Summer 2007

Explaining Dividends to Your Clients
By David Wylie

In July, Texas Mutual Insurance Company began distributing a company record of approximately $125 million in individual policyholder dividends. The 2007 dividend plan included an approximately $49 million individual policyholder dividend, a
$74 million special dividend and a
$2 million early qualifier dividend, a new feature in 2007. We will distribute early qualifier dividends in late November.

Some of your clients who receive a dividend will have questions. This guide will help you explain and promote our dividend program.

What is the individual policyholder dividend?
The individual policyholder dividend rewards loyal employers with low claim losses. It includes an annual and retention component.

The annual component rewards qualifying employers who had a policy that expired in 2006 with an acceptable loss ratio. The retention component rewards qualifying policyholders for up to five consecutive years of acceptable loss ratios, beginning with the policy that expired in 2006. We designed the retention component to reward customer loyalty.

What is the special dividend?
The special dividend is a discretionary award based on our exceptional financial results in 2006. All policyholders who qualified for an individual policyholder dividend qualified for a special dividend.

What’s new in this year’s dividend plan?
The Agents Advisory Council asked Texas Mutual Insurance Company to shorten the dividend cycle for new policyholders. The early qualifier dividend is our response to their request.

First-year policyholders with an expiration date between January 1, 2007 and June 30, 2007 can qualify for an early qualifier dividend. The policyholder must have an in-force policy on October 15, 2007, and their loss ratio must be within the acceptable range. We will distribute early qualifier dividends in late November. We will send you a list of your qualifying clients in advance.

Is the dividend taxable?
It could be, depending on the policyholder’s individual business situation. Policyholders should consult a tax professional.

Where do I find a policyholder’s dividend history?
You can review your clients’ Texas Mutual Insurance Company dividend history online.

What if I have more questions?
Call us at (800) 859-5995 between 8:00 a.m. and 5:30 p.m.

Past dividends are not a guarantee of future dividends, and the Texas Department of Insurance must approve all dividends.

MUTUAL INTERESTS - Summer 2007
Explaining Dividends to Your Clients
Redesign Makes Texas Mutual Online Even Easier to Use
Purchasing Group Spotlight: LSA Puts Premiums in Reverse
Groups Earn Dividends
Ken's Corner: Give Your Clients Three Good Reasons
Marketing Material Available Online
Earn 3.5 CE Credits

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Texas Mutual Insurance Company.