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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - DECEMBER 17, 2002 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of Germania Mutual Group and its subsidiaries, Germania Farm Mutual Insurance Association, Germania Insurance Company and Germania Fire and Casualty Company and removed them from under review. The rating has been assigned a negative outlook. A.M. Best has also affirmed the financial strength rating of B++ (Very Good) of Germania Life Insurance Company with a revised rating outlook of stable. All of the companies are located in Brenham, TX.
The property/casualty rating action reflects the group's stabilized surplus position through the issuance of a $15 million surplus note with generally favorable terms as well as the implementation of corrective actions. Prior to the issuance of the surplus note, the group's surplus declined by 16% through the first nine months of 2002 largely due to water and mold related losses. In response to these operating trends, the group has tightened underwriting guidelines, excluded mold on all dwelling policies and implemented a mandatory 1% deductible on all hurricane, wind and hail losses.
Operating under Chapter 16 of the Texas Insurance Code, Germania Farm Mutual maintains a unique competitive structure due to its form and rate freedom as well as its exclusion from premium tax and exemption from the Texas Windstorm Insurance Association. Going forward, it is anticipated that the group will increasingly utilize this advantage.
Despite the stabilization in surplus and implementation of corrective measures, A.M. Best views the property/casualty rating outlook as negative due to Germainia's geographic concentration of risk and subsequent exposure to weather-related events as well as the future development of existing mold claims.
The life/health rating affirmation is based on Germania Life's strategic affiliation with the Germania Mutual Group of property/casualty companies, its continuing emphasis to expand market profile through ordinary life insurance and annuity product distribution, its trend of positive statutory earnings performance and favorable risk-adjusted capitalization.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.