Main Street America To Acquire Grain Dealers Mutual

NU Online News Service, June 28, 12:43 p.m. EDT

The Main Street America Group said it has reached an agreement to acquire Indianapolis-based Grain Dealers Mutual Insurance Co. Financial terms were not released.

Completion of the transaction is expected before the end of the year and is subject to regulatory approval, the companies said.

Grain Dealers Mutual is a 107-year-old multiline property and casualty carrier that currently provides coverage in nine states. The bulk of its business is in North Carolina, Oklahoma, Mississippi and Indiana. Its product mix is 65 percent commercial and 35 percent personal, Main Street America said.

Don Malcom, president and chief executive officer of Grain Dealers Mutual, will continue to oversee the company's daily operations out of its current headquarters, Main Street America said. It will also maintain a regional service office in Greensboro, N.C.

Main Street America said that with the deal it will be entering some new states, as well as increasing its presence in several existing states. The Jacksonville, Fla.-based company said it expanded its operations to the Midwest last year when it acquired Michigan-domiciled Great Lakes Casualty Insurance Company.

Grain Dealers Mutual had $27 million in net written premium in 2008 and net loss of $2.66 million, according to Highline Data, a subsidiary of National Underwriter parent company Summit Business Media Co.

Main Street America reported net written premium of more than $809 million in 2008 and net income of $26 million. The company writes business in 24 states operating five p&c insurance carriers: NGM Insurance Company, Old Dominion Insurance Company, Main Street America Assurance Company, MSA Insurance Company and Great Lakes Casualty Insurance Company, Highline Data reports.

This afternoon, insurance rating service A.M. Best placed Grain Dealers Mutual financial strength rating of "B (Fair)" and its issuer credit rating of "bb" under review with developing implications.

Best said that the insurer's results could be negatively affected by weather-related and pension charges that could affect its risk-adjusted capitalization. If the deal is not completed, Best said Grain Dealers Mutual's rating could be downgrade due to its "declining capitalization and continued weak operating results." Completion of the deal would have a positive impact on its ratings.

The rating and outlook for Main Street America and its subsidiaries are unchanged, Best added.

This story was updated at 2:52 p.m. EDT