A.M. Best has assigned a financial strength rating of A (Excellent) and a long-term issuer credit rating of “a+” to Integrity Select Insurance Co. (Integrity Select) in Appleton, Wis.
The outlook assigned to these credit ratings is stable.
Integrity Select is a newly formed company that will write auto, property and liability lines of business in states primarily located in the Midwest and Southeast United States. Integrity Select is wholly owned by Integrity Mutual Insurance Co., which is affiliated with Grange Mutual Casualty Co.
Collectively, those two companies along with other pooled affiliates form Grange Mutual Casualty Pool (Grange), headquartered in Columbus, Ohio.
Integrity Select provides additional rate and filing capabilities and is now part of the existing pooling agreement. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” with a stable outlook for all other members of Grange’s pooling agreement. (Please see below for a listing of the companies.)
The rating affirmations 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.
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 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 is Grange’s above-average expense ratio 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. In addition, commission expenses prospectively are expected to decrease to be more in line with the market.
The FSR of A (Excellent) and the long-term ICRs of “a+” have been affirmed, with a stable outlook for the following members of the Grange Mutual Casualty Pool:
Grange Mutual Casualty Co.
Grange Indemnity Insurance Co.
Grange Insurance Co. of Michigan
Grange Property & Casualty Insurance Co.
Integrity Mutual Insurance Co.
Integrity Property & Casualty Insurance Co.
Trustgard Insurance Co.
Source: A.M. Best
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