Business Moves

State Farm, Florida

Florida’s largest private insurer, State Farm, has decided to cease writing new policies for homes. The move is not expected to affect most of the company’s 1 million current policyholders. But it will likely place greater pressure on the state-run insurance provider, Citizens Property Insurance Corp.

A State Farm spokesman told the St. Petersburg Times that the company decided to stop writing new policies for homes because Florida lawmakers passed legislation last year to reduce property insurance rates. State Farm also has plans to drop roughly 50,000 home policies issued to coastal residents.

“We’ve got to have the reserves to pay claims of our existing customers,” State Farm spokesman Chris Neal told the Times.

Regulators allowed State Farm to increase premiums by 52 percent in 2006, but legislative changes forced the company to lower rates by 9 percent statewide in 2007.

Other insurers such as Liberty Mutual and Nationwide have also withdrawn from Florida.

Aegis Insurance Co., Mississippi

Aegis Security Insurance Co. resumed writing new manufactured housing and dwelling policies in the state March 1. The company is also offering a 20 percent overall rate reduction.

“Aegis is setting an example that we hope other companies will soon follow,” said Mississippi Commissioner of Insurance Mike Chaney. “Not only are they once again making insurance available to our citizens, but are doing so at affordable rates. They are showing that they intend to be accountable for the policies they write in the state. Slowly and surely we are seeing the insurance markets in Mississippi stabilizing to levels that are in the best interests of all our consumers.”

The decision to resume writing business came about in part due to recent changes in the Mississippi Wind Storm Underwriting Association or wind pool assessment process, according to Chaney. Aegis had ceased writing new business in Mississippi after Hurricane Katrina in an effort to reduce its exposure to assessments from the wind pool.

Meadowbrook, ProCentury

Michigan-based Meadowbrook Insurance Group, Inc. reported it will acquire ProCentury Corp. in a transaction valued at approximately $272.6 million in cash and stock to be paid to ProCentury shareholders.

The combined entity will adopt and operate under the Meadowbrook name and will continue to trade on the NYSE under the ticker symbol “MIG.”

Robert S. Cubbin, Meadowbrook chief executive officer, will continue in his current role in the post-merger combined entity and two ProCentury board members will join Meadowbrook’s board of directors.

Meadowbrook’s total gross written premium for 2007 was $346.5 million and ProCentury’s was $238.3 million.

The acquisition will expand Meadowbrook’s specialty lines capabilities with ProCentury’s expertise in the excess and surplus lines market. Both companies are based in the Midwest and said they have similar employee cultures.

The transaction is expected to be completed in the third quarter of 2008.

Meadowbrook Insurance Group, Inc.specializes in alternative risk management services for agents, professional/trade associations, and small to medium-sized insureds.

ProCentury Corp. is based in Columbus, Ohio. Its subsidiary, Century Surety Co., underwrites property and casualty insurance for small and mid-sized businesses. Century Surety Co. primarily writes excess and surplus lines insurance and markets its products through general agents.

Topics Florida Mississippi