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Pennsylvania Lumbermens Mutual Insurance Company and Indiana Lumbermens Mutual Insurance Company announced on Wednesday that they have executed agreements to affiliate their respective companies.
Once in effect, the affiliation will result in common management, shared services and pooled reinsurance. The affiliation agreements are subject to approval by the applicable departments of insurance, a process that management expects will be completed by year’s end.
The headquarters of the newly affiliated group will be in Philadelphia, Pennsylvania, with significant operations to be performed in Indianapolis, Indiana.
The companies said the agreements represent an affiliation of two ongoing legal entities, and not a merger. Over time, there will be a gradual sharing of resources, but the names of the companies, their brands and the unique products that they each bring to the marketplace will be preserved, the companies said.
John F. Wolf, who is currently president and CEO of Indiana Lumbermens Mutual, will retire from that position and become a member of the Board of Directors of both companies.
Meanwhile, John K. Smith, president and CEO of Pennsylvania Lumbermens Mutual, will serve as CEO of the integrated organization.
“This combination is an opportunity to capitalize on the strengths of each organization for the benefit of all. It will allow us to offer a broader and financially stronger market for the insureds of both companies, and a more secure workplace for employees,” said Smith.
The companies said their management consulted with A.M. Best Company, the insurance ratings firm, and anticipates that the affiliated group and its members will be assigned a financial strength rating of A-. Currently, Pennsylvania Lumbermens Mutual has a financial strength rating of A- from A.M. Best while Indiana Lumbermens Mutual has a financial strength rating of B+.
Pennsylvania Lumbermens Mutual Insurance Company, based in Philadelphia, was established in 1895, and deals solely in providing property/casualty insurance to the wood products and building material industries. The company has approximately 5,100 policyholders. Its annual net written premium was $111.6 million for 2012.
Indiana Lumbermens Mutual Insurance Company is headquartered in Indianapolis, and was founded in 1897 to provide an alternative source of fire insurance coverage for the state’s lumberyards. It has since grown to offer a range of insurance products to the building materials and forest product industries. The company has approximately 1,110 policyholders. Its annual net written premium was $33 million for 2012.
Source: Pennsylvania Lumbermens Mutual Insurance Company, Indiana Lumbermens Mutual Insurance Company