Meadowbrook Enters Quota Share Agreement with Swiss Re

Meadowbrook Insurance Group, currently under review by rating agency A.M. Best Co., says it has reached a quota-share agreement with Swiss Re to address capital concerns.

The Southfield, Mich.-based specialty program manager says it will surrender 50 percent of unearned premium on a selected portion of its business in return for an undisclosed ceding commission, starting Dec. 31.

Additionally, Meadowbrook says it will cede 25 percent of direct written premiums on this selected, unidentified portion of business, effective Jan. 1, 2013.

Meadowbrook says both transfers will be about $90-$100 million.

In a statement, CEO Robert S Cubbin says,” We are moving as expeditiously as possible to solve the existing uncertainty,” and its agreement with Swiss Re as well as other actions the company has taken “will help alleviate the doubt relating to our rating and establish a capital position that currently and prospectively supports our business strategy.”

In October A.M. Best placed Meadowbrook’s “A-minus” financial strength rating under review with negative implications and added there is a “reasonable likelihood that the ratings (the financial strength and issuer credit ratings) will be downgraded” based on Meadowbrook’s admission of more losses for prior years 2011, 2010 and 2009, as well as "earnings prospects going forward."

The announcement that A.M. Best had narrowed its eyes toward Meadowbrook followed the insurer’s broadcast that it needed to add more than $31 million to its reserves to handle higher-than-expected loss activity from accident years 2009, 2010 and 2011.

The expense was recorded in third-quarter results, when Meadowbrook reported a net income loss of $26.6 million.

Meadowbrook says its exposure to Superstorm Sandy is primarily limited to marine and properties in the Northeast. It expects about an after-tax impact from the storm of between $3.5 million and $4.5 million.

Comments

Resource Center

View All »

Complimentary White Paper: The Compression of Workplace Time

How brokers and carriers respond to the compression of workplace time will create significant competitive...

The Changing Insurance Consumer: 6 Ways to Create Profitable Relationships

Today’s mobile and web-savvy consumers have new expectations when it comes to interacting with your...

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Looking for Markets?

Search Kirschner’s Insurance Directory to help service your hard to place risks.

497 Risk Categories | 70,000 P&C Insurance Markets

kirschners
Specialty Markets Insight eNewsletter

Receive updates and analyses on hard to place and challenging coverages. Sign Up Now!

Advertisement. Closing in 15 seconds.