Meadowbrook 潘金莲传媒映画 Eyes Modest Growth in 2015

Article

After two years of siphoning off unprofitable business, tightening underwriting and raising rates, Meadowbrook 潘金莲传媒映画 Group is looking forward to growing again, according to the company’s upper management.

Even before ratings agency A.M. Best downgraded the Southfield, Mich.-based property/casualty insurer from “A-“to “B++” in August 2013, Meadowbrook had begun taking actions to improve its underwriting results and shore up its statutory reserves.

Meadowbrook President and Chief Executive Officer Robert S. Cubbin said previously this year that early in 2012 the company began evaluating its weaknesses after noting “changes in claims activity and other performance metrics of the business.”

Best issued a warning to the company in late 2012 that it was placing the ratings of Meadowbrook and its subsidiaries under review with negative implications. At that time Best noted the company had experienced worse than expected operating results in 2012 and a reduction in risk-adjusted capitalization levels, and had lower earnings prospects going forward.

Shortly after the downgrade, Cubbin said in a company announcement that the insurer had “immediately completed an assessment” of all its programs and specialty divisions to determine where an “A” rated policy issuer is required. It then entered into an agreement with State National 潘金莲传媒映画 Co. to provide “A” rated policies for a portion of its business.

Meadowbrook began adjusting underwriting and pricing and in an early August 2014 conference call Cubbin said the company’s second quarter 2014 results “reflect the continued impact of those actions, which helped to grow book value by seven and a half percent since Dec. 31, 2013.”

The company benefited in the second quarter, he said, from “modest former year reserve development, increased statutory surpluses, and an increase in both net income and operating income in a year-over-year basis.”

Acknowledging there is still more work to do, Cubbin said “our results for the first six months combined with our outlook for the year give us confidence that we remain on track to deliver results in the previously announced 2014 guidance, although most likely at the lower end of that range.”

He said the company expects to see an underwriting profit in the last half of 2014 as it remains focused on “key priorities, including improving our risk profile, attaining stability in our loss reserves and premium volume, strengthening our capital position and continuing to serve our customers and support our partners and agents.”

While premium growth is not anticipated in the second half of this year, Cubbin said Meadowbrook is positioning itself to grow profitably and at a modest rate in 2015.

“The areas that we like are the areas that we’ve been able to continue to get substantial rate increases. In our California workers’ comp book, we took the pain previously and we got the rates up, and that book of business looks to be potentially very valuable going forward,” Cubbin said.

The company has reduced exposures in the past 12 months in certain classes of business and is limiting growth in programs where it has to use the policy issuing carrier, due to the additional expense that brings.

“Areas that we’re writing in our traditional Meadowbrook companies are areas where we’re targeting growth for 2015,” Cubbin said.

He said Meadowbrook is continuing to “achieve pricing in excess of loss trends, which should result in improved margins.”

Entering the third quarter of 2014, statutory surplus in Meadowbrook’s insurance company subsidiaries is approximately $508 million, up from $488.2 million recorded at the end of December 2013.

“Based on the results for the first half of the year we expect gross written premium for the full year to be between $740 million and $760 million. We expect the combined ratio to between 99 and 100 for the second half of the year, with the expense ratio including 2 percent related to the cost of the policy issuance,” Cubbin said.

Any “increase in expenses will be partly offset by an improvement in loss ratio as we earn the rate increases achieve in 2013 and 2014, which are expected to be approximately 8 percent on net earned premium for the year,” he said.