Fitch Affirms `A-' FSR Of Merchants Insurance Companies.Business Editors NEW YORK--(BUSINESS WIRE)--June 5, 2000 Fitch, the international rating agency, affirms the `A-' insurer financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of Merchants Mutual Insurance Company (Merchants Mutual) and Merchants Insurance Company of New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). (Merchants New Hampshire). The rating is based on each company's expertise in its chosen insurance markets, adequate capital position, conservative investment portfolio, experienced management team and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating performance. The ratings also consider the companies' modest size and scope of operations relative to peers. The Rating Outlook is Stable. Merchants Mutual is a mutual property/casualty insurer based in Buffalo, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . From 1962-85, the company owned 100% of Merchants New Hampshire, a stock property/casualty insurer domiciled dom·i·cile n. 1. A residence; a home. 2. One's legal residence. v. dom·i·ciled, dom·i·cil·ing, dom·i·ciles v.tr. 1. in New Hampshire. In 1985, a portion of Merchants Group, Inc., the holding company parent of Merchants New Hampshire, was sold to the public. Subsequent stock sales have reduced Merchants Mutual's ownership of Merchants Group to approximately 10 percent. Merchants Mutual and Merchants New Hampshire have a unique strategic relationship. The companies have a common senior management team as Merchants Mutual management operates Merchants New Hampshire through a management agreement that runs through 2003. The companies each focus on selling personal lines and small commercial lines (companies with less than 25 employees) insurance through the same network of independent agents in 14 states. Merchants New Hampshire is positioned in the market as a preferred carrier, while Merchants Mutual focuses on standard risks. The companies also purchase catastrophe reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. on a combined basis. Merchants Mutual reported assets of $154.8 million and policyholders' surplus of $48.6 million at March 31, 2000. Net written premium was $52 million in 1999. Underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance has been favorable in recent years. The combined ratio was 98.9% in 1999 and 97.6% in 1998. Net income was $6 million in 1999 and $10 million in 1998. Merchants New Hampshire is a somewhat larger company than Merchants Mutual, with assets of $233.1 million and policyholders surplus of $52.1 million at March 31, 2000. Net written premium was $94 million in 1999. Following several unfavorable years in the mid 1990s due mainly to adverse loss development on certain classes of commercial business, Merchants New Hampshire has reported improving results in the last three years. The company's statutory combined ratio was 103.5% in 1999 and 104.5% in 1998. Net income was $7 million in 1999 and $7 million in 1998. While both companies are adequately capitalized, operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. and risk-based capital levels are somewhat more conservative at Merchants Mutual relative to Merchants New Hampshire. Merchants Mutual's ratio of net written premium to surplus was 1.1 times (x) at year-end 1999, and the risk- based capital ratio was 335%. Merchants New Hampshire had net premiums to surplus of 1.8x at year-end 1999 and a risk- based capital ratio of 228%. Investment policy is similar for Merchants Mutual and Merchants New Hampshire, emphasizing high quality and liquidity. Fixed-income securities Fixed-income securities Investments that have specific interest rates, such as bonds. represent more than 90% of each company's invested assets. Exposure to noninvestment-grade securities and equities is modest. |
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