FINANCIAL SUMMARY

The following summarizes the financial condition and operating results of Lawyers Mutual Liability Insurance Company of North Carolina for the two-year period ending December 31, 2025. These results are prepared in accordance with statutory accounting principles established by the National Association of Insurance Commissioners and are subject to any modifications required or permitted by the North Carolina Department of Insurance. An electronic copy of the Company’s 2025 Annual Statement is available upon request.

In 2025, Lawyers Mutual continued to operate in a challenging environment marked by heightened competition and increasing claim severity, both of which reflect ongoing industry trends. Premium growth remained constrained, consistent with the broader professional liability market, which has experienced limited growth over the past decade. Similar to 2024, claim severity increased in 2025 and is expected to remain a near-term concern. Despite these pressures, the Company generated a positive underwriting result and benefited from strong investment income.

Financial Results

The Company reported a Net Underwriting Gain of $899,433 in 2025, compared to $2,149,671 in 2024, on Direct Premiums Written and Assumed of $18,469,137 and $18,867,866, respectively. Net Premiums Earned decreased slightly to $14,955,905 from $15,193,021, in line with the slight decline in written premiums.

Claims Incurred rose to $9,307,199 from $8,362,913 in the prior year. This increase was primarily driven by higher claim severity in 2025 and notable unfavorable development related to the 2024 report year, partially offset by favorable development from earlier years. Underwriting expenses increased slightly but remained below the rate of inflation, reflecting continued cost discipline.

Net Investment Income remained strong in 2025, supported by a favorable interest rate environment. The Company recorded a net realized loss on investment sales during the year, largely attributable to strategic portfolio reallocations undertaken in accordance with its long-term investment strategy.

As a result, Net Income totaled $4,389,089 in 2025, compared to $6,587,345 in 2024.

At year-end, admitted assets were $168 million, and policyholder surplus increased to $126 million, representing growth of 3.5%. This increase kept pace with inflation and strengthened the Company’s financial position against economic uncertainties and investment-related risks. Continued profitability from underwriting and investments, along with subsidiary distributions, supported surplus growth and enabled the Company to declare and distribute a policyholder dividend of 5.505%.

Additional details are provided in the accompanying summary financial statements.