Summer 2004

Dividend Details for Your Clients
By Harry Mahler, Senior Vice President of Underwriting & Loss Prevention

Approximately 3,500 Texas agents will have the opportunity to bring good news to their Texas Mutual^®clients by telling them about their share of our $50 million retrospective dividend plan.

We estimate that over 27,000 policyholders will receive a dividend in 2004, our sixth consecutive year of dividends. As in the past, our general dividend plan includes an annual component for qualifying customers and a retention component for select, longtime policyholders.

Qualifications
To qualify for the annual component, your client must have been an active Texas Mutual^® policyholder on June 15, 2004, and must have had a Texas Mutual^® policy that expired in 2003 with acceptable loss ratios for the applicable period.

The retention component rewards each qualifying client for up to five consecutive years as a Texas Mutual^® policyholder, beginning with the policy expiring in 2003 and working back to policies from previous expiration years. The policies’ aggregate loss ratio must be within an acceptable range to qualify for the retention component.

A policyholder may not qualify for a dividend if our records show outstanding legal issues, open investigations, unresolved premium recovery or accounts receivable issues, or other matters that require special handling. Also, we cannot award dividends to policyholders enrolled in our Start program (insurer of last resort) for expiration year 2003.

Special dividend
Unlike previous years’ dividend plans, the 2004 plan includes a special dividend for policyholders that qualify for a general dividend. This discretionary award reflects our company’s exceptional financial results in 2003.

The special dividends, along with the general dividends, will help us reward your Texas Mutual^® clients whose loyalty and low claim losses have contributed to our success.

Group dividends
The general and special dividends are separate from our group purchase dividend program. Last year, Texas Mutual^® purchasing groups received dividends totaling over $1.3 million, and we have already awarded over $500,000 in group dividends this year.

Many of your clients in Texas Mutual^® purchasing groups may receive a group dividend as well as a general and special dividend.

We award purchasing group dividends to qualifying groups at different times throughout the year.

More information
Insurance company dividends are not taxable. If your clients need more tax information, we suggest you refer them to IRS Publication #550 at www.irs.gov, and have them discuss the matter with a tax professional.

State law prohibits insurance companies from guaranteeing annual dividends. Our philosophy, however, is to share our financial success with our good customers.

If you have any questions about our dividend programs, contact your Texas Mutual^® marketing representative.

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Texas Mutual^® is a registered service mark of Texas Mutual Insurance Company.