CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 04, 2002 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating to A (Excellent) from A+ (Superior) for Germania Mutual Group (Brenham, TX), and placed it under review with negative implications. This rating action reflects the deterioration in the group's financial strength as increased losses have resulted in a surplus decline of approximately 13.5% through the first half of 2002. As a result, the group's capitalization no longer supports a Superior rating. In addition, the increase in premium volume combined with deterioration in surplus has elevated the group's leverage position.
The on-going Texas mold situation may continue to impact future capitalization and performance. These negative rating factors are partially offset by the group's conservative investment portfolio, which has generated consistent investment income, and Germania's longstanding market presence and solid agency relationships. However, the rating has been placed under review due to concern for the group's declining capital, increased leverage and overall market issues.
The rating will remain under review through the fourth quarter of 2002, pending A.M. Best's enhanced understanding of management's plans to stabilize capitalization and improve operating performance.
The group financial strength rating of the following members of Germania Mutual Group has been downgraded to A (Excellent) from A+ (Superior) and placed under review with negative implications:
- Germania Farm Mutual Insurance Assn.
- Germania Fire & Casualty Company
- Germania Insurance Company
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.