UMIA, a leading medical professional liability organization in the Mountain States, completed 2017 in a solid financial position. For the year, we reported continued strong policyholder surplus, profitable operating results and outstanding customer retention. Insurance rating agency A.M. Best affirmed our financial stability with an “A” (“Excellent”) rating.
Our ongoing financial strength enables us to deliver superior service to our policyholders while continuing to invest in opportunities that will drive future growth. Ultimately, our solid financial position fuels our mission to help physicians and all those who devote their lives to health care attain their dream – to help, heal and serve.
At the end of 2017, policyholder surplus, a key indicator of financial strength and stability, was $111.4 million, up 3.0 percent over 2016 and 8.4 percent since the end of 2013. These funds enable us to honor our commitments and invest in new avenues to increase value for our policyholders.
UMIA reported 2017 net income of $9.6 million even though direct written premiums of $37.1 million declined 7 percent from 2016. This decline reflected increased pricing pressure as the health care market continued to consolidate and a well-capitalized medical liability insurance industry aggressively priced premium. Our invested assets continued to perform well for both income and total return, helping to support our operations and build our financial strength.
Despite the challenging market conditions, UMIA still managed an underwriting profit in 2017 of $155,000 resulting in a combined ratio of 99.4 percent. This compares to an underwriting profit of $3.0 million and a combined ratio of 92.7 percent in 2016. The decrease in underwriting profitability was primarily driven by the decline in premiums and makes the careful management of expenses even more important.
During 2017, 97.4 percent of our clients chose to continue their policies with UMIA rather than switch to a competitor. We take pride in the trust our clients place in us, and we are committed to providing personalized service and innovative offerings that will continue to earn their business. In 2017, our former UMIA subscribers received a $30.8 million installment payment derived from their decision to partner with Constellation and MMIC in 2013.
Our solid financial position allows us to continue to invest in solutions designed to protect our policyholders from medical liability risks and to support them in improving patient care, protecting their reputations, reducing health care delivery costs and driving growth for their organizations. In addition, we are expanding the value we can offer our clients by joining with strong partners under the Constellation umbrella.
During 2017, we negotiated a strategic collaboration with CliftonLarsonAllen (CLA), a leading health care professional services firm providing financial, strategic and operational consulting to more than 8,300 health care and senior living clients across the U.S. The collaboration was announced in January 2018.
In addition, we have continued to expand our portfolio of programs that enable physicians and their practices to frequently assess patient experience, document compliance with evidence-based care guidelines and use practice data and insights to strengthen their negotiations with payers. We also have further expanded our data analytics capabilities to discern insights from our extensive claims data into factors contributing to medical liability risks and care team inefficiencies.
Working with strong MPL insurance and “beyond insurance” partners will help us grow and enhance our value even as change continues to sweep the health care market. We are grateful for the opportunity to serve our valued clients and the broader health care community – and to support the vital work they do to help, heal and serve. We sincerely look forward to another year of service.