S&P Affirms NC Grange Mutual Insurance Co. 'Bpi' FSR

Apr 13, 2001, 01:00 ET from Standard & Poor's

    NEW YORK, April 13 /PRNewswire/ -- Standard & Poor's today affirmed its
 single-'Bpi' financial strength rating on North Carolina Grange Mutual
 Insurance Co. (NCGIC).
     The rating action reflects the company's very weak capitalization, limited
 geographic diversification, very weak operating performance, and aggressive
 investment profile.
     Headquartered in Greensboro, N.C., NCGIC (NAIC: 16683) writes homeowners
 multi-peril, farm owners multi-peril, fire, allied, and commercial multi-peril
 insurance.  Policies are written exclusively in its home state and distributed
 primarily through independent general agents.  The company began business in
 1935 and is owned by private individuals.  Stanly Mutual Fire Insurance Co.
 was merged into NCGIC at year-end 1999 and contributed almost $400,000 in
 surplus to the combined entity.
     Major Rating Factors:
 
     *     At year-end 1999, capitalization was extremely weak, as indicated by
           Standard & Poor's capital adequacy model.  In 1999, the company was
           more leveraged than its peer companies, with net premiums written
           plus liabilities to surplus at 6.8 times.  In addition, NCGIC's NAIC
           risk-based capital ratio is below the industry median at 154.0%.
           Surplus, which was at $1.9 million at year-end 1999, has registered
           zero compound annual growth since 1992.
     *     The company's business scope is considered limited.  In addition to
           the limited surplus, total 1999 net premiums written amounted to
           just $6.2 million.  The company has product and geographic
           concentrations, with significant exposure to catastrophes on a gross
           basis, as all of direct premiums written are in North Carolina.
     *     Operating performance has been very weak, with a five-year average
           ROR of negative 15.7%.  The company has no retained earnings. At
           year-end 1999, unassigned surplus was negative $1.4 million.
     *     The company's aggressive investment profile (common stock represents
           93.8% of surplus), in the context of erratic earnings, is also
           limiting factor.
 
     Ratings with a 'pi' subscript are insurer financial strength ratings based
 on an analysis of an insurer's published financial information and additional
 information in the public domain.  They do not reflect in-depth meetings with
 an insurer's management and are therefore based on less comprehensive
 information than ratings without a 'pi' subscript.  Ratings with a 'pi'
 subscript are reviewed annually based on a new year's financial statements,
 but may be reviewed on an interim basis if a major event that may affect the
 insurer's financial security occurs.  Ratings with a 'pi' subscript are not
 subject to potential CreditWatch listings.
     Ratings with a 'pi' subscript generally are not modified with "plus" or
 "minus" designations. However, such designations may be assigned when the
 insurer's financial strength rating is constrained by sovereign risk or the
 credit quality of a parent company or affiliated group, Standard & Poor's
 said. -- CreditWire.
 

SOURCE Standard & Poor's
    NEW YORK, April 13 /PRNewswire/ -- Standard & Poor's today affirmed its
 single-'Bpi' financial strength rating on North Carolina Grange Mutual
 Insurance Co. (NCGIC).
     The rating action reflects the company's very weak capitalization, limited
 geographic diversification, very weak operating performance, and aggressive
 investment profile.
     Headquartered in Greensboro, N.C., NCGIC (NAIC: 16683) writes homeowners
 multi-peril, farm owners multi-peril, fire, allied, and commercial multi-peril
 insurance.  Policies are written exclusively in its home state and distributed
 primarily through independent general agents.  The company began business in
 1935 and is owned by private individuals.  Stanly Mutual Fire Insurance Co.
 was merged into NCGIC at year-end 1999 and contributed almost $400,000 in
 surplus to the combined entity.
     Major Rating Factors:
 
     *     At year-end 1999, capitalization was extremely weak, as indicated by
           Standard & Poor's capital adequacy model.  In 1999, the company was
           more leveraged than its peer companies, with net premiums written
           plus liabilities to surplus at 6.8 times.  In addition, NCGIC's NAIC
           risk-based capital ratio is below the industry median at 154.0%.
           Surplus, which was at $1.9 million at year-end 1999, has registered
           zero compound annual growth since 1992.
     *     The company's business scope is considered limited.  In addition to
           the limited surplus, total 1999 net premiums written amounted to
           just $6.2 million.  The company has product and geographic
           concentrations, with significant exposure to catastrophes on a gross
           basis, as all of direct premiums written are in North Carolina.
     *     Operating performance has been very weak, with a five-year average
           ROR of negative 15.7%.  The company has no retained earnings. At
           year-end 1999, unassigned surplus was negative $1.4 million.
     *     The company's aggressive investment profile (common stock represents
           93.8% of surplus), in the context of erratic earnings, is also
           limiting factor.
 
     Ratings with a 'pi' subscript are insurer financial strength ratings based
 on an analysis of an insurer's published financial information and additional
 information in the public domain.  They do not reflect in-depth meetings with
 an insurer's management and are therefore based on less comprehensive
 information than ratings without a 'pi' subscript.  Ratings with a 'pi'
 subscript are reviewed annually based on a new year's financial statements,
 but may be reviewed on an interim basis if a major event that may affect the
 insurer's financial security occurs.  Ratings with a 'pi' subscript are not
 subject to potential CreditWatch listings.
     Ratings with a 'pi' subscript generally are not modified with "plus" or
 "minus" designations. However, such designations may be assigned when the
 insurer's financial strength rating is constrained by sovereign risk or the
 credit quality of a parent company or affiliated group, Standard & Poor's
 said. -- CreditWire.
 SOURCE  Standard & Poor's