
Rated A- (Excellent) by A.M. Best
Rated A- (Strong) by Fitch Ratings

Overview of 2009 Consolidated Results and Capitalization*

Trustmark weathered the challenges of 2009 well, with higher sales, solid operating results, increased capital and surplus, and successful advancement of the company’s strategy to enter the growing Consumer Health Advice (CHA) market space.

Operating Results
Trustmark reported pretax earnings of $51.3 million, down from $53.0 million reported in 2008. This was due to a number of large medical claims paid out, primarily in several of our small-group business segments, and reduced enrollment of insured and administrative plan members as a result of the persistently high unemployment rate. The lower reported gain also reflects Trustmark’s planned, strategic shift away from higher-risk medical and sports disability products toward lower-risk voluntary products, benefit administration, wellness, and healthcare management services.

Insurance company accounting conventions, however, conceal underlying strength in Trustmark’s 2009 earnings. According to Generally Accepted Accounting Principles (GAAP), earnings in 2009 were $72.6 million, up nearly 9 percent from $66.4 million in 2008, on a comparable basis. As an insurance carrier, Trustmark must deduct the entire sales (acquisition) cost of policies in the year they are written. For that reason, record 2009 sales in Trustmark Voluntary Benefit Solutions, where acquisition costs are highest, negatively impacted reported earnings. GAAP requires that acquisition costs be deferred and amortized over the life of the policy. This better reflects the growth and profitability of our voluntary products division.

Trustmark’s core businesses booked sales of $203.6 million in 2009, an increase of 6 percent, led by record sales and 14 percent growth in Voluntary Benefit Solutions, 11 percent growth in CoreSource, and 4 percent growth in our Employer Medical business. Operating revenue declined 4.2 percent, to $794.4 million, due to the impact of high unemployment on the total number of insured members and plan participants, as well as Trustmark’s ongoing shift toward less volatile and lower cost segments of the employee benefits market.

2009 Growth Initiatives
As part of the company’s strategy to grow Trustmark Voluntary Benefit Solutions, Trustmark Life Insurance Company of New York was established in 2009. The division is now offering its flagship Universal Life products in that state, giving us a nationwide, 50-state presence in the voluntary products market.

In April 2009, Trustmark entered into an agreement to offer small-group medical plans to clients of New England Financial, a MetLife-affiliated company, adding more than $21.0 million in new sales and $7.3 million in revenue for the year to our Employer Medical business. Based on successful work administering the North Carolina High Risk Pool, CoreSource, Trustmark’s TPA subsidiary, added the State of Mississippi High Risk Pool as a client in 2009. In addition, the division’s innovative population health management product, YourCare, exceeded 100,000 enrollees by the end of the year and is now available to our fully insured clients.

Although the deal did not formally close until February 26, 2010, it is important to note Trustmark’s acquisition of HealthFitness Corporation, since it greatly accelerates Trustmark’s CHA strategy. HealthFitness, based in Minneapolis, Minnesota, is an award-winning provider of integrated health and fitness management services. The company adds to expertise Trustmark already has in healthcare management, data analytics, and health advocacy through CoreSource, our Employer Medical businesses, and Health Contact Partners. Building on this foundation, we are constructing a comprehensive Consumer Health Advice solution to help people improve their health, effectively navigate the healthcare system, increase productivity, and reduce medical costs.

Strong Capitalization
With the partial recovery of the financial markets and strong overall operating performance, Trustmark was able to grow capital and surplus, a key measure of financial strength, by 10 percent in 2009, from $453.4 million to $499.2 million. As of December 31, 2009, the company’s NAIC Risk-Based Capital Ratio was 1,171 percent. Independent rating agencies A.M. Best and Fitch Ratings recognized Trustmark’s solid capital position by affirming the company’s A- financial strength rating and Stable outlook in January and June 2009, respectively. Both rating agencies reviewed the pending acquisition of HealthFitness and again affirmed Trustmark’s ratings in January of this year.

*Represents the consolidated financial results of Trustmark Mutual Holding Company for the 2009 calendar year.

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