PORTLAND, Maine, June 15, 1998 – More than 32,000 Maine employers will soon receive their first distribution of the capital each contributed to help fund the start-up of Maine Employers' Mutual Insurance Company (MEMIC) according to John Leonard, President and Chief Executive Officer of the state's largest workers' compensation insurance company. The announcement was made today at the sixth annual meeting of MEMIC policyholders.

MEMIC's Board of Directors recently voted to disburse $5.1 million from the company's growing surplus to employers that contributed as much as 35% over and above the cost of their workers' compensation premium during the first three years the specialty carrier was in business. The disbursement will be made the week of June 22.

"The return of capital by MEMIC marks the most recent and significant chapter in the history of this employer-owned and-governed company. All who have been associated with this organization, particularly the policyholders and their employees, can take great pride in this tremendous accomplishment," said Leonard who has served as chief executive since the company began operations in 1993.

"Though most checks will average $150 in this first distribution, it initiates a process many thought would never occur. It is our hope that future annual distributions will be in ever-increasing amounts with all eligible policyholders receiving the balance of their total capital contribution over the next five years," said Leonard. The company collected approximately $47 million through its unique capitalization fee.

He cautioned, however, that future distributions are dependent upon continued success in workplace safety efforts as well as continued support from Maine's legislature of the 1992 statutory reforms.

Leonard emphasized that the company has been a leading force in changing Maine's once notorious workers' compensation system. Loss time injuries in Maine have been reduced by more than 33% since 1992 according to the Maine Bureau of Labor Statistics which has resulted in four successive years of rate decreases.

"MEMIC has done more than any other insurance company to stabilize the workers' compensation market in Maine. We have placed more than 15,000 announcements on television, radio and in newspapers to educate the public regarding the importance of workplace safety. In addition, we have held more than 800 safety training workshops and made more than 14,000 on-site safety consulting visits. We have set the highest standards for injury management while also reducing the number of disputes that once routinely jeopardized the relationships of employers and employees. As a result of these changes, we have reduced the overall cost of insurance to our policyholders by more than 40 percent when considering the elimination of capital contribution, rate reductions and credit plans," said Leonard. "In short, we have helped make a measurable difference in the lives of Maine workers and in the Maine economy."

It is estimated that the cumulative savings for MEMIC customers since 1993 has amounted to more than $375 million, money that many employers have used to fund expanded employee benefit programs, new jobs and capital improvements.

In 1993, MEMIC was given ten years to become adequately capitalized, a goal the company reached in roughly half the allotted time. In May, the Bureau of Insurance certified the company's capital adequacy which, when expressed as a ratio of premium-to-surplus, is equivalent to many of the nation's leading insurance companies.