AM Best

A.M. Best Revises Issuer Credit Rating Outlook to Stable for Members of Grange Mutual Casualty Pool


Lewis DeLosa
Financial Analyst
+1 908 439 2200, ext. 5529

Rick Decker
Assistant Vice President
+1 908 439 2200, ext. 5423

Christopher Sharkey
Manager, Public Relations
+1 908 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
+1 908 439-2200, ext. 5644


OLDWICK - MAY 20, 2016 09:09 AM (EDT)
A.M. Best has revised the issuer credit rating (ICR) outlook to stable from negative and affirmed the financial strength rating (FSR) of A (Excellent) and the ICRs of “a+” of Grange Mutual Casualty Company (Columbus, OH) and its pooled affiliates, collectively known as Grange Mutual Casualty Pool (Grange). The outlook for the FSR remains stable. (Please see below for a listing of the companies.)

The rating actions reflect Grange’s solid risk-adjusted capitalization, strong product management focus and well-established regional market presence. Grange’s solid risk capital position is reflective of its moderate underwriting leverage, conservative investment profile and comprehensive reinsurance program. Positive operating results since 2012 reflect significant enterprise risk management actions taken over the past several years to improve underwriting profitability. Specific profitability initiatives included tightening of underwriting guidelines, the increased use of predictive analytics and more precise pricing in all lines of business. In addition, Grange is continuing to execute a gradual product diversification and refinement strategy within its current geographic footprint that is also designed to improve operating performance. Pre-tax operating income has been supplemented by a consistent level of net investment income that has helped to grow surplus in each of the last five years despite the low interest rate environment. Furthermore, investments in technology and product development are expected to continue to improve operating efficiencies.

Partially offsetting these positive rating factors are Grange’s above-average expense ratio, recent adverse reserve development in the commercial auto line of business and the concentration of business in Ohio. This concentration exposes the group to potential weather-related losses, as well as changes in the regulatory, legal and competitive market environments. Grange’s elevated underwriting expense ratio is mostly driven by above-average commission costs. However, Grange’s expense disadvantage is partially offset by the profitability underlying its core book of business as reflected by its five-year average pure loss ratio, which compares favorably with the private passenger automobile and homeowners composites.

Factors that could result in a negative rating action include subpar underwriting and operating results that potentially cause a significant erosion of risk-adjusted capitalization.

The FSR of A (Excellent) and the ICRs of “a+” have been affirmed, with the ICR outlook revised to stable from negative and the FSR outlook maintained at stable, for the following members of the Grange Mutual Casualty Pool:

  • Grange Mutual Casualty Company

  • Grange Indemnity Insurance Company

  • Grange Insurance Company of Michigan

  • Grange Property & Casualty Insurance Company

  • Integrity Mutual Insurance Company

  • Integrity Property & Casualty Insurance Company

  • Trustgard Insurance Company

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.

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