In 2009, The Main Street America Group continued our trend of positive performance.

We remained focused on sustaining profitability and maintained our underwriting discipline despite significant pricing pressures and an overall weak economy.

We also fulfilled key elements of our long-range plan, spreading risk through geographic diversification and taking steps to increase scale through additional distribution points. Furthermore, we successfully implemented new products and policy processing platforms throughout many of our 24 states.

Our spectacular 18.2 percent return on equity was driven primarily by a profitable combined ratio of 97.4 and an investment gain of $105.5 million, the largest singleyear increase in our 86-year history. We significantly strengthened our balance sheet by adding $84.5 million to surplus.

Our commercial lines business, which accounts for 55 percent of our company’s net written premium of $815 million, achieved a 92.5 combined ratio. Three of our five regions also recorded results that were noteworthy in 2009, with the Jacksonville Region posting an 84.9 combined ratio, the Syracuse Region a

94. 4 and our Midwest Region a 92.7. While we fell short of our total premium plan for the year, our net growth was

1. 3 percent. We are encouraged that new business growth increased 13.4 percent and our regional teams were able to report overall growth in the final months of 2009.

We could not have achieved these excellent financial results without the strong support of our customers and the tireless efforts of our employees who continued to take care of our customers in a magnificent way.

During the year, we experienced many accomplishments in our product areas.

We launched our new Main Line Business Owners Policy (BOP) in conjunction with our Main Street Station commercial lines policy processing platform in 14 states, including three new Western states, and experienced a significant year-over-year spike in new BOP premium in 11 existing states. We plan to launch Main Line BOP and Main Street Station in several additional states during 2010.

In personal lines, our Personal Auto MVP multivariate product performed well in the 12 states where it has been rolled out over the past three years. We also continued to make it as easy as possible for our customers to write personal lines business with us via our Main Street Station personal lines policy processing system, which has been implemented in 11 states.

We increased our market share in Delaware by acquiring Westfield Insurance’s personal lines book in the state. We will continue to launch Personal Auto MVP and Main Street Station in additional states throughout 2010 while also introducing our new Homeowners MVP multivariate product in eight states.

We also generated $84.4 million in written premium through reinsurance operations and program business – a nearly 100 percent increase over 2008. This was fueled by our successful partnerships with select independent agents in Oklahoma and Texas.

In our surety business, more than 15,000 transactions have been generated directly by our customers at their desktops via our Main Street Station system where bonds can be simply processed in just a matter of minutes. We are continuing to expand our market share in this sector and recently acquired CAIC Holdings Company’s surety business in Texas.

Our claims team continued to deliver on its promise to respond quickly and fairly when our customers and policyholders needed us most. We recently enhanced our ClaimCenter system which will make our claims processing more efficient than ever.

In our initial entry into the Midwest, we successfully integrated our Great Lakes Casualty Insurance Company following our acquisition of this Michigan-domiciled carrier in fourth quarter 2008. In Michigan, we introduced our Personal Auto MVP and commercial products to our new distribution force of independent agents, the vast majority of whom were the former owners of Great Lakes Casualty.
We also had a very successful first year in our three new Western states – Arizona, Nevada, Utah – via our partnership with the Leavitt Group, whose independent agents distributed our commercial products to their “Main Street” small business customers.

In late November, we closed our affiliation with Indiana-domiciled Grain Dealers Mutual Insurance Company. We will benefit from the strength of Grain Dealers’ 108-year-old franchise as we enter Indiana and Mississippi in 2010, as well as increase our market share in several existing states including North Carolina, Oklahoma and Tennessee.

We will also establish Indianapolis as our new Midwest Region headquarters as part of a regional realignment. The realignment, consisting of four regions, will enable us to incorporate new and overlapping Main Street America/Grain Dealers Mutual states efficiently. It will also help us improve the aggregation of states with similar demographic and industry issues within the same region.

Our initiative to grow our volume of distribution points was not limited to our new markets. We appointed more than 100 new independent agents in our core Eastern Seaboard states. We also conducted a series of Listening Tours in many of these states. At these town hall meetings, our long-time customers were able to openly provide feedback to members of our senior management and regional management teams. We expediently initiated several actions based on our customers’ invaluable comments. More Listening Tours are planned throughout 2010.

We also initiated Agency Technology Councils for commercial lines and personal lines to let our customers candidly provide their feedback about the functionality of our Main Street Station policy processing systems and identify areas for enhancement.

Our customers repeatedly tell us that “The MSA Experience” – taking care of our customers and our customers’ customers better than anyone else – is Main Street America’s key differentiator in the marketplace. Hundreds of our customers have made us No. 1 or No. 2 in their agencies. We thank them for partnering with us and helping us to achieve the level of success we had in 2009, especially as they faced significant challenges in their respective markets.

As the founding company partner of Trusted Choice® in 2001, we continue to champion the national branding program of the Independent Insurance Agents & Brokers of America, which has grown to more than 10,500 agent members and 53 company partners. Trusted Choice enables independent agents, who typically brand themselves at the local level, to compete against other insurance companies with alternative distribution systems and strong national brands. The program also helps to reinforce that independent agents provide consumers with expertise and choice, and act as their trusted advisor. Everything we distribute in the marketplace is co-branded as The Main Street America Group and Trusted Choice – from our annual report to our product marketing materials to our quarterly results videos that are broadcast via our YouTube channel.

Our 2009 performance positions us very well against the industry. Our strong financial standing will enable us to invest in new products and new technology to help our customers continue to profitably grow their “Main Street” books of business with us. We are extremely well-capitalized, which will allow us to pursue a variety of expansion opportunities in both existing states and new states – including affiliations, acquisitions and partnerships – enabling us to continue spreading risk and increasing scale.

We look forward to partnering with our customers in 2010 to profitably grow and achieve our financial goals in what we hope will be a more stable economy for our customers and their customers alike.