MTM Member Dividends

On February 15th, the MTM Board of Directors met and approved a member’s dividend based on calendar year 2017 results. With the dividend proposal approved, we will be hitting the road beginning Monday, March 5th for delivery of those checks. Before I get into the details of the dividend, I will update you on the events of the last six weeks in case my recent article on this was missed.

The dividend for this year started with our CFO’s comment about the tax benefit of declaring the dividend before December 31st, rather than after all the official results were confirmed in January. Our CFO’s comment was based on President Trump’s signing the new tax law just before Christmas. The net savings would be about $490,000 of tax savings by declaring the dividend in late December versus in late January or early February. The MTM management team did a quick check of results and determined we could make a pretty accurate bet on what the year-end results would look like. It’s not something that we took lightly, and that it’s important that we make sure the dividend is covered by the actual results of the company, but with a half a million dollars hanging in the balance, we thought this was the time to make a decision. The Board was called up for a special vote, and the vote gave $3.5 million in member dividends. By doing it that way again we saved $490,000 in taxes.

Now, fast-forward to February 15th and we find the actual results justify the $3.5 million, and we 1started discussions with the Board on how the $3.5 million would be paid. As that discussion started, the Chairman of the Board suggested that based on current news, and consistent with our member focus, we should add $500,000 to the $3.5M, since that was the tax savings by the dividend declaration at the end of December. All Board members and the management team agreed that that was the proper move to make for our members, so the good news is that we were then discussing a $4 million member dividend.

Like past years, the dividend is actually two different dividends. One dividend, which makes up 40% or $1.6 million of the dividend total, is a loyalty dividend. That goes to all members that had an MTM policy that renewed on January 1, 2018 and prior. Each member’s premium is totaled up to the total premium of MTM members, and that factor is used then to apply to the dividend amount of $1.6 million.

The second dividend (60% of the $4 million) is based on the member’s loss ratio. The loss ratio used in the calculation are years 2013 through 2015. Companies that beat the company’s loss ratio are then eligible for a second dividend that is made up of $2.4 million. This second dividend turns out to be larger than the loyalty dividend because more money is allocated to it and because there are fewer members receiving it.

Both dividends received unanimous Board approval and the instructions to management were to get the checks issued ASAP and start the delivery immediately thereafter. That is what we will do. In the meantime, know that the MTM management, Board, Board Finance Committee and Board Marketing/Underwriting Committee are working on behalf of the members to get financial results that allow us to continue this member dividend program. This year is the fourth year in a row for this program and we are looking forward to continuing it.

Megan Brown, the VP of Marketing and Sales, and I do most of the deliveries, and we are looking forward to dropping by your shop again. Anything you can do to keep the snow and ice to a minimum would be greatly appreciated. See you soon.