Md. Commissioner Seizes Carroll County Mutual

April 12, 2004

The Circuit Court For Baltimore City, Maryland, at the request of Maryland Insurance Commissioner Alfred W. Redmer, Jr., and with the consent of the company’s board of directors, has entered an order to rehabilitate The Mutual Fire Insurance Company of Carroll County (“Carroll County Mutual”).

The consent order appoints Redmer the receiver for the company and directs him to take possession of all of the company’s assets and to conduct the company’s business under the general supervision of the court effective immediately.

Commissioner Redmer stated that he was taking this action “to ensure that the company has sufficient monies to pay current and future claims.”

Redmer cited consistent declines in the company’s financial health.

“It is my hope that under the guidance of experienced insurance professionals, this company can be turned around, become healthy and continue to do business in the state of Maryland,” Redmer said.

Carroll County Mutual will continue to operate and to serve its policyholders during rehabilitation. Notices that explain the rehabilitation and assure policyholders that their policies remain in force will be sent within the next 15 days.

Carroll County Mutual began selling insurance in 1869 and is licensed to write business only in Maryland. The company is primarily engaged in the underwriting of homeowners’ insurance policies. Carroll County Mutual’s policies were primarily marketed through local independent agents. Carroll County Mutual’s most recent financial statements reflect approximately $6.1 million in direct premium written during 2003.

Financial reports showed that the company’s policyholder surplus had fallen below the applicable statutory minimums and the company’s Risk Based Capital (“RBC”) requirements had declined to the point at which action was mandated by law.

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